Research

Modernizing benefits for multinational companies

In conversation with Swiss multinationals

March 22, 2019
| Switzerland

Introduction

As it is for most of their counterparts around the world, meeting the demands and expectations of the modern workforce is having a profound impact on how multinational companies headquartered in Switzerland approach employee benefits. To find out more, we interviewed executives responsible for managing benefits globally for their companies.

We wanted to learn:

  • How companies’ businesses and workforces have evolved over recent years, and what future trends companies are anticipating
  • How current benefit programs fit with the changing nature of their businesses and the evolving expectations of an intragenerational and diverse workforce
  • How companies are modernizing their benefit programs*

We tested modernizing benefit themes across multiple dimensions of benefit program management, including what benefits companies offer (to align with modern needs or habits), and how they finance (via modern ideas or methods) and deliver them to the employees (by using modern approaches).

It is worth noting that our findings are not unique to Swiss companies; in similar discussions, European-based multinationals expressed comparable views on the importance of modernizing benefit programs.

About the interviews

We interviewed 11 large Swiss multinationals for this article with worldwide operations in varying industries, including financial services, pharmaceuticals, supply chain and logistics, and retail. Most have more than 30,000 employees in over 50 countries; three companies employ more than 100,000 people spread all over the world.

Executive summary

Modern employer

All the companies we spoke with, across different industries, referred to a renewed focus on core competencies, an emphasis on digital transformation and automation, and an increasing focus on diversity and inclusion. And more than ever before, companies said they want to build their brand as a modern employer in order to attract, retain and engage younger, technology-savvy talent. In fact they were quite specific about what that entails:

  • Leaders that clearly define their company’s vision for the future
  • Purpose-driven work, with opportunities for employees for meaningful career experiences and growth
  • Workplace policies that offer greater flexibility, and celebrate diversity and inclusion
  • Corporate responsibility toward communities and the environment

Modern benefits

So do they think their current benefit programs are fit for purpose as a modern employer? Certainly all think the traditional benefits they offer, such as pensions, medical benefits and life coverage, are indeed appropriate in the geographies in which they operate. That said, there is a growing recognition that providing market-competitive benefits is no longer enough. To varying degrees, companies talked with us about what is on their agenda for modernizing benefits:

  • Broadening the definition of benefits to include wellbeing programs, flexible work policies and workplace amenities
  • Offering a portfolio of benefits that supports the culture of the company with flexibility and choice to appeal to their increasingly diverse workforce
  • Understanding what employees want, and aligning benefits with employee values and preferences to maximize the return on investments
  • Delivering true economic value for employees by leveraging companies’ global scale to reduce cost and improve access to financial products, underwriting risks and tax advantages
  • Not merely communicating a list of what is offered and what the company pays, but rather engaging employees to use their benefits effectively, and offering them personalized support
  • Streamlining operations to reduce the strain on resources via automation and digitalization
  • Using participant behavior and usage data to make insightful decisions in designing sustainable programs, adapting them over time and managing costs

Not so fast

Online portals for delivering a consumer-grade experience are important, but when it comes to benefits, it is equally or more important to ensure that employees make informed choices and have a stress-free experience when they use the benefits that are offered to them.

During our conversations, we also noted several important considerations that companies need to navigate as they embark on their modernization journey:

  • Interestingly enough, while companies talked about how younger, technology-savvy employees are increasingly influencing their attitudes toward benefits, there was little discussion around the needs of more experienced labor pools, such as caring for aging parents. It is important that companies consider the needs of the entire workforce when developing workplace and benefit policies.
  • Companies are increasingly looking to simplify the benefits they offer, making them consistent across all business units and harmonizing benefits after corporate transactions. That said, they understand the need to balance their focus on simplification with potential cost implications and potential differences in needs of different workforce cohorts.
  • While offering greater choice and the option to flex coverage up or down are important to meet the needs of an increasingly diverse workforce, our conversations also highlighted the challenges companies face due to limitations imposed by regulations, and the complexities and costs of flexible benefits platforms.
  • It is certainly easy to see the economic value of scale and risk underwriting offered by group benefit programs to employees; however, multinational companies find it more difficult to create value for their employees in countries with small operations.
  • Communicating a comprehensive benefit story under the modern employer brand, and using online portals to create consumer-grade experience, is high on most companies’ modernizing agenda. We certainly agree; however, when it comes to benefits, supporting employees to understand their benefits, make informed choices, and ensure administration and operational policies help employees have a stress-free experience are equally important, if not more so.
  • Modernizing benefits will increasingly involve developing an operating model that enables collaboration among different functions responsible for rewards and benefits, workplace policies, inclusion and diversity programs, and wellbeing programs.
  • We found that many were more focused on the benefits they offer and how they communicate. There appears to be less emphasis on modernizing how benefits are financed, streamlining operations, and using data-driven analytics and insights to make optimal decisions around design and cost management.

In conclusion

The complexities of managing employee benefit programs are amplified for multinational companies because the definition of benefits is broadening beyond those they already offer. Companies need to consider the numerous countries in which they operate; the need to coordinate stakeholders across multiple functions and geographies; variations in social benefits and local regulatory frameworks; and responding to rapidly evolving technology, employee expectations and dynamics. That said, the quest for modernization is important if companies want to attract, retain and engage the talent necessary for their business success in an increasingly complex and global world. To achieve their modernization agenda, given the magnitude and complexities of the undertaking, a systematic approach is critical. To that end we suggest companies:

  • Articulate a benefit philosophy that reflects business strategy, organizational culture, employee values and preferences, and diversity and inclusion goals.
  • Deconstruct their broad-based philosophy into tactical objectives around the benefits offered, how they are paid for, and how they are delivered to the employees in a manner that engages and supports them.
  • Build an operating model and governance protocols to execute on the modernization agenda by understanding the gaps between what needs to be done and what is happening on the ground.
  • Stay on track as the business and workforce evolves, corporate transactions occur, laws and legislations change, and employee preferences and behaviors evolve.

Endnote

*For the purposes of this study, we defined modernizing benefits using the Oxford English dictionary definition of to modernize: “adapt (something) to modern needs or habits, typically by installing modern equipment or by adopting modern ideas or methods.” The term modern is defined as “related to present or recent times as opposed to the remote past.”