Compensation packages give firms a competitive edge in staff retention and enhance efficiency
IT APPEARS THE concept of flexible employee benefit plans that allow staff to select the items which best suit their individual needs has finally found acceptance in Hong Kong. Employers realise that such plans can offer competitive advantages and potential efficiencies, even though implementation may involve addressing a number of legal and contractual issues.
Black Mountain, the human resources services firm, conducted interviews with approximately 50 HR managers working for multinationals and other organisations, and found that about 24 per cent of employers offered flexible benefit packages. This represents an increase of 60 per cent from 2002, while more than a third of the companies surveyed were considering introducing the practice before 2008.
In employment contract terminology, anything an employer provides beyond salary or bonus is defined as a benefit. Those mandated by law, such as Mandatory Provident Fund contributions, are statutory, while a large degree of discretion can be applied in awarding other voluntary benefits.
In certain cases, benefits can total as much as 20 per cent of the remuneration paid to an employee, and the work required in administration can be significant. Therefore, if efficiencies can be achieved at the same time as individuals get the extras they most value, all parties come out ahead.
For example, given the choice, a younger employee in his or her mid-20s might prefer membership of a trendy gym, while someone in their mid-40s with three children would opt for additional disability, life or medical cover, which is the most popular of the options commonly offered in Hong Kong.