October 10, 2012 (PLANSPONSOR.com) – Multinational companies are aiming to significantly increase the corporate control and oversight of their employee benefit programs worldwide, with the intention of countering rising costs and financial risks.
However, Aon Hewitt’s “2012 Corporate Governance of Global Employee Benefits Study,” conducted in partnership with the American Benefits Institute, reveals most employers are still allowing flexibility for their local operations to make decisions—corporate policies tend to be more a guideline rather than a mandate for local operations. Fewer than one-in-five companies said they are confident that local practices are in line with corporate guidelines and fewer than 10% said they are confident that corporate controls are adequate to reduce financial and operating costs and risks.
Other key findings from the report included:
- 88% of companies said employee benefits are on the agenda for boards and senior management of their companies due to the costs and risks of benefit programs;
- Approximately 70% of employers are leveraging their global scale to reduce costs of benefits operations and are implementing stricter controls and corporate oversight in both mature and emerging markets;
- More than 90% of companies expect to have corporate benefits policies in place over the next three years. However, less than 60% of organizations are certain that their local benefit plans will be aligned with corporate guidelines;
- On average, only about 40% of companies have formal structures in place. Of this group, an average of 65% said that protocols such as this are effective. On the other hand, only 16% rated their governance protocols as effective when established informally or in an ad hoc manner.