November 15, 2023
The Business Group facilitated a call for employers to discuss the challenges and strategies used when considering a global consistency strategy for employee benefits. The discussion addressed ongoing trends, such as centralizing decision-making processes while balancing global objectives with local nuances, the role of captives and brokers in managing rising costs and the pursuit of more comprehensive health benefit programming across the world. The conversation also highlighted the complexity of providing equitable benefits across a global workforce. Various approaches to benchmarking and evaluating the competitiveness of benefit offerings were discussed, underscoring the need for a nuanced understanding of both global strategies and local sensitivities in managing employee benefits.
The subsequent recap dives further into some of the key themes discussed during the call.
Employers are increasingly shifting toward consideration/implementation of a global consistency strategy when designing their employee benefit plans.
When polled, 35% of employers on the call shared that they already have a global consistency strategy in place, and over half (55%) indicated that their organization doesn’t currently have a strategy but are considering implementing one. Only 10% don’t have one in place and aren’t considering doing so. A few employers are considering putting a global consistency strategy in place to foster more equity and address benefit design inconsistencies that don’t align with their core organizational values and standards. For example, when analyzing current coverage discrepancies, one employer found that some employees have access to car allowances while others don’t, as well as varying levels of social support and state-sponsored coverage in different countries. Notable inconsistencies in benefits were also highlighted as operational challenges. To address these issues, one employer centralized its benefit management, moving from a local human resources (HR) model to a global HR Center of Excellence (COE). This shift was aimed at ensuring that employees on the same team, but in different locations, have access to similar benefits, promoting fairness and unity within the organization.
Employers must balance global goals with local challenges as they build globally consistent benefit programs.
On the call, a central theme emerged about the challenges employers face in constructing globally consistent benefit programs, with a particular focus on balancing global goals against local realities. Some of the most significant hurdles identified include reconciling government-provided benefits with those offered by employers; addressing local funding challenges and cost implications; administrative burdens; dealing with regulatory barriers; and varying language capabilities. In particular, one employer highlighted the challenge of local funding structures, where entity-level funding and administration of benefits, along with diverse financial capabilities and priorities, hinder consensus, creating significant obstacles for a cohesive global benefits strategy and complicating both planning and execution stages.
Lack of health outcomes data and benefits maintenance data was also noted as a significant challenge. For example, an employer observed that while the company has implemented various benefits programs worldwide, it lacks comprehensive outcomes data to assess the effectiveness of these programs. The absence of data makes it difficult to understand the impact of its benefits on employee well-being and productivity. Without such insights, it can be challenging to make informed decisions about which benefits to continue, modify or discontinue.
Employers are also exploring ways to better understand and cater to local needs while seeking to centralize decision-making processes. Employers often face the daunting task of juggling lean HR resources with the need for comprehensive programs. Several employers spoke of the complexities inherent to their organizational structures, such as being highly matrixed or facing funding and operational model challenges. These issues are further exacerbated by the intricacies of handling benefits at the local entity level, where divergent practices and financial constraints complicate efforts to integrate resources on a global scale. The discussion also touched on strategies to navigate these challenges. A few employers are developing core practices and creating COEs while also establishing global inventories and governance frameworks. Another solution mentioned was the engagement of local brokers to better understand and manage annual costs. This strategy enables employers to gain clearer insight into actual spending in each country. By taking this step, they can better align their global benefits strategy with actual costs, ensuring a more efficient and informed approach to managing employee benefits on a global scale.
Strategic and thoughtful partnerships are crucial to effectively rolling out globally consistent benefit programs.
In the quest to enhance employee health benefits, employers have explored various point solutions targeting specific areas. However, it was noted that a key limitation of these solutions is their specialization in only certain areas, allowing for reimbursement in those specific fields but not beyond. This has led employers to consider broader strategies. They are increasingly seeking partnerships with vendors who can offer more comprehensive programs addressing a wider range of health needs rather than just specialized ones. This shift is driven by the desire to provide employees with a more holistic health benefits package that encompasses various aspects of health and wellness, rather than limiting support to a few select areas. This approach not only simplifies the management of health benefits but also ensures that a larger spectrum of employee health needs is met.
Along with weighing these various considerations, some employers are using captives to increase flexibility as well as diversity, equity, inclusion and belonging (DEIB) initiatives. Among employers who shared that they already have a captive in place, a few discussed their approach to assessing captive partnerships globally during each renewal, looking at criteria within each country to determine the relative risk level and whether pooling is an option. This process involves a careful evaluation of each locale’s unique needs and risks. However, as an employer on the call pointed out, not all plans are suitable for inclusion in a captive. This employer noted that while it has a global strategy for mental health and critical illness, local regulations and cultural factors often play a dominant role in determining the acceptance and effectiveness of these strategies. As a result, this employer must allow for variations and independence at the local level. Similarly, another employer mentioned the importance of considering a wide range of criteria before deciding to include a benefit in its captive. Both employers emphasized that captives are not a one-size-fits-all solution; they are long-term financing arrangements intended to stabilize financing plans over time. However, they cautioned that captives are not the remedy for plans with poor performance and experience.
As evidenced throughout the call, employers are increasingly adopting a global consistency strategy to manage rising costs, enhance the equity of benefit plans across locations and navigate local challenges more effectively. As part of these efforts, employers are leveraging captives, brokers and other strategic partners. While building a globally consistent benefit program is challenging, including navigating barriers to ensure alignment with local regulations and ongoing economic constraints, employers continue to work through these challenges in the hope of better aligning their benefits globally to their operational goals and organizational values.