Benefits strategies in Latin American firms are changing rapidly as business practices across Latin America have been in a constant state of flux since March 2020 and the onset of the COVID-19 emergency, with telecommunications disruptions and transitions followed by supply chain shocks. global inflation and labor shortages in many countries.
The pandemic has also brought a crop of fast-growing tech start-ups to the region, with companies eager to recruit and retain the best talent.
To get a solid understanding of current trends in employee benefits in the region, BNamericas spoke with Álvaro Cristi, head of health and benefits for Latin America at Willis Towers Watson, which is managing around $1 billion in benefits within the region.
BNamericas: What is WTW doing to address the evolving needs of workers in 2022 and the coming trends for human resources and employee benefits?
Christians: We are heavily involved in benefits design and strategy, as well as their negotiation, implementation and administration. Therefore, we need to collect a lot of information, while also making sure that the data we get is good.
Over the past three years, we have targeted information on the latest developments and eventually developed a survey of HR managers that we call ‘benefit trends’.
In addition, with the issue of wellness becoming a top priority since the start of the pandemic, we have put together another study that collects data on the wellness strategies in place at every company across the region and with that information that we got able to create a stable standard.
Finally, and this is fresh out of the oven, we have a survey called ‘profitability’, which employees answer.
We’ve had more than 35,000 employees respond to this survey worldwide, and about 5,000 in the region, and with that, we’re able to gather data to understand what employees want.
BNamericas: I read a message you gave recently on the importance of understanding ’employee experience’ in the same light that software developers understand UX or user experience, and that’s something that WTW really focuses on . What is WTW thinking about this?
Christians: There are so many challenges these days. We are in a constantly changing world and the HR process is accelerating.
Before the pandemic, the benefits process was much more static. There was an idea of trying to offer flexibility, to improve perception, but companies were concerned about integrating what employees actually valued to avoid building expectations.
But we integrated this into a work environment survey conducted once or twice a year. The pandemic accelerated this process by forcing us to take a careful look inward and raise risk profiles.
Second, it forces us to understand where we’re going, like in those companies where telecommuting had to be implemented quickly, what we need to do is make that change in culture.
It also forced us, whether the office work is back or not, to look at the kinds of problems people were facing at home. The strategy shifted to focus more on the person. Health issues became primary, mental health issues as well.
BNamericas: What about adapting to the climate of new jobs and labor shortages? What are companies doing to retain the best people and hire the best talent?
Christians: The benefits strategy is changing very quickly. Today, your HR department is fighting to retain talent against companies [workers] considered more attractive, such as new technology companies, which in many cases were spurred by the pandemic.
Today we are seeing how start-ups in a short period of time turn into unicorns, which accelerates the process of their evaluation, and all this is very attractive to the younger generations.
Those companies that have a brand recognition that, in the past, was enough to generate more retention, are now being threatened by new companies – start-ups – that have innovated their benefits strategy, managing to attract attention of talent in different industries.
Competitiveness in attraction and retention is being seen in profiles related to the areas of technology, customer experience and developments, where companies are looking to better position their benefits matrix for these talents. This also helps improve the employee experience within the organization.
BNamericas: Are there new realities with employee retention?
Christians: There are some. First, our expectations of how long someone will work with us are never long, especially with the younger generations. So the only way for a company to attract and retain [talented people] is to ensure that their work experience there, even for just four years, has been excellent.
Strategies are moving this way, and as they are, our work at WTW is also beginning to evolve in this direction.
Today, our structure is a much more holistic model that goes beyond simply being an intermediary for various benefit plans. Our focus is on supporting the development of benefit strategies to improve the employee experience, seeking to reduce the gaps between companies’ and employees’ perceptions.
In this sense, we are seeing a revolution, also in the composition of human resources teams, which includes people with much more analytical profiles, who seek to align the objectives of the strategy with the goals of the company. This change leads to the search for new benefits and their flexibility.
BNamericas: Do you have an example of a company that made such a radical change in mindset with benefits and it paid off?
Christians: Some time ago, in Chile, the large state-owned mining company [Codelco] there was a conflict with the employees of the contracting companies, which caused them to be able to access a benefit plan with similar scope to the employees.
This brought about a change in the benefits strategies of other large companies, where they made it a policy for contractors to have access to benefit plans. This change brought about an improvement and transformation of the benefit policies of many companies in this country, which to this day continues to be a good practice.
The result is that today Chile is the most advanced country in the region in terms of the equalization of benefits between contractors and direct employees.
BNamericas: What about the strategy of benefits in specific industries, with firms that require specific skills?
Christians: Our challenge as a company is to support the development of profitability strategies for new emerging roles such as automation processes in manufacturing companies. In this case, the problem that exists is to create a sample for reviewing the competitiveness of its earnings. For this, comparison between different industries becomes very important.
BNamericas: How are companies, and especially start-ups, dealing with the economic uncertainty that has erupted since then, with ongoing lockdowns, the war in Ukraine, high interest rates, strong inflation, supply chain issues, etc.?
Christians: Inflation has affected some countries more than others. The current economic uncertainty makes it necessary to focus on the continuous review of the benefits strategy, due to the cost this represents in the total compensation.
Based on this, we have seen that for employees the flexibility of benefits has become a valued attribute. Between 70-72% of people prefer a more flexible structure. On the other hand, start-up companies, within their strategy, seek to differentiate themselves with more innovative benefits.
They provide coverage, for example, for gender change or to turn to co-parenting, allowing both members of the couple to organize vacations, days off, vacations. Flexibility in [start-ups] it is much bigger.
Of course, it’s very different to compare a start-up with 80 employees to a company with 1500. When you’re looking for flexibility, the problem is that it’s more expensive in large groups.
When I offer such options, it generates anti-selection, higher claim rates and increased cost estimates. It is more difficult to finance.
Let’s not forget that flexibility includes customized developments. Each manager puts together a project according to the company’s culture. Today, we are very challenged by our customers who ask us to be always monitoring, looking for efficiency and structures that make the benefits sustainable in the long term.
BNamericas: Are there regional issues at play with benefits?
Christians: Given the new governments, there are changes in some countries in the region that will require a re-evaluation of the benefits strategy.
The closest example is the process that Chile is going through, where there is a possibility of change in the health and pension system, as well as in the labor legislation, which leads companies to be in constant evaluation for the economic impacts that these modifications can generate.
BNamericas: Are there areas of benefits hit harder by inflation?
Christians: We are conducting a study to project medical inflation for 2023 and expect it to be between 7% and 12%, depending on the country. We try to generate good projection mechanisms, average cost, frequency, etc., to estimate accident rates of benefit programs. We also seek to create agreements with suppliers to reduce costs, for example telemedicine, negotiations with pharmaceutical chains, etc.
