China is one of the fastest growing markets in which to do business, and the attraction and retention challenges faced by most multinational companies (MNCs) are to a certain extent a reflection of the drastic talent war.

Benefits are increasingly considered as a major factor that contributes to the attraction and retention of employees in an organization. The level and design of benefits provided by an organization have significant implications to both the employer and the employee. Employee benefits can be perceived as having a tangible value to the employee as part of a total rewards package.

To assess current benefits offerings and to provide insights into recent trends, Mercer has conducted this survey, collecting data as current as July 2007. The survey reflects the benefits practices of 72 multinational companies, including facts and valuable trend information, which will help organizations to better understand benefits program structures and to effectively leverage organizational resources reflective of the prevailing trends.  

Survey highlights

Employees are not very happy with current benefits

• Only 36% of the companies surveyed believe that their employees are satisfied with their current benefits

• The benefits issues that employees are most dissatisfied with are:

• Inadequate benefits levels (76% of companies)

 

• Not tax effective (60% of companies)

 

• No flexibility in selecting benefits (53% of companies)

 

• Benefits not relevant to needs (40% of companies)

How will benefits costs change in five years?

• Seventy-four percent of surveyed companies anticipate an increase in benefits expenditure/cost in the next five years

• Sixty-four percent of companies expect pension expenditure to increase (either by implementing or enlarging pensions)

What are employers planning on doing?

• Fifty-six percent of surveyed companies are considering changing their existing benefits, with a significant majority (95%) of them planning to do so in the next three years

• The top three objectives that companies aim to achieve by undertaking benefits changes are:

• Stronger attraction and retention (81% of companies)

 

• More competitive (75% of companies)

 

• Higher employee satisfaction (72% of companies)

 

• Pensions and housing are the two programs that companies want to change the most

Pensions are the focus, with enterprise annuity (EA) the most likely choice for delivering such benefits

• Among the companies surveyed, 44% currently offer employees pension benefits, and 56% do not

• For the companies that do not offer pension plans, half of them indicated that they will start to offer pension plans within three years, while nearly 75% of them will do so within five years

• When considering the delivery of pension benefits, companies will most likely choose EA; a preference expressed by 63% of companies that plan to offer pensions. More than three-quarters of companies that currently offer pensions plan to convert them to EA in five years

Flexible benefits plans are a favorable means to addressing employee needs

• Flexible benefits are perceived favorably for meeting the emerging and diversified needs of employees

• Seventy-nine percent of the companies surveyed perceive that flexible benefits are ideal to fit employees’ different and continuously varying needs

• The biggest advantage of flexibility is providing employees with choice (52% of companies)