A new study from Aon Hewitt and the American Benefits Institute reported that 70 per cent of organizations have some form of corporate guidelines and controls in place to govern their benefits plans.
The American Benefits Institute and Aon Hewitt found that despite the formal rules, only a fifth of the 200 surveyed multinational firms were what they called “best practice” organizations.
“Market volatility, rising costs, competitive pressures and regulatory changes are driving the desire to manage benefits more centrally by multinationals,” said Amol Mhatre, senior partner at Aon Hewitt.
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According to the study, best practice organizations excel in key areas such as understanding benefits costs, risks and opportunities, having well-defined risk management policies and monitoring and reporting on risks on an ongoing basis. They also tend to have operating models that define roles and responsibilities at the local, regional, and corporate level, in addition to providing the human resources and finance departments with central access to data and market information on the benefits programs.
The survey found that 93 per cent of best practice companies had established global centres of expertise for managing their international benefit programs, while only 51 per cent of other organizations had such a centre. Eighty-seven per cent of best practice organizations conduct formal audits to make sure that local benefits are “aligned with global policies,” with 56 per cent of the leading companies expressing a high degree of confidence in their benefit programs and how they match up to workplace strategies. Only a quarter of other organizations conduct formal audits and only six per cent of those groups express the same level of confidence in the alignment of their benefits and strategies.
“The financial cost of plan sponsorship is significant. In some ways, the management of these programs across multiple continents represents an even more daunting challenge,” said James Klein, president of the American Benefits Institute. “Compliance with myriad regulations may always be difficult, but this study shows how the world’s ‘best practice’ plan sponsors thrive in a competitive global business environment.”
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