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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April 21, 2022

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

Companies with strong governance processes have been nimble in addressing the needs of their diverse workforce and filling gaps exposed during the COVID-19 pandemic as well as during other crises that occur. As global companies’ international workforces continue to grow, they are especially aware of the importance of defining corporate policies and practices. In addition, cultural factors unique to different regions of the world, along with increased government scrutiny and regulations, are challenging multinationals to implement institutional safeguards and pay closer attention to their governance. But even apart from the external pressures bearing down on them, companies are addressing governance for other important reasons: to achieve best practices across the board, including in the financial arena, and reap other rewards that result from having healthy internal processes.

Governance encompasses virtually all areas of a company’s structure and its operating methods. However, the area of most concern to global employers is benefits governance, the structures and processes that relate to health care, risk benefits and retirement plans. Many members have constructed a framework for governance, and they are looking for guidance and direction to refine it.

In the development of a governance structure, it is important for benefits to be in sync with the overall mission and goals of a company. What’s at stake, among other things, is a company’s fiscal health. Benefits are expensive, and both over- and under- providing them has downsides. Companies want to secure the health and well-being of their workforce, but they aim to do so with some consistency across the spectrum of their operations in different local markets. At the same time, they must be able to factor in and allow for the cultural customs and socioeconomic realities of each location.

As employers move to become more globally consistent, governance can provide a process to foster that consistent approach and fill gaps. This guide discusses integrating global consistency strategy efforts into the various aspects of the governance process.

The Business Group designed this resource to share strategic insights about governance. The material was gathered from survey results, discussions and interviews. The guide highlights trends and evolution based on the surveys and interviews the Business Group has done over the past 14 years in the global benefits governance sphere. The guide illustrates how some member companies approach the different areas of governance.

Governance structures are defined as the following:

 

Centralized: All decisions regarding plan design, vendor selection and budget must be approved by corporate prior to implementation.

Partially centralized: Some decisions on plan design, vendor selection and budget are reported to or approved by corporate based on established dollar limits or other agreed upon thresholds.

 

Regionally centralized: Decisions on plan design, vendor selection and budget are made regionally but not necessarily reported to or approved by corporate.

Decentralized: Decisions on plan design, vendor selection and budget are made locally with minimal or no input/approval from corporate.

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