Global benefits management is one of the many challenges faced by organizations with a global workforce. Legal requirements, cultural practices and expectations are different in every country, and yet global benefits packages must be designed in a way that all the different requirements and expectations are met.
At the same time, a global benefits strategy must ensure that employees in certain regions don't feel undervalued because the legally required benefits level in their country of residence is lower. And last but not least, the chosen strategy must respect the company's bottom line to keep stakeholders happy. So, how does successful global benefits management work?
A global benefits strategy is a strategic approach to managing employee benefits globally. Its objective is to provide relevant and compliant benefits packages for all employees on the business’s global payroll.
The key principles businesses need to consider when developing a global benefits strategy include:
Managing global benefits doesn’t mean offering all employees around the globe the same universal benefits package. Instead, the aim is to design benefits programs that make employees feel valued and respond not only to employee needs but also to legal regulations.
Employee benefits play a very important role when it comes to:
Employee retention and turnover
Offering employees a generous benefits package is a sign of appreciation and recognition of their work. In fact, 92 percent of employees declare benefits an important factor with regard to job satisfaction.
What’s more, employee benefits are a decisive factor for talent acquisition. As a survey conducted by Glassdoor reveals, 63 percent of people looking for a new job pay attention to the offered benefits package when considering a job opportunity.
What applies to employees working for a local employer also holds true for remote employees working for a big, multinational organization. That’s why employee benefits always need to be managed carefully, regardless of whether they are destined for a local team or a globally distributed team.
There are numerous benefits and perks companies can offer their distributed workforce as part of their global compensation strategy. Global employee benefits can be grouped under two main categories:
Legally required benefits
Voluntary additional perks and benefits
Employee benefits that are common standard in many countries include:
Paid time off (PTO): paid vacation days, sick leave, paternity leave, maternity leave, parental leave, paid time-off on public holidays, and more
Pension: retirement plans or similar funds
Insurance coverage: disability insurance, health insurance
Even in countries like Canada or the US where legal requirements for employee benefits are quite slack, it’s often common practice for companies to offer compensation and benefits packages that include health, dental or life insurance policies—and are therefore expected by employees to a certain degree.
In addition to these standard employee benefits, there are numerous other ways to reward employees by offering:
Meal and transport vouchers
Childcare and other family-related benefits
Company retreats, workations and corporate social events
Employee trainings for professional development
Flexible work arrangements, including remote work
Mental health and well-being benefits
Annual or performance-based bonuses
Student loan assistance
Of course, it’s possible to add many more items to this list as businesses are free to decide what benefits to offer their global teams. But this freedom of choice doesn’t make global benefits management any easier.
When developing a strategy for global benefits management, HR needs to juggle different expectations and requirements which include compliance, employee expectations, competitiveness and cost awareness. This means that the offered benefits packages must:
Match local standards (i. e. legal requirements and employee expectations) in every single geography
Be fair to all employees
Be competitive without making corporate expenses go through the roof
Each country has its own regulations and requirements when it comes to employee benefits. Having remote employees in several countries around the globe means having to fulfill the legal requirements imposed by each jurisdiction while meeting employee expectations at the same time.
Commonly expected benefits can include bonuses such as a 13th month salary, meal vouchers or transport allowances. Needless to say that the more geographies a business operates in, the more difficult and complex global benefits management becomes.
With a globally distributed team, factors such as fairness and transparency become increasingly important. Of course, benefits standards vary from one country to the next, but team members located in jurisdictions where standards are low might feel less valued if their benefits package doesn’t even come close to the one offered to their international team mates.
Companies that aspire to be truly global should think along the lines of “one company, one global team, one benefits package” and find a common baseline.
In order to be able to compete with other local and global companies that tap into the same talent pool businesses usually have to offer above-average benefits programs to attract talent.
Especially when hiring in foreign markets, this can become quite tricky as organizations often lack insights into local standards and practices. Usually, a lot of time and effort is needed to research local market norms and learn about expectations and customs.
Last but not least, benefits programs for globally distributed teams need to be cost-effective. The challenge is hence to provide valuable, relevant benefits to the team and respect the business’s bottom line at the same time.
From a financial point of view, it’s almost impossible to bridge the gap between benefits standards across geographies without considerably increasing costs. That’s why global benefits management is often about combining localized benefits with universal additional perks.
Given all the different factors that need to be considered in global benefits management, it’s not hard to imagine that finding the middle ground can be very challenging.
For example, if a company has a distributed team of remote employees based in Germany, India, the US and China, developing a global benefits strategy that is locally compliant, fair, competitive and cost-effective at the same time will be a big task. Let’s illustrate this with a closer look at leave management.
All of these countries have different annual leave regulations. In China, for instance, the minimum annual leave required by law is five days. Employees in India, on the other hand, are used to receiving at least 15 paid vacation days per year.
US federal law doesn’t provide for any paid time off—in practice, however, employees usually receive between one and three weeks of paid leave per year. And German labor law makes it compulsory to give employees at least 20 days off per year—with most companies even offering between 25 and 30 days.
So, what strategy should the business choose to manage benefits for their global team? Should they create a standardized benefits program that is the same for all their global employees, which means having to offer the highest legally required minimum of paid days off in order to ensure compliance across all geographies?
Or should they offer localized leave policies, which will keep the CFO happy but increases the administrative burden on HR to coordinate the different leave policies?
As illustrated in the example, there are two possible ways to administer employee benefits for a global team. Similar to deciding on a global compensation strategy, multinational companies can either opt for:
A global approach, i. e. one global standard which is rolled out across all geographies
Or a localized approach, i. e. benefits packages are designed individually for each country following local rules and standards
Since both approaches have their pros and cons, most multinationals decide to compromise by offering some standardized global benefits—for example a home office stipend for remote workers or a membership in a co-working space—while keeping other benefits localized—this typically applies to traditional employee benefits such as health insurance.
In any case, organizations should clearly define the objectives they want to attain with their global benefits management. The best way to do this is to work out a global benefits strategy that defines which incentives can be offered as a global standard, and which ones have to be adapted to each country individually.
The chosen global benefits management approach should align with the business’s overall operational strategy and values. It should also consider key factors such as talent acquisition and employee retention, while being compliant and competitive across all geographies.
The Lano Academy is for informational purposes only and should not be construed as legal advice. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this article.
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