Dow pioneers the 'cafeteria' plan

A major expansion that began a few years ago had a marked effect on Dow Chemical Thailand's staff profile. It left the company with a growing proportion of employees from the notoriously mobile "generation-Y".

It was one of the factors that launched the company's search for unconventional methods of attracting and retaining staff.

Dow's human-resources boss, Siriporn Phuangmarayat, related closely to Facebook's "I Like It" culture: she wanted to satisfy her employees by giving them choices when selecting their employee-benefit packages.

Siriporn and her HR department bravely pushed forward their proposals, which took a full two years in the planning. Despite some hurdles and extra workloads, the scheme was launched in July. "If we had become disheartened, we would have abandoned it two years ago when we couldn't find any vendor [to offer a flexible-benefit solution]," she said.

Employee feedback derived from "listening sessions" at various Dow sites over the course of three years and a higher staff turnover caused by the expansion of petrochemical firms at Map Ta Phut were the main motivators. Dow's own major expansion occurred in 2007 and 2008, when it recruited about 400 new staff. A majority of its employees have now been with the firm less than five years and many of them are under 35 years old.  Dow and its joint ventures currently employ about 894 people in Thailand.

"We wanted to initiate something that nobody else did; which would enable us to stay ahead of the curve. But base salaries could not be touched," Siriporn said.

Unlike traditional benefits packages, the flexible plan allows employees to choose from a range of benefits that suit their needs at a particular point in time. For example, single staff may not appreciate the value of insurance packages for spouses and children, whereas vacation or education packages may attract them.

"Some staff asked why we provided benefits to spouses and children, and if they had no children, could they transfer the insurance benefits to their parents?  Unfortunately, insurance firms don't permit that if the parents are over 60," she said.

A "cafeteria" plan responds better to the needs of newer-generation staff, who prefer to be able to choose what they like, Siriporn said. Therefore, in its internal-communication campaign, Dow mimicked Facebook's "I Like It" concept, featuring a young staff presenter in a shocking pink outfit declaring her delight with her choice of benefits.

Siriporn said that, to her knowledge, there were still no large firms in Thailand, either local or multinational, that had shifted to a flexible-benefits plan. This is because implementing a cafeteria plan requires a lot of administrative work that may be too complicated for big companies. As well, companies are required to make a significant initial investment in the system and - as in Dow's case - pour in a budget for additional benefits to ensure that its staff accept the plan.

"Companies must be daring. But we believe it will be good in the long term," she said, adding that Dow expected the project to take two years to reach a break-even point.

To ensure staff acceptance of the plan, Dow made sure that all core benefits were retained, while adding the flexible benefits with an additional budget of Bt7,500 per head. Under the firm's "co-sharing" concept, Bt2,500 is deducted from the salary of each employee to boost his or her flexible benefit allowances to Bt10,000, or 10,000 points.

Basic benefits, including accident and life insurance, are maintained, although employees can opt to reduce the coverage from the standard 24-times-their-salary and transfer the "points" for other purposes. They can also "sell" vacation days and use the points thus obtained to "buy" other benefits instead. However, to maintain a healthy work-life balance, employees cannot sell more than three days of their annual vacations.

In its first experimental year, Dow's "cafeteria" plan has 20 flexible-benefit items on offer, in four main categories: healthcare, life security, learning and recreation.

"Spa treatment at any place. Insurance firms won't pay for pimple treatment, but we do. We also pay for some dental procedures that insurance doesn't cover, such as tooth crowns. Sports equipment, tour packages, airline tickets....or any kind of study: cooking, piano, English classes...either for themselves or for their children," Siriporn said, giving examples of her firm's flexible-benefit choices.

Gadget purchases are not included in the benefit packages at present because the company views these as luxury items.

The most popular flexible-benefit item has turned out to be additional coverage for the cost of hospital rooms. Normally, employees have to pay anything additional to the Bt1,300 daily limit provided by the standard insurance package.  "This is like we are upgrading the benefits to our employees," she said.

At present, their base salary accounts for half of the total pay of Dow employees. Core benefits represent 35 per cent and flexible benefits, 15 per cent. The company aims to raise the flexible-benefits portion in a future.

Siriporn said that to ensure successful implementation of a flexible-benefit plan, firms must understand clearly their objectives and their targeted employee groups, win concrete support from senior management, conduct sufficient studies and internal-communication campaigns and ensure a teamwork approach.

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