How to offer flexible benefits internationally

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• International flexible benefits schemes are becoming more popular because of the employee engagement and cost savings they can bring.

• Global flex helps create a strong employer brand for all staff.

• Employers must choose providers carefully, ensuring they have the technology and resources to implement a scheme in all required countries.

• Employers must consider local tax, legislation and cultural differences.

• Countries with less union activity and state benefits work better for flex.

Case study: Online tool handles global flex for Trowers and Hamlins

International law firm Trowers and Hamlins has about 700 employees and partners, with more than 150 of these based in the United Arab Emirates, Bahrain, Oman and Egypt.

Three years ago, the firm decided to ensure its reward package would increase awareness, appreciation and participation in employee benefits, and also improve staff retention, engagement and recruitment.

Trowers and Hamlins also put in place an online benefits tool, called th&me, with the help of Thomsons Online Benefits, which saw the launch of online flex across all its locations.

Although the firm could not offer salary sacrifice arrangements to its international offices because of local restrictions, it was able to allow staff to alter the levels on life assurance, and buy and sell holiday.

After the launch, 60% of employees agreed that they perceived an increase in their remuneration as a result of th&me.

Paul Robinson, director of HR, says: “All employees and some partners globally now see th&me as part of life at Trowers and Hamlins, providing a great understanding of the value of their benefits package, enabling them to choose various levels of benefits via the flex scheme.”

Rolling out a flexible benefits scheme internationally promises to boost staff engagement and recruitment, but it can be a long and complicated process, says Tom Washington

For employers with staff in international locations, harmonising and standardising benefits sets particular challenges. Trying to ensure that not only perks, but also education and communications are consistent globally, is a tricky task. Yet once implemented, an international flexible benefits scheme can give employers a vital edge in the global battle for talent.

Such schemes are most common in multinational organisations with a higher-thanaverage spend on benefits. In global industries such as financial services, media and pharmaceuticals, international flex is becoming a key engagement and recruitment tool.

Simon Binney, head of business development at Vebnet, says there has been a rise in demand for international flex in recent years, largely driven by the cost-efficiencies and consistencies that can be achieved.

“Advances in technology over the past 10 years mean benefit plans can be operated across the internet, in multiple languages, using one platform and taking account of different demographic populations and circumstances, inexpensively,” he says.

“The potential for flex across Europe, the Middle East and Africa, United Arab Emirates, US, Canada and Asia Pacific regions is huge, as large corporates increasingly have a more fluid workforce. We have seen growth over the past five years in countries such as Spain, the Netherlands, Sweden, China, the US, South America and the UK. We anticipate this trend continuing but we will also see demand increase in places such as Hong Kong, Singapore, Malaysia and India.”

Martha How, a reward principal at Aon Hewitt, says: “We used to have international flex conversations with one or two clients a year, but we have had conversations with 17 over the past year and have bid for several projects. We are actively working with three [employers] to implement international flex.”

Hurdles to global flex

But before employers make a foray into global flex, there are hurdles to consider. Varying regulatory and legal environments present the biggest challenge, and it is vital to address the needs of different countries in parallel, including market practice. Rolling out flex in several countries simultaneously also requires balancing the needs of larger and smaller locations and finding providers that can offer multinational benefits.

How adds: “I advise employers to use a global benefits firm that can provide technology, consulting and benefit placement support, plus liaison with local vendors. There are quite a few minefields and flex means different things in different places.”

Local tax regimes and legislation make certain countries more flex-friendly than others. Employers must identify which benefits will work in each location, and how easy it will be to offer them.

In Germany, for example, restrictions around collective bargaining agreements, tax regulation and works councils make it less easy to offer international flex. Elsewhere in Europe, Italy’s high level of social security and restrictive legislative environment also hinder the attractiveness of flex.

Graham Jarvis, managing director of Staffcare, says: “Countries that do not offer substantial levels of government benefits are better suited to flex, as the benefits will offer something meaningful to employees.

Culturally acceptable

“France offers substantial levels of benefits and flex schemes have not traditionally worked there. By contrast, flex works well in Spain, the Netherlands and many countries in Asia. Any country can be flex-friendly as long as it is culturally acceptable in the organisation and is driven through by management to get buy-in from key stakeholders in the country. Issues really arise with providers and tax breaks.”

When suitable locations for flex are determined, the choice of perks must then be considered. Vebnet’s Binney says: “Most organisations look to implement best of breed into all their packages, but there are few true multinational benefits, so what is best of breed in the UK, may not be best of breed in, say, Hong Kong.”

Benefits that work well in global flex include those sourced via a multi-national pool, such as risk benefits; buying and selling holiday; and voluntary benefits. The same goes for perks that are defined and managed by an employer, such as bonuses and loyalty rewards. But pensions can be tricky because of legal and tax variations across borders.

Also, some benefits may not be available in certain countries, and others may be too expensive. Many employers opt to roll out a basic flex scheme, adding complexity and localised perks later as the scheme matures.

Employers must also consider how the scheme will be administered, and realise the importance of getting buy-in from local HR teams early in the process to be able to gather the data they need from each location.

Matt Waller, chief executive at Benefex, says: “We have a financial services client at which all HR support is centralised in Poland, so all reward and benefits support is delivered in the same manner. We also have a large client that has sought to create an international strategy, communications, system and tool kit for each country and then deploy and support it using local teams and infrastructure. Collaboration is the key.”

Jacqueline Otten, principal at Towers Watson, says that, generally, the strategy for flex would be set centrally with local input from each country. “Communication and implementation would then be delivered at a local level. The administration, including helpline support, would also be done centrally using a global systems platform.”

Offering flex globally is a long and complicated process, and is not feasible for many employers. But for those willing to take up the challenge, the prize of employee engagement at an international level awaits.

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