Literature review of Global Employee Benefit
Employee’s benefit is an indirect reimbursement, which “include various types of non-wage compensation provided to employees in addition to their normal wages or salaries” (BLS Information, 2008). Examples of the benefits are following: disability income protection, employer-paid housing, health, dental and life insurance, disability income protection, retirement payments, daycare, sick leave, paid vacation, funding of education, any flexible work arrangements, and other social benefits. Nowadays Global companies are a complex mixture of native divisions with their own exclusive and sole benefits needs. Multinational company are to provide their employees benefits that promotes economy, development, technology, efficiency, and at the same time lets local divisions attract talent, experts, experience and key employees. Benefits for employees “exist in companies worldwide, but the types and levels of benefits vary greatly from country to country” (Encyclopedia, 2009).
Employee’s benefits have several sources of origin: some are assigned by law - workers or unemployment compensation, legal time compensation, social security, others are organized by a certain firm, as depends on the company’s or industry’s policy where company operates – life and health insurance, pensions, medical plan, paid vacation. Mostly everywhere employee benefits at some degree are taxable.
When a company attracts valuable employees, how does it keep people on board? One of the most worthy way is to propose a good benefits package. The intention of employee benefits “is to increase the economic security of staff members, and in doing so, improve worker retention across the organization” (Roland, 2011). Providing a good benefits package is the ability to search for, find and keep highly qualified key workers.
Nowadays a great tendency may be seen - companies continue to expand globally, becoming multinational and therefore benefits programs become more important.
1. Being able to provide employee’s benefits, competitive benefits programs and control costs in diverse cultures and;
2. Creating global benefits strategy when provided benefits are to meet various needs of international workers;
3. Develop a competitive program to draw, attract and retain talented people;
4. Searching for the most cost-effective possibility to administer international benefits;
5. Constructing identification and recognition for the value that global benefits award to a company.
International business is the key to development, opportunity for growth and bright future for many companies. Because of the current global economic crisis, organizations are to make sure that multinational benefit programs are appropriate and those programs to run smoothly.
Nowadays world is changing rapidly and one of the most important factors on international markets is increased competition, companies and their employees need to be able to keep up with constantly changing effective innovation and automation. Successful managers need to adapt to the global environment and quickly changing business, and those managers are to be found. With companies being highly competitive and numerous new employees entering the markets, employers have to become even more innovative, creative and sensitive in the managing manner, design, timing and creating benefit plans. As from experience it may be noted that employers, who do not provide updated programs and do not escape limited way of doing business, have more problems and difficulties finding and keeping desired types of employees. Many researches have been organized “about the standards that can forecast the success factors of rewards because most programs identical in nature, in one situation are successful in employees’ point of view, but not in another scenario present the same results” (Brown, 2008).
Multinational companies survive and operate in dynamic environment, and when they spend certain portion of costs to provide employees benefits, they struggle wondering what benefits are to be offered to reflect national market policies, their costs and what kind of risks they may implement. Many benefit programs have changed their direction and have .been influenced by technology, terrorism attacks, natural disasters and workplace violence.
Several advantages of benefit programs for employers and employees may be mentioned:
When flexibility is provided by companies in benefit programs, employers has a possibility to recruit and keep qualified employees;
Employee’s benefits help manage low costs of risk coverage and simplifies financial weight of the organization;
Employee’s productivity improves because of implementing benefits program, efficiency and functionality increases because employees are assured of their security for themselves, families and also are afraid to lose such protection;
People are less likely tom leave work or search for other alternatives;
Organization saves money, as premiums on rates are tax deductible as organizational expense.
Advantages for employees:
Because of the proposed conditions employees can experience calmness and composure, which increases their productivity, desire to work and gratification by assurance that they are protected;
When employees are given benefits they value, they will be more satisfied with their work, rarely miss workdays, will not have a desire to quit, and gain greater commitment when reaching company's goals;
Special employees with disabilities are provided with an insurance package and are given additional protection and even income replacement when considerable illness;
When employees agree and are satisfied with the benefit program and the coverage, they feel a sense of pride.
Companies and manager try to support aspects that really matter:
Financial security -
Compensation: must be fair and competitive;
Retirement: retirement programs are to be offered and should reflect national policy, traditions and customs;
Employee’s Inducement Plan: licensed employees have the right to participate in an inducement plan and help the company achieve annual financial targets;
Scholarship program: there is an opportunity for employee’s children to apply for financial programs and gain higher education scholarships.
Professional growth -
Career development: working hours should be enriching, with many possibilities to obtain skills development and career growth; company’s environment is to be favorable for constant learning and development;
Training: many companies practice implication of training programs and studies to improve and develop employee skills;
Activity management: when working in groups together with the manager, setting aims, discussing feedbacks and planning career path;
Educational assistance: coverage of tuition, courses and trainings related to the job.
A supportive working environment: at all levels in the business company should have strong culture that encourages diversity, provides opportunities to grow careers.
A safe place to work: company needs constantly improve health and safety performance;
Personal well-being -
Healthy lifestyle: many companies provide access to their own fitness rooms or cover all fitness-related expenses;
Paid time-off: those time-off include holidays, vacations, holidays, illnesses or, disability.
Flexibility: being flexible and providing supple schedules helps people to coordinate their work life and personal life.
People when searching for a better working place always expect to be provided with paid holidays, for example New Year's, Christmas day, Birthdays, Independence Day, Labor Day and etc., be able to either take time off without pay or use vacation days for holidays, for example religious holidays, and are waiting for four weeks paid vacation time per year. Employees are requires to be provided with weeks for baby birth or adoption, any serious health condition of the employee or a member of the family. After unpaid leave comes to an end, person has to be restored in the same or an equivalent job. None the less, among all types of reward, monetary pay is considered ever-present and significantly important factor (Milkovich and Newman, 2004).
Besides all the positive aspects mentioned above, one of the most influential facts is that when right benefits are offered, businesses and start-ups always grow.
The biggest mistake companies make when running a business is leaving employees out of the benefits plan. As soon as organizations start offering their benefit programs, complexity and difficulties arise, and the reason is because key benefits are under government scrutiny and mistakes are easily made when setting up those plans. A rule should be set up in all organizations: when one employee gets a preferential benefit, the same benefit is to be implemented on everyone. Of course, there are ways that managers may use to exclude some of the workers, but this practice should never be implemented.
Benefits are to be given to the employee, if he/she needs them, giving unwanted benefits is just waste of companies money. For example, young workers usually do not need life insurance, as they have other priorities. So before take somebody into service, employees are to be surveyed and benefits ranked according to necessity. Managers should remember that “by communicating the awareness and the desirability of available rewards, organization can persuade the desired behavior that can help in achieving the strategic priorities of the firm” (Rumpel and Medcof, 2006).
For multinational companies corporate governance of employee benefits is very important. The company may operate in a centralized or decentralized manner, but managing costs and risks is obligatory – usage of global benefits strategy to reduce financial risks and operational costs. One of the main reason why companies sponsor employee’s benefits is to be competitive in national markets – organizations become involved in local country benefits questions and decisions.
Several measures of global employee’s benefits management realization are to be mentioned:
Constant access to reliable and significant benefits, financial and operational data worldwide;
Organizational evaluation and appraisal of possibilities, opportunities and risks to manage these risks;
Identification of companies policies to manage opportunities;
Governance structure to carry out organizational strategy, allocation of responsibilities between global, regional and national functions to make;
Launching model to control and monitor risks using corporative policy metrics.
Those companies that use mentioned above measures while managing global benefits, are more satisfied and confident with managing benefit programmes. Centralized operating model is becoming today more in demand than any others, and this trend seems to continue in the future. Companies establish corporate policies to control and manage important from a company’s perspective risks, implement formal governance structure to reduce costs. This trend is also reflected in global benefit management programmes, though it should be known that level of centralization is mostly driven by financial costs and risks of company’s plans.
Employers and employees in the modern fast developing global workforce deserve complex and sophisticated insurance coverage for health and life insurance. As mentioned above it is becoming increasingly important govern employee benefits corporately – because financial costs and risks lately grew due to their value for the company.
It is known worldwide that companies grant benefits to be globally competitive, but the costs of sponsoring those plans are greatly rising and usually rising disproportionately to the value that benefits may return to companies back.
Today many business managers face financial and operational effects and consequences of benefit programs that were used years ago, when corporate and organizational environment was different. Rising costs are also aftermaths of factors outside of employers’ controls, such as national longevity, inflation costs and tec. Costs and risks of employee benefits are greatly involved in local benefits decisions. Companies pay attention and find corporate negligence of benefits sponsored by costs of benefits obligations very important. Not many companies are pleased with current level of organizational involvement in managing outside the country where headquarters are placed. Most multinationals organizations have corporate policies to control national benefit questions, but many do not know if benefit practices on national markets are connected with rules and policies established by corporate activities. To be adequate a company must have not only global benefit strategy at the corporate level, but also mechanisms to fulfill the strategy and control financial decisions. Collecting information from multiple sources, keeping it current at the corporate level and knowing how to use benefit information is a challenging and difficult task, but greatly valuable.
When governing benefit plans at organizational level local country requirements are to be met and an independent corporate management role is to be seized, this leads to the point that decisions in financial and operational management are supported by fit business logical justification. There is no one most suitable practice for a corporate structure, as all organizations are different, and one practice may work for one company and not work for another. The method in which an organization manages its employee’s benefits greatly depends on following factors: company’s structure, operational method, types of benefits, charges and costs, risks and cost/risk budgets.
Nevertheless, there are major advantages for international companies from benefit corporate governance:
Now main factors that influencing international employee benefits industry may be mentioned:
- Some factors point at the fact that in employee’s benefit programs mass customization and flexibility is to be used: “ageing of the work force, people’s inability to retire financially, healthcare costs rising at double the rate of regular inflation, social security cutbacks” (The Swiss Life, 2015);
-Companies today face not only local, but international challenges as well: legislation changes, financing of benefits, low interest rates, keeping information, costs up to date;
- Managers main concern is to find innovative, meaningful, significant and cost-effective programmes that are to be offered to employees;
- Today company function in the period of political instabilities and uncertainties, which means that governance plays a great role in todays development.
Every employee has different financial, professional and personal goals, companies must appreciate those differences and offer such package that will be right just for the, which means to use individual approach. When entering the market and getting employed, every person should have access to a wide range of global benefits and specific programs. There is a way to raise employee’s motivation and it is by performing “appraisal system especially when efforts directly link with reward through particular and formalised individual objectives” (Thompson, 2001). And it should be said that when company create a reward systems entirely according to the intent of their employees, it happens to human instinct to work hard in order to achieve their own and organizational objectives (Pfau and Kay, 2002).
All benefit plans are established to encourage employee’s performance and influence on their high achievements of goals. Today people have a special view on their health care system and the demand for universal health coverage greatly grows. Not only health plans are important, but also questions connected to the retirement. Many employers today “offer retirement plans as vehicles for employees to save during their years of active employment” (Xerox Corporation, 2016). Moreover employers prefer government to be constantly involved in the health insurance program, the main reasons are invariable changes, growing costs and complexity of the benefit program system. Worker’s or employer’s nationality does not matter, everyone wants control continuously be involved.
Workers nowadays are much more flexible, mobile and job turnover. Even though, many managers are concerned about the great decline in organizational trust among workers: whether there is trust to the company, employer and government. Workers should have greater trust in their employer, and in today's fast developing, highly technological, with many possibilities and opportunities economy, employee stay the most important factor in recruitment of skilled, talented and valuable workers. Besides all the fact mentioned above, “employees (and many employers) still view an effective bonus plan as the single greatest motivator in the workplace “ (Randstad USA, 2014).
In conclusion, it should be said that today doing business across borders is standard process, while global approach to gain international benefits for employees is just coming into focus, and this subject deserves increased attention. For an organization to develop an international and a global benefits strategy is an important step that will help move towards and not to base on the past experiences.
Establishing organizational policies, that are aimed at managing costs, risks and opportunities of the worker, is very important from a company’s perspective. Formal governance structure should also be implementing and at the same time invented solely to realize such policies, which will allow many organizations allocate resources in the optimal way, ensure a preferable outcome and reduce costs and risks of benefit plans. When the everything is planned and organized, key to unfolding the strategy is constantly gathering information: data about given benefits by the government, large international companies and other national and regional competitors. Today while unstable and challenging economic and political times, effective management processes must be implemented and used to attract staff and obtain efficient benefits solutions. All organizations that implement a global benefits strategy are to see the results on many levels: more efficient and operative administrative control, constant information flows, skilled and in demand employee keeping in today’s competitive business world, obtaining a competitive advantage on local and global markets.
References
(February 28, 2008) BLS Information. Glossary.U.S. Bureau of Labor Statistics Division of Information Services. Retrieved from http://www.bls.gov/bls/glossary.htm
(April 8, 2011) Brian Roland. Abenity. Abenity: What Does It Cost To Replace An Employee? Retrieved from https://abenity.com/celebrate/employee-engagement-cost-to-replace-an-employee/
(May, 2015) Global Employee Benefits. The Swiss Life Network Perspectives. Retrieved from https://www.swisslife.com/content/dam/id_corporateclients/downloads /newsletter/newsletter_may_2015/Global_Employee_Benefits_May_2015.pdf
(December 1, 2014) "Want to Retain Me? U.S. Workers Say ‘Show Me the Money’". Randstad USA. Retrieved from https://www.randstadusa.com/about/news/want-to-retain-me-us-workers-say-show-me-the-money/.
(February 23, 2016) Recent Research in HR and Employee Benefits 2016. Xerox Corporation. Retrieved from https://hrlaws.services.xerox.com/wp-content/uploads/sites/2/2016/02/hrc_fyi_2016-02-23.pdf
(2009) Employee Benefits. Encyclopedia of Management. Retrieved from http://www.encyclopedia.com/topic/Employee_benefits.aspx
Milkovich GM, Newman JM Motivation and Personality, Harper &Row, New York, 2004. Print.
Thompson M Contextual determinants of reward systems’ success: an exploratory study, 2001. Print.
Rumpel S, Medcof J Total rewards: good fit for tech workers, 2006. Print.
Pfau B, Kay I The five key elements of a total reward and accountability orientation, 2002. Print
Brown Measuring the effectiveness of pay and rewards: the Achilles’ heel of contemporary reward professionals, 2008. Print.
