How to balance regional state support and benefits needs within a multinational strategy

At a basic level employee benefits exist to plug the gaps between employee needs and the protections and provisions laid out for them by the state

How an employer designs and delivers the needs of employees with state provisions differentiates them as either attractive or unattractive as an employer.

Get it wrong and you could be spending time and money in areas which aren’t appreciated, failing to meet your local operational needs and mismatching with global, people objectives.

Get the balance right and you have a cost-effective, agile programme which supplements state benefits to achieve employee appreciation, enables local operations to deliver the workforce strategy they need – and allocates benefit investments efficiently.

Define your global principles

Whether reviewing an established strategy or building a new one it helps to identify a clear set of global principles – recognising the values of your organisation and its objectives.

How hierarchical or egalitarian should benefits be?

What common themes such as wellbeing and ESG should be promoted – how do these best translate locally?

How should benefits serve commercial and workforce strategy needs?

These are the principles against which you test multinational benefit decisions and the extent to which state provision should have any influence.

Desk-based state provision evaluations

State support varies widely from country to country. The OECD’s Pensions at a Glance 2023 assesses state pension to earnings replacement ratios for average earners at 26.2% in Ireland and over 80% in Spain and Greece with the UK sitting just in the bottom half at 41.9%.

On healthcare the OECD Health at a Glance 2023 report assesses state records on Effective primary care and Effective preventative care as above average in Spain, Sweden and Canada among others.

Poland and Germany were below average for both. France and Lithuania scored well on "effective primary care" but were below average for "effective preventative care".

For some countries core primary care support will be valued most. For others, employers can demonstrate their wellbeing credentials and protect long-term workforce health, by meeting employee needs on health screening for example.

State protections in the event of death and inability to work vary widely as well and influence expectations on life cover and income protection benefits from country to country.

Desktop resources such insurance market data provider AXCO, insurance market reports and independent studies from OECD for example, can lead to country-by-country heatmaps of likely hotspots for different benefit needs based on state provision - but this is really just a starting point.

Digging deeper

Headline data often hides important nuances.

Dig a bit deeper into the OECD pension stats1 and you see other perspectives. In India a male earning twice average earnings receives a 22.7% replacement ratio (20.7% for women) whilst it stays high at 71.3% in Portugal and 68.4% in the Netherlands.

In Ireland the replacement ratio for someone on twice average earnings is 13.1%. Employers gearing up for auto-enrolment there are asking to what extent their future pension scheme designs should be driven by legislation, how much should it be driven by employee outcomes and what will other employers be doing?

If your reward structure needs to pay higher than average salaries, to recruit and retain in countries where the state pension system is heavily tilted towards lower earners – should it not also factor in the greater need for additional workplace pension funding?

Market position and benchmarking

Being clear on how you want to position your benefits offering is necessary to making sure you can project the employee value proposition (EVP) you want.

Benchmarking by state minimums and entry level benefits will probably not achieve that. In the US the Affordable Care threshold won’t deliver much appreciation among employees.

Even an entry level healthcare benefit costing $200 to $250 a month per employee is likely to have deductibles/excesses which make the cost of claiming high. The insurance then becomes meaningless to many employees.

‘Above average’ positioning may be necessary in countries where you are looking to grow and talent is especially hard to come by. ‘At average’ may be sufficient in others.

Local knowledge is key

Desktop analysis may assist prioritisation. The best way to understand the impact of state provisions, market positions and options on supplementary benefits is to hear from the experts on the ground.

This includes your own people - employee feedback is invaluable of course. Having trustworthy, engaged ‘in country’ advisers’ is also essential to understanding:

State provisions
Supplementary benefit solutions
The impact of upcoming changes in state provision
Market positioning
Local culture and expectations

Right team

Locally your team of advisers need to have cross market, multi-benefit capabilities to avoid benefit bias.

They should also be big enough to access the range of options needed by you but be committed to looking after your local country populations however large or small.

Depending on your internal resources you may be able to manage the local connections yourself – alternatively you may add in the support of a global benefits consultant.

If you are using a global consultant they should have local country advisers with genuine local country credentials - to match your global footprint.

Right framework

State benefits are the financial and wellbeing underpins for global employees but building and maintaining a multinational strategy requires clarity on market position, ongoing gap analysis and local insights.

Putting the pieces together

Ask yourself: do you have a global governance framework with all of these?

A set of guiding global principles/reference points
Visibility over costs and milestones
Access to local knowledge from trusted local experts
A view on your current market positioning – benefit by benefit, country by country
Rolling gap fill implementation programmes
Capacity to keep watch over all your jurisdictions
Trusted central global benefits consultancy support – when you need it

Gathering the right team and implementing a comprehensive framework will help you see the wood for the trees and strike the right balance for your organisation – globally and locally.