Investment in benefits is a major priority for attracting and retaining talent
VIETNAM, September 26, 2023 – Three in five employers in Vietnam 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.
60% Competition for talent is the most important factor influencing organisations’ benefits strategies in Vietnam
The survey found that competition for talent (60%) is the most important factor influencing organisations’ benefits strategies in Vietnam. Rising cost (51%), which was top two concerns in 2021, continue to be one of the major concerns of the employers in 2023, a sign that employers are increasingly under pressure to balance their budgets and evolve benefits strategies. Economic weakness (42%) factor which was not one of the top external influences driving benefits strategy in 2021, now takes priority at third place. Organisation restructuring factor has dropped to fourth in priority in 2023 compared to third in priority in 2021.
The ambition to improve benefits continue to compete with the increasing pressure to manage costs and optimise the value of benefits programmes. Nearly two third of employers cited that persistence of higher inflation (63%), and a weakening economy and business environment (68%) would have a significant impact on their benefits budgets in the next two years.
The current state of the economy is putting employers in Vietnam in a precarious position, balancing between winning the competition for talent and contending with the rising cost of services, all while budgets remain tight. Despite the challenges, employers recognised the urgency in delivering more efficient benefits programmes and remained 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 are optimised to become more cost-effective,” said Bui Thi Hoang Yen, Director of Health & Benefits, Vietnam, WTW.
The results of the Vietnam 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 Vietnam see health benefits (71%), career training and development (50%) and flexible work arrangements (35%) as the most important benefits in their portfolios. These priorities are also closely aligned with the broader APAC region, which saw the same top two priorities at 61%, 47% respectively and the the third (flexible work arrangement) ranked fourth in priority (31%) in the APAC result.
Looking ahead, employers in Vietnam recognise the importance of achieving ‘above market’ positions for their benefits portfolios, including healthcare insurance, over the next two years. While only 19% of employers describe their current financial wellbeing / short term finances benefits as ‘above market’ relative to their main competitors, 49% desire to reach this position in the next two years. Other top three benefits include career, training and development (21% 'above market' position currently vs. 44% desired 'above market' position), flexible work arrangements (19% current vs 39% desired), and health benefits (18% current vs 42% desired).
At the same time, respondents expressed a strong desire to improve their current benefits portfolios to compete with their competitors. More than one-third (39%) said they are looking to improve the positions of their benefits in mental health support, followed by financial wellbeing / short-term finances at 34%, as well as retirement plan / long-term finances at 33%. Employers 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 83% planning to improve contract terms with their vendors and above two-thirds (71%) looking to secure additional funding for their benefits programmes. Half of the respondents (50%) are also looking at reducing the generosity of benefits programmes overall, 49% plan to bundle different services into one package from a single vendor and 41% plan to increase employee share of cost.
Vietnam employers are also looking at ways to maximise employee experience and engagement, with 58% planning or considering to provide tools and services to help employees choose the best options when using their benefits. Over a haft (53%) are also planning or considering provide single digital platform where employees can access all benefits and services and provide information to help employees understand the various options and costs when selecting benefits.
“Our survey shows that employers are rethinking their benefits strategies to achieve ‘above market’ positions and adapt to employees’ 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 Vietnam, 219 employers took part in the survey, representing 0.2 million employees.
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