Almost three-quarters of employers have global minimum standard for employee benefits, WTW survey says
Almost three-quarters of employers (70 per cent) have a global minimum standard for employee benefits, almost double the 36 per cent who said the same in 2019, according to a WTW survey.
These numbers reflect the growing competition within the workforce, partly due to generational and cultural shifts that are seeing more of an emphasis on work-life balance and self-fulfilment, according to Daniel Tsai, business and law professor at Toronto Metropolitan University.
Implementing a global minimum standard that matches the North American Standard helps make multinational companies more competitive, allowing them to retain more talent, he said.
“National companies are accelerating their use of global minimum standards for benefits because they really want to go after high-skilled workers,” Tsai said.
“Companies are recognizing that people want to be supported when it comes to things like parental leave, hybrid work environments, healthcare and even daycare. These provisions all contribute to quality of life, and in a competitive marketplace, especially for high-skilled workers, these incentivize employees to want to work at and stay at a company.”
Key benefits considerations for employers
For organizations that have a high level of global mobility, consistent global standards not only contribute to attraction and retention, but also make intra-company transfers easier for employees, said Jim Winkler, chief strategy officer for Business Group on Health.
Minimum standards also allow companies to “truly operate” as a global enterprise, which creates consistent support for all employees regardless of their location, he said.
“Businesses work best when the workforce is able to optimally perform regardless of their role or where they are in the world. Creating standards that provide basic financial protection and access to certain types of care, for example, allows businesses to feel comfortable that they will not face a situation where someone within your workforce faces a situation for which you have not done your best to help them.”
However, when an employer adopts a minimum standard for employee benefits, the countries that have less generous benefits are brought up to the country with the highest standard, and this comes at a cost for employers. To manage this cost, employers could create a multi-year phased strategy for raising benefit standards, Winkler said.
Employers should also be careful in wording their strategy statement and defining what minimum benefits consist of to avoid unintended consequences such as constructive dismissal cases, he said.
“There’s a subtle but important nuance between the wording of a published strategy and the wording of an insurance policy. Employers also need to look at these policies every year to ensure they are holding themselves to the minimum standards, and conversely, if they have created a potential calamity for themselves, they need to recalibrate what the standards are accordingly.”
Trends for global minimum standards
According to WTW’s survey, 61 per cent of employers are focused on employee wellbeing, a trend that has continued over the last five years, as employers increasingly use employee benefits to attract and retain talent and as a means to support employees’ wellbeing.
Within health and wellbeing, Winkler has noticed three key areas where employers are focused on creating global minimum standards:
- prevention and access to primary care
- access to mental health services
- services that fit under a diversity, equity, inclusion and belonging health equity strategy, such as gender reassignment surgery.
“Making sure employees have access to preventative and primary care, mental health coaching and intervention services are benefits employers are increasingly looking to provide, especially after the pandemic.” he said. “Services under the broader banner of DEI are also emerging. In some countries, gender reassignment surgery, for example, is available through the public health system but in others it’s not, so some employers are looking to provide private medical insurance for services like this.”
Some companies are also offering stipends for services like gym memberships to further emphasize employee wellbeing and keep themselves competitive, Tsai said.
Outside of wellbeing, benefits like parental leave, daycare services or stipends, competitive vacation packages and flexible hybrid or remote work policies are all benefits that can be globally standardized to help make employers attract and retain talent, he said.
“There is a focus on employee-centric benefits so these are things that employees are focused on in terms of flexibility and choice or having employers create benefit programs that align with what their employees want.”
Defining ‘global’ with employee benefits
One factor employers wrestle with is what being globally consistent truly means, as many employers have a disproportionate number of employees spread across multiple countries, Winkler said.
“For some employers, globally consistent means that ‘I'm going to do the best I can for as many people as I can, but I may not be able to do this for 100% of my population,’” he said.
The ability to have truly consistent standards across multiple locations may also vary across countries based on whether the insurance market is private or public and vendor availability. Because of this, having broader statements focused on certain areas or types of coverage is the most effective way to create consistent benefits, Winkler said.
“While denominating x amount of money for a particular service creates a crystal-clear objective, if often becomes rather hard to administer, due to currency fluctuations and purchasing power, so having broader sweeping statements with regards to coverage is often the more effective way to do it.”
Future of global employee benefits
Creating a minimum global benefits standard is an increasing trend Winkler has seen from employer members and is one he believes will continue.
As innovation occurs in the pharmaceutical space — in particular, in cell- and gene-based therapies — insurance systems, national health systems and private insurance marketplaces will have to look at how to finance this, he said.
“If as part of my global minimum standard, I say I want all my employees to have access to primary care prevention and vaccines, at what point does something cross over from a run-of-the-mill vaccine that's relatively low cost delivered to a lot of people to something that's more targeted? That is something that could run interference with a global minimum standard strategy.”
Meanwhile, once minimum standards are individualized, there is the potential for companies to offer more on top of the minimum offerings; but for the majority of employers, the increasing implementation of global standards evens the playing field, Tsai said.
“I think these standards are going to continue to be used, then it’ll reach a peak and taper out. The standards will be adopted, and then we’ll see a potential race among the elite firms to offer more than just the minimum, with more and more escalation among those companies that are really competitive for the best talent.”
