The Continuum of Outsourcing

Global benefits programmes demand rigour and complex integration.

By Jeff Miller

When managing global benefits, any organization must first consider where it is in the process of benefits administration and what its priorities are. Employee demographics, the cost of benefit programs in each country, various legislative and regulatory issues, and the need to increase employee productivity and engagement are only some of the stepping stones along the way.

Ultimately, successful global benefits management calls for an integrated framework to address these and other complexities. This framework combines programme design, administration, capital investment, and the employee experience—with governance at the centre to monitor global compliance, prepare aggregate reporting, and support oversight committees.

Of course, all models of benefits governance are not the same, varying along a continuum from total local autonomy to a completely centralised model. Typically, benefits governance exists somewhere in the middle of this continuum, sharing responsibilities between local and headquarters on the various components of the integrated framework (design, cost, provider, and vendor selection, etc.).

Strategy to Implementation
But the idea of a truly global benefits governance structure is still fairly far off for many if not most multinational companies, according to Mercer’s 2009/2010 governance survey results. More than 100 multinational organisations participated in this survey of retirement benefit plans, insured risk, healthcare, and medical plans. Specifically, 62 per cent of survey respondents said they were two to five years away from a global benefits governance structure that had such things in place as global policies articulated and implemented effectively and regular reporting to a global committee, with key measures managed and monitored. Fortunately, better balance is on the way.

Implementing a governance structure requires a model that proceeds logically and smoothly from initial strategy to final implementation. This begins with the governance framework (guiding principles, objectives, policies, risk assessment, etc.) and moves to a current assessment (data, reviews of design, compliance, and investment). This inventory of current programs is critical to ensuring that a complete model is in place, covering all aspects of benefits around the world. Only after the assessment phase can people (executive sponsors, global/local managers), processes and tools (reporting, approval processes, roles, and responsibilities) be appropriately established. The implementation of a governance structure is then completed by rolling out the plan, through execution of training, communication, and the key ongoing areas of implementation, such as data maintenance, administration, compliance, vendor selection, and oversight

With a global benefits governance structure in place, then, the goal of global benefits service delivery and administration becomes more achievable. Ideally, this is an end-to-end solution that moves from design and implementation (including benefit audits, strategic benefit advice, benefit policy design and consulting) to enrollment (communicating eligibility options to employees and managing their enrollment and status changes) and the ongoing handling of life events.

Global benefits service delivery should provide a consistent member experience (such as a single online portal for all benefits, enrollments, and retirement planning tools, plus total rewards statements, help lines, etc.). Ultimately this global model must enable a client experience that includes a single point of contact for corporate and regional client management, along with local contacts for direct connectivity.

Shortened Distance to Global HRO
At that point, the distance to an effective and efficient global strategy is shortened. On the global level, that means seamless IT infrastructure and systems, with global operations centres, oversight and governance, relationship reporting, employee access and online interactions, management and vendor relations, operational effectiveness, and continual improvement. From the local perspective, depth is delivered via on-the-ground knowledge and consulting expertise, delivery resources, and helpline contact centers—keeping you abreast of local competitive practices and legislative compliance applicable to that region or country.

This model depends on a global provider that can deliver an integrated, multilocal benefits administration program, affording value from financial and nonfinancial standpoints. Financially, there are some key fundamentals. The outsourcing contract is typically based on fixed (per member) fees, so costs are predictable.

In addition, the offshoring of services allows organisations to increase capacity efficiently and cost-effectively during planned growth (such as a merger or acquisition) without adding resources. Meanwhile, the outsourcing provider’s capital investment spend and scale on system and technology infrastructure and upgrades should yield measurable savings.

Nonfinancial benefits include a single point of contact globally, freeing up HR resources for more strategic roles within the company. Successfully managing your global benefits programmes demands a rigorous approach and an integrated framework that is centred on solid governance. Ultimately, the benefits administration strategy must take a world of complexity into consideration as it aligns with a global outsourcing partner that can deliver ongoing, continuously improving efficiency and effectiveness—all in the service of productivity, employee engagement, and competitive edge.

Jeff Miller is the president and group executive of Mercer’s outsourcing business, located in Norwood, Massachusetts.
 

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