This document discusses total HR solutions and issues related to increasing salary costs, employer liability, and offering benefits to employees. It notes the legal requirements employers must meet, but that liability is perceived to be limited. Insurance is suggested as the most cost efficient way for companies to cover liability. Increasing salary costs significantly impact taxes for both the company and employees. Losing staff can cost 50% of their annual salary to replace them. Offering supplemental insurance benefits can help manage costs, improve staff retention to save 5% of salaries, and increase the ability to attract quality personnel.

1. TOTAL HR SOLUTIONS

2. EMOTIVE SUBJECT - ISSUES
• Legal Requirements Employer Liability
• Increasing Salary Costs
• Offering Benefits as part of Contract:
1. Taxation Issues
2. Perceived Value
3. Opting Out of State Benefits
4. Managing Costs
5. Staff Attraction and Retention

3. Employer Liability
• There are certain legal requirements but they are perceived by most Companies
to be limited Liability
• Claims have been steadily increasing with the biggest issue covering the Medical
Costs.
• Most costs efficient is to cover under Companies Commercial Insurances.
• The insurer will indemnify against liability under your contract of
employment to pay medical expenses and compensation including legal
costs in respect of death or bodily injury by accident or through
occupational disease caused during the period of insurance to any
employee or employees whilst being engaged, in the course of
employment by the insured, in the work connected with the insured’s
operations including business travel. The aforesaid employees of the
insured shall include casual labor, seasonal and temporary workers and
apprentices.

4. Increasing Salary Costs
• Staff still believe if they perform their job well that they deserve double figures
salary increase
• Effect is huge on tax for both Company and Employee
• Loosing staff due to not increasing Salary can cost at least 50% of that
persons annual salary with recruiting new staff and training to a point of
efficiency.

5. Insurances as Part Of Benefits
1. Perceived Value
• Why do Chinese just want cash salary
• Do your staff understand the value of Supplementary Medical Insurance and
additional Life Insurance. Would they prefer better options?
• Taxation of Salary and Employee Benefits
2. Opting Out of State Benefits
• Is your local tax office allowing Opt Out Options?
• If so have you calculated cost of current Sate Benefits?
• You can purchase Stand Alone Medical (inc Maternity), Group Life, Income
Protection and Saving Plans for Staff at approx 65% of current State Costs

6. Insurances as Part Of Benefits
3. Managing Costs
• By offering better benefits it can be shown that you can reduce costs in many
areas
• Reduce State Benefits and Taxation Costs to Company
• Reduce Taxation to Staff
• Improve staff retention and so saving the equivalent of 5% of overall
Company Salaries per year.
• Increase attraction of available personnel in Market
4. Does Supplementary Medical Insurance Benefits work for you and your staff?

7. Retaining Employees
A set of common talent management challenges faces
employers all around the world
• Recruiting and retaining the best
employees
• Increasing productivity of
employees
• Managing the costs of benefits
• Employees’ need for financial
planning
• Employees’ need for financial
protection
• Employees’ need for recognition
• The diminishing role of the state in
health and social welfare programs
Major impact
on the
bottom line

8. CHINA The Bigger Challenge
37% of the US-owned
companies think that recruiting
talent is their #1 operational
challenge…
...this is more than regulatory
concerns, lack of transparency,
bureaucracy or infrigement of
Intellectual Property rights*
44% of the executives at
Chinese companies think
insufficient talent is the
biggest barrier to their
global ambitions…
...but only 25% believe lack of
capital is the main challenge**
Sources:
* AmCham Shanghai survey of US-owned businesses based in China
** McKinsey Quarterly survey of 63 Chinese executives at major companies, June 2008

9. Offering Competitive Insurance Benefits
Overall shortage of talent supply
Despite the vast supply of college graduates, less than 10% of job candidates
are suitable for work in a foreign- owned company
In the next 15 years, domestic companies need 75,000 managers who can
work in a global environment, but today they have only 3,000-5,000
High turnover (e.g., 28% for MNCs in Shanghai in 2010)
Since training and promoting employees is time-consuming, many
companies resort to fishing in the same pond
COMPETITION FOR TALENT IS FIERCE
Sources: McKinsey Global Institute report on “Addressing China’s looming talent shortage”; Shanghai foreign investment association;
Firm healthcare survey (2005); Firm patient survey (2004)

10. *
Very important
*
Important
Neutral
Less
important Not at all
important
Talent consider
insurance benefits an
important factor in
choosing employers
Sources: McKinsey Global Institute report on “Addressing China’s looming talent shortage”; Shanghai foreign investment association;
Firm healthcare survey (2005); Firm patient survey (2004)
Offering Competitive Insurance Benefits

11. What are Companies Offering Staff?
• It is estimated 83% of multinational companies surveyed offer medical
plans in China to Foreign Staff
• At present below 0.5% of all Companies offer stand alone Medical
Insurance to key Chinese Staff
• 60% are offering all Chinese staff a level of supplementary Medical Cover
• Many offer full International Insurance to foreigners whether locally hired
or not
• Most have Employers Liability covering work-related accidents and
occupational diseases

12. Employee Insurance Benefits
• Enhanced job satisfaction
• Less time spent at hospitals and back at
work same day
• Increased motivation and commitment
• Greater efficiency
• Reduced stress and sick leave
• Reduced turnover
Happy
Employers
&
Happy
Employees

13. Case Study – Hotel Industry
INITIAL ISSUES
Two 5* hotels suffered very high staff turnover
historically
Hotel A had a staff turnover of 43%
Hotel B had a staff turnover of 38%
Turnover generally high in hotel industry,
favorable economic climate for job switchers,
and No Employee Benefits

14. IMPACT ON STAFF TURNOVER
SOLUTIONS IMPLEMENTATION
• Presented employee insurance
benefits solutions at the
hoteliers Associations early 2008
• Specially designed and tailored
employee benefits scheme for
Hotels A & B
*%
*%
*
HOTEL A HOTEL B
• Solution was rolled-out middle of
the year
• By end of following year both hotels
had seen a reduction of 40% in staff
turnover.
• The following year both hotels had
also reduced salary increases from
an average of 15% per year to 8%
*%
*%
*
Case Study – Hotel Industry