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Written by Paul Bacon
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How being flexible can help you keep hold of your key employees.
In the previous edition of Network HR our resident agony aunt Audraie Lecocq received a letter from a HR manager who was worried about losing key staff members to other companies offering higher salaries. Audraie astutely pointed out that whilst an organisation may not be able to compete in purely financial terms, offering other incentives and benefits is an excellent way to help retain staff.
War for talent
The above problem is a common one in China. As the economy grows, a gap between the number of talented personnel on the market and the amount of available positions is beginning to develop. This gap is widening constantly and finding the right people to fill the right jobs is becoming more and more difficult. Several studies last year, including one by the International Labour Organisation (ILO), estimated that there is a shortage of nearly 750,000 trained managers in China. Because of this rather frightening disparity, employee turnover is becoming a major concern for HR staff, many of whom are worried that a full-scale ‘talent war' could soon be sparked.
The demand for highly-qualified staff is intensifying rapidly and many organisations are already beginning to draw their battle-lines as they prepare to fight tooth-and-nail for talent. The Bank of China and China Construction Bank have both introduced stock options as part of their employee incentive schemes in the hope that this added option will be attractive to potential talent, a CCB spokesman said: "We expect to build up our core competitiveness by attracting more talent and improving innovation through the employee incentive programmes." Similarly, last summer computer giant Lenovo became the first Chinese company to register a corporate pension scheme in a move designed to create long-term employee security. It claims that 70% of its Chinese employees have, thus far, applied to join the scheme.
With major companies already making such efforts, you now need to be asking yourself what you are doing to hold onto your best staff and to make your organisation attractive to potential employees? If you find yourself coming up with answers like: "nothing special", or "I am not sure", then it is time to think about what you should be doing. Money may well be a big issue here, especially if another company is prepared to offer more of it to one of your best staff. However, being flexible may well help you to skip over many financial hurdles.
"finding the right people to fill the right jobs is becoming more and more difficult"
Browsing the buffet
Exactly what are flexible benefits? Put simply, they are a way of giving your employees the opportunity to decide which benefits they think will suit them most, allowing them to tailor their own package, as opposed to being stuck with the regular ‘one size fits all' type of policy. Possibly the clearest way to describe them is by making a comparison with a buffet-style dinner. When you visit a buffet restaurant you can fill your plate with as much or as little of each dish as you choose. The same is true of flexible benefits. With traditional benefits packages the organisation decides which and what quantity of benefits the employee receives, but flexible benefits allow employees to choose which options are of most use to them and how much they want to contribute to each.
In setting up a flexible scheme you need to consider, which options you will offer to your staff - or to put it another way, which dishes will be on your menu. Following in the steps of Lenovo a pension plan could be one of your first options. This could prove to be a particularly attractive option to many younger employees who, because of concerns over China's state pensions, are now beginning to seriously think about their future at a much earlier stage in their careers. In fact, a recent survey by Horizon Research revealed that 32% of Chinese employees have serious concerns about their old age, a figure that has doubled in just one year. Therefore, allowing employees to have flexibility in regards to their long-term future is a great incentive.
Many of your key, more experienced employees are likely to have families, so it is also vital to offer choices that serve family security well, such as a family health plan or life-assurance. Also, considering the employment market is so competetive, it is quite likely thay you may be forced to look outside your own city to find the right person. If this is the case, then travel benefits are a great idea to feature in your buffet. For instance, travel insurance can be factored in as can subsidised tickets for trips home or even company cars.
There are two key ways in which you can implement a flexible policy. The first is to take a set percentage of your employees salary - for example 10% - and devote that to their benefit package. Your employees can then decide how much of that percentage can go to each benefit, 5% to a pension and 5% to a family health plan for instance. The second option though, is to be even more flexible and allow your employees to decide not just which benefits they would like, but also how much of their salary they can devote to them. This means that staff members concerned about their future can devote more of their salary to a pension scheme and those with a family can put more towards life assurance.
"flexible benefits allow employees to choose which options are of most use to them and how much they want to contribute to each"
Potential pitfalls
What is that I hear? This all sounds very complicated? Well, to a certain extent, that is true for both employer and employee. If you move from offering one or two fixed benefits to suddenly developing a choice of many, then it will certainly take time to acclimatise. Therefore you may think about phasing a program in over the course of a full year, during which time you provide your employees with as much information as possible about each benefit, allowing them to make the most informed choice possible. You may also think about who you want to cover with the scheme. Do you go for blanket coverage, offering flexible benefits to all your staff? Or, do you focus on your most valuable team members? A limited scheme would certainly be cheaper and easier to initiate.
And what of your existing benefits, do they simply go out of the window? Probably not. Sweeping and comprehensive changes will make the process of acclimatisation even more difficult. One idea would be to include some current benefits within the options offered to staff. There are some benefits that must remain sacrosanct however. For example if your company offers a certain amount of paid sick leave or maternity leave, those benefits should be left firmly in place.
Reaping the rewards
Can flexible benefits really make that much of a difference in keeping your staff? You may be surprised. The first thing a flexible plan does is show your employees that you care and, crucially, that you value them as individuals. As part of a large organisation it could be very easy for your staff to get the impression that they are just one small cog in a giant machine, but giving each person a choice shows that you see them as more. Beyond that however, it also gives talented people a reason to stay, a reason to stop them simply taking the money and running when a company offering a higher salary comes knocking. Additionally if you factor in benefits that focus on long-term security for your employees, such as a pension plan or an annual stock option, you create stronger ties to your talent.
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