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Optimising employee experience and benefits, not salary hike, is key to winning the talent race in Hong Kong

March 8, 2023

Instead of only relying on salary increase, business leaders need to adopt an integrated approach and start enhancing their employee benefit schemes and experiences to stand out in the war for talent.
Health and Benefits|Employee Experience|Benessere integrato
Beyond Data|Modernising Benefits

The past year was not an easy one for Hong Kong. Stifling pandemic controls, tumbling stock market, slowing global demand and the ongoing economic slump in China have led to a 4.2% contraction in Hong Kong’s GDP. As economic woes deepened, more than 100,000 residents left the city, leading to its biggest drop in population in at least 60 years.

As the city starts its road to recovery, the journey ahead is expected to be long and bumpy without the return of its lost talent. According to WTW’s 2022 Salary Budget Planning Report, the number of companies in Asia expecting challenges in attracting and retaining talent this year has almost doubled compared to two years ago, from 31% to 65%. To make matters worse, attrition rate in Hong Kong rose to 18% in 2022, higher than any other countries in Asia Pacific.

Rising attrition rate and a tighter labour market have put the pressure on companies to review compensation to ease hiring and retention. Across the region, pay and bonus are the top considerations for employees when looking for a new job. This is expected to boost salary increase in Hong Kong by 4% in 2023.

Beyond the competitive labour market, in the same survey by WTW, close to 70% of companies identified inflation as a key factor influencing salary increase in their companies. Compared to the rest of its Asia counterparts, companies in Hong Kong have benefited from a relatively restrained inflation spike over the past year. But with inflation expected to continue to fluctuate in the coming year, pegging compensation against it will only create pressure on business margins and further dampen companies’ ability to compete in the shrinking talent pool.

Therefore, it is time for companies to reconsider their current approach to counter the competitive labour market and inflationary pressures. Beyond pay and bonus, companies often forget that job security, flexible work, leave benefits and sense of purpose are also key factors employees look to when considering a new job. This means that instead of only relying on salary increase, business leaders need to adopt an integrated approach and start enhancing their employee benefit schemes and experiences to stand out in the war for talent.

We outlined three ways this can be achieved:

Providing support to improve wellbeing

Employee wellbeing is becoming a mounting concern, with 46% of employees experiencing anxiety or depression. Yet only 43% of them said their employers’ initiatives have helped to improve their mental health. This shows the need for companies to consider more holistic lifestyle support and flexible benefits to improve the health and wellbeing of their workforces. Spending accounts that can provide voluntary insurance support, access to gyms and fitness classes and mental wellbeing tools, are some of the possible solutions to make employees feel more supported and obtain the necessary help.

Being inclusive and agile

Companies that stand to benefit from the increasingly volatile and complex world are those that can embrace agility at scale. With the pandemic upending work patterns, more than half of employees want to work remotely, and hybrid work options should now be a key consideration in every workplace. At the same time, many insurers’ policies still have exclusions related to gender, and companies need to relook their benefits schemes to align with their Diversity, Equity and Inclusion (DEI) strategies.

Capturing employees’ needs through active listening

Understanding what employees want in their benefit schemes is key to differentiating companies in their efforts to become an employer of choice. Today’s employees want to be heard, with four in 10 indicating they want employers to prioritise employee listening. However, only one-quarter of companies in Hong Kong are treating this as a priority. By listening and developing a deeper understanding of their expectations and preference, companies can better support employees in the current environment to achieve efficiency at the workplace.

With close to half of employees planning to change jobs, companies have a tough road ahead as competition heats up for the top talent in Hong Kong. As inflationary pressure continues to rise globally, they need to understand that talent attraction does not need to come at the expense of operational resilience. The race for talent cannot be won with increased salary alone. Instead, enhancing employee experience and benefits will be the key factors that truly set companies apart.

This article was first published on ET Net in Chinese on 22 February 2023.


Eric Lam
Head of Health & Benefits, Hong Kong
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