Multinational employers are building infrastructures to manage employee benefits globally by centralising benefits decision making but this is ahead of the operational realities, according to research by Aon Global Benefits.
Its 2015 Global benefits survey, which surveyed 184 respondents specialising in global benefits and reward, found that a lack of centrally held benefits information is blocking strategic priorities, while benefits information is draining resources.
Many employers are using centres of excellence, a model for global businesses which gives central oversight of benefits plans around the world. This helps a business align benefits with organisational goals, provide consistency, efficiency, scalability and competitiveness. Among other things, these also support compliancy and harmonisation.
The research found that the model is ahead of operational reality because benefits decision making has a heavy involvement from local stakeholders. The research found that 40% of respondents make mainly local decisions, while 15% only make local decisions.
Only 7% of respondents make only global decisions.
But the research also found that as benefits expertise is removed locally, global centres of excellence are increasingly taking responsibility for all areas of plan management and administration.
It found that 56% of respondents do not have a global benefits database yet and see reviewing benefits in key countries as one of the top-ranking priorities for the next 12-to-24 months.
There is also a lack of excellence in the management of plans with 65% of respondents agreeing that their plans are only fit for purpose.
The research also found that traditional multi-national pooling is on the wane, while captive funding for insured benefits and other financing initiatives are increasing.
It highlighted that less than 10% of respondents without an existing pool are looking to implement a new pool, while 33% of those with a pool are actively keeping the structure under review.
Carl Redondo, leader of Aon’s Global Benefits practice in the UK, said, “The survey results are striking. There is a clear trend of centralisation at multinationals, yet it isn’t yet flowing through to the way that employee benefits are managed.
“There appears to be an increase in the influence of global centres of excellence but the vast majority of decisions are still being taken by local stakeholders. The data also shows us that the effectiveness of centres of excellence is generally being restricted by a lack of up-to-date information and administration activities.
“The stand-out message is that while organisations are building the infrastructure to manage employee benefits globally, we are still in a transition to that model.
“As they go through this, global benefits teams are being hampered by a lack of data and administration, reducing overall effectiveness.
“The trend towards benefits centres of excellence is a positive step to improving the governance and effectiveness of benefit programmes around the world.
“However, the research highlights that establishing one is only the start of the journey; significant change management is then needed to drive value from the new model.”