March 04, 2024

When implementing a global benefits strategy, organizational structure can be either a source of acceleration or a potential hindrance to success. Whether operating in a centralized or decentralized environment, multinational employers are uncovering learnings and challenges as they work to optimize their strategic approach in line with their organizational goals. On March 4, 2024, the Business Group held a call for employers to discuss pain points as well as collaborative opportunities for the future.

The following recap summarizes the key themes and approaches shared during the call.

Governance Structure  

Employers utilize a mix of different governance structures when making plan design, budgetary and vendor partnership decisions. These structures could be partially centralized, decentralized, centralized or regionally centralized. When asked, most employer respondents on the call stated that they have a partially centralized governance structure, which is an arrangement where some decisions go through corporate HQ before implementation based on certain threshold amounts or dollar limits. The next most selected approach was decentralized, where decisions are made locally with little to no input needed from HQ. These two approaches were followed by a centralized structure, where all decisions must be reported to corporate HQ, and regionally centralized structures, where decisions are made regionally but not necessarily approved by corporate HQ. In terms of who owns the budget for benefits, there was an even split between local, global, business line and other entities (e.g., corporate, operating company).

Internal Approach to Governance  

Most employers have or consider themselves to be a Center of Excellence (COE) for benefits within the U.S., but less so globally, resulting in the need for strong collaboration and seeking input from regional teams. One employer shared that as they work to further centralize their governance process, they run all high-level decisions through a Benefit Administration Committee and Benefit Design Committee. Likewise, employers are attempting to empower regional teams to be more connected and develop relationships with regional broker contacts. Nevertheless, internal staffing challenges are a pain point, with some employers having to “beg, borrow and steal” internal support where possible to make progress on strategic initiatives. For these reasons, employers emphasized the importance of ensuring that they are leveraging the optimal people and teams within their organization and clearly understanding their roles and responsibilities.

The significance of utilizing vendor partners as an extension of an employer’s team was highlighted. A couple of employers with a partially centralized governance structure leverage a global broker partner to help manage their global benefits strategy and provide high-level oversight. Establishing clear expectations and aligning vendor partnerships with organizational structure were noted as important. For instance, having renewal expectations in place for vendors can help make sure there is enough allotted time to meet all deadlines.

Global Benefits Responsibility  

Employers on the call acknowledged the complexity of managing benefits across diverse regions. One prevailing challenge is maintaining global alignment and effective communication in a virtual work environment. Other employers on the call echoed this sentiment, emphasizing the value of a regionally driven approach that combines centralized management for significant benefit plans with regional decentralization, aligning with the overall corporate benefits philosophy. These insights highlight the necessity of fostering open communication channels between global and regional teams.

A recurring theme in the discussion was the ongoing transformation toward proactive communication. Recognizing the journey toward a more proactive approach, employers on the call shared that they are evolving their structures to facilitate continuous improvement. The implementation of quarterly meetings on global benefit management helps streamline communication, fostering collaboration and alignment on a global scale.

Navigating the intricacies of governance structures, global alignment and budget management underscores the multifaceted nature of global benefits responsibility. Budget allocation and cost responsibility for global benefits were acknowledged as complex. When the budget is managed at the local level, involvement of local finance teams is crucial. The discussion highlighted the necessity of engaging with finance teams to secure funding and overcome challenges in managing costs globally.

The question of leave of absence (LOA) management surfaced as a significant consideration, especially in multinational corporations. The varying practices between regions, as observed by one employer on the call, raised questions about ownership and policy management. Insights from other employers revealed diverse approaches, emphasizing the need for alignment and consistency in global LOA policies.

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