Why Are Employee Benefits Important in 2024: A Comprehensive Guide for Malaysian Businesses

The short answer to why employee benefits are important is because you need them to compete with other employers who also want to attract and retain the best employees to remain competitive as a business.

As to why they are so important now in 2024?

That's because the top talents in the current employment market not only expect you to provide good employee benefits... they also expect you to understand (and offer) the types of benefits that they actually need to achieve the kind of work life that they desire today.

One that is — partly realised in the wake of the COVID-19 pandemic — balanced, healthy and, ultimately, sustainable.

Now, if you're ready to dive in to more details and learn:

• What employee benefits should you offer, and why?
• What would your business gain in return?
• The upcoming trends of employee benefits
  (it literally pays to stay ahead of the game!)
• How do you implement employee benefits effectively?
  (Super helpful if you are new to this)

Then let's begin.

What are employee benefits?

Employee benefits are additional perks or privileges given by employers to their employees, on top of the basic salary. These benefits are there to enhance employee satisfaction and their well-being in and outside of their workplace. 

The benefits can be things like medical insurance, transportation allowances, and additional EPF contributions (more than what's mandatory).

Why are employee benefits important?

Employee benefits have long been a tool for businesses all around the world to keep employees happy (since as early as 1739 in the UK).

The same goes for Malaysian businesses today that are fighting tooth and nail to attract and retain talents among the relatively stable employment market.

(...A stable job market signals that businesses are growing, or at least maintaining, their workforce and thus, implies a consistent demand for employee benefits!)

Providing benefits to your employees shows your commitment to their well-being and future.

It is also a great way to set your business apart and stand out from its competitors.

As a key to attracting talented employees

Picture this: Two companies are offering similar roles with the same salary, but one has a comprehensive benefits package while the other doesn't.

It's a no-brainer which one a job seeker would choose!

Recent research data reveals Malaysian employees are desiring benefits that align with the kind of work that is truly sustainable and provides long-term growth.

As you face the competitive job market today, a strong employee benefits package can be a real game-changer when it comes to attracting and retaining the cream of the crop.

Remember that top talents are not just looking for a paycheck, they are also looking for a company that values their well-being and growth in every sense.

To maintain a loyal and content workforce

We all know that employee happiness is the door to employee loyalty.

Imagine having a job that not only pays the bills... but also looks after your health, offers flexible work schedules to foster better work-life balance, and encourages personal development to help you become the best that you can be.

Sounds like a dream, right?

This dream is exactly what a good benefits package can create for employees.

There are statistics that prove so as well — according to Qualtrics' Employee Experience Trends Report among employees in Asia Pacific and Japan, these are the key drivers of an employee's intent to stay with a company:

• I feel as if I belong at this company
• Overall, I feel my career goals can be met at this company
• I feel positive about myself at work
• I believe this company has an outstanding future
• I feel energized at work

Most of these sentiments cannot be possible without having good health, a work-life balance that will prevent a burnout, and personal development to realise one's highest potential.

Successfully maintaining a productive and content workforce also helps reduce the costs of employee turnover.

Furthermore, there are statistics that say when an employee is happy with certain benefits offered by their employer they are more than two times more likely to recommend their employer to job seekers.

Why employee benefits matter especially in 2024?

The global shifts in the way we work, primarily influenced by the pandemic, have brought employee well-being to the forefront of business strategies.

It is as if, in the aftermath of the pandemic, employees all over the world have recalibrated their focus onto (physical and mental) health, family and relationships.

As we already established, a salary alone is no longer enough.

Employee benefits have become a tangible expression of your company's values and its commitment to its employees' well-being.

Today, it's also crucial for employers to be adaptable in the face of changing work environments.

Flexible work schedules, mental health support, health and wellness programs, and continuous learning opportunities are now key factors influencing your employees' job satisfaction and productivity.

(For instance, many employees do not think wasting 2 hours on daily commute is necessary or worthwhile to maintain a job any more! Especially when they feel they can be equally or 55% more productive working from home whenever the arrangement would make sense.)

In short, businesses that offer a well-rounded, comprehensive benefits package are better positioned to thrive in 2024 and beyond.

If you choose to neglect these changes, your employees will look elsewhere!

Employee benefits trends in Malaysia

As you craft and curate your benefits package, it pays to match your offerings to what your employees and job seekers in the market are looking for.

To help you in your efforts, here are some of the key trends in employee benefits in Malaysia:

1. Flexible working arrangements

As technology advances, many companies have moved towards more flexible working arrangements such as hybrid work (working from home some days of the week) and flexible hours (flexible starting and finishing hours in a workday).

Offering these types of arrangements can be very attractive to employees, as it helps improve their overall happiness, work-life balance, and even work performance.

2. Personalised employee benefits packages

One trend that has emerged in recent years is personalisation of benefits packages.

Which means you cater to the specific needs of your individual employees with the benefits you provide.

For example, some companies offer their employees to choose freely from a group of benefits as long as the total costs do not exceed a set amount every year.

In such a case, a married employee might choose to extend medical insurance cover for their spouse and children, whereas another employee who is focusing on upskilling and advancing their career might choose to use the fund on certification courses.

3. Wellness initiatives

Employee wellness programs are becoming increasingly popular in Malaysia, as employers recognise the importance of promoting healthy lifestyles among their staff.

These programs typically include activities or services such as health screenings, fitness classes, mindfulness app subscriptions, healthy meal boxes in the office, and even counselling and psychotherapy sessions.

4. Education and training opportunities

Very typically, the superstars in a workplace are a special bunch who care a lot about personal and professional growth.

They can feel unfulfilled quickly in a stifling environment.

To retain your best employees, providing ongoing education and training is essential.

Many employers now offer education and training opportunities as part of their benefits package, either through covering a portion of their postgraduate education costs or facilitating on-the-job training programs.

What exactly would your business gain from offering employee benefits?

A good benefits package can make a huge difference in the lives of employees and is definitely one of two biggest factors (aside from basic salary) affecting their decision to stay with your company long-term.

In 2024, discussing employee benefits is more important than ever before.

For utmost clarity, these below make a clear summary of how offering employee benefits will benefit your business.

There are 4 main gains:

1. Attracting top talents

Good employees know their worth!

And they want to work for companies that value their well-being and are happy to invest in their future.

Offering employee benefits is particularly important in a competitive job market where the best employees have many options. 

2. Reducing employee turnover costs

When you lose an employee, studies have reported that you lose about 4 months' worth of an employee's salary.

The recruiting costs, loss of productivity, time and opportunity costs from having to train up a new hire — they can all add up quickly.

Utilising employee benefits to keep your talents is an obvious solution to decrease your turnover rates.

3. Increasing productivity and customer satisfaction

A happy group of people who are willing to go above and beyond to achieve your company goals, assisting and covering for each other whenever a team member inevitably falls short?

That is 10 times more valuable than just having a team.

When morale is high and a positive work culture is in place, productivity is increased (and KPIs such as customer satisfaction and many others see improvement).

4. Improving company's reputation

Establishing a shining brand reputation infinitely helps you boost your bottom line.

A company with (a reputation for) low turnover rates will have a much easier time recruiting talented people.

Similarly, once a company develops a reputation for high employee turnover it will face difficulty attracting dedicated people who are looking to commit for the long term, which can further perpetuate any existing productivity issues.

Use employee benefits as a strategy to elevate your company's reputation in your recruitment efforts.

5. Creating meaningful impact

Bonus benefit!

At the end of the day, when you are dealing with employees you're dealing with fellow humans with dreams, goals, fears and worries of their own.

Providing an opportunity through work to enrich someone's life is an amply meaningful way to leave a legacy and make a positive impact on the society.

What are some of the most important benefits to employees in Malaysia?

As a Certified Financial Planner who has worked with dozens of employed professionals, dissecting, analysing and devising strategies for their personal finances...

Here are my takes on what's most important for your employees:

• Medical (and life) insurance: a major peace-of-mind element for many employees in a time of high medical costs in our country
• Flexible hours/hybrid work: allows for a heightened sense of autonomy and hence promotes personal happiness and productivity
• Professional development programs: a win-win for employers and employees; when employees learn, employers earn.
• Paid parental leave: having a child is an immensely life-giving transition; give your (male and female) employees the space and capacity to soak up all the joy this season of their life can offer and come back with renewed perspectives (and motivations to provide!).
• Personal finance education: although not seen offered a ton in Malaysia, imo this is so fundamental to an employee's long-term well-being. I may be biased but doesn't this just make sense? Employers can benefit profoundly when they educate their employees on how to properly manage what they make to successfully achieve their financial goals.

These are a few of what I believe to be the most essential. 

While they do gear towards employees who are married with children, stay tuned for a next post on more ideas for different employee groups.

How to implement an effective employee benefits program?

The key is in tailoring the benefits to your employee needs.

But first, before diving into creating a new benefits package, take a good look at what's already in place.

How well-received are your current benefits? Are they in line with industry standards?

Remember, an effective benefits package is not about offering everything under the sun. It's about understanding what your employees value most and delivering on that.

Find a way to get feedback about what your staff love and what they'd like to see improved. An anonymous survey or face-to-face meetings are great to get the ball rolling.

Design benefits around actual employee needs

Employee needs can vary wildly depending on factors like age, lifestyle, and family circumstances.

What a fresh graduate values will look vastly different from what a seasoned mid-career professional with a family would appreciate.

Try to understand the unique needs of your staff members and tailor your offerings accordingly.

Communicate those employee benefits

All the benefits in the world won't matter if your employees don't know about them or understand them!

Regularly communicate your benefits through emails, company meetings, and onboarding sessions. Include them in the employee handbook if you have one.

Make sure to explain each benefit clearly and highlight how it adds value to your employees.

And always be open to questions and feedback. Help your employees fully appreciate the benefits they have.

Measure the impact

What gets measured, gets managed.

Making sure your benefits packages are working is a continuous effort.

Monitor different metrics in your business to course correct when necessary:

• Benefits utilisation rates: Track how frequently your employees are utilising the benefits offered. Low utilisation suggests that they do not find the benefits valuable, or they simply may not be aware of them.
• Retention rates: Monitor turnover rates before and after implementing or changing benefits
• Recruitment metrics: If your benefits program is competitive, it will attract high-quality applicants. Look at the number of applications received and the quality of new hires.
• Employee engagement: Measure the level of employee engagement and job satisfaction. This can be done through regular pulse surveys or a more formal annual engagement survey.
• Absenteeism and productivity: Good benefits can contribute to healthier and happier employees, which can, in turn, reduce absenteeism and increase productivity. Monitor changes in these metrics in relation to your benefits.
• Cost-benefit analysis: Look at the cost of implementing the benefits against the value they provide, which can be observed in terms of productivity, retention, and other specific metrics that are important to your company.
  

You will and should see things improve after implementing a benefits package that meet the needs of your employees.

Over to you.

It's clear that employee benefits are more than just fancy extras thrown into a job offer.

They are strategic tools that can drive employee satisfaction, boost productivity, attract top talent, and ultimately propel your company success to new heights.

Remember, the investment you make in your employees is an investment in the success of your business.

So, go ahead and create an employee benefits package that resonates with your team, aligns with your company values, and drives your business goals forward. After all, a company is only as strong as the people behind it.