Benefits, or sometimes called fringe benefits, have been instrumental in talent recruitment & retention to organisations. Companies go as far as crafting unique employee benefits program to compete for the best talents. In fact, a recent survey by Mercer Marsh found that around 60% of the participating employers labelled benefits as ‘very important’.

However, implementing a highly desirable program is only half of the work. For it to be effective and generate higher results in the workplace, proper evaluation is equally important.

The importance of perks and incentives for employees

In Asia, an average of 13% of a company’s payroll is dedicated to staff benefits, as stated in the Mercer Marsh survey. The golden question is: are employees’ perks worth spending on?

If we look at Maslow’s hierarchy of needs, we see that after physiological needs (such as food, water and shelter) are met, safety needs are next. Today, the people’s need for security is fulfilled by their jobs and the benefits it brings which includes financial, health & retirement safety nets. Moreover, it is human nature to be driven by rewards, and having a strategic reward system with the use of staff benefits is an advantage for companies.

Below is an interesting chart of the Maslow’s hierarchy of needs in the “employee engagement” context.

Maslow Hierarchy of Needs Employee Engagement.jpg

The ROI of Employee Benefits

What is the return of investment (ROI) when it comes to investing in employee perks? The short answer is better employee engagement, which manifests into improvement in productivity & reduction of absenteeism. Further to this, the improvement in productivity boosts morale & job satisfaction.

MetLife’s 10th annual study of employee perks trends especially shows a strong link between job satisfaction and the staff benefits offered.

Eventually, if employees are dedicated to their job and to the company, their loyalty and enthusiasm are reflected in the fact that they will tend to take fewer days off. Having to replace an employee that left the job; or having other employees cover up for their missing colleague results in some form of financial loss and reduces the productivity at the workplace. On the other hand, being able to retain employees with perks results in a lower turnover rate and other indirect costs such as recruitment & training costs.

Indeed, happier employees brings in more revenue for the company. It’s a win-win scenario.

Craft strategic employee benefits program

It is not enough to just provide staff benefits; it is more important to customise a company’s employee benefits program to the culture and the specific needs of the current employees.

Structure, evaluation, and purpose behind employee perks are essential. If the value of the employee benefits program is not properly communicated to the employees, then they may not fully appreciate the benefits offered by the company. Nonetheless, abuse of benefits can also occur. For example, while medical coverage may project a sense of care towards the employees, but employees may fake a sick leave just to get a day off without spending their paid leaves.

Fake sick leaves is becoming a widespread issue and have garnered heavy attention in the media lately. Clinics that participate in such practices have also been shut down & penalised by the authorities.

Find out how HealthMetrics helps companies reduce fake MCs with it’s digital employee medical benefits platform by issuing digital MCs directly from company-approved healthcare providers.

Article by Vulcanpost: If Your HR Is Using This M’sian Startup, You’d Think Twice Before Faking Your MC

Current challenges to implementing effective staff benefits packages

The question is then: which employee perks should be implemented? How do we know which employee benefits program will deliver the best results and at the same time most cost-effective? Many companies are missing a few points when researching and analysing their data to answer these questions. This is because they focus on the traditional tactical approach to evaluate their staff benefits.

1) The Traditional Tactical Approach

This approach focuses mainly on the use of external benchmarking to assess whether their employee benefits package is most likely to be effective. Thus, companies consider what the competitors do and follow market trends when designing their benefits program. Internal data, such as employee feedback and relevancy, tend to be overlooked.

2) Irrelevant To Company Goals

Companies tend to mimic current trends when designing employee perks, however, it is also important to keep it relevant to the company’s corporate culture.

For example, WOBB, a recruitment portal that emphasizes culture fit, aligns its business vision with the type of employees they want to attract & how their workspace should be like. WOBB’s startup culture & its aim to attract talented young tech-savvy employees would mean providing unique workspaces such as working on bean bags.  

FUN FACT: WOBB’s name is an acronym for the term “Working On Bean Bags”.

That said, it would be irrelevant for say a manufacturing company to implement similar perks. So, employee perks are the most effective when they align with the company’s culture and resonate with the employees.

3) Lack of Awareness & Proper Communication

Sometimes, the problem does not lie much in the employee benefits program but rather in the way they are communicated to their beneficiaries (in this case, the employees). Often, employees are unaware of the benefits available to them and how to utilise the perks.

For instance, it is unlikely for an employee to read an entire manual explaining their benefits; however, a simple and visual presentation will be a lot more intuitive & memorable.

Without proper communication of the benefits, any strategically crafted benefits program would not see its full potential & may be inadvertently dismissed as effective.

4) Infrequent Evaluations

Companies tend to evaluate their employee benefits program once a year. It is recommended to review the organisation’s benefits packages on a regular basis or every quarter.

The continuous review would help companies understand the effectiveness of the program and continuously optimise it. Besides that, employees needs, demographics or even the company’s direction may change with time.

What makes an employee benefits program most effective?

It is imperative for an employee benefits program to be:

  • Adaptable: There should be room for changes after each evaluation. The process to introduce alterations should be smooth and well-communicated.
  • Sustainable: Companies should be aware that their employees demographics changes with time. Take for example a company that has great retention may see its employee grow old with the organisation. Therefore, perhaps such an organisation may see a shift in its benefits from more lifestyle perks to increasing health & retirement security perks.
  • Personalised to one’s needs: Every employee in an organisation may be very different from each other. Perhaps a company with very mixed and diverse demographics may consider offering flexible benefits packages so that employees can choose which benefits may be more relevant to them & their families.
  • Affordable: A higher budget does not necessarily equate to effectiveness. Maintaining the benefits program within the company’s allocated budget coupled with the company’s corporate culture will reap higher rewards without incurring financial strain. It is also important to make sure that the cost outlay is predictable.

A new approach to evaluating the impact of employee benefits

It is not enough to compare external trends and benchmarks with one’s employee benefits program to evaluate its effectiveness. Companies have valuable data that can be used to determine the effectiveness of the benefits program.

Here are some methods that can be used for evaluating the effectiveness of employee benefits programs:  

1) Listening To Employees

Employee feedback is essential to improving a company’s staff benefits. In the end, it is the employees who will benefit from the program, thus it is important to involve them in evaluating the effectiveness of the benefits offered.

Furthermore, involving the participation of the employees is an effective means of communicating their benefits & consideration put into the welfare of the employees. It would instil a sense of being cared for & being heard which in turn manifests into loyalty.

To obtain employees’ feedback, online or offline survey tools can be used. Such inside information can further be used to foresee internal workforce trends. This helps companies to plan for the future needs of the employees & the changing demographics making it a sustainable approach.

2) Focus On Business Objectives

It is important that the staff benefits align with both the culture and the objectives of the company. Business objectives may change over time, therefore, staff benefits should be adaptable to present and future goals.

3) Staying Up-To-Date With The Legislation

Local laws are constantly changing. Therefore, it is imperative to be up-to-date with new legislation and whether it would affect your employee benefits programs. For example, the 2018 Malaysia Budget encourages private organisations to emulate the public sector by implementing 90-days paid maternity leaves instead of the usual 60-days.

Measuring the impact of an employee benefits program

Internal data that can be used to evaluate a company’s employee benefits program include employee’s absence rate, medical claims history, physical check-up data and employee feedback.

However, it is not the amount of data that matters, instead, it is how the data is used.

Analysing Valuable Metrics

If the goal of the benefits program is higher productivity and reduced absenteeism, how do quantify those metrics? How do we measure the impact of employee benefits?

The specific metrics will vary from company to company and would depend on the company’s goals. Moreover, the metrics should be clearly defined and as measurable as possible.

Here are a few to be considered:

  • Turnover rate
  • Overall revenue from clients
  • Number of medical certificates issued
  • Number of sick days
  • Employees’ ratings on their current benefits
  • Employees’ medical conditions

Discover the True ROI of Employee Benefits. What are the direct & indirect costs associated with Employee Benefits & it’s relationship with Employee Engagement? How do you measure ROI?

Article: True ROI of Employee Benefits

Effective communication with employees

Alas, even the best of employee perks can be ineffective if they are not being communicated to the employees effectively. As mentioned above, communicating the benefits may be more effective if presented in a visual format.

Here are ways to evaluate the effectiveness of the benefits program via communication with the employees:

  • Take into consideration how the employees react to the stated staff benefits and how they feel about them
  • Allow employees to rate each benefit & compare it with how their managers rate it themselves
  • Focus on personalised needs & segment respondents into different demographic categories

It is without a doubt important for companies to put an employee benefits program in place to attract, retain, and motivate valued employees. Nevertheless, keeping up with the everchanging nature of employee needs, trends and demographics would mean organisations need to be mindful of optimising the benefits program with time to suit the current needs of employees and business goals.

A comprehensive and productive dialogue between the employees and the evaluators of the employee perks is as important as the measurable data analytics to determine the effectiveness & future optimisations of the program.


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