Research Reveals Benefits Best Practices for Multinational Companies

Aon Hewitt and American Benefits Institute discovered that only 20% of multinational firms surveyed are leading the way as “best practice” organizations.

Multinational companies face increasing cost pressures and rising risk when it comes to managing their employer-sponsored benefits programs around the world.

A new report from the American Benefits Institute (the research affiliate of the American Benefits Council), in partnership with Aon Hewitt reveals these mounting challenges are continuing to drive the centralization of global benefits management. 

Aon Hewitt and American Benefits Institute surveyed more than 200 multinational corporations around the world to determine their current and expected approach to global benefits management, and found that while 70% of organizations have some form of corporate guidelines and controls in place, they still struggle to effectively manage their global benefits centrally.

The survey discovered that only 20% of firms are leading the way as “best practice” organizations, excelling in five key areas:

  • HR and finance have central access to data and market information on their global benefits programs;
  • Understand benefits costs, risks and opportunities;
  • Have well-defined risk management policies;
  • Have an operating model with roles and responsibilities defined at the local, regional and corporate level; and
  • Monitor and report risks on an ongoing basis.

The best practice organizations generally have the information they need to make risk management decisions. By comparison, only 20% of “other” organizations have access to necessary data to understand their risks, and monitor risks and opportunities on an ongoing basis. In addition, 93% of best practice companies have established global centers of expertise (COE) to manage benefit programs, while 51% of other organizations use a global COE model.

Eighty-seven percent of best practice organizations conduct formal audits to ensure that local benefits are aligned with global policies, compared to just one-quarter for other organizations. More than half (56%) of best practice companies say, with a high degree of confidence, their benefit programs are in line with their workforce strategy; by comparison, only 6% of other companies are confident that their benefits are in line with their workforce strategy.

“Globalization has made the world smaller in many ways, but the risks associated with plan sponsorship continue to grow,” says James A. Klein, president of the American Benefits Institute. “The results of this study, especially when compared to the results of four years ago, gives us valuable insight about how multinational benefit plan sponsors are trying to manage those risks while recruiting and retaining a world-class workforce.”

The research report discusses centralization trends, key challenges in managing global benefits, correlation between best practice and business outcomes, and more. It is available here.