Need to know:
- Health benefits and pensions are in demand around the world as ageing populations put pressure on state systems.
- Legislation, cultural differences, and state provision can necessitate tweaks when rolling out a global reward strategy.
- Setting high level objectives that reflect an organisation’s values can help to create an equitable reward strategy that motivates employees.
Reward globalisation can deliver benefits including savings and simplicity as well as setting out a clear message about an organisation’s values. But employers must take local differences into account when rolling out their strategies.
Offering the right reward package is increasingly important. The Global talent crunch study by consultants Korn Ferry, published in May 2018, estimates that by 2030 a global talent shortage could mean more than 85 million jobs go unfilled.
This war for talent is putting the focus squarely on benefits, which now make up between 24% and 26% of a worker’s compensation, says Gethin Nadin, chief innovation officer at Benifex and Zellis. “The rapidly changing nature of the employer-employee relationship has put huge pressure on employers to do more to reward and support their people,” he explains. “Benefits are a priority for many employees.”
Global trends
A handful of trends are helping to shape benefit preferences. Adam Harding, divisional director, international at Howden Employee Benefits and Wellbeing, says: “Ageing populations are putting pressure on state healthcare and pensions around the world. Employees are crying out for health benefits and pensions.”
As an example, he points to the United Arab Emirates, which introduced pension laws in 2023 mandating an employer contribution of 15%.
The pandemic has also helped to drive the health and wellbeing agenda. Nebel Crowhurst, chief people officer at Reward Gateway, says: “Employees expect their [employer] to provide health and wellbeing benefits. The pandemic has also helped to make flexibility the norm in many workplaces.”
Local differences
While there are some global trends, employers must not overlook the local differences. “If [an organisation] is too rigid with its global reward, it won’t resonate with employees,” says Harding. “An employee in the UK wouldn’t know what to do with a luncheon voucher but they’re a common benefit in many EU countries.”
Mental health benefits are another example of how employee expectations vary. Standard in the US and UK, taboos mean these benefits are rare in the Middle East.
Other concerns can creep in too. For example, employee assistance programme (EAP) usage drops in the Far East, says Michelle Bishop, global practice leader (multinational benefits and mobility) at Gallagher. “It’s a confidentiality issue,” she says. “Employees don’t want to be seen to be worried about their mental health in case it’s seen as a weakness.”
Cultural differences can also stymie organisations wishing to roll out family-friendly policies. A UK employee can take up to 52 weeks statutory maternity leave, of which 39 weeks are paid, but in the US, the norm is just 12 weeks of unpaid leave.
State support can also shape local benefits. Although rare, a good level of state pension or a well-funded public health service can take the shine off the equivalent employee benefits.
Employer challenges
Employers can face further challenges too. “There might be legislation governing what an employer must offer, especially around pension and health insurance benefits,” says Harding. “Employers can also have difficulties around access to local providers. Tweaks are often necessary.”
Very few benefits are truly global. While it is possible to run a global EAP or virtual GP service, many global benefit programmes are a patchwork of local providers. This can bring administrative headaches and make promoting benefits to employees more difficult.
The organisation can add to the challenges. “[An employer] might not have the right benefits knowledge on the ground to support implementation of a global strategy,” says Nadin. “This is particularly the case where there is only a small employee population.”
Managing expectations
Striking the balance between global and local is key to delivering benefits that motivate employees wherever they are based. To achieve this ‘glocalisation’, Bishop recommends starting with some high-level objectives around what the organisation wants to achieve through reward. “Reward specialists need to consider what the [organisation] stands for, for instance [environmental, social and governance] (ESG), wellbeing or flexibility, and how these values can be demonstrated in the benefits on offer,” she explains. “It can be useful to set a baseline position too, pulling in data on what is and isn’t possible in each country.”
Translating this global strategy into rewards that motivate employees on a local level requires a robust communications programme too. Employees talk but ensuring the strategy is transparent, equitable and reflects the organisation’s values will help to keep everyone happy.
