April 21, 2022

Global Benefits Governance Guide

Employers utilize their global benefits governance process to adapt to the challenges their workforces face and reinforce their global strategic initiatives around the world.

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Audits are a tool employers can utilize to ensure that their governance process is compliant. This section looks at how employers utilize audits for reassessing their governance process, ensuring that benefit programs are working as intended and integrating globally consistent efforts.

Auditing the Governance Process

Governance is an interactive process, and an audit allows a company to examine if its process is working the way the organization stated that it should. An audit should consider the following questions: Are the key elements of the governance process being followed? Are there any discrepancies between what a company say its process is and what the company is actually doing? If discrepancies are identified, do they create a liability?

Despite the importance of these questions, only a handful of companies responding to the Global Benefits Governance Survey have audited their governance process (Figure 1). Given limited resources, most companies reevaluate their governance process when they have a major change or addition such as:

• Organizational restructure;
• Global business or benefits strategy change;
• Benefits harmonization process from mergers, acquisitions and divestitures;
• Global partner change;
• Global financing mechanism implementation; and
• An unintended gap or liability is identified.

 

Figure 1: Audits Performed to Ensure That the Governance Process is Adhered to Throughout the Organization, 2021

Source: Global Benefits Governance Survey 2021

Auditing benefits as part of the governance process has traditionally been more prevalent in the retirement space, which tends to have more compliance requirements. However, in recent years, auditing medical and risk benefits has increased. These audits are typically tied to a company’s established approval process as they look at compliance issues resulting from local regulations, global consistency, financial liabilities, process adherence and unintended gaps. The audit results help illustrate what needs to be addressed in the approval process. The level of detail in audits can be dictated by regulations as well as company needs.

Audits Incorporating Global Consistency Strategy

Audits can allow companies to drill down on their benefit offerings and view them through an equitable lens. For example, employers may include questions to see what offerings fit the company’s minimum standards. A company may offer a benefit, but once it is examined closely, the company may find that the benefit does not meet as many of the employees’ needs as the employer expected. In sum, an audit will give employers a better sense of the gaps in their benefit offerings so that they can better meet their diverse workforce’s needs.

What Employers Need to Keep in Mind with Audits

Questions that employers should consider when reviewing audits of their governance process include:

• What is the purpose of the audit (e.g., regulatory compliance, alignment with global consistency efforts, global financing mechanism integration)?
• What is the frequency of these audits and is that frequency sufficient?
• Are the audits performed by internal or external personnel? A combination of the two? Is this effective?
• In addition to audits, are other methods used to stay current with HR legal regulations? Does the approach to managing legal and regulatory issues vary by country? Is this both appropriate and effective?

An audit is a critical tool for governance. It can assess the process itself or the benefit programs within it. It can also be tailored to meet the priority the company is striving to achieve (e.g., equitable lens). Given the intensity of the process, audits should be limited to crucial needs, whether it is strategic alignment or ensuring that compliance requirements have been met.

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Articles & Guides Governance Global Benefits Management