The benefits culture for expats is changing as multinationals seeks to wrestle control of remuneration away from local operations to cut costs and manage risk.
As expats become more mobile and the big move to the Asia Pacific gains momentum, more companies have to think about the financial and legal implications of benefits on a worldwide scale.
A study by Aon Hewett, www.aon.com, a human resources solutions business shows many employers are still letting local branches make decisions, but few are confident that those decisions are in line with wider corporate strategy.
HR managers are concerned at 20% of companies that local decisions are outside corporate guidelines, while less than one in 10 has confidence that their employers have the necessary controls to manage costs and risk.
“Globalisation poses a unique set of strategic and compliance challenges for multinational employer-sponsors of benefit plans. To continue their commitment to health coverage and retirement security for their employees, they must manage the growing risks associated with plan sponsorship,” said James Klein, president of the American Benefits Institute, which conducted the survey for Aon Hewitt.
“It appears that centralisation of corporate benefits governance is already helping to mitigate some of these challenges by improving communication between headquarters and worldwide operations.”
Companies need to have a stronger influence over decisions about remuneration packages made by local branches, explains Amol Mhatre, global benefits strategy and solutions leader at Aon Hewitt.
“While financial drivers play a big role, companies want to do this for a variety of other reasons, including managing reputational risks and resource constraints on the ground. Companies that want to design more sustainable benefits programs need to implement a more formalized governance structure to manage financial and operational costs and risks,” he said.
Cutting benefit costs
Fears over costs and risk have pushed employee benefits on to the agenda for many executives.
Around 70% of employers are cutting benefit costs by buying on a global scale instead of locally, while making sure stricter controls and corporate oversight are applied.
Most companies plan to impose global corporate benefits policies by the end of 2015, but fewer than 60% are sure local benefit packages will link in to corporate guidelines.
Currently, only 40% of companies have formal benefit controls in place, and only two thirds of these believe their procedures work.