Running a global business today is not easy, and managing an international workforce is a challenging yet critical aspect of organizational success. Many companies with a global presence struggle with an imbalanced approach to employee benefits, often leading to inefficient spending and overlooked opportunities.
Common Challenges in Managing Employee Benefits for the Global Workforce
In our work with international clients, we consistently encounter several key areas that pose significant challenges for organizations. Most commonly, companies have arrived at this point because of rapid growth and a reliance on “getting something” in place. This has led to outcomes that are often contradictory and driven by a narrow one-country perspective or heavily influenced by US home country standards.
1. Over-investment in Certain Areas
Many organizations tend to overcompensate in specific aspects of their global workforce strategy. For example, companies often overspend in one country and underspend in another because benefits have not been implemented under one consistent strategy. Two other examples of excessive spending are equity compensation and leave programs. Companies often pay U.S.-level equity compensation to employees based outside the U.S., leading to inconsistencies and overspending. For leave, many organizations mistakenly adopt US policies without considering generous locally required standards, thus leading to “double dipping” of sorts.
2. Under-investment in Key Areas
Conversely, areas that frequently suffer from underinvestment include retirement plans, health and wellness programs, and key emerging trends. These elements are crucial for employee engagement and retention but often receive less attention and funding, especially in international markets.
This dichotomy in spending leads to a misaligned strategy that not only affects the company’s financial health but also impacts employee satisfaction and overall company brand in many markets.
Tailoring Global Benefits Strategy for Real Impact
It can be quite a daunting task to try to align your benefits program across multiple jurisdictions. We have found that the following principles can help guide you toward meeting your goals:
1. Embrace Total Rewards: Overcoming “Acquired Rights” Concerns
Adopting a total rewards approach can be instrumental in negotiating changes. By presenting a holistic view of compensation, benefits, development opportunities, and work environment, companies can more effectively communicate the value of proposed changes to employees. This approach not only addresses concerns around specific benefits but also enhances the overall employee value proposition, making it easier to reach agreements on modifications that align with both company goals and employee needs.
2. “Glocalize” Policies (Especially Leave): Beyond US Standards
Too often we see US standards and strategies being applied globally with leave policies often a major source of concern. This well-intentioned attempt to standardize policies across borders often leads to compliance issues and discontent among the international workforce. It is still possible to influence local policies across all benefits to reflect your global philosophy but try not to start with the US as the benchmark.
3. Lifestyle Benefits: The Importance Of Tax-favored Benefits
Many international jurisdictions offer tax-favorable status for certain benefits. This can be effectively combined with emerging strategies to offer lifestyle benefits globally that truly reflect your value proposition, as well as provide a path toward greater harmonization.
4. Avoid Temporary Fixes: Build the Foundation For the Future
It is quite common when entering a country for the first time to implement quick fixes such as providing an allowance in place of benefits. In the long term, these temporary fixes can be costly, and inefficient and impact employee engagement. This is a good time to phase out these fixes and install the proper foundation to deliver the right benefits. There are a variety of solutions for even smaller companies such as PEOs, and multiple-employer arrangements to help with this.
5. Educate Leaders: Aligning Global Vision
The diversity of international operations means that different countries may have varying needs and gaps in their benefits offerings. It's crucial to educate your leadership, both in HR and across the business, about these nuances. It takes time, often a few years, to make changes. Help leaders understand how you intend to align the needs with the benefit offering and present the plan for how you recommend to get there.
Conclusion
Managing the employee benefits program of an international workforce requires a delicate balance between aligning global consistency with local competitiveness, and international markets can sometimes be challenging to operate in. However, benefits are a critical component of total rewards and can define your face to the market regardless of your compensation or equity programs. By taking the time to make sense of the strategy, companies can achieve a more efficient, engaged, and productive global workforce.
For organizations looking to optimize their international workforce employee benefits strategy, partnering with experienced consultants can provide valuable insights and tailored strategies. Contact us for expert guidance in creating a balanced and effective global workforce strategy.