Employee Benefits

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Employee Benefits FlexibilityTrends in
Eastern Europe

• October 29, 2008

Martin Mácha Mercer EEMEA HB Business Leader
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Content

• Current Reward and Benefits Issues
• Business Case Benefits Strategy
• Designing Delivery Flex Solution
• References
• Contact details

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Current Reward and Benefits Issues
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Social and Economic Environment

• Slow down of the European economy expected as the
  result of global financial crisis
• Less staff
• Less travel
• Less budget for benefits?
• Social Security Reforms pending or speed up?
• Ageing population
• Low birth rate
• Structural shortage not due to cycle
• Increasing costs of Health Care systems
• Quality of Life as a key value
• Work-life balance
• Quality of life in retirement

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Mercers ResearchThe global business themes
driving HRs Agenda
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The aging workforce
Percentage change in population by age group
2000-2010

Generation Y Echo Boom
Baby Boomers Age Bubble
Generation X Shrinking pool of Prime Workers
Matures Retirees
Source Holding On How the Mass Exodus of
Retiring Baby Boomers Could Deplete the
Workforce. How Employers Can Stem the Tide.
Center for Organizational Research, March 2002.
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The stated priorities of each group

• Matures and Boomers
• Work/life balance
• Retirement planning
• Flex time
• Job security

• GenX
• Career growth
• Earnings potential
• Pay for (individual) performance
• Family healthcare

• GenY
• Participative, casual work cultures
• Cross-training challenges
• Self-development opportunities
• Recognition and praise

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Changing Demographics Examples of Mercer Services
Global Trends Services

• Phased retirement programs
• Plan design and implementation to meet needs of
  diverse workforce

• Flexible working arrangements for older workforce

• Increasing social security costs
• Reduction of social security benefits and
  extension of retirement age
• Growing pressure for companies to supplement
  social security benefits

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Emerging Skills ShortagesExamples of Mercer
Services
Global Trends Services

• Plan design and implementation

• Market targeting and recruitment strategy
• Retention and turnover management
• Employment branding

• Growth of pension plans in emerging markets

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Engaging Employees Examples of Mercer Services
Global Trends Services

• Communication
• Personal financial planning
• Plan design and implementation

• Organization research (employee surveys, etc)
• Total rewards strategy
• Segmented workforce rewards
• Rewards individualization

• Greater employee choice and flexibility
• Focus on employee communication, financial
  planning
• Impact of plan designs on employee retention

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Business Case Analysis Benefits Strategy
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Aligning Benefits to Business and HR Strategy
Employer Perspective Our benefits programs foster
the knowledge, competencies and behaviors
necessary for business success
Employee PerspectiveMy benefits are part of a
compelling value proposition that I understand
and support
A companys benefit programs must be relevant
to that companys unique business and HR goals.
Benefits ROI is meaningful and in increasing
demand.
Cost Perspective Our benefits costs are
affordable and sustainable, and do not crowd out
other profitable investments
External Perspective Our benefits are competitive
in comparison with our peer and based on best
practices on the market
One conceptMany unique variations
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Aligning the Strategy Integrating four
perspectives how to understand?
EMPLOYER PERSPECTIVE
COST PERSPECTIVE

• Business leader interviews and/or surveys
• Workforce analytics that seek to understand
  current workforce behaviors and the associated
  business impact.

• Understanding the costs of current and proposed
  benefits programs,
• Projections to take account of a range of
  possible future business performance scenarios.

EMPLOYEE PERSPECTIVE

• Employee preference and engagement research,
  through online surveys or in-person focus groups.
• Research may include understanding employees
  perceived value of the employment brand.

• Competitive benchmarking
• Review of evolving labor markets
• Understanding environmental trends in benefits.

EXTERNAL PERSPECTIVE
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Benefits ManagementA comprehensive solution

• Planning
• Understand
• Global
• Benefits and
• Pooling
• Strategy
• Set Program
• Objectives
• Document Action
• Plan
• Facilitate Annual
• Planning
• Meeting
• Attend Regular
• Update Meetings

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Flex Solutions
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Understanding flexTypically a flex plan works
like this
Old
New
Personalised
Spend onHealth Lifestyle Risk Security Training
Tax effective Cash
Benefits



Core
Core
Salary
Core
Salary
Salary
Salary
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Spectrum of ChoicesEvolving process for
employers in every country
Different solutions
for
Different objectives
Cost complexity
Segmentation
Flexible Reward
Flexible Remuneration
Complex flex
Simple flex
Individual benefit choice
Payroll deduction
Affinity
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Flex Development The state of each market
UK and Irish market
Denmark and Spain
Czech Republic and Hungary
Implementation Cost
Single flex
Flex benefits
Flex Reward
Payroll deduction
Voluntary benefits
Flex Remuneration
Segmented Flex benefits
Employee Segmentation
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Measuring the return on investmentWhich of these
are important for you?

• Better attraction and retention
• Increased employee satisfaction
• Increased awareness of total reward
• Improved self-service behaviours
• Reduced HR effort
• Improved recruitment efficiency
• Reduced sickness
• Increased flexible working
• Better targeting of reward
• Increased resource availability and utilisation
• Simplification/harmonisation of terms
• Reduction in benefit costs
• Increased control of volatility in benefit costs
• Increased risk-sharing with employees
• Reduced Tax and Social Security payments

What does Flex, in itself, achieve?
What can be achieved through Flex?
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Detailed Project ProcessMain steps undertaken to
deliver a successful flex plan
2. Design, Funding, Communication
4. Administration
1. Business Case
3. Implementation
Enrolment
Ongoing
Month One
Month Three to Five
Month Six
From Month Six
Month One to Three
Mobilisationplan
Consolidate Vendors
Broking
Finalisedesign
IR rules
Monitor
Measure
Projectplan

• Workshops
• Plan design
• Comms strategy
• Admin strategy

Confirmadmin spec
Validateservicemodel
Data mgmt
Spec
Processbuild
Systembuild
Test
Vendors
Enrolment
Planning and design matrix
Implementation matrix
eHRdelivery
Front office

• Finalise
• Project structure
• Contract

Back office
Commslaunch
Education/training
Fullinfo
Validate
Launch enrolment
Continue to educate reinforce
Reinforceand remind
Develop communication materials
Project structure project management tools
Awareness Understanding
Co-operation
Action
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Service delivery model Roles and tools involved
in flex administration
Membership / Employee
Flexible Benefits Website
HR Representatives
Flex Administration
Employee Service Centre
Benefit Suppliers
Call Filter
Payroll System
Administration System
Call Tracking Database
Representatives
HR System
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Flex Technology
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Set-up of a new clientCustomized design and
language
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Benefits are managed within defined benefit
groupsEach benefit will have its own group and
can be added / removed anytime
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All and any specific employee or benefit data can
easily be exported
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Mercer Flex Clients
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Questions?
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Contact Details

• PhDr. Martin Mácha
• Managing Director
• Tel [phone]
• martin.macha_at_mercer.com

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www.mercer.cz