If you read nothing else, read this…
- Employers are increasingly establishing governance teams and appointing global benefits brokers to work with their benefits teams.
- Growth in technology, especially smartphones, has boosted the communication of global benefits programmes, but this can still be a challenge.
- Employees are looking for more benefits that improve their work-life balance, such as marriage and baby bonuses, rather than the more traditional, costly offerings, such as private medical insurance.
We live in a global age, where a growing number of businesses are operating on an international level and are expected to deliver greater value than ever when it comes to global benefits.
In many cases, there is a growing expectation on global benefit professionals to exceed expectations and boost employee engagement. Glenn Elliott, founder and chief executive officer of Reward Gateway, says: “The key thing I’ve noticed is a real push for benefits to deliver value and move the needle in the employee engagement conversation. Employers are frustrated by expensive benefits that don’t even create the basics of employee goodwill.”
Private medical insurance is a prime example because employees generally expect it as a given but do not necessarily appreciate its true value, especially in the United States. “Despite the enormous cost, and the fact that [a large proportion] of human resources’ time and budget is spent on insurance, most employees think it is too complex and feel that the cover was better years ago,” says Elliott. ”It has zero impact on employee engagement or goodwill.”
Employees are instead looking to their employers to provide global benefits that actually help to enrich their work-life balance. “We are seeing employers desperately trying to manage healthcare costs so that they can create budget for things people actually notice and value,” Elliott says.
Financial help to ease employees through their lives outside work, for example, a wedding bonus and baby bonus, are proving popular in many organisations.
Growing numbers of organisations are also looking to put in place governance teams to work alongside their benefits team. Lee Thurston, global employee benefits director at JLT Employee Benefits, says: “Many [employers] are looking at this strategy but perhaps rolling it out on a regional rather than global basis to confirm proof of concept first.”
Establishing a global governance team can, however, be somewhat complicated. “It involves a clear strategy, set of objectives and timeline to agree certain landmark achievements,” explains Thurston. “It then needs dedicated, experienced practitioners to make this happen involving various stakeholders [for example, the employer, consultants and insurers].”
Many organisations are also appointing a global benefits broker to help deploy a better strategy to achieve cost savings, ensure compliance and provide management information, especially when it comes to managing the differences between regional and country schemes. Thurston says: “Local schemes just deal with one set of issues, whereas regional and global policies have to take a wider view. [Employers] that look at a global picture have to take different legislation, regulation, taxation and cultural differences into account.”
A good broker should be acutely aware of changes in regulations across the globe, says Adam Harding, business development manager international at Jelf Employee Benefits. “Businesses often use an external party that is well versed on governance in all locations. This can be from full set-up in a location to just some effective due diligence to keep on top of changing regulation, such as the regulations implemented in Dubai recently for mandatory healthcare to minimum benefit levels,” he says.
When it comes to managing regional compensation, an employer’s primary issue is often how to comply with local regulatory requirements. “Once this is achieved, they then tend to benchmark their benefits against sector peers to see how they compare with the market to make sure their programme is competitive,” says Thurston.
But according to Harding, the question of global, or regional, management of compensation does not have a straight answer. All organisations vary in their approach to managing regional compensation and it depends on whether the in-country employees are expatriates or local nationals, the size of the populations in each location and where the head office is based. “Benchmarking is taken from a number of sources, including industry reports, experience of employees, for example, what they have had at other organisations, and, as a broker we can give our clients an indication of what similar [organisations] are doing,” he says. ”The key is to make sure mandatory requirements are met, as in all realism each [employer] will vary its benefits programme to a degree, even when working in similar industries, so a key consideration in deciding on a benefits package is what kind of calibre employee they want to have.”
As this process develops, employers may consider offering a standard level of benefits globally. They might also consider the most efficient use of the insurance products on offer, such as claims prevention and management techniques or administrative support.
Employee communication is also a major issue when it comes to managing a global benefits scheme, says Elliott. “As an industry, we still struggle to deliver anything helpful in terms of communications, although some [organisations] are starting to get some next-generation products out which leverage developments in technology.”
The growth in technology, especially around smartphones, has really helped boost the communication of global benefits schemes. “Today, we can expect the majority of those of working age to have a smartphone, something that would have been unthinkable just five years ago,” says Elliott. “Not only has this made everything faster, but it has also had the effect of making business more competitive and consumers more demanding. We now expect information to be tailored to us and delivered when and how we prefer. This expectation extends far beyond our consumer habits and into our working lives.”
Domestic and General engages global workforce with recognition scheme
Domestic and General launched an international reward and recognition scheme for its 2,500-plus employees in December 2014. The reward programme, provided by Red Letter Days for Business, is available to employees in six countries: the UK, Australia, France, Germany, Spain and Italy.
Phil Harvey, group HR director for the warranty provider, says these types of schemes are a great way of engaging a global workforce. “After just six months, more than 40% of all our people had taken part in the scheme, and our flagship Employee of the Year award generated more than 50 individual nominations,” he explains.
The points-based programme has four levels of award: Everydaymore, which allows an employee to instantly reward a colleague who they feel has gone above and beyond their role with 10 points; Managingmore, which allows managers to reward exceptional contributions with 50 points; Monthlymore, an international monthly award, where staff nominate peers who have delivered results against the organisation’s values of care, creative, driven, dependable, expert and fair, with 1,000 points; and Employee of the year, for which the winner is chosen from among all recognition winners during the year.
The level of award can be redeemed against vouchers for experiences, high-street shops, cinema visits, hampers and holidays. “Our award recipients tell us that what they really value is the ability to choose what they do with their points”, says Harvey. “We’ve seen skydivers, surprise holidays and pampering days, as well as many household purchases and treats. Points have even been put towards making a wedding day really special.”
Harvey says implementing the scheme has not been an easy process but that, ultimately, it has paid off. “A huge amount of work goes on behind the scenes: setting up the system, managing the employee database with our partners, communicating the scheme, co-ordinating and arranging the awards,” he says. “But the investment and effort are worth it; everyone in our [organisation] knows that we will support them when they want to call out great performance and behaviours, and that we will give them the tools to do so.”
Viewpoint: Global reward requires complex design
The challenges of managing reward are considerably underestimated by many outside of the human resources function. It is much easier to get it wrong than get it right. When managed poorly, reward can demotivate, disengage and disenfranchise people very quickly and make headline news when the cause of value destroying behaviour. When managed well, it can only complement all of the many things required to ensure people are behaving and performing in the right way to support the organisation’s strategic direction. Moreover, the complexity of designing and managing reward increases exponentially in multi-national operations.
To navigate the challenges of managing reward for value, key considerations for global reward leaders must first include the business strategy: what is the strategic context for reward decisions, especially in terms of the behaviours and strategic focus required of [their] people?
Second, reward philosophy: how does the firm approach the governance of global operations and how is it seeking to influence the effort, focus and behaviour of its people?
Third, business intelligence and decision-making: how does [an employer] ensure [it has] complete business information about global and local market activity to ensure the best possible fit between reward systems and the business models they are supporting?
Next, manage the people that manage people. How does [an employer] engage people managers throughout the organisation to ensure they are effective at managing performance and making meaningful the firm’s effort and reward bargain with employees under their care?
Finally, sell the opportunity: how does [the employer] craft an employment narrative that leaves each and every employee in no doubt about the answer to the question: ‘why should I want to work here?’
This final point has nothing to do with money. It has everything to do with alignment between the organisation’s purpose, its values and its people. If its purpose does not appeal to the idealistic motives of its people, they are the wrong people. No reward system, no matter how generous or sophisticated, will ever make good that deficiency. The greatest weapon in an organisation’s arsenal is a mutually rewarding work experience that allows both employee and employer to achieve their full potential to do something worthwhile together.
Dr Jonathan Trevor is associate professor of management practice at the Saïd Business School, University of Oxford