Our Global Benefits Just Happened

Thoughts on Creating an Integrated Global Benefits Program

By Susan Lomartire
International Employee Benefits Practice Leader

Crafting an Effective International Benefits Strategy

Effective, long term international benefits programs are carefully conceived and nurtured .. they don’t just happen. The best programs evolve from a careful and sequential effort, usually employing at least the following broad steps.

  • Deciding Who We Are
  • Auditing and Designing The Global Strategy
  • Setting the Critical Benefit Elements and Mix
  • Establishing the International Benefit Process
  • Implementing the Process Country by Country

Deciding Who We Are

An often overlooked step in the program design process is carefully and honestly developing a definition of how the global employee benefits program reflects and supports who we are as a company. An unfortunate process outline of global employee benefits follows a model which is roughly

  • We do what we must because it is done among our competitors.
  • Benefit decisions are generally made for application in the US
  • Now that it is done in the US, try to make it work elsewhere.

A more constructive approach is generally

  • We have a firm and communicable grasp and statement of who we are as a company.
  • While each benefit element and level is carefully evaluated for its competitive effectiveness, it is primarily a honed statement of who we are as an employer.
  • Each benefit element and level may have had its genesis in the US program, but its philosophical underpinning and relative value in the compensation mix is ready for application in other countries
For example, if we have a 401k with a company match of up to 5%, this makes a statement about us as an employer that is different than would be the case of there was no company match. Hopefully there is a solid reason for our position that goes beyond “everyone else is doing it”. That is, implicitly or explicitly, our company match states “Company support of a retirement plan is important to us to about a 5% of salary level per year.” This becomes a concept that is exportable to the global benefit philosophy.

Auditing and Designing the Global Benefits Strategy

Seasoned international benefits professionals know that the global benefits program will be tested by foreign country employees and managements against “what is always done” in the particular country of interest. To the extent that the corporate program is solidly reasoned and consciously crafted to meet company goals, it will meet these challenges and tests.

To the extent that the program is (a) a more or less knee jerk replication of the US boilerplate or (b) a jumble of local country programs implemented on an ad hoc basis, it will be a subject of rather endless discussion and explanation.

If our “who we are” analysis produced a definition of medical coverage that is roughly

  • Company provided medical coverage for employee and dependents is important to us, but
  • We believe that the coverage should support major expenditures, leaving minor expenses to the employee

this is a broad philosophy which is exportable to every country in the world, whether or not that country has a national health plan. It becomes a basic underpinning of the global benefit program. Similar global statements of dental cover, vacation, pensions, and the complete range of benefit offerings are made, completing our global benefits strategic statements.

Setting the Critical Benefit Elements and Mix

Once we have set our Global Benefits strategy through a series of succinct statements by benefit area, the global benefit “template” rolls naturally out of these statements.

The benefits design is preceded by the important caveat

Unless local national conditions dictate otherwise ….

As an example, in Australia several decades ago few employees had an employer provided supplemental health plan. The Australian national program is quite good and supplemental plans were considered unnecessary. Enter US multinational employers. Following a reasoning that (a) US employees had company purchased health plans, and (b) supplemental plans would provide a competitive edge, many employers proceeded to secure and offer supplemental plans on a routine basis. Australian employees were delighted, but the upshot is that today such supplemental plans have become a virtual competitive necessity.

Using our medical benefits example, this element becomes

  • A solid employer provided medical benefit for employee and dependents
  • Providing coverage for major medical expenses, but
  • Leaving routine/minor costs for the employee to bear, and
  • Subject to the competitive environment of the particular country.

In like manner, a full set of elements are designed.

Establishing the International Benefit Process

Without establishing an unmanageable bureaucracy, it is important for the global benefits professional to establish in advance the criteria and methods under which local country benefits will be solicited, evaluated and implemented. An eye to future growth of the company is important in this regard.

For example it is not uncommon that an emerging company begins to select and place national employee benefits with local country insurers in a rather ad hoc manner. Over time the company is successful and grows until someone notices that foreign benefit plans have become substantial, and should be evaluated under multinational risk pool scenarios. What quickly emerges is that many of the local country insurers are not pool participants, and although conceptually pooling may give great economic advantage, as a practical matter it would require a virtual complete replacement of the global benefit program to achieve it.

At a minimum the process outline should include

  • The definition of each benefit area as to level of benefit to be quoted
  • A definition of acceptable benefit vendors, including pooling affiliation
    A statement of competitive benefit position desired
  • A process for evaluation and approval of benefit offering

Implementing the Process Country by Country

As new country operations are established (or current country operations face renewal of programs) the global process is applied. Using a simple example of health benefits in Singapore, the employer may have established a global model of health benefits that is roughly

  • Selected insurers will be preferred if having pooling affiliations
  • Programs will cover employees and dependents
  • Medical benefits will provide
  • Hospitalization
  • Out patient doctor coverage
  • Prescription coverage
  • Dental coverage

Evaluation of the Singapore environment will reveal

  • Aviva Insurance has the greatest number of pooling affiliations
  • Hospitalization coverage is solidly competitive, but with significant coverage differences in specific categories (ex. Maternity) from US plans
  • Outpatient coverage is a quickly emerging employee benefit, and should be included.
  • Dental coverage should be carefully considered before inclusion, as it is by no means universal.

The key point of the process is that anticipated and expected values are compared against local norms, with variances being carefully considered and affirmatively decided by the company.

Susan Lomartire
Worldwide Consulting LLC
(01) (919) 663 - 1919
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