www.mercer.com employee benefits & flexibility trends in eastern europe october 29, 2008 martin...

www.mercer.com

Employee Benefits & Flexibility

Trends in Eastern Europe

October 29, 2008

Martin Mácha

Mercer EEMEA H&B Business Leader

http://www.mercer.com/

2Mercer (Czech) a.s.

Content

Current Reward and Benefits Issues

Business Case & Benefits Strategy

Designing & Delivery Flex Solution

References

Contact details


Current Reward and Benefits Issues


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


Mercer’s ResearchThe global business themes driving HR’s Agenda

.s

Changing Workforce Demographics

Globalizing Business Operations

Engaging Employees

Controlling Costs and Managing Risk

Generating Top-Line Revenue Growth

Continuously Improving Processes

Responding to Emerging Skills Shortages


The aging workforce

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.

Percentage change in population by age group – 2000-2010

60

50

40

30

20

10

0

–10

–2075–795–9 10–15 15–19 20–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 65–69 70–74

% Generation Y

“Echo Boom”

Generation X

Shrinking pool of “Prime Workers”

Matures

“Retirees”


The stated priorities of each group

Matures and Boomers

Work/life balance

Retirement planning

Flex time

Job security

Gen–X

Career growth

Earnings potential

Pay for (individual) performance

Family healthcare

Gen–Y

Participative, casual work cultures

Cross-training challenges

Self-development opportunities

Recognition and praise


Changing Demographics Examples of Mercer 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

Global Trends Services


Emerging Skills ShortagesExamples of Mercer Services

Plan design and implementation

Market targeting and recruitment strategy

Retention and turnover management

Employment branding

Growth of pension plans in emerging markets



Engaging Employees Examples of Mercer 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


Business Case Analysis & Benefits Strategy


One concept…Many unique variations

A company’s benefit programs must be relevant to that company’s unique business and HR goals. Benefits ROI is meaningfuland in increasing demand.

Employer PerspectiveOur benefits programs foster the

knowledge, competenciesand behaviors necessary for

business success

Employee PerspectiveMy benefits are part of a

compelling value proposition that I understand and support

Cost PerspectiveOur benefits costs are affordable

and sustainable, and do not crowd out other profitable

investments

Aligning Benefits to Business and HR Strategy

12

External PerspectiveOur benefits are competitive in

comparison with our peer and based on best practices on the market


Aligning the Strategy Integrating four perspectives – how to understand?

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 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.

EMPLOYER PERSPECTIVE

COST PERSPECTIVE

EXTERNAL PERSPECTIVE

EMPLOYEE PERSPECTIVE


Benefits ManagementA comprehensive solution

Design Monitor Claims

experience Monitor Market Trends

and Legislation Review and adjust

Design

Provider Management

Complete Renewal Premium Analysis and Negotiations

Obtain Competitive Proposals (if required)

Select Provider or Review Coverage

Perform Profit Sharing Audits

Administration Review Amendments Maintain Enrolment

Information and Calculate Premium

Pay Premium Answer Employer and

Employee Questions Address Service Track Claims & check

Documentation Compliance

Communication Announce

Amendments Issue Regular

Employee Newsletter

Ongoing Plan Management

Design Complete

Benchmarking Develop Design

Provider Selection Develop Placement

Strategy and Evaluation Criteria

Develop and issue RFP (Specifications)

Evaluate Financial and Legal Terms

Evaluate Coverage and Service Levels

Select Provider and Service Levels

Administration Validate Policy Terms

and Conditions Set-Up Plan Complete Enrolment Calculate Premium

Communication Develop Strategy

Design Communication Materials

Produce and Deliver

Program Set-up

Planning•Understand Global Benefits and Pooling Strategy•Set Program Objectives•Document Action Plan

•Facilitate Annual Planning Meeting•Attend Regular Update Meetings

Flex Solutions


Salary

Benefits

Salary

Core

€

Salary

Core

€

Salary

Core

€

Old New PersonalisedSpend € on

HealthLifestyle

RiskSecurityTraining

Tax effectiveCash

Understanding flexTypically a flex plan works like this…


Spectrum of ChoicesEvolving process for employers in every country

Different solutions

Flexible Reward

Segmentation

Flexible Remuneration

Complex “flex”

Simple “flex”

Individual benefit choice

Payroll deduction

Affinity

Co

st &

co

mp

lexi

ty

for Different objectives


Flex Development The state of each market

Imp

lem

enta

tio

n C

ost

Voluntary benefits

Payroll d

eduction

Single flex

Flex benefits

Segmented Flex benefits

Flex Reward

Employee Segmentatio

n

Flex Remunera

tion

UK and Irish market

Czech Republic and

Hungary

Denmark and Spain


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 achievedthrough Flex?


1. Business Case 2. Design, Funding,Communication

3. ImplementationEnrolment OngoingMonth One

Month One to Three Month Three to Five Month Six From Month Six

Workshops:• Plan design• Comms strategy• Admin strategy

Workshops:• Plan design• Comms strategy• Admin strategy

Finalise:•Project structure•Contract

Finalise:•Project structure•Contract

Mobilisationplan

Projectplan

Project structure & project management tools

ConsolidateVendors

ConsolidateVendors

Pla

nn

ing

an

d d

esig

n m

atri

xBrokingBroking Finalise

designFinalisedesign IR rulesIR rules

Confirmadminspec

Confirmadminspec

Validateservicemodel

Validateservicemodel

DatamgmtDatamgmt SpecSpec

eHRdelivery

eHRdelivery

Commslaunch

Commslaunch

Education/training

Education/training

Develop communication materialsDevelop communication materialsIm

ple

men

tati

on

mat

rix

MonitorMonitor

Processbuild

Processbuild

Systembuild

Systembuild TestTest

FullinfoFullinfo ValidateValidate Launch &

enrolmentLaunch &enrolment

MeasureMeasure

VendorsVendors

Front officeFront office

Back officeBack office

Continue to educate

& reinforce

Continue to educate

& reinforce

EnrolmentEnrolment

Reinforceand remindReinforce

and remind

Awareness… Understanding… Co-operation… Action…

Detailed Project ProcessMain steps undertaken to deliver a successful flex plan

4. Administration


Payroll System

HR System

FlexAdministration

AdministrationSystem Representatives

Call Tracking Database

Call Filter

Flexible Benefits Website

Membership / Employee

HR Representatives

Benefit Suppliers

Employee Service Centre

Service delivery model Roles and tools involved in flex administration


Flex Technology


Set-up of a new client:Customized design and language


Benefits are managed within defined benefit groupsEach benefit will have its own group and can be added / removed anytime


All and any specific employee or benefit data can easily be exported


Mercer Flex Clients

Questions?


Contact Details

PhDr. Martin MáchaManaging DirectorTel: +420 221 [email protected]

mailto:[email protected]

www.mercer.cz

www.mercer.com employee benefits & flexibility trends in eastern europe october 29, 2008 martin...

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