Seven out of ten global or regional benefit managers at multinational companies have limited or no access to timely financial information related to current employee benefit spending, according to Towers Watson’s 2014 Current and Emerging Global Benefit Themes research.
Mark O’Brien, senior consultant at Towers Watson said: “It is striking that global and regional benefit managers at many multinationals – which often spend hundreds of millions of dollars on employee benefits annually – do not have this vital piece of information. Nowhere else within their businesses would such a lack of management information or oversight be acceptable. The underlying information exists, but needs to be extracted in a structured manner from finance systems, which is often the difficult part. Notwithstanding, we see more advanced multinationals allocating the resources necessary to address this so they can use information on benefit spend to help identify risks and opportunities, make decisions and prioritise their activities to increase the return on investment from their benefit plans.”
The Towers Watson research also shows that two-thirds of multinationals are at the early stages of developing their global benefits strategy and management approach. This means they are either just getting started or narrowly focusing on a single global benefit management area.
Mark O’Brien said: “From our work with many different multinational companies, we observe that the most effective strategies integrate a number of different aspects, but that companies often lack the experience to develop fully effective, integrated strategies. This limits their ability to fully realise many of the opportunities to drive business value from benefit provision that more advanced multinationals achieve. For example, companies that benchmark against their peers and systematically review their own activities and programmes gain information and insights that help them to quickly focus on making effective changes to their global benefit management strategy.”
The Towers Watson research also confirms that multinational companies’ benefits and pension focuses are shifting. For example, multinationals are moving from a primary focus on defined benefit (DB) pensions to a more balanced view across a broader range of benefits, in particular, defined contribution (DC) plans and employee health. According to the research other focus areas are more enduring over time, such as the management of financial risk, benefit spend optimisation and the effective handling of corporate transactions.
Mark O’Brien said: “The relentless corporate mandate — do more with less — means the organisational and operating models of the benefits function must evolve to reflect and achieve this goal. From our experience, multinationals that have a clear focus, ordered priorities and which use third-parties thoughtfully are more likely to meet this challenge of being more efficient and effective.”
Overall, Towers Watson’s research highlights that there is always further opportunity for improvement, whether multinationals are just beginning to gather data, or their global benefit management strategy has been evolving for many years. It suggests more mature organisations draw on their own – and other companies’ – global benefit experience to adopt or adapt techniques, organisational structures and operating models which fit their unique circumstances. The research shows that they customise what has worked and learn from other companies what hasn’t, for example more advanced multinationals are more likely to have implemented a structured benchmarking approach than newer companies.
Mark O’Brien said: “From our experience, continuous review and refinement of the global benefit management organisation and its processes, programmes and strategies leads to better outcomes for both employees and their organisations. Multinationals that ask themselves the most challenging and strategic questions, and address them, are typically the companies that achieve the greatest value from their employee benefit programs and spending. This is reinforced in our research through the fact that global or regional managers in the more advanced multinationals often have broader remits which provides them with greater potential opportunities to add value. They can ask the real challenging questions and have a chance at answering them as they have timely access to financial management information and have adopted benchmarking as a ‘business-as-usual’ discipline, as well as being in a position to strategically focus local resources to identify risks and opportunities.”