www.mercer.com
Employee Benefits & Flexibility
Trends in Eastern Europe
October 29, 2008
Martin Mácha
Mercer EEMEA H&B Business Leader
2Mercer (Czech) a.s.
Content
Current Reward and Benefits Issues
Business Case & Benefits Strategy
Designing & Delivery Flex Solution
References
Contact details
4Mercer (Czech) a.s.
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
5Mercer (Czech) a.s.
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
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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”
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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
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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
9Mercer (Czech) a.s.
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
Global Trends Services
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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
Global Trends Services
12Mercer (Czech) a.s.
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
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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
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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
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Salary
Benefits
Salary
Core
€
Salary
Core
€
Salary
Core
€
Old New PersonalisedSpend € on
HealthLifestyle
RiskSecurityTraining
Tax effectiveCash
Understanding flexTypically a flex plan works like this…
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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
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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
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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 achievedthrough Flex?
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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
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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
24Mercer (Czech) a.s.
Benefits are managed within defined benefit groupsEach benefit will have its own group and can be added / removed anytime
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Contact Details
PhDr. Martin MáchaManaging DirectorTel: +420 221 [email protected]