As their international workforces continue to grow, global companies are made especially aware of the importance of defining corporate policies and practices. In addition, cultural factors unique to different regions of the world as well as increased government scrutiny and regulations are challenging multinationals to implement institutional safeguards and, generally, pay closer attention to their governance. But even apart from the external pressures bearing down on them, companies are addressing governance for other important reasons: to achieve best practices and the financial and other rewards that ensue by having healthy internal processes.
Companies recognize the need to identify the inter-relationships between management levels, and the need to improve transparency with shareholders and the appropriate government entities. Indeed, governance encompasses virtually all areas of a company’s structure and its operating methods. However, the area of most concern to members of the Global Business Group on Health (GBGH) is benefits governance, which includes the structures and processes that relate to health care, life insurance, pension and retirement plans. Many members have constructed a framework for governance, and they are looking for guidance and direction to refine it. According to the 2016 Aon Hewitt Global Benefits Governance and Operations Study report, only a third of responding companies know what their global plan costs and risks are with substantial understanding drop off in non-priority markets.
The Global Business Group designed this resource to share tools and to answer questions members have about governance. The material was gathered from survey results, benchmarking calls and interviews. Member identities have been removed from all of the contents, including the case studies, to protect company confidentiality.
The toolkit has been organized to illustrate how some member companies have approached the different areas of governance. Each major area contains descriptions extracted from interviews, as well as actual samples of documents, charts and graphics provided by member companies. Each company is denoted by the use of a letter and is described through four categories of information: company type, employee population size, number of countries with operations and governance structure.
Governance structures are defined as the following:
Decentralized: Decisions on plan design and vendor selection are made locally with minimal or no input from corporate HQ.
Regionally centralized: Decisions are taken at a regional level but not necessarily reported back to corporate HQ.
Partially centralized: Some decisions are reported to corporate HQ based on established dollar limits or other agreed upon thresholds.
Centralized: All decisions regarding benefits outside the US must be approved by the corporate HQ prior to implementation.