November 21, 2011
Benefits without borders
By Amanda McGrory
For a human resources department, sometimes dealing with benefits just on the U.S. side can be complicated enough.
With the new health care laws and struggles with retirement, there is plenty to deal with in the states, but for many companies, benefits don’t stop at the U.S. border, which is making it increasingly important to develop a strategic alignment between benefits programs in all countries, says Lenny Sanicola, senior benefits practice leader for WorldatWork.
“As more and more organizations become global, there is an organizational desire to develop a common framework without necessarily a one-size-fits-all plan,” Sanicola says. “There is a desire to better facilitate a global mindset and reinforce desired messages, such as organizational vision, mission, values, etc., through benefits and other total rewards programs across world regions.”
When using a more aligned approach, corporate management organizes the benefits on a global scale and reviews and strongly influences each modification in the U.S. benefits programs, which can provide some advantages, Sanicola says. These advantages include an improved understanding of global financial commitments, control over benefits policy, consistent financial reporting, financial savings from global economies of scale, and internationally shared resources and ideas.
By having an aligned approach to global benefits, HR professionals can also do a better job focusing on their duties, instead of spending their time trying to educate employees about their different benefits on the various international fronts, says Iain Jones, senior consultant for Towers Watson. If those HR professionals were to simply field questions all day, they would not be able to provide the necessary value and strategic guidance that is needed.
“Most global benefits directors are trying to figure out how to manage the workload,” Jones says. “If at the end of the day, they are responding to ad-hoc queries – one question from one country and another from another country – they don’t have time to focus on the strategic aspects. If an HR department can get the strategic and the tactical elements of global benefits sorted out, they can really add value, rather than firefighting every day.”
For many companies, navigating through the various laws of each country is often difficult, Jones says, because the requirements can be quite different than the U.S. With respect to the global benefit legalities, there are statutory benefits and mandatory benefits. Statutory benefits are required by law and provided by the government. These are similar to programs such as Medicare and Social Security. Mandatory benefits, however, are required by the law and must be provided by the employer. Because mandatory benefits are not something HR departments regularly deal with, this can be confusing, Jones says.
For example, all employers in Australia must provide defined contribution plans based on its superannuation requirement, Jones explains. Understanding the various laws takes some research, but it is necessary to form that strategic approach.
Surveying employees is also helpful, Jones adds, because benefits are valued differently across the globe. For a country like Canada, health care benefits aren’t as important as they are in the United States. Instead, flexible working arrangements could be more valuable to Canadian employees who already have health care coverage.
As companies continue to place a greater emphasis on aligning global benefits, Sanicola expects to see technology play a greater role in communication, which is a critical element in successfully centralizing global benefits. With a greater global presence, an employer must be familiar with international practices, and this is achieved by effective communication.
“Improvements in company infrastructures and technology platforms have enhanced the ability of companies to better communicate globally, and the rise of social media platforms has further increased communication opportunities with those employees in various geographic locations,” Sanicola says. “As organizations expand their operations to global markets, the effectiveness of benefits and total rewards will depend upon HR’s understanding of the differences in rewards practices around the world.”