Stephen McLaren Q&A: “We have to get medical inflation under control”

The employee benefits expert on how businesses are moving beyond financial reward – and where health insurance will go next

GCC businesses are becoming more generous when it comes to employee benefits. However, this often means looking beyond financial reward to focus on flexible working, says benefits expert Stephen McLaren, director of AES International. He told People Management what that means for HR professionals devising reward strategies.


Why is flexible working increasingly important in the reward mix?

Companies are having to be more innovative to retain and attract employees. Allowing them to work remotely not only results in the employee feeling more valued and trusted, it also often increases work output. This is confirmed by Stanford professor of economics Nicolas Bloom. He cites a Singapore company where half the staff worked from home four days a week, while the other half came into the office five days a week. In a nutshell, according to the credible two-year study, the employees who worked from home saw a massive increase in productivity and also tended to remain in their jobs longer.

In Willis Tower Watson’s 2018 Current and Emerging Global Benefit Themes pulse survey, it was shown that multinationals believe employee benefits are worth investing in, with 40 per cent of respondents anticipating they will expand the range of benefits on offer in the near future. However, cost and financial risk management will still be important. There will be a drive to be more creative, looking at other factors including modernisation of compensation and benefit packages.

Is there a dilemma for employers about how to keep the cost of health insurance low while still demonstrating they care about employee wellbeing?

Yes – the medical inflation rate in the UAE is running at over 10 per cent annually. Employers are often looking to decrease the level of cover offered to employees, to reduce that annual increase. They have to think more about how to help their group reduce this and thus help retain the cover offered.

Is there any evidence that more extensive and comprehensive healthcare schemes offer more substantial ROI?

I have not seen a study to provide that evidence. However, for example, if an expatriate employee has the cheapest plan available, depending in which Emirate they have a visa, if they breach the annual maximum they may have to leave the UAE, which is a loss of talent issue.

With multinationals, where they can demonstrate that wellbeing plans work, they are investing in the workforce in the region. In time, I believe that as the market matures, it will become the norm.

Is the market around employee wellbeing mature enough to expect the concept to be applied to staff at every level of an organisation?

No. I feel we need to get medical inflation more under control, to allow companies to develop longer term strategies for wellbeing at all levels. So there is a cost consideration and also a change of attitude by some employers, which will come as people are staying longer in the UAE, so they will invest more money into longer-term wellbeing strategies. We have come a long way in a short time.

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