A Mercer and Harvard Business Publishing in-depth study on the needs and expectations of multinational companies in the area of global benefits outsourcing finds that 45% of HR senior executives surveyed have taken on global roles within the last two to three years, and a full 40% have assumed such responsibilities within the last 12 months alone. Many companies reported having more than 50% of their workforce located outside of their corporate home country or region.
The study shows that benefits administration processes mainly remain a local responsibility, with outsourced transactions varying by region, based on regulatory differences and organizational complexities. According to a white paper on the study results, a typical sourcing of retirement benefits is a combination of outsourced activities and in-house benefits administration by country, often with multiple vendors in each region. “It is not unusual to see a single insurance carrier handling both defined benefit (DB) and defined contribution (DC) plan administration in, for example, Canada, while in the U.S., companies may use one recordkeeping firm for DB and another for DC. In contrast, Germany relies on a mixture of consultants and insurers to perform such functions, while many countries in Asia rely primarily on in-house administration,” the paper said.
Respondents said they face significant business challenges that threaten to slow their progress in globalization, in particular the lack of centralized employee and benefits data. The lack of a consistent approach to governance and compliance creates further challenges – many companies find it difficult to ensure that they are up to date and compliant with legal policies in the many countries and regions within which they operate.
In addition to dealing with internal barriers, companies face an external challenge in their quest for benefits globalization in that vendors are not yet operating effectively on a global scale and, as a result, are reluctant to establish global arrangements with their clients. According to the paper, vendors also find it difficult to support a consistent delivery model when the existing level and type of service vary so widely among countries and regions.
The lack of standardization across geographies impacts globally mobile employees who are unable to access the same service functions across locations. Without a consistent online system to answer their benefit questions, expatriates find it difficult to get the details they need to make informed benefit decisions. They then turn to HR, which must field employee inquiries instead of focusing on more strategic initiatives.
When presented with multiple global solutions that could help address companies' business imperatives, 90% of respondents in Mercer's survey chose two in particular: a global HR manager portal to centralize employee benefit plan data, and a consistent and integrated global employee online experience.
"A global HR manager portal could deliver global employee demographics, compensation and benefits data, industry benchmarks across those domains, as well as legislative and regulatory news by country," the white paper said.
The global employee online experience - integrated across all benefit domains and regions - would make it easier for employees to access policies and programs, and conduct transactions. This would make vendor management and employee communications significantly easier for HR.
"The findings show that in order to become more strategic on a global level, senior HR leaders need better data and transparency across all of their benefit programs worldwide. Clearly, this presents a great opportunity for us to develop global products and solutions that will help them meet this need." noted Jeff Miller, president of Mercer's outsourcing business, in a press release.
The white paper, "HR's expanding frontier: From local to global strategic partner," is available at www.mercer.com/HRexpandingfrontier .