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Business needs to tailor benefits to ensure talent emerges, says Mercer

Cuts in public finance necessitate a ‘tailoring’ approach to benefits to enable companies to trim costs and “give themselves an advantage in the war for talent”, says international consultancy Mercer.

In its Benefits Around the World Report 2011, out today, Mercer says multinational companies are being confronted with challenges created by reform of the state pension and the health and welfare system. Consequently, companies are having to review the cost, risk and competitiveness of employee benefit programmes around the world.

Jean-Philippe Provost, US international consulting group leader at Mercer, said: "Declining public finances have prompted a general retreat in state retirement and health provision; some countries are even looking to their pension and health systems for new sources of revenue. Changes vary, but include increases in retirement ages, restrictions on tax relief, reductions in benefits and increases in worker contributions".

"One of the trends coming out of this research," Provost continued, "is the manner in which companies are looking for cost efficiencies and value for money. Some are reducing benefits for new hires or introducing cost sharing, while others are consolidating with third party vendors or pooling of insurance risk to achieve economies of scale. A number of firms are taking a different approach and are introducing programmes to help cost control in the longer term, such as wellness programmes and flexible benefits programmes.

"Most multinational companies are looking to deliver cost-savings one way or another, but the manner in which they are dealt with will determine whether a company has the funds and strategies in place to give it a commanding position."

In terms of trimming costs in the most appropriate and employee-orientated manner, John Hall, Mercer's EMEA international consulting group leader, advocated the redirection of money saved towards schemes that will increase employee productivity.

Hall added: "Central oversight and monitoring of policy can identify risks and issues and enable companies to react appropriately, by encouraging behavioural change through a global health management program, for example. Money saved in these areas, such as reduced insurance premiums, can be diverted into other programmes that can support the productivity of the workforce."