Health & Benefits Blog
Traditional total compensation - consisting of base salary and bonus - is under increasing pressure and the importance of fringe benefits has increased in recent years. How can a company ensure that it offers an attractive employee package and what adjustments should be made to modernise it?
We spoke to Marco Schmid, Director Work & Rewards and Reto Ebnöther, Head of Health & Benefits, both at WTW Switzerland, about a recent exemplary client project and the future of total compensation.
Marco, WTW is a leading consultant in the field of compensation. Why do companies approach you and use our services?
Marco Schmid: One of the main reasons for this is our extensive database on compensation, HR policies and practices, and benefit design practices, which WTW has as a leading provider through its own surveys worldwide. The database takes a globally consistent approach in capturing country-specific elements to meet the needs of local and multinational organisations.
This gives companies access to reliable tools, local consulting expertise and up-to-date benchmarking data to position their company among the competition. At the same time, they ensure the wellbeing of employees and control costs and risks.
The development of the last few years shows that employers no longer only want to check compensation, but that benefits are also an increasingly important part of the so-called total compensation package. More and more employers are adopting a total rewards approach. Why is this? How does this show in conversations with your clients?
Marco Schmid: Even though inflation is not as noticeable in Switzerland as in other European countries, employee salaries are coming under increasing pressure. The current shortage of skilled workers and limited financial resources do not simplify the situation and mean that companies must differentiate themselves as employers in order to attract new talent and retain existing ones. In addition to remuneration, benefits such as occupational pension schemes, accident and daily sickness insurance and other fringe benefits are becoming an increasingly important factor in taking the pressure off employee salaries and setting employers apart from their competitors.
A heterogeneous workforce and large generational differences also mean that individual employees have very different needs in terms of employer benefits. A review of the entire employee package is therefore all the more important in order to understand where a company currently stands in comparison to the competition and to offer employer benefits that are relevant to employees.
Let's talk about one of your last big Total Rewards projects. What was the starting point of this benchmarking project and what challenges did the client want to overcome with our help?
Marco Schmid: The company primarily wanted to review employee compensation and at the same time look at retirement benefits and employee benefits as part of the overall package. It is often difficult for employers to make such an overall assessment of compensation and benefits because many different internal contacts, such as Human Resources and Compensation and Benefits, must be involved. In addition, it is particularly important to include the employee's perspective on benefits. As already mentioned, employees' needs are very different and can be misjudged by the employer or even by external consultants. For this reason, the employee's view on benefits is usually ascertained by means of an employee survey (for example, through a survey or a virtual focus group).
Reto, you and your team covered the benefits perspective in this project. What was different about this benchmarking project compared to previous projects?
Reto Ebnöther: Unlike in many other projects, the client did not just want a qualitative analysis of his employee performance. Usually, we do a comparison of their individual performance against the data of a selected peer group. The client wanted us to quantitatively evaluate as many of these benefits as possible, so that they could be added to the base salary and bonus as effective performance in Swiss francs.
The resulting quantitative graphs were incredibly informative. It was possible to see at one glance, for example, in which employee categories pension fund benefits were the reason for a below-average total package and what influence an increase in holiday credits had on total compensation.
Nevertheless, it was essential not to underestimate the importance of individual benefits for employees in the overall analysis. This rarely correlates with the costs. That is why we again specifically included the survey results and our local expertise.
Finally, the task was to draw the right essence and form future-oriented conclusions from this large amount of data.
Marco, how was the benchmarking report received by the client? And what did the client do with these results?
Marco Schmid: The benchmarking report was very well received by the client. In particular, the 360-degree view from a combination of market data, employee view, management view of the client and the consulting approach of WTW, including supplementary comments on current market trends, were very useful for the company. This is because it allows the focus to be placed on the right elements when adjusting compensation and benefits, and the benefits to be adjusted where employees see the greatest added value.
We also see time and again that communicating employer benefits to employees is a challenge. Employees are often not aware of what benefits are available to them at all.
Finally, a general question: How do you see the development in the market? From a Total Rewards perspective, what are the biggest challenges for companies in the coming years? Do you think that such interdisciplinary projects will increase?
Marco Schmid: At WTW we have known for a long time that the Total Rewards approach is the right one. Until now, however, the implementation of such a project on the part of the company has always been difficult because various contact persons must be involved and the coordination and execution of such a project are rather time-consuming.
However, due to the ever-increasing competitive pressure and the change from an employer's market to an employee's market, employers must be able to differentiate themselves more and more from their competitors in order to attract and retain new talent.
Meanwhile, many companies understand the importance as well as the added value of such a holistic approach and therefore we expect an increase of such projects in the future.
Reto Ebnöther: I agree 100 per cent with Marco. Until 2 or 3 years ago, many companies pursued the goal of offering the same benefits as the competition. They simply wanted to look good, avoid unpleasant moments in job interviews. But the market has changed. The so-called employee value proposition is now of central importance. Job interviews have become recruitment interviews. Differentiating oneself in this situation through salary is possible, but costly and rarely sustainable. The goal must be to inspire candidates for one's own company through long-term emotional topics. In addition to a meaningful job, this includes interesting, flexible benefits tailored to the individual employee groups, embedded in an appealing corporate culture.
The soft factors are therefore becoming increasingly important, and many companies still have untapped potential here. And in order to tap into this, a holistic analysis and a strategy that encompasses all dimensions of the employee value proposition is imperative.
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| Title | File Type | File Size |
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| BDS Global Brochure | .8 MB |
