Employee Benefits: Insights & Perception Survey 2015

Aon Hewitt surveyed 129 organizations, and over 60% of these have a turnover of over `500 crores. The survey covers more than 12 industries, including but not limited to IT, ITeS, BFSI, engineering, manufacturing, FMCG, pharmaceutical, automobile, energy and telecom.

The survey aims to provide inputs to organizations for designing cost-effective and competitive plans that align the employer's business strategy with the employee's needs. In execution, it studies five important pillars of benefits schemes – strategy, perception, design, administration and communication.

The study first assesses various strategies that organizations engage while creating employee benefits schemes. Secondly, it seeks to understand how employees perceive the benefits offered to them. It also studies how current benefits programs are designed and explores how they can be revamped for better effectiveness. The survey examines how these programs are administered and what part they play in company budgets. Finally, it highlights how benefits schemes are communicated across organizations.


Through the Employee Benefits Study, Aon Hewitt discovered that when organizations consider benefits to be an integral part of the Total Rewards framework, it allows them to design, deliver and communicate the program with better focus.

In India, multinational companies lead this trend with 72% articulating benefits as a part of their Total Rewards strategy, against 43% of Indian organizations. If we look at large organizations with a turnover of above `1,000 crores, this number increases to 60%. This also seems to be the preferred tactic for large employers (almost 86%) with employee size of over 20,000.

Integrating rewards into the overall compensation package helps employers get a higher return on their benefits spend. The compensation package becomes more attractive to new hires, and it encourages employee engagement and retention, while keeping costs in check.

In the recent years, employee preference has become a priority for about 50% of organizations, while regulatory aspects and financial considerations are more important for large organizations (83% and 81% respectively). For mid-sized organizations, financial considerations and market competitiveness take precedence over other factors.

However, employee engagement, talent hiring and retention are largely the top objectives for everyone.

Employee engagement, productivity and wellness head the list for 100% of the pharmaceutical and medical sector. Across industries, employee engagement is a priority for large organizations (94%), whereas hiring and retaining talent stays on the top for all large employers (100%).

Most organizations are on the same page about keeping employees happy, however, only 9% of employers put it on their high priority list.

Aon Hewitt’s survey suggests that to maintain market competitiveness, employers need to:

  • Innovate constantly and introduce new elements in their benefits programs
  • Introduce differentiated rewards to attract and retain talent
  • Opt for an approach with a basket of benefits from which employees can “pick and choose”
  • Blend the company’s global benefits philosophy with prevalent local country benefits to create end-to-end alignment

From the employees’ point of view, there has been a major shift towards accrued benefits. They are looking at what they are getting now, rather than what they will receive later.

39% of organizations are aware of this shift towards immediate benefits (insurance, a gymnasium, car, etc.). However, in large organizations, 43% employees lean towards medium-term benefits.

The survey reveals that at present, employees perceive the value of their benefits program as “somewhat positive. ”Only 11% of them feel that their rewards are of high value. However, in large organizations, 54% employees derive high or sufficient value from their benefits package.

Employers believe that better communication of benefits might help change employee perceptions. The challenge is to increase the perceived value without increasing the spend on benefits.

A majority of organizations (60%) agree that offering employees the flexibility to choose benefits will have a positive impact on their perceived value. However, for large organizations with a higher numbers of employees, this strategy can become a challenge.

Overall, the HR philosophy of organizations still seems to conform to general market trends. Two-third of organizations, especially large ones, build their benefits program based on prevalent market practices. However, some employers are increasingly ditching traditional approaches and considering differentiated benefits
programs to match their diverse workforce. 

Aon Hewitt favors this approach and suggests that organizations focus more on redesigning their benefits programs. But first, they need to understand where existing designs fail.


While examining the existing design of benefits schemes, the survey discovers that retirement benefits rule the roost with statutory components like gratuity and provident fund. 80% of large organizations lean on retirement-oriented benefits.

Health and wellness are a high focus areas for 49% of organizations, while workplace comforts seem to have got lost in the maze with 67% of organizations paying no attention to them at all.

Flexible benefits emerge as the most effective rewards tool to drive, engage and satisfy employees. Unfortunately, only a marginal 8% of organizations have put flexible benefits into full force. 49% of organizations offer partial flexibility.

Aon Hewitt suggests that skeptical employers test the feasibility of a flexible program first with a targeted group. They can later scale upto a wider audience and add new features to the kitty. This is easily possible with adequate budgets and efficient administration.


On an average, organizations spend 10% to 35% of the overall rewards budget on employee benefits programs. Large organizations tend to spend more but overall only 16% organizations spend anything over 35%.

In recent times, inflationary costs have pushed up the amount of money spent by employers on employee benefits. However, this has not translated in a proportionate increase in the employees’ perceived value of these benefits. In fact, there seems to be no direct correlation between an organization’s spend and the perceived value.

To cut down on this expenditure, organizations are working on improving employee communication and on highlighting health and wellness benefits.

30% of organizations have offered co-payment options for medical premium and claims, whereas 54% have restructured their benefits programs to curtail costs.

Aon Hewitt asserts that employers now need to look beyond conventional cost-control measures and offer differentiated control benefits based on employee needs.  Redesigned packages should use benefits responsibly and eliminate all wastage. Employers need to continue to push health and wellness programs. There is also a greater need for refining how these benefits are communicated.


The survey found that when employees are aware of the benefits available to them and their families, it results in greater engagement and a more motivated and productive workforce. Presently, communication initiatives are a primary focus of a whopping 81% of organizations.

Preliminary benefits are communicated primarily via the Intranet or through e-mails. 41% organizations use e-portals as a medium for employee benefits communication.

Large IT/ITeS organizations are naturally technologically more advanced, and 75% of these organizations use a variety of technological interventions for communication of rewards.

Aon Hewitt has identified the need for a robust technology platform in all organizations. This can help in smart integration of all the elements of design, administration, and communication of a benefits program.

In summary, the survey notes that the critical focus of employment schemes will continue to be health and retirement coverage. However, employers will need to get creative, keeping in mind the employees’ desire for flexibility in benefits. Responsible use of benefits needs to move up on priority lists, as do better communication and effective administration.

One size will definitely not fit all.


Chitra Jayasimha
Senior Actuary & Practice Leader, Retirement & Investment,
Aon Hewitt

For more information, please write to us at talentscapes@aonhewitt.com
Follow us on LinkedIn at Aon India & Twitter @Aon_India

Get in touch
Aon India Consulting