I’m currently managing director of Content and Business Planning at The Korea Times. Before I took the current position in early 2024, I served as managing editor in charge of both paper and online for over three and a half years. In 2015-2018, I worked as Singapore correspondent covering ASEAN nations.
Secret of employee wellness
Finance and healthcare offer higher benefits than IT and engineering
By Kim Jae-kyoung
By Austin Kweon
The Employee Benefit Program is an important part of the total reward to employees and this is increasingly more important these days. However, the demographics keep changing in the company and the satisfaction of this program has been even decreasing in many companies for the past few years, despite employers spending more money on it. It is mainly due to the fact that the employee benefit programs are not fully incorporating what employees are valuing.
AON Hewitt’s Benefit Index Study, designed to value the employee benefit programs more independently and analytically, is regularly measuring the value of employee benefit programs in Korea and provides some insights.
First, there is a trend by industry: there are industries providing benefit programs with higher or lower competitiveness compared to others. Finance and health care provides higher benefits, while IT and engineering industry tends to be lower. This is due to the different historical backgrounds and total reward policy.
Second, the benefit program with no legal minimum requirement varies largely by company and industry, while the benefit programs with some legal minimum requirements do not. The legal minimum level seems like it is acting as a “nudge”, so many companies provides only the legal minimum in some benefits, which was not intended by the policy makers.
Third, as a single benefit item, retirement benefits account for the largest portion among the value of total benefits. Consequently, the competitiveness of retirement plans has a great influence on total benefits. In the meantime, the risk benefits including group health insurance take the smallest portion and least influence on the overall benefit value.
Fourth, with the introduction of Employee Retirement Benefit Security Act (ERBSA), many multinational companies are moving toward the Defined Contribution (DC) Plan. The DC plan is an individual account based plan, in the sense that each employee has an individual account to manage in the system.
However employees are not very happy with the investment decisions they face, because in general they do not have strong preferences of different investment styles. Therefore employers should give employees some kind of guideline. It can be a default option.
Fifth, many companies provide various allowances and subsidies. However depending on age groups and situations, some benefits are not utilized, therefore not very valuable to those who do not use them.
Replacing this area with flexible benefits can increase the value of the benefits by providing more flexibility as well as discounted price through group purchasing. For example, the price for a night at a condominium through the company flexible benefit can be much cheaper than the normal price.
Overall, the employee benefit program should be designed effectively to maximize shareholder value and the careful estimation of competitors’ movements should be considered to prevent going over the redesign work again. The impact of the employee benefit program will be more and more significant in this era of talent wars.
Austin Kweon is the leader of Retirement and Benefits Consulting at AON Hewitt Seoul Office (Austin.kweon@aonhewitt.com)