A recent study showed that 80% of the respondents (employers) had changed/modified their compensation structures to match market rates.
Companies are under increased pressure to provide global compensation and benefits to mitigate talent retention challenges and support their members’ holistic well-being.
In this article, we’ll cover everything you need to know about global employee benefits, including their significance, essential components, and how to build an effective benefits strategy for your team.
What Are Global Employee Benefits?
Global employee benefits are non-wage forms of compensation that multinational companies provide to their workforces scattered across different locations worldwide, in addition to their regular salaries. Companies often tailor such benefits to meet statutory requirements in the countries in which they operate, as well as local norms, cultural expectations, and employee lifestyles.
The goal is to adapt the employee benefits to those offered by companies operating in those countries. However, multinational companies often go a step further and provide more benefits to differentiate themselves from “local” companies and maintain their competitive edge.
Ultimately, these benefits enable employers to maintain equity, competitiveness, legal compliance, and consistent employee experiences across all their locations worldwide.
Why Global Employee Benefits Matter For International Businesses
As an employer, you need to have a robust and well-designed global employee benefits package to remain competitive in your overseas markets. Otherwise, you risk losing your top talent to the biggest companies in those markets, especially if they provide culturally relevant benefits.
Other reasons multinational companies must invest in international businesses include:
- Legal Compliance: Each country you operate in has its own labor laws that stipulate mandatory employee benefit standards, such as minimum paid leave days and social security contributions. Having a good global benefits package ensures compliance with local labor laws, protecting your organization against legal penalties and reputational damage.
- Attracting and Retaining Talent: Global competition for top talent is at an all-time high, and employees know it. They expect comprehensive, equitable benefits regardless of where they live, so offering competitive global benefits helps your organization attract job candidates.
- Supporting Workforce Well-being: When your employees feel well-cared for, they are more likely to stay engaged, focused, and loyal. In addition, they are likely to lead healthier lifestyles, maintain a better work-life balance, and experience less work-related stress or burnout, all of which impact their holistic wellness.
- Supports Consistent Global Employee Experience: As your company grows, it might be challenging to maintain a unified company culture across different countries. Having a global employee benefits package helps bridge that gap by reinforcing company values such as equity for all employees.
- Enables Company Expansion: A global employee benefits package helps your company to enter new markets smoothly because it allows you to adapt quickly to local requirements and expectations.
Essential Components of a Global Benefits Package
When creating your global employee benefits package, you can break down the perks into three primary categories. These categories are legally mandated benefits, non-statutory benefits, and voluntary benefits.
Here are the essential components within each category:
Legally Mandated Benefits
Legally mandated benefits are mandatory benefits that a country’s government requires all employers to provide to their employees; otherwise, employers risk legal and financial penalties.
Such statutory benefits often vary from one country to another. For example, minimum paid leave is mandatory in the UK, but it is not in the US.
Examples of legally mandated employee benefits include:
- Health benefits: They are at the core of any benefits package. As such, it is crucial to ensure the insurance provider you choose is licensed to operate in the countries where your employees reside.
- Retirement and Saving Plans: Not all countries require employers to contribute to such plans. However, in countries with such mandates, consider matching contributions to pension funds, 401(k) or equivalent plans, and investment or saving plans.
- Paid leave and time off: Several kinds of benefits fall in this category, including annual leave requirements, parental leave, sick leave, and national and local public holidays.
- Life and Disability Insurance: These support employees and their families during unexpected hardships, such as workplace accidents or in the event of death.
Non-Statutory Benefits
Governments do not legally mandate non-statutory benefits; however, they tend to arise from the expectations of a country's workforce or the industry within which your organization operates.
Employers often consider offering such benefits to maintain or improve their competitive advantage in the job market. Examples include:
- Financial Incentives such as performance bonuses, stock options, sales commissions, and cost-of-living adjustments.
- Additional paid time off beyond the legally mandated limits.
- Corporate health and wellness programs such as paid gym subscriptions, yoga classes, game rooms, financial counselling, and healthy office snacks.
- Professional development initiatives such as tuition reimbursement, skills development training, and leadership development programs.
- Flexible work arrangements, such as remote and hybrid work.
- Family insurance coverage
Voluntary Benefits
Multinational companies may offer voluntary perks to fill gaps left by other forms of benefits.
For example:
- Meal vouchers are popular in Europe.
- Transport allowances are popular in Asia.
- Housing allowances are popular in cities with a high cost of living.
- Home office stipends are considered a must-have for remote workers.
How to Build an Effective Global Benefits Strategy
Designing a global benefits strategy isn’t simply about scaling up your current perks. Remember, benefits that would work for a US-based team could be deemed irrelevant or even illegal in another country.
As such, companies with global teams ought to build an employee benefits strategy that accounts for cultural context and legalcompliance.
Below is a step-by-step guide on how to design a global benefits strategy that meets your team’s needs and preferences:
1. Establish Core Global Standards
Highlight your company's priorities, values, and goals in relation to employee well-being. In this stage, you need to identify what you want your company to be associated with, such as mental health support.
In addition, you should establish a baseline of benefits that apply to all your employees, such as health and wellness coverage and minimum paid time off.
2. Assess Employee Needs
Conduct surveys and focus groups to understand your employees’ benefits needs, including which perks they value the most.
This gives you insight into how to personalize the employee benefits to individual needs to boost enrollment and participation rates.
3. Partner With a Benefits Broker
Don’t wait too long to involve a benefits broker to help you streamline the benefits planning process.
The benefits broker will help you align your benefits strategy with the company's broader goals, which are integral to the programs’ long-term survival. Additionally, benefits brokers come with essential industry insights and could help you negotiate competitive rates in foreign markets.
4. Research Local Regulations
Each country has a set of labor laws and regulations that you must adhere to. Failure to comply with these laws can expose you to legal risks, penalties, and possibly the loss of your operating license.
Therefore, it is essential to have a legal team that has jurisdiction in the overseas countries to help you stay compliant.
5. Benchmark Your Competition
Benefits benchmarking is an effective way to learn about popular perks offered by other multinational companies.
It also helps identify gaps you can exploit to offer superior employee benefits compared to those offered by other companies.
6. Find a Reliable Global Benefits Provider
Shortlist vendors that can help you design benefits packages tailored to your employees' needs across several countries.
Many companies opt to use global employer of record (EOR) services, global HR platforms, and international insurance brokers to simplify compliance and administration.
But how about wellness benefits?
The advantage of employee wellness benefits is that you can deliver most perks through virtual corporate wellness programs. For example, you could provide on-demand wellness webinars on yoga and guided meditation to help employees relax after hectic shifts.
At SoHookd, we offer pre-built wellness benefits programs that employers can customize to their global teams and launch within 2 weeks. Our partnerships are procurement-friendly, as we don’t tie you down with contracts.
Book a strategy call today and discover how to design a global employee wellness benefits package that supports your team’s holistic well-being.
7. Communicate Clearly
The best way to boost benefits enrollment and participation rates is by involving your employees to create a sense of ownership of the programs. Communicate the benefits you’ll offer and how employees can access them.
Also, consider regular employee training that accounts for language and cultural barriers, such as by providing multilingual documentation.
8. Monitor and Adjust
Conduct regular employee benefits surveys to determine whether your team finds the offered perks useful or not.
Additionally, monitor employee sentiment by tracking key metrics, such as job satisfaction and Net Promoter Scores, to determine whether the provided wellness benefits have been effective drivers of employee engagement.
Challenges in Managing a Global Benefits Program
Building a global benefits program is only one part of the job. Managing it day-to-day and ensuring it remains aligned with your team’s diverse benefits needs is where most companies fall short:
Common mistakes companies make with their global benefits packages include:
- Complex Legal Requirements: Each country you operate in will have unique and evolving labor laws and tax regulations. This can make compliance challenging even for a company with a well-resourced HR department, hence the need to partner with a benefits broker to help you navigate the legal landscape.
- Cultural Differences: Employees in different countries expect different sets of benefits. As such, providing one-size-fits-all perks could leave some members feeling unseen, leading them to disengage from the company. To avoid this, personalize the employee benefits to individual preferences and needs.
- Administrative Complexities: Coordinating benefits with multiple vendors and policies across several countries can be challenging for HR teams. To counter this, integrate an employee benefits administration software into your HRIS to streamline enrollment, ensure compliance, and track benefits utilization metrics.
- Data Security and Privacy Issues: Managing global employee data requires compliance with data privacy laws, such as GDPR. Therefore, it is essential to conduct regular data audits to identify and address compliance gaps.
- Lack of Incentives: A common reason global employee benefits fail is that companies do not provide incentives to encourage members to enroll and participate in the programs. Incorporate employee wellness incentive programs into your global employee benefits to help employees overcome psychological barriers to participation.
At SoHookd, we offer the only wellness-focused incentives marketplace that lets employees redeem their gift cards for items that support their wellness goals. Even better, we do not charge any PEPM or minimum fees to access the wellness marketplace.
Download our free ebook to learn how incentives can boost employee participation by upto 73%.
Future Trends in Global Employee Benefits
As the world becomes more digitized and organizations embrace remote teams, companies will be under increased pressure to evolve their global employee benefits.
Here’s what we anticipate the global employee benefits landscape will evolve in the next five to 10 years:
- Benefits Personalization: Employees increasingly expect benefits tailored to their unique lifestyles as opposed to one-size-fits-all benefits packages.
- Focus on Mental Health: Employers are acknowledging the effects of workplace stress and burnout by introducing corporate mental wellness programs to help members deal with anxiety and social isolation.
- Flexible Work Arrangements: The increasing popularity of remote and hybrid work requires employers to design benefits tailored to such work arrangements. For example, more companies will start offering home office stipends, flexible time-off, and digital wellness programs to enhance their remote team’s well-being.
- Sustainability-focused Benefits: Some organizations are offering benefits aligned with their corporate social responsibility (CSR) goals, such as green commuting incentives, ethical investing options, and volunteer time off, to appeal to the public and increase their brand’s perceived value.
Frequently Asked Questions (FAQs)
Below are answers to common questions about global employee benefits:
Are Global Employee Benefits Taxable for Employees?
Yes. Global employee benefits are taxable in most cases. However, the circumstances vary from country to country.
Some benefits, especially non-cash benefits such as health insurance, are often tax-exempt, while cash benefits, such as performance bonuses, are usually taxable.
Can Employees Choose Their Own Global Benefit Providers?
It depends. Some companies often provide a list of benefits providers that members can choose, especially for essential benefits like health insurance coverage and retirement plans.
Are Global Benefits Covered Under International Labour Laws?
There are no unified international labor laws that govern global employee benefits.
However, the International Labor Organization (ILO), an agency of the UN, has a set of foundational standards and principles it expects member countries to follow when enacting national, regional, and local labor laws.
How Often Should Global Benefits Be Reviewed?
At a minimum, you should review your global benefits annually. This allows you to audit the uptake, efficiency, and cost-effectiveness of existing plans.
It is also an opportunity modify the benefits to comply with changes in national and regional labor laws.
Conclusion
International companies should view global employee benefits as more than just an administrative necessity or a statutory requirement for setting up offices abroad. The perks offer a strategic edge for attracting and retaining top talent in those countries.
However, a common challenge companies face is finding a benefits provider they can partner with to deliver the perks to their teams, which is why we recommend working with a benefits broker.
At SoHookd, we partner with benefits brokers to help companies deliver experiential benefits for their global teams. You could opt for a pre-built package, or we can help you build your own program, where you personalize the perks to each member’s benefit needs. Additionally, we offer procurement-friendly programs and won’t tie you down with contracts or PEPM fees.
Offer personalized employee benefits that drive engagement for your global team. Schedule a call today.
