Managing global benefits centrally can create conflict with local reward teams so Victoria Furness advocates using diplomacy and clear communication
Multinational HR teams considering the best way to implement a global benefits policy would do well to remember HSBC’s ‘cultural collisions’ advertising campaign, which first appeared in 2003. The series of adverts demonstrated the importance of local knowledge by highlighting what happens if you misunderstand differences in national cultures.
While often amusing, these adverts provide a cautionary tale for the growing number of multinationals putting central teams in place to co-ordinate benefits and other areas of HR internationally. Graeme Read, group managing director of executive search consultancy, Antal International Group, says: “You only have to look at some of the howlers people have made over the years.”
Take the example of company cars. “In Luxembourg or Belgium, cars are an important part of the benefits package. But take that policy to Moscow and a car is almost a disincentive as the employee won’t be able to get to work because of traffic congestion,” Read adds.
Unsurprisingly, each nationality is likely to favour different benefits. Each country also has its own tax and legal framework to take into consideration, so managing all aspects of a global one-size-fits-all benefits policy is nigh on impossible centrally. But while individual benefits might be hard to standardise globally, many benefits practices, such as the process of introducing or changing benefits, and the role perks play in attracting and rewarding staff can be centrally co-ordinated.
Nigel Bateman, head of the global consulting group at Towers Perrin, explains: “Rather than having an edict [from head office], you end up with a structure of guiding principles and metrics that establish how things are run for local managers.”
Although this group might still have some questions about why they need to change the way they work, essentially, it’s about doing things in an optimal way, says Bateman.
More often than not, conflict arises between central global and local HR teams due to a lack of communication. Local managers may become frustrated if they feel their input and expertise are being ignored; while the biggest aggravation for global HR managers is that central policies aren’t being adhered to at a local level. Stuart Duff, a partner at Pearn Kandola Business Psychologists, says: “Conflict is not driven by policy but the people who are communicating the policy and the people who are hearing [it]. So it’s important to raise awareness of national cultures and individual expectations by working with local HR teams. Managers shouldn’t assume that the Western way of doing things is always the best way either.”
Gareth Jones, head of flexible benefits at Aon Consulting, has experienced the challenges involved in rolling out a package of flexible and voluntary benefits to several countries firsthand while in a previous role he held at Royal Bank of Scotland. “The big problem was always the other country feeling they were the lesser partner. There was that attitude of ‘just because it works in London, doesn’t mean it will work here’. So we had an employee focus group running in Gibraltar [as well as other regions] to get the views of people over there,” he explains.
As a result, employees felt their opinions were being listened to and RBS could ensure that it was delivering benefits which people actually wanted.
SociÈtÈ GÈnÈrale, another multinational financial services firm, has also taken an international approach to some aspects of benefits provision. The organisation, which is headquartered in France, rolled out total reward statements to employees in its corporate and investment banking arm in 35 countries last year. The initiative was designed to promote SociÈtÈ GÈnÈrale as an employer of choice and increase employee appreciation of the range of benefits available to them.
Interestingly, in addition to enjoying a high take-up rate – 60% of employees in Asia, Brazil and Canada accessed their online statements – the project helped improve relationships between central global and local HR teams. Ben Wells, consultant for Buck Consultants, which helped build the global system and deliver the statements, says: “[SociÈtÈ GÈnÈrale] developed an understanding of how to work with countries and create a balance between relevance at a country level while, at the same time, retaining global consistency and control.”
Naturally, a lot of communication and diplomacy was required behind the scenes to ensure SociÈtÈ GÈnÈrale’s first global HR initiative got off the ground. “[It has] a culture of working remotely behind closed doors, so we found ourselves coaching the client at the beginning of the project to go out and talk to these countries,” Wells explains.
Face-to-face meetings between global and local HR representatives can often help to build bridges across geographical borders. But Pearn Kandola’s Duff warns that face-to-face interactions can work differently between countries in the East and West. “In the West, we tend to make decisions by giving our views, and a manager will then make a decision. But in a country such as Japan, managers wouldn’t necessarily want to voice their opinion in front of a more senior manager, so a lot of decisions go on elsewhere. Again, it comes back to recognising how local cultures make decisions,” he explains.
There are times, however, when a corporate culture can re-shape local or national practices. “For example, in certain cultures, particularly in China, promotion in a business has typically been down to a family relationship as much as anything else. But this doesn’t work for many global businesses, so corporate culture has started to re-educate this undesirable national behaviour. You can also have local or national culture affecting global corporate culture.
“For instance, we have a client in the recruitment industry, which has drawn a lot of best practices from the Australian market that it thinks should be applied as global principles,” explains Duff.
As in any negotiation, the most desirable outcome is one in which both parties feel they have gained something. It might be a hard-fought struggle to reach that point, but if, at the end, employees feel a fair approach has been taken to the benefits they receive and the organisation can see the benefits of centralising certain reward policies, many multinationals will believe it is a battle worth fighting.
Case Study: Enterprise Rent-A-Car
Enterprise Rent-A-Car employs 70,000 staff across five countries. To make it easier for employees to move around within the company, the firm has a global benefits strategy in place, offering all staff a core benefits package comprising private healthcare, life insurance and income protection.
Donna Miller, European HR director, explains: “It’s very consistent, so employees transferring from one location to another experience no variance in the core benefits they receive.”
The package also offers economies of scale with one supplier, Unum, providing income protection for four-of-the-five countries that Enterprise works in.
While the company takes a global approach to benefits policy, however, some of its providers, and employee terms and conditions may vary by location. Each country also manages the administration of benefits locally and has the opportunity to decide what benefits it will offer on top of the core package. “Decisions are based on what’s customary for that country,” explains Miller.
Communication is key to the success of central global and local HR relationships. “In Europe, we meet quarterly face-to-face with HR teams, then once a year, we take all European HR teams to the US for a large company HR meeting,” she explains.
The global HR team is also receptive to feedback and ideas from local HR managers. For example, following a recent suggestion from local HR teams, a global HR manager has taken over responsibility for uploading each country’s employee benefits selection data to the company’s central HR system. “There’s lot of flexibility around practice. It’s important to listen to people, as it’s easy to get stuck in your ways,” says Miller.
Top tips: How to manage international HR relationships
- Maintain good quality benefits information, as it will ensure that policies are adhered to at both a central and local level.
- Create global HR principles about how to reward people, but never assume blanket benefits provision will work.
- When rolling out a global benefits initiative, look for quick ways of helping local HR teams save money, so they can see global policies also have benefits for them.
- Do your homework by researching each local market’s unique characteristics and tap into local HR expertise.
- Involve local HR teams in making benefits decisions from the start.
- Don’t be afraid to say ‘no’ to any local HR requests, but make sure you explain your reasons for doing so.