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As companies continue to expand globally, HR executives must find strategic ways to refine their employee benefits programs for a global workforce. Benefits decision-makers face a wide range of challenges. They must develop and deliver benefits across different cultures and geographic locations, balance costs and tailor benefits to each locale, all while ensuring that proper governance and compliance processes are in place. In addition, employers want access to up-to-date benefits information to build programs that maximize employee attraction, retention and engagement.
The most pressing concern for U.S. multinationals managing benefits outside the United States is being able to comply with legislative requirements, according to employers participating in MetLife’s 12th annual Employee Benefits Trends study, released in March 2014.
Beyond legislative compliance concerns, using plan design to control costs and improve the effectiveness of benefit communications were found to be top priorities, according to the study.
Another major concern is managing employee benefits for expatriates. The expatriate workforce is estimated to grow by more than 10 percent in 2014, and companies continue to invest considerable time and money in their globally mobile employees. The study showed that most U.S. employers still have their expatriate workers on a U.S.-based plan, although the percentage of those that have an expatriate-specific plan increases with company size (16 percent for those with more than 500 U.S. employees and 20 percent for those with more than 5,000 U.S. employees).
Maria R. Morris, executive vice president and head of Global Employee Benefits business at MetLife, and Didier Weckner, deputy chief executive officer of AXA France and head of AXA Group Life Board, sat down with SHRM Online at the recent MAXIS Global Benefits Network (GBN) International Forum in Miami to discuss the leading trends and challenges facing multinational employers managing global benefits. MAXIS GBN was founded in 1998 by AXA and MetLife. The network includes locally licensed member insurance companies in over 110 countries, is used by over 750 multinational employers and covers 1.5 million employees worldwide. Morris and Weckner are co-chairs of the MAXIS GBN board.
SHRM: What significant trends in benefits management are you seeing this year?
Morris: Employers are becoming increasingly global. Statistics from the U.S. Chamber of Commerce in 2011 showed that the growth of U.S. employers’ non-U.S. workforce was 4 percent, whereas domestic employee growth was flat.
Weckner: That same trend is happening for European and emerging market multinationals around the globe; they’re growing outside their home countries. That’s important, because historically, HR professionals chiefly worried about the needs of employees in their home country. Now they really do have to take on global responsibilities.
Morris: Another prevalent trend is the importance of attracting and retaining talent. It’s a growing issue all over the world. And we’ve found that employee benefits, second to salary, are really the hook for employers to attract and retain talent. Benefits are tied to employee loyalty and employee satisfaction.
Weckner: Regulations are another constantly changing area. Social schemes previously financed by governments are starting to put more of the cost back on the consumer, and in turn, employee benefits is a very efficient way to cover gaps in social scheme changes.
SHRM: Are government-provided benefits giving way somewhat to the private sector, allowing businesses to provide more benefits options?
Weckner: There are two different scenarios. In emerging markets, you have a need for coverage that doesn’t exist in those countries. In those countries, governments are beginning to provide social security schemes, but private plans are the main plans you find, in answer to the needs of the population. Multinationals were often the first entities to introduce these schemes in those countries. On the other hand, in developed countries, such as in Europe and Australia, and even some of the developing countries, like Mexico, the governments are no longer able to provide the benefits as they did in the past.
Morris: Another trend is the rise of the middle class in developing countries. They’re buying cars and homes and have more things they want to protect. Therefore, the protection products offered as employer benefits become more important to them and figure into where they choose to be employed.
Weckner: Obtaining health coverage is becoming a key need around the world. People want to protect their families. I remember 20 years ago in France, everyone was focused on car insurance, saying that would be the future of the industry. And if you said that one day, your health insurance will cost more than your car insurance, people would have said you’re crazy. Today, it’s the reverse. That reversal, which first took place in the U.S. many years ago, is beginning to occur in Europe, Asia and Africa and will soon be the case everywhere.
SHRM: What is changing in benefits administration and delivery?
Weckner: Globalization is a very strong trend. Something that happens in Singapore has an effect on the parent company in the U.S. and the entire company group. Employers want to take care of all their employees, wherever they’re based. They want to know what is happening with all these employees worldwide, taking into account the local social security systems.
Morris: One thing I hear a lot from our customers is that they need more flexible and tailored solutions. HR professionals know that there are many ways to govern global benefits. One way is having corporate HR at headquarters set high-level standards and basic governance across the globe, and let the local subsidiaries offer benefits in any way they choose. Another way is to have total control at the top level, where headquarters defines and manages the entire global benefits structure. And you have everything in between. One size does not fit all in the global benefits community.
SHRM: Is multinational pooling declining?
Morris: Pooling is still strong, but it’s not growing nearly as fast as captive and multi-local structures. Plan pooling started out as a way to share risk across the globe, and in most cases there were savings opportunities. It was an opportunity for the customer to get a dividend as separate global subsidiaries’ risk was managed as one plan.
Over the past 30-40 years, as countries have gotten more mature and mortality rates have stabilized, much of the savings from pooling have already been realized. Employers got real benefits from pooling, including good reporting from subsidiaries, but we’re hearing that employers want more reporting, especially in the health care space. Health care costs are trending even higher outside the U.S., at over 10 percent annually on average. Employers want more transparency and more consultative information like trends and benchmarks from their local subsidiaries. That’s very important for them.
There’s an increasing interest to self-insure global employee benefit risks. A locally admitted insurer issues a local policy to the multinational’s subsidiary. The local insurer transfers the insurance risk via reinsurance to an insurance company owned by the parent company of the locally insured subsidiary. Initially the use of an owned insurance company to self-insure risks was limited to property and casualty risks. In the last 10-15 years, it has become more common for large multinationals to consider also using their own insurance company to self-insure employee benefit risks.
Then there are also the multi-local solutions, where the contract is still signed with the local insurance provider, but the global HR head receives the benefits of global reporting and data aggregation. Multi-local structures have been increasing in recent years. The reason could be that the multinational is not ready to set up a pool, or maybe doesn’t see the benefit of a pool, but still wants the better reporting and transparency, service-level agreements, compliance and regulatory oversight that an insurance company can provide.
Weckner: Some companies want to make sure their employees are protected all over the world, but they don’t want to enter into the insurance business. They just want to have a supplier guarantee the quality and price. Many times a company uses more than one of these plan options.
SHRM: How is technology changing benefits management?
Morris: Technology is becoming increasingly important as a way to gather consistent information for employers. Some members of our MAXIS network companies can input client data into technology platforms that generate reporting and analytics that the multinational parent company, and the regional and the local teams can see. Technology has helped aggregate data to show employers where chronic health care risks exist within their employee populations.
Weckner: Asia is probably ahead in mobile technology. Their apps provide the ability for the consumer to be able to find a doctor near the home, to understand their health plan, and to have their ID card available on the app. You don’t see as much of that in the U.S., where you still see people with paperwork and plastic ID cards.
SHRM: What’s happening with corporate preventive health and wellness programs?
Morris: Chronic disease and issues like stress and obesity that lead to chronic disease are at epidemic levels, in both developed and emerging economies. Providing guiding principles on health and wellness at the top level is critical. But health and wellness is delivered locally. So you need to marry your top-level health and wellness strategy with real capabilities on the ground in each country.
SHRM: Can you offer some regional examples?
Morris: In Latin America, you’re going to see more health screenings and health fairs and initiatives to manage chronic disease with families, not just individuals. In some markets, health care is focused on gym memberships and discounts on things that enhance good health. It all depends on the level of sophistication in that market. In Western Europe and the U.S., employees are thinking of health and wellness in a very specific way. They’re interested in issues like mental health, smoking cessation and obesity resilience. In developed countries, sedentary work environments are a main concern. However, in Egypt, hepatitis C prevention is a huge concern since Egypt has the world’s highest prevalence of it. In China and the Gulf, diabetes prevention programs are more important.
SHRM: What about the expansion of benefits packages in Africa?
Weckner: Africa produces a small portion of worldwide GDP, about 3 to 5 percent. If you exclude South Africa, it’s even smaller. But some areas are growing quickly. Algeria is growing very fast, for example, and developing a middle class. A lot of multinationals are heading there, including developing industries, and they will need to provide benefits to their people. Just as multinationals led the way in building the benefits landscape in other emerging markets, we believe they will take the lead in Africa.
Roy Maurer is an online editor/manager for SHRM.
Follow him at @SHRMRoy
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