Benefits for global expansion

Canadian companies are extending their reach globally more than ever. Whether they are exploring for oil and gas in a remote corner of the planet or looking for more economical manufacturing capabilities in Asia, they’ll need employees to help run their business.

This can create some challenges for Canadian benefits managers that are given the responsibility of ensuring that both expatriate and local national employees are provided with competitive benefits programs. Even experienced benefits managers may find themselves out of their comfort zone being suddenly thrust into the world of international benefits for the first time in their career.

If this is your first venture outside the Canadian benefits marketplace, my first recommendation is to keep an open mind. While some aspects of global benefits programs may be similar to what you’re used to here in Canada, other facets may be different, like end-of-service benefits (such as in Qatar), bike-to-work schemes (in the United Kingdom) and reduced working hours during Ramadan (in the United Arab Emirates) to name a few.

So, where should you start? First, become familiar with any mandatory requirements, such as social security programs, statutory minimums and legal requirements.

Social security programs—Develop an understanding of what your employees are entitled to through national social security programs and how they coordinate with supplemental company-sponsored programs. While many countries have socialized medical care, it’s common for employers to provide some level of private medical coverage. In some countries, there may be tax advantages or exemptions for employers that provide a supplemental program meeting certain requirements.

Statutory requirements—Establish a baseline by understanding what minimum statutory requirements the company must adhere to and then determine if your competitors typically exceed these limits and to what degree.

Legal requirements—Before signing an insurance contract, make sure the insurer is legally allowed to provide coverage in the countries you are operating in. For example, in some Middle Eastern countries, you can only offer coverage through a local insurer. However, it’s common for large global insurers to have “fronting” arrangements through a local carrier allowing them to legally provide coverage in that specific country.

Also, in many countries it’s common for benefits to be part of the employment contract. So, if you’re implementing any benefits changes, be prepared to give employees adequate legal notice of any changes.

Supplemental benefits
Once you become familiar with any mandatory requirements, you can begin to assess what supplemental benefits, allowances and paid-time off you need to offer to be competitive. Determine which benefits are offered by your peer companies as well as the level of benefit typically provided. If possible, determine the median benefit levels and where you want your program to compare in relation to this benchmark.

In most countries it’s pretty standard to provide some level of life, accident and disability insurance as well as medical and dental benefits. Pensions, retirement savings or end-of-service benefits are also common program elements. Car and housing allowances may be competitive. Don’t be surprised by the amount of paid time-off entitlement, which can be a lot more generous than in Canada. It’s not uncommon for some companies in parts of Western Europe to offer new employees five weeks of vacation days, plus flex days and statutory holidays.

Obtaining competitive data can be tough depending on which area of the globe your company has decided to start a venture. In Western Europe and certain Asian and Latin American countries, good competitive benchmarking data is often readily available through many large global HR consulting firms. However, if you’re drilling for oil in the Middle East, Africa or a tiny island nation in Asia, acquiring competitive data can be much more difficult.

In these situations, consider finding a local insurance broker or consultant. If there are no local brokers but you’re lucky enough to have an established HR professional on the ground, they may be able to gather competitive information from an HR network of industry peers. Many companies are willing to share their competitive data if you agree to provide them with information about your programs in return.

This was exactly the situation I found myself in a few years ago, while managing global benefits for a large oil and gas company. We were growing rapidly in Libya and there were no local brokers and no hard competitive data available. However, a plane ticket, a travel visa and a week of networking in the capital city of Tripoli with industry peers in the HR and benefits community gave me the competitive data I needed to move forward with program changes. It also gave me the opportunity to talk to local employees and hear first hand about their concerns and needs.

While navigating international benefits can be challenging, it can also be very rewarding. Educating yourself about the people and culture of other nations in our global village can give you a fresh perspective on the benefits programs we offer right here at home.