What are the key issues affecting global employers’ benefits strategies?

Courtney Ellis Jones

The rise of the global employer, and the importance of emerging markets for expanding organisations, has changed the way businesses engage with their employees. The needs arising from different cultural norms and fulfilling the expectations of a varied workforce have created rich, robust employee networks, but with it has come an increasing demand on benefits, total reward and compensation as departments seek to bridge the mismatch between personnel requests, business requirements and local jurisdictions.

Global organisations have indicated their key challenges are around collaboration, agility, transparency, innovation and productivity, according to the Engaging hearts and minds report, published by global management consultancy Hay Group in January 2015. The research found a dangerous disconnect between how employees perceive reward for their performance, compensation for their hard work and incentive for effort. Clarity around what employees are offered by their employer is not always felt and the reality is that as businesses expand into new locations, the offering of benefits as enforced by local jurisdictions, such as increased holiday time or mandatory health checks, becomes confusing for the mobile workforce.

Clarity and communication, therefore, have become the chief issue for benefits in global organisations.

As employees move globally to fill talent shortages the lack of transparency on how their core benefits will change, outside of assignment-related packages and deductions or cost-of-living adjustments within payroll, is becoming increasingly problematic. For example, some US employers allow increased holiday days based on tenure of service or position within the organisation. When moving to a jurisdiction where increased holiday is mandatory, such as Germany, how do they carry the benefit of these days? Is it absorbed as part of the new state allowance and, if so, what benefits will be given in lieu? These questions are often not addressed, by either the business or the employee, and are left in stasis until either a return to the home location or into another jurisdiction.

Employers must be prepared to address how changes in benefits will affect employees. While medical insurance and private coverage are synonymous with US benefit packages for employees, it is less common in Europe, where nationalised healthcare systems are employed. Even where private medical insurance is part of a benefits package, the application of it is vastly different to how US medical insurance and coverage is utilised.

Challenges in benefits arise from a lack of understanding on how these change within a global context and the expectations of employees to maintain a similar or same level of offering, regardless of location. Managing these expectations while realising effective total reward and compensation programmes through delivery of cost optimisation to the business is one of the top issues for global benefits; and it is not easy. So how can global organisations tackle this problem with benefits and a mobile workforce?

One way is through flexible benefits plans and setting more fluid parameters around the enrolment and change periods, both inside the home and host countries.

As people’s style of working changes, with arrangements such as commuting, business travel and localisation increasing, benefits must become malleable and able to reflect the circumstances as they evolve for the employee. Employees must be enabled more in their own benefits and given more remit and control over how they utilise both soft and hard benefits.

By addressing these issues, organisations will also be able to adequately respond to the chief issue affecting global benefits: reluctance to move.

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The murkiness of benefits and their application across borders is a major point of contention for potential expatriates and one that often limits the move or forces the organisation to invest money in places where communication and clarity could have resolved the question. Businesses need to be less afraid of addressing reductions or changes as a result of jurisdictions and more proactive in educating their employees on their benefits within new locations.

Courtney Ellis-Jones is content manager at the Forum for Expatriate Management (FEM)