Case studies: AstraZeneca, Vanco
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Organisations operating across more than one country could gain significant advantages from rolling out the same or a broadly similar flexible benefits package to staff in each location. Those considering such a move, however, should be aware that it is not a task for the faint-hearted. This is due to certain differences between countries that can make implementing an exact replica of a flex scheme in more than one global location problematic. These range from varying tax and employment laws to factors such as the average base pay differing from country to country and, therefore, the amount that staff will have to spend on benefits. But before dismissing the idea of implementing flexible benefits globally, it should be noted that a number of organisations have taken on the task and been satisfied with the results.
Martha How, leader of the UK reward team at Hewitt Associates, says: "I have designed three international flex schemes and the advantages are: consistency across the globe and [a scheme that is] easier to communicate. For those organisations that have consistent management reporting and reward structures generally, [it] is great for benefits to be aligned." Employers also stand to save costs by using the same technology platform and the same provider in several countries. Steve Mansfield, group HR manager at virtual network operator Vanco, which has rolled out flex in 14 territories, explains: "There are tremendous branding advantages in terms of labelling your flexible benefits [plan] and you can save money in terms of global insurance cover, but I would suggest people [rein in thoughts of making] vast economies." Alistair Denton, managing director at provider firm Motivano, agrees some cost savings are possible, but explains that, in reality, these will not be the main reason for an employer to implement a global scheme.
"It is usually about having and creating something that is supportive of them as an organisation having a global brand." Often, however, providing exactly the same benefits in each country isn’t possible. As well as the legal and tax issues, this may be because a particular benefit costs too much in one country, or because it simply isn’t available. "When we were trying to put in place a flexible benefits scheme that ran across four countries, we wanted to offer private medical insurance to people in those countries. In some of those territories [however] they didn’t even have providers, let alone a system of consistent pricing," adds How. Trying to purchase private medical cover in Africa, for example, can be challenging. The advantages of remaining consistent across territories also depends on the countries involved. "If you are going to implement a scheme in the UK, Netherlands and Germany, you could get pretty close to implementing the same scheme. But if you picked Greece, Spain, Italy, France and Switzerland, you would find you’d get multiple schemes," How adds.
Employees in Rome and New York, for example, typically have vastly different holiday allowances, with New Yorkers taking an average of between 15 and 20 days, while many Italians receive 30 days or more. "You may want to give everyone the ability to sell five days’ holiday but it may be that one country doesn’t allow people to go below a given level, which means they can’t sell five, they can only sell two," Denton adds. Once an organisation has accepted that a scheme is unlikely to be exactly the same in each location, the next step is making sure that the right people are involved in the process. Chris Bruce, director of marketing and technology at Thomsons Online Benefits, explains: "There are huge politics involved with trying to implement any global project and you need to have someone senior in the organisation [taking overall responsibility for it] who can remove blockages." But senior management are not the only group which needs to be involved, says How. "At a very minimum [you would need to involve] HR in each country and procurement. Generally there are IT implications too, so IT people would need to be involved."
Getting employees on board involved is also a key factor, adds Bruce. "It is incredibly important to engage with employees in each country early on. They have got to understand why it is important, and what they are going to get out of [the scheme] and not just see it as something head office is enforcing." A communications consultant may also need to be involved, because if a scheme is going across borders, an organisation may decide to translate information about the scheme into multiple languages, as was the case at Vanco. "We launched [flex globally] in English [initially] and in the second year we realised that, while the vast majority of our employees do understand and speak English, it would help the [scheme’s] image if we had local language translations," says Vanco’s Mansfield.
Employers should also remember that in certain countries there is likely to be heavy union involvement when changing the benefits package and should therefore allow time for this to occur when rolling out flex to affected locations. But a global flexible benefits scheme will not be right for all organisations and many firms decide that it is not for them. Those that do decide to go ahead with a global package, meanwhile, would do well to draw on the benefit of hindsight and speak to other businesses that have already gone through the process.
Case study: AstraZeneca
Pharmaceutical company AstraZeneca offers flexible benefits plans in a number of the countries in which it has an employee presence including its three main locations: the US, Sweden and the UK. The company has a two-page document that outlines its global compensation and benefits aims, but doesn’t specify exactly what should be offered in a flex package. Malcolm Hurrell, vice president of human resources UK, explains: "There is nothing saying that you have to flex particular elements [for example] amount of holiday [entitlement] in all of your markets because it wouldn’t work. It would be a non-starter because culturally it wouldn’t fit across all the countries." He believes it is important that the company has a philosophy towards supporting flexible benefits globally, rather than replicating a package in each location. "We have actively sponsored the principle of flexibility in the package and then asked markets to look at the appropriateness of that in relation to the tax regime, the provision of state benefits and so on." The UK enables more salary sacrifice arrangements to be put in place, than for example, Sweden where the tax system has resulted in the need for a different scheme to be implemented.
Case study: Vanco
In April 2003, virtual network operator Vanco simultaneously introduced its flexible benefits package, V:choice, across eight countries – the UK, Germany, Spain, Italy, Netherlands, Singapore, the US and Australia. In 2004, this was extended to cover Belgium, France and the Czech Republic, followed by Sweden, Switzerland and Poland at the end of 2005. Steve Mansfield, group HR manager, says it wanted to provide a branded solution that employees in all countries would recognise and understand if they moved between locations. However, he acknowledges it is not possible to provide exactly the same benefits in all countries. "You set off with goals to provide fairly standard benefits but you have to be flexible bearing in mind all the different variables you can encounter in each country. If you look at things like income protection schemes, it may not necessarily be available in different countries, or it may be difficult to obtain if you don’t have a reasonable-sized workforce in a particular territory." He added it was vital that the global flex scheme had high-level support in the organisation. "It wasn’t something that was introduced at a middle management level and sold upwards and downwards. It literally came from the top, which assisted the process greatly."