Harmonising flexible benefits internationally

Bringing harmony to benefits provision globally through a flex plan can pay dividends for employers, but there are numerous pitfalls they need to avoid, says Georgina Fuller.

As businesses become increasingly global and multi-national organisations open up opportunities for employees to move between locations, some employers are looking to harmonise their benefits provision internationally and are turning to flexible benefits schemes to help them do so.

The concept of global flex schemes, where staff can opt in or out of a range of employer-paid benefits or take cash, is really starting to take off, according to Chris Bruce, managing director of Thomsons Online Benefits. “Organisations are becoming increasingly global in outlook and I think in 10 years it will be the norm for all companies to offer an international flex package of some sort.”

An increasingly competitive global marketplace and modern technology have both had a major impact on the way organisations operate, also playing a part in their decision to implement a flex scheme internationally. Michelle Warmsey, client manager of voluntary benefits at Marsh, explains that employers need to be able to compete in a global marketplace and offering a good benefits package can help to give them an edge. “Businesses need to ensure they are offering a similar package worldwide. It is not just about being competitive, it is also about retaining their brand,” she says.

While rolling out a flexible benefits plan across numerous countries at once might sound like a heavy undertaking, it can be quite straightforward, adds Warmsey. “It is not complicated as long as it is managed well and organisations spend plenty of time researching all the countries that will be involved on a local level,” she says.

Before setting the wheels in motion, however, employers should ensure they have set clear objectives around what they want flex to achieve internationally. “The most important thing is making sure that benefit objectives marry with the corporate objectives of the company as a whole,” says Bruce.

When looking to roll out a flex scheme across countries, there are a number of approaches employers can take in sourcing provider support. They may opt to use a single provider that is able to operate across all countries involved or utilise international brokers in each country. Many employers will also enlist the knowledge and expertise of local HR teams.

Some providers can usually offer one technology platform for the whole flex plan, which can be accessed in each country. Employers may prefer to work with one provider as the process can be easier to manage than if they are dealing with lots of different contractors. “[A] provider should be able to offer clear delivery timescales and work out how the benefits fit in with each country’s local market,” Warmsey adds.

Implementing an international flex scheme, however, is not without its pitfalls. Employers need to be aware of local differences in state benefits, as well as complexities arising from local legislation and taxation rules.

Obtaining buy-in from local HR teams early on in the process is also vital if employers are to be able to gather the data they require from each location with the minimum of difficulties. In Italy and France, for example, all benefits are mandated and have to be negotiated with work councils, so employers must ensure they consult with the relevant bodies.

Tony Hatton-Gore, director of remuneration and benefits at global engineering, design and business consultancy Arup, says flex is harder to implement in some global markets. “Flexible benefits are fairly common in the UK and US, but not in other parts of the world. It is a question of identifying what benefits would work in each country and looking at how easy it would be to roll them out,” he explains.

So far, the firm has rolled out a flex scheme to its 4,000 UK staff, and is now looking at rolling out a similar plan internationally. “We already have a global HR system in place and we can consult with regional HR teams about the local marketplace but we will also look at working with local providers,” he says.

Employers must also take cultural differences between countries into account. Sheila Sheldon, director of European operations at reward specialist Michael C Fina, says: “The culture of a country is a really important factor. Within the UK, [for example], people are [appreciative of] public recognition among their peers. But in a country like Asia, staff typically like things to be quite low profile and don’t necessarily want to be singled out.”

Employers should take on board employees’ views on the flex scheme itself. “We usually encourage employers to get a staff steering committee to do some local research. Any manager or employee can get involved as a spokesperson and put forward thoughts and suggestions on behalf of their peers,” says Sheldon.

Employers should bear in mind, however, that it is still relatively early days for global flexible benefits schemes, and not all countries are as advanced as in the UK. This may entail making an extra effort to communicate the scheme to staff, and obtain local management buy-in.

Bruce says: “There is no global definition of what a flexible benefit actually is so it can be confusing. You would expect a country like the UK to understand what the objectives are in local markets but flexible benefits may not exist on a global level in some countries.”

The current economic downturn could also make it more difficult to make the business case for flex. “Finance functions are going to want better control over costs and lower implementation costs. While they may also be looking at more alternatives to cash incentives, it may be harder to build a business case for a global benefits programme,” Bruce says.

Government restrictions could also prove to be a stumbling block, particularly in Europe. “More companies are offering flexible benefits schemes now but there are still so many limitations in some European countries. Business practices vary hugely and I think we have still got a long way to go before we see [international] flex plans becoming the norm,” says Hatton-Gore.

Key aspects employers should consider:

– Corporate objectives, such as competitive advantage, cost savings and so on.

– The type of benefits that can be offered in each location.

– The legislative environment and tax restrictions in each country.

– The culture of the country, along with awareness and understanding of local issues.

– Perception of the employer and corporate brand, internally and externally.

– Communicating and broking the flexible benefits plan.