90% of U.S. and UK tech firms plan to expand overseas, and 76% of those firms will be in more than three markets by the end of 2024* The benefits of global expansion far outweigh the many challenges it brings to global HR departments
As many companies continue to expand globally, benefits programs for their international workforce grow in importance. Global benefits executives face a range of challenges including delivering benefits in diverse environments and cultures, offering competitive benefits programs to help retain employees, controlling costs and streamlining administration. Here we look at the issues facing global HR departments, how to address those issues and we also pose an action plan for any organisations who find themselves in similar situations.
Challenges global expansion brings to the HR function
While globalisation often delivers immense benefits to companies, it also brings with it significant levels of complexity and new business challenges. Benefit and Compensation Managers have experienced these issues first-hand, as they grapple with a new range of issues across their international businesses:
- How to ensure equitable alignment of benefits packages across different jurisdictions,
- How to take account of local practices and norms,
- How to manage mobile employees, and
- How to manage the administration a number of schemes in different countries.
Centralising the global benefits strategy
In response to these challenges, the most progressive international companies have moved to more centralised employee benefit solutions. These enable Benefit and Compensation Managers to design and manage employee benefits in multiple countries in a fair and effective way. These schemes have many advantages over a collection of local schemes.
For example, a single scheme can be established for all qualifying multinational employees and mobile employees. Within this, multiple categories can be implemented to comply with local regulations and practice.
Such a scheme has the following advantages:
- Better governance of benefit programmes with central control. Removes the need to have HR local support for small employee numbers in regions.
- Centralised account and claim management
- Cross border schemes are suitable for inclusion in multinational pools
- A single set of accounts that can have a cost breakdown per jurisdiction if required,
- Free cover limits which are often larger than individual scheme limits reducing medical underwriting requirements
As a result of these advantages the benefits become too hard to ignore.
- Global companies have global HR strategies: As companies internationalise, they soon seek to develop consistent and centralised HR strategies for their company as a whole. Global risk solutions are in keeping and aligned with a global HR strategy
- Same terms and conditions for all employees: International companies seek to develop consistent remuneration practices and other employment conditions across borders. This demonstrates fairness to employees who should be more engaged as a result. A centralised group risk solution further embeds these ideals
- Employee mobility becomes easier: With a centralised group risk scheme, this becomes one less factor to consider as employees move across included jurisdictions This also gives the employee certainty in their benefit provision.
- Centralised control: With centralised HR solutions, a group head office can more efficiently manage multiple countries and can ensure fully admitted local solutions with their overall policy. Centralised risk solutions are a natural extension of such a policy
- Compliance control: When risk solutions are centralised, monitoring a single risk scheme. is much easier than monitoring multiple schemes with multiple providers
- Administration and billing efficiencies: A centralised scheme results in a single risk provider relationship and a single invoice for the scheme. Of course local categories and cost breakdowns can be provided.
- Access to multinational pooling: Cost savings, better underwriting terms and greater scheme efficiencies are achievable when schemes from a number of different jurisdictions are pooled together. This gives employers the added advantage of receiving dividends if the pool performs well.
The Employer Action Plan – a starting point
- Understand your current benefits programs — Research your current domestic and international programs. Make reviewing your plans a continuous process and not a reactive exercise.
- Work with your local subsidiaries to obtain country specific benefits information. This data will help educate you on what benefits employees value at the local level.
- Consider what efficiencies and cost savings can be gained through a cross boarder risk solution.
- Discuss how adding multinational pooling and different global benefits techniques can benefit your company and improve your benefits strategy.
- Communicate, execute and monitor — Educate all employees across the company around the details of the new strategy. Execute and monitor the effectiveness of your strategy.
- Communicate how centralized global benefits management is facilitating the birth of innovative ideas across borders.
Companies growing internationally is a feature of business today. HR practices are moving towards centralised solutions to achieve consistency and efficiencies. Benefits and Compensation Managers can achieve these benefits too, by examining the opportunities available to implement European and worldwide group risk solutions for their employees.
*Source: The State of Global Expansion Report 2019 – Velocity Global.
Utmost Corporate Solutions provides group risk solutions for Irish domestic and multinational corporates and EU-based multinationals from Utmost PanEurope, and for non-EU based multinationals from Utmost Worldwide.They also offer tailored solutions for voluntary, flexible benefit programmes and affinity schemes.