Investment in benefits still a priority for attracting and retaining talent
MALAYSIA, July 24, 2023 – More than four in five employers in Malaysia see competition for talent as the number one business issue influencing their strategy for employee benefits in 2023. Despite rising costs, an increasing number of employers are targeting an ‘above market’ benefits position to attract top talent. That is according to the 2023 Benefits Trends Survey by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company.
The survey found that competition for talent (82%) is the most important factor influencing organisations’ benefits strategies in Malaysia. Rising costs, which was not among the top four concerns in 2021, has now risen to second place (60%), a sign that employers are increasingly under pressure to balance their budgets and evolve benefits strategies. Although the focus on flexible working arrangements has dropped slightly from 2021, it is nevertheless a priority at third place, followed by an increased focus on inclusion and diversity.
The ambition to improve benefits continue to compete with the increasing pressure to manage costs and optimise the value of benefits programmes. More than half of employers cited that persistence of higher inflation (54%), and a weakening economy and business environment (54%) would have a significant impact on their benefits budgets in the next two years.
“The current state of the economy in Malaysia is putting employers in a precarious position, as they balance winning the competition for talent and contending with the rising cost of services, while budgets remain tight. Despite the challenges, it is clear that employers recognise the urgency in delivering more efficient benefits programmes and remain committed to improving their portfolios. The key now will be to develop a truly equitable approach that not only tailors to the individual needs of the workforce, but also ensures that the value of their investments is optimised to become more cost-effective,” said Rosalind Yu, Director of Health & Benefits, Malaysia, WTW.
The results of the Malaysia survey mirror the views of employers from the wider Asia Pacific (APAC) region, which also identified competition for talent, rising costs, flexible work arrangements and the focus on inclusion and diversity as the top four business issues influencing their organisations’ strategies for benefits.
Employers in Malaysia see health benefits (69%), career training and development (62%) and risk and insurance benefits (41%) as the most important benefits in their portfolios. These priorities are also closely aligned with the broader APAC region, which saw the same top three priorities at 61%, 47% and 41% respectively.
Looking ahead, employers in Malaysia recognise the importance of achieving ‘above market’ positions for their benefits portfolios over the next two years. While only 16% of employers describe their current financial wellbeing / short term finances benefits as ‘above market’ relative to their main competitors, 40% desire to reach this position in the next two years. This is followed by mental health support (12% ‘above-market’ position currently vs. 29% desired ‘above-market’ position), career training and development (21% current vs 38% desired) as well as health benefits (17% current vs 34% desired).
At the same time, respondents expressed a strong desire to improve their current benefits portfolios to compete with their competitors. Close to one-third (32%) said they are looking to improve the positions of their benefits in financial wellbeing / short-term finances, followed by mental health support at 26%, as well as family and caregiving support at 25%. They are also placing a greater emphasis on diversity, equity and inclusion (DEI), with more than half (55%) planning or considering actions to understand key issues in DEI that are affecting employees.
In terms of benefits financing, employers are taking more aggressive actions to manage the budgets of their benefits programmes, with 71% planning to improve contract terms with their vendors and almost two-thirds (65%) looking to secure additional funding for their benefits programmes. Half of the respondents are also looking at bundling services into one package from a single vendor, 45% plan to expand the use of risk financing arrangements and 37% plan to mitigate retirement plan risk.
Malaysia employers are also looking at ways to maximise employee experience and engagement, with 60% planning or considering to provide a single digital platform where employees can access all benefits and services. Over two-fifths (43%) are also planning or considering more tools and services to help employees choose the best options when using their benefits.
“Our survey shows that employers are rethinking their benefits strategies in order to achieve ‘above market’ positions and adapt to employee’s fast-evolving preferences in the near future. This will be a critical step in bridging the gaps of their existing programmes and more importantly, help to effectively manage business priorities such as rising cost and the competition for talent.
“Companies that can differentiate themselves and implement holistic benefits programmes will stand to gain a strong advantage against their competitors. To achieve this, they must keep their ears close to the ground and maximise the employee experience, such as by leveraging on data and technology, to ensure that they are meeting the needs of a diverse workforce. The answer to this is an integrated and sustainable approach to their benefits strategies built on flexibility, where employers can adapt effectively to employees’ evolving needs without compromising on the priorities of the business,” said Cedric Luah, Managing Director and Head of Health & Benefits, International, WTW.
The 2023 Global Benefits Trends Survey examines the future direction of an organisation’s benefits strategy, how innovative solutions are used for old and new challenges, and how employers are changing and adapting their benefits design, financing, administration and analytics.
The survey was conducted between March and April this year with responses from a total of 5,233 employers across 95 markets globally, representing 22.9 million employees. Amongst which, 1,746 employers are based in Asia Pacific, representing 4.9 million employees. In Malaysia, 85 employers took part in the survey, representing 0.2 million employees.
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.
Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.
