Rock-star’ scientist Brian Cox, when talking about the principles of quantum physics, said this: “Everything is connected to everything else.” Being a scientist rather than a historian, he might not have realised he was quoting Lenin, who, when he said it, was talking about social-political connectivity.
It’s become very apparent over the recent past that we – at least economically – live in a global village, where local events can and do have global consequences. The 2008 UK recession was directly connected to US housing loans, for example, while Brexit is impacting business and economies around the world, not just in the UK and Europe.
This “Internet of Economies”, to use a so-coined phrase, also relates to employee benefits, with many multi-national companies now looking to at least have global oversight – if not yet global management – of benefits.
Trying to run a global benefits strategy is no easy task – although management can be centralised, most benefits will need to be adapted to match local needs and expectations. Therefore, in reality, it is virtually impossible to run a global ‘one-size fits all’ benefits package. But, why is that? While there are many reasons, they tend to fall into two broad interrelated categories:
Local expectations
While reward and benefit will vary by industry, status, experience etc., there may also be key local expectations. For example, even before automatic enrolment, the headline benefit in the UK was a retirement pension, with other benefits such as life insurance often dependent on and secondary to this. Compare this to the USA, where the primary benefit is healthcare.
Local regulations
Government regulation may shape and drive local benefit requirements and levels, too. Again, we have the example of automatic enrolment in the UK, Australia, New Zealand and Israel, with similar arrangements being rolled out in Denmark, Georgia, Ireland, Poland, Thailand and Lithuania. Likewise, compulsory healthcare benefits are becoming the norm in gulf countries and are already in place in Saudi Arabia and UAE, and planned for Bahrain, Oman and Qatar. Some European countries also have mandatory healthcare benefits (Netherlands, Germany), with an opt-out available for high earners.
So, if it’s not possible (or even desirable) to directly match benefits across national borders, how can a Global Benefits Manager do their job? In my opinion, it’s down to two things: a) what you decide you want to offer, and b) how you go about offering it. So, if your company’s answer to a) is “a globally competitive reward and benefit strategy”, using this following template – which answers b) – is a good way to get started.
Risk benefits
These are generally available worldwide, so a package providing life insurance, accident and disability cover across global locations could be achieved. In doing so, however, consideration should be given to the potential to improve rates, costs and underwriting using multi-national pooling, which in addition to cost savings, makes managing centrally easier.
Retirement/workplace savings
With retirement/workplace savings, it is difficult to have a single strategy because of the vast differences in regulation, tax treatment and providers/investment options. However, one way a business could globalise the benefit is to set a company-wide contribution level. Obviously, this needs to meet legislative requirements, but if say 10% of salary was set across the business, local benefit managers could then design the local vehicle to suit their specific needs.
A word of warning: although there may not be specific pension requirements in the Middle East, many countries will have a mandatory end-of-service bonus/gratuity, which is often set at a month’s pay for each year worked. They might not be pensions per se, but they are a cost to the business and should be budgeted within the ‘compensation and benefits’ area.
Health and wellbeing
Provision varies significantly from country to country (and even within countries – e.g. Dubai, Abu Dhabi, Canada etc.). Therefore, again, it is not possible to operate a single solution. Yet, a business could set a benchmark of ‘state provision plus’, meaning all employees would be entitled to a level of healthcare supplemental to local state provision. While the overall result might vary dramatically by territory, at least a standard is set.
Usually, expats are on a (relatively) short-term contract/assignment. As a result, it is probably best to treat them as outliers, avoiding complications of enrolling them in local plans that may cause significant issues around mobility.
Examples include:
- workplace savings made in to a local plan: these might not be accessible once the expat returns home (e.g. currency restrictions) or could be subject to taxation
- life insurance benefits: similarly, there could be issues around these being paid out of the assignment country
- health insurance: a ‘local’ policy might not provide access to care in the home country during vacation or repatriation
Specific solutions for expats exist for a reason – trying to use local benefits may not prove as cost effective as first thought.
Global benefits are always going to be difficult to manage. But with patience, access to knowledge and expertise, to return to Professor Cox, everything can be connected to everything else.
