Paternalistic View of Benefits Shifting

There’s a lot of fuss nowadays about creating a benefits plan that works across multiple generations. What may be even more complicated, though, is creating a benefits strategy across multiple nations.

Eighty percent of business executives believe the U.S. companies should expand globally, according to Rutgers’ “Globalization: Challenges of Corporations During Expansion” infographic from May, 2016. And an estimated 39 percent of American CEOs plan to complete a merger and acquisition in a different country.

In an increasingly global workforce, managing the diverse needs of multinational employees may be a challenge. The way benefits work in each country is driven by local culture, legislation and providers, said Chris Bruce, managing director at Thomsons Online Benefits, a global benefits management company.

In the United States, employees generally place more value on offered medical and retirement plans than in European countries where the state typically provides health care and pensions.

In Asia, employees value cash over a structured benefits plan, he added. Employees can spend it on what applies directly to their life. This flexible “cash is king” approach is spreading to Europe.

Perks and flex accounts — including company car allowances, bicycle allowances or discounts on buying items — are valuable benefits to employees beyond the U.S. border, said Ken Poletti, senior vice president, ecosystem partner solutions at Benefitfocus, a cloud-based benefits management platform.

“The biggest issue companies have when they’re looking at a global benefits plan is, typically, the benefit function is quite operational and more of a governance function,” said Bruce. “So it’s difficult for them to be strategic about benefits because they don’t have the infrastructure to understand what the plans are and how successful they are.”

Organizations need to plan to get the most possible value from the benefits budget. This can only be accomplished, noted Bruce, if the organization has insights into the cost, benefits and effectiveness of its benefits plans.

Employers are faced with the challenge to stay relevant to a diverse global workforce. But there are certain elements that are trending to employees around the globe, said Bruce: for example, the “cash is king” approach in Asia.

Traditionally, in the United States and Europe, most benefits plans have been designed for middle-class white males with families, he added. This thinking has been around for decades. In reality, there’s no reason a company should be providing high levels of certain traditional benefits like life insurance to a young, single college graduate with no family.

“The old, paternalistic view of benefits is going away, and now it’s much more, ‘How can we appeal to people? How can we use the money we have to the best effect and be relevant?’ ” said Bruce.

One example of this “reimbursement benefit,” said Bruce, is a Thomson employee who, having recently married a Brazilian man, took the money she would have spent on life insurance coverage and used it for Portuguese lessons instead. Bruce has found this flexible type of benefit as a modern way to show employees

that his company cares.

Poletti also noted that more often employers are offering employees more choice in how they use their flex accounts, allowing them to choose what works best for their family or life situation.

Another rising trend is shifting the economic responsibility of paying for benefits from the company to the employee, according to Chris Mumford, managing director of AETHOS Consulting Group in London. For example, one of the world’s largest global hotel groups has reduced the company pension contribution to 1% of the salary.

“[This puts] the onus on the employee to fund the rest,” wrote Mumford in an email interview. “We expect this trend to continue to spread.”

Bruce saw a similar trend internationally, noting that this shifting responsibility from the employer to the employee is happening across several different benefits, like in U.S. medical plans. As health care costs rise in the United States, employees are required to pay more.

Andie Burjek is a Workforce associate editor. Comment below, or email at aburjek@humancapitalmedia.com. Follow Workforce on Twitter at @workforcenews.