For advisers looking to deliver value for their clients and grow their business, the international stage is where it’s at. The number of multinationals is growing apace, as is the widening pool of globally mobile employees. At the same time employers are trying to become increasingly competitive when it comes to improving recruitment, retention and productivity whilst also finding savings and realising efficiencies. Advisers who can help global clients square this circle might just be worth their weight in gold.
Multinational companies – primarily small to medium sized organisations – are set to increase in number by 13.6 per cent from 12,230 today to 13,900 by 2021, according to a recent study by market research company Finnacord. Over the same period, thenumber of employees who are classed as expatriate or corporate transferees is expected to exceed 1m.
Companies in this space need a strong framework to support their growth trajectory and their employees at the same time. But with tight budgets, disparate workforces with equally disparate needs, and all-too-familiar hurdles in terms of developing, agreeing and securing funding for wellbeing benefits and services, where do they start.
Maximise existing benefits
Look to existing initiatives first, share best practice and demonstrate value to employees, says Willis Towers Watson managing director, global services & solutions Nigel Bateman. “Companies may have the aspirational desire to put in place a full-on expat package but that’s not a sustainable operating model,” he says.
“It’s important to help employers make the best of what they’re prepared to make available. This could involve putting voluntary benefits in place and making them accessible to local employees in lots of populations. It’s also likely that companies are already providing pensions and life insurance and these kinds of things can contribute to employee wellbeing too.”
The same can be said of the added-value wellbeing benefits that come as standard with group income protection (GIP). From second medical opinion services to employee assistance programmes (EAPs) for employees and their families.
“This is where the online experience can help – to help convey in a coordinated way to employees these things already exist and they’re valuable,” says Bateman.
Does uniformity matter?
Although some companies advocate putting in place minimum standards in terms of certain benefits, such as life and pensions, across all the countries in which they operate, this isn’t always best policy.
“Multinational companies don’t always want to provide blanket benefits across jurisdictions as some benefits may be of more value, and therefore of greater competitive advantage to the employer, depending on the geography,” says Unum head of proposition development Ambika Fraser.
The most important challenge for many organisations is represented by the need to integrate, in a consistent way, employer-provided benefits with other coverages as part of mandatory programmes or through social security, comments Aon global benefits consultant Janet Heaton.
“Most of our clients approach this through an overarching governance structure, usually in the form of a global benefits policy. This would cover broad principles, for example stating a benchmark that the client would aspire to,” says Heaton.
“Another approach would be to work with a global supplier so that the employees have a similar experience – this could be a global technology platform or using the same insurer in each market.”
Consider diverse needs
Besides, uniformity of benefits seems to fly in the face of tailoring to need.
Introducing more choice and flexibility into benefit packages – including voluntary benefits – increases employee appreciation, according to Willis Towers Watson’s Global Benefits Attitudes Survey. It found that employees – particularly younger employees – with some choice or flexibility are more than twice as likely to report their benefits package meets their needs as those without.
It found that benefits are more important then ever in the face of financial insecurity. A significant number of employees reported they’d have a hard time raising the money for an emergency expense. In the Eurozone countries, around 30 per cent said they couldn’t come up with €2,000 in an emergency. UK employees displayed the lowest levels of financial resilience, with 41 per cent unable to find £1,600.
GIP can help with financial support and wellbeing interventions where illness or injury strikes. But what about unexpected bills or other expenses?
Financial wellbeing is now considered on a par with physical and mental wellbeing. Indeed, studies have shown that it’s intrinsically linked to psychological health. Consequently, more than a third – 35 per cent – of global employers have now implemented financial support, outside of pensions, as a global wellbeing initiative, according to Thomsons Online Benefits’ latest Global Employee Benefits Watch.
Understand expat concerns
Alongside improved choice of benefits, shouldn’t employees living and working away from home simply be offered more benefits because they have greater needs? Not so, according to Heaton.
“I wouldn’t say wellbeing is more or less important for a globally mobile employee. However, what we can say is that experiencing an assignment or relocating can be challenging for employees and their families. These challenges can impact on the employee’s wellbeing.
Safety concerns and long-distance loneliness are commonplace. One third of globally mobile employee respondents to Cigna’s 360° Wellbeing Surveysaid they feel less safe than they did 24 months ago, particularly in the US and Africa. And one-fifth suffer from loneliness, which increases to nearly one quarter for those who are single or live alone.
Somewhat surprisingly, 40 per cent of respondents also said their employer doesn’t provide them with any medical benefits. They rely instead on self-purchased insurance or on cover provided by their partner’s employer. Also 51 per cent said they’d prefer to return to their home country to receive medical treatment.
Telehealth taking off
With this in mind, Cigna sees a big market for telehealth solutions, providing access to general practitioners and consultants from healthcare providers in an employee’s home country. “We’ve championed this for over a decade and it never really made it to the mainstream, but we’ve now reached a tipping point for telehealth,” says Cigna Global Health Benefits medical director Dr Peter Mills.
“Consumers have the technology in their pockets. Healthcare providers are not as focused on footfall – they recognise it’s a global marketplace and want to expand their brand. Plus health insurers know that telehealth provides a good way of ensuring quality care at a good price.
“With all these stakeholders aligned, we’ll now see much more of telehealth solutions across global populations.”
Meanwhile, the requirement for all companies, whether global or not, to keep a lid on costs, whilst improving productivity has led to benefits becoming more risk led, says Canada Life Group Insurance marketing director Paul Avis.
“The pecking order is now different,” he says. “It used to be HR answering to finance with procurement at the top. The chief risk officer now sits above procurement.
“Risk officers want global risk oversight. They want to know the human capital risk in each jurisdiction: is it absence, an ageing workforce, an increase in chronic conditions, financial wellness? They then look to the benefits fraternity to help.
“HR and risk might approach things from opposite ends but the end goal is the same: to mitigate risk.”
Avis sees a big opportunity for growth in the multinational pooling market as these arrangements not only offer the kind of global risk oversight required, but also “amazing amounts of management information, access to local benefits and services, and they’re risk-free: a dividend if the pool is positive and losses carried forward if it isn’t.”
Pools are no longer the preserve of just the biggest companies. More small to medium sized companies are taking advantage of these arrangements.
Generali Employee Benefits Network regional manager – UK, Ireland & Nordics Damian Ross comments: “The eligibility rules vary but, in our experience, they’re available to companies with a minimum annual risk premium spend of €20,000 [£17,500], with just one initial contract – such as group life or group income protection – and employees in at least two countries.”
Avis adds: “There are around 3,000 multinational pools worldwide but there are 100,000 multinational organisations. This risk-free area of group insurance remains significantly underpenetrated.”
What about the Brexit effect?
Attraction and retention will represent key business priorities in a post-Brexit environment, according to research by Mercer entitled Workforce Monitor.
The report states that the extent of the “shrinking UK workforce” is brought into stark reality by the fact that immigration is likely to fall in coming years thanks to Brexit. It highlights increasing dependency ratios, with fewer people working and more retirees to pay for, the ramifications of which are stated as:
- A workforce shortage negatively impacts productivity and GDP growth.
- Pension and healthcare costs will grow far more rapidly than long-term economic growth.
- Skills shortages put pressure on wages, making some UK based operations uncompetitive unless they adapt.
The impact on global benefits? Commentators expect the importance of benefits to increase further, especially in those industries where skills shortages are more prevalent.
Paul Avis of Canada Life Group Insurance comments on the potential impact of Brexit on group risk: “Around 75,000 City jobs are currently going overseas. The UK’s group risk industry covers around 12 million people. Unless all the highest paid individuals with the biggest benefits leave, we don’t expect a huge impact on group risk.”