04 Nov 2024
by Anne Terry

The pros and cons of an equitable approach to multinational benefits

Taking an equitable approach to benefits ensures that each employee receives benefits and support suited to their specific situation and location.

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In a globalised business environment, companies are increasingly faced with the challenge of structuring employee benefits that are both fair and reflective of their corporate values across diverse geographical regions.

According to REBA’s Multinational Benefits Strategy Research 2023, fairness and environmental, social and governance goals are top business drivers affecting global benefits strategies.

This is part of a much wider focus on providing equitable benefits, highlighted recently in Mercer’s overview of employee benefits market conditions

An equitable approach

Benefits for all and an increasing focus on diversity, equity and inclusion is a headline trend as firms look towards 2025.

But it’s important for organisations who want to take an equitable approach to multinational benefits to clarify what they mean. Equitable does not mean equal, despite these often being interchangeable concepts.

Equality usually encompasses a one-size-fits-all approach, giving every employee the same tool to achieve a specific goal regardless of individual needs or restrictions. 

Equity, meanwhile, considers individual needs, giving them the right tool that allows them an equal chance to achieve the same goal.

Diverse needs

Adopting an equitable approach means focusing on fairness and recognising the diverse needs and circumstances of employees across different regions. 

For instance, while offering identical life insurance benefits in every country might seem equitable at first glance, the varying tax regimes, social security systems, and cultural attitudes toward benefits in different countries could mean that this approach is not in the best interests of all employees.

An equitable approach considers local factors in each country of operation including social security, laws and attitudes and adjusts benefits accordingly, ensuring that each employee receives benefits and support suited to their specific situation and location.

Taking an equitable approach can bring several advantages:

The pros 

  • Greater employee satisfaction and engagement: Tailoring benefits to local needs and cultural contexts can significantly boost employee satisfaction. When benefits align with the needs and values of employees, they feel more valued and supported, which can lead to increased engagement and loyalty.
  • Helps a company uncover their own culture and values: An equitable approach to benefits can help a company create the right culture across the entire organisation, reflecting their pledge of fairness and inclusivity. By addressing the needs of employees in different regions, companies can reinforce their values and demonstrate a genuine commitment to supporting a diverse workforce.
  • Recruitment and retention benefits: Offering benefits that are perceived as fair and relevant can help attract and retain top talent in a competitive global market. Companies can differentiate themselves from competitors and become employers of choice. 

However, there can also be challenges to taking an equitable approach.

The cons

  • Takes a lot of work. It requires a thorough understanding of local regulations, tax implications, and cultural preferences. This process can be resource-intensive, demanding significant time and effort to ensure that benefits are appropriately tailored and compliant with local laws.
  • Challenging to deliver effectively. Effectively communicating and administering benefits across multiple regions can be tricky, especially if many HR and benefit teams are involved. Misalignment or administrative errors can undermine the perceived fairness and effectiveness of the benefits, potentially leading to dissatisfaction among employees
  • There are risks if not managed properly. While equity aims to be fair, there is a risk that tailored benefits might still be perceived as inequitable if not managed carefully. For instance, if one region receives significantly better benefits than another, it could lead to feelings of resentment and inequity among employees

Conclusion

Taking an equitable approach can strengthen organisational cohesion and create a more inclusive company culture that resonates with employees across different regions. 

However, without careful planning, an equitable approach can lead to unintended negative outcomes. 

Benefits that are culturally inappropriate or irrelevant can create issues, including reduced employee morale and potential reputational damage. 

To be successful companies need a thorough understanding of local cultures, careful planning, and effective execution to ensure that benefits are perceived as fair and valuable by employees across all the regions a business operates in. 

By finding the right balance and taking expert guidance, companies can create benefit strategies that truly reflect their commitment to fairness and inclusivity, and ultimately drive employee engagement and satisfaction. 

Howden can help organisations at any stage of their global journey to create a multinational benefits programme that is appropriate, compliant and cost effective. For more information, click here.

In partnership with Howden Employee Benefits

Howden provides insurance broking, risk management and claims consulting services, globally. We work with clients of all sizes to provide dedicated employee benefits & wellbeing consultancy.

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