How social benefit strategies are rapidly changing in Latin America
The performance strategies of Latin American companies are rapidly changing as business practices across Latin America have been in a state of constant flux since March 2020 and the onset of the COVID-19 emergency, with lockdowns and remote working followed by supply chain shocks. global inflation and labor shortages in many countries.
The pandemic has also spawned a slew of fast-growing tech startups in the region, with companies striving to attract and retain the best talent.
To get a solid view of the current trends in employee benefits in the region, BNamericas spoke to Álvaro Cristi, Head of Health and Benefits for Latin America at Willis Towers Watson, which has approximately $1 billion in benefits in the region -dollar managed.
BNamericas: What is WTW doing to meet the changing needs of workers in 2022 and the coming trends for human resources and benefits?
Christi: We are heavily involved in the design and strategy of benefits, as well as their negotiation, implementation and administration. Therefore, we have to collect a lot of information and at the same time make sure that the data we receive is good.
Over the past three years, we’ve purposefully collected information about the latest developments and ultimately developed a survey of HR managers that we call “Benefit Trends”.
Additionally, as wellbeing has become a top priority since the start of the pandemic, we’ve put together another survey that collects data on the wellbeing strategies deployed at every organization across the region, and with that information we’ve done it in able to establish a solid benchmark.
Finally, and this is fresh out of the oven, we have a survey called “Benefitness” that employees answer.
We’ve had more than 35,000 employees worldwide and approximately 5,000 in the region complete this survey, and this has enabled us to collect data to understand what employees want.
BNamericas: I read a message you posted recently about the importance of understanding “employee experience” in much the same light as software developers understanding UX or user experience, and that’s what WTW is really focusing on. What does WTW think about this?
Christi: There are just so many challenges these days. We are in a constantly changing world and the HR process is accelerating.
Before the pandemic, the performance process was much more static. There was this idea of trying to offer flexibility to improve perception, but companies were concerned about incorporating what employees actually valued so as not to set expectations.
However, we have incorporated this into a work environment survey conducted once or twice a year. The pandemic accelerated this process by forcing us to take a close look internally and collect risk profiles.
Secondly, it obliges us to understand where we are going, as in the companies that have had to implement remote working quickly, what we need to do to bring about this culture change.
It’s also forced us, whether or not office work has returned, to see what problems people are facing at home. The strategy shifted towards a stronger focus on the person. Health problems became a priority, as did mental problems.
BNamericas: What about adapting to the new employment climate and labor shortages? What are companies doing to retain top talent and hire the best talent?
Christi: The benefits strategy changes very quickly. Today, your HR department is struggling to retain talent over companies [workers] as more attractive, such as start-ups – technology companies that in many cases have been boosted by the pandemic.
Today we see startups becoming unicorns in a short period of time, which speeds up their evaluation process, and all of this is very attractive to younger generations.
Those companies that have brand awareness, which in the past was enough to generate greater loyalty, are now being threatened by new companies – start-ups – that have been innovative in their benefits strategy and managed to attract the attention of talent themselves to pull the various branches.
Competitiveness in attracting and retaining is seen in the profiles linked to technology, consumer experience and developments where companies are looking to better position their value matrix for these talents. This also helps improve the employee experience within the organization.
BNamericas: Are there new realities in employee retention?
Christi: There are a few. For one thing, our expectations of how long someone will work with us are never long, especially among younger generations. So the only way for a company to attract and hold [talented people] is to ensure that her experience there, even if she has only worked for four years, is excellent.
The strategies are going in this direction and our work at WTW is also beginning to develop in this direction.
Today, our structure is a much more holistic model that goes beyond simply brokering various pension plans. Our focus is to support the development of benefit strategies to improve the employee experience in order to reduce the gap between company and employee perceptions.
In this sense, we are seeing a revolution, even in the composition of human resources teams, where people with much more analytical profiles are being incorporated, trying to align the goals of the strategy with the purposes of the company. This change leads to the search for new advantages and their flexibility.
BNamericas: Do you have an example of a company that implemented such a radical mindset shift with benefits and paid off?
Christi: Some time ago in Chile, the large state-owned mining company [Codelco] had a conflict with the contractors’ employees which resulted in them being able to draw on a benefit plan of similar scope to the employees.
This led to a change in the performance strategies of other large companies, where they defined as a policy that contractors have access to performance plans. This change led to an improvement and transformation in the performance policies of many companies in this country, which remains a best practice to this day.
The result is that Chile is now the most advanced country in the region in terms of matching performance between contractors and direct workers.
BNamericas: What about advantage strategy in specific industries where companies need specific skills?
Christi: Our challenge as a company is to support the development of benefit strategies for the emerging roles, such as: B. Automation processes in productive companies. In this case, the problem is to create a sample to verify the competitiveness of its profits. For this, the comparison between different industries becomes very relevant.
BNamericas: How are companies and especially start-ups coping with the economic uncertainty that has erupted since then with ongoing lockdowns, war in Ukraine, high interest rates, high inflation, supply chain problems, etc.?
Christi: Some countries are more affected by inflation than others. The current economic uncertainty is leading to a focus on ongoing performance strategy review because of the cost this represents in total compensation.
With this in mind, we have seen that employee benefit flexibility has become a valued attribute. Between 70-72% of people prefer a more flexible structure. On the other hand, startup companies strive to differentiate themselves with more innovative advantages as part of their strategy.
For example, they provide cover for a gender change or co-parenting, allowing both members of the couple to organize time off, days off and vacations. The flexibility in [start-ups] is much bigger.
Of course, it is very different to compare a start-up with 80 employees with a company with 1,500. If you’re looking for flexibility, the problem is that it’s more expensive in large groups.
If I offer such options, this leads to anti-selection, higher damage ratios and rising cost projections. It’s harder to fund.
Let’s not forget that flexibility includes tailor-made developments. Each manager puts together a project that fits the culture of the company. Today we are very challenged by our customers, who ask us to always be on the lookout for efficiency and structures that make the benefit sustainable in the long term.
BNamericas: Are there regional issues in the game with perks?
Christi: In light of the new governments, there are changes in certain countries in the region that require a reassessment of the performance strategy.
The best example is the process that Chile is going through, where there are opportunities for changes in the healthcare and pension systems, as well as labor legislation, forcing companies to constantly assess the economic impact these changes could have.
BNamericas: Are there service areas that are more affected by inflation?
Christi: We are conducting a study to forecast medical inflation for 2023 and we expect it to be between 7% and 12% depending on the country. We are trying to generate good projection mechanisms, average cost, frequency, etc. to assess benefit program accident rates. We also strive to make agreements with suppliers to reduce costs, e.g. B. telemedicine, negotiations with pharmaceutical chains, etc.