Category Archives: Global HR Expertise

Shock and Awe

Posted on January 22, 2010 by | 3 comments

Author:
Chuck Csizmar – CMC Compensation Group

When you first look to purchase compensation surveys for your international population, it’s going to be a real wake-up call.  For those accustomed to only US surveys you will find that the available data in many countries is more limited than what you’re accustomed to seeing, as are the number of companies involved.  What won’t be reduced though is the expense.  Quite the opposite.  If you have multiple countries to deal with, your budget for credible compensation data will likely become a multiple of your US experience.

When I worked overseas my budget for compensation surveys was 3-4 times my previous US budget – and I only had to worry about Europe.  What a shock that was – spending much more and arguably receiving less.

Think on it, though: each country is a separate USA, a unique national entity having country-specific labor laws, employment regulations, tax structure, competitiveness challenges and variations of economic strength.  For each you will need a country-specific survey to assess the local competitiveness of your employees.

International HR practitioners will need to adjust their thinking to react effectively in smaller countries, where the working population is limited and so is the number of survey participants.  It will be difficult to slice surveys by geography, industry or employee segment, as the data points grow smaller and smaller with each criteria.  For example, a well-regarded Mercer survey for Sweden showed 202 participating companies, while the Netherlands counted 81.  Meanwhile the US survey totaled 500 companies.

To compound this dilemma of accessing credible data you will typically be required to pay “list” costs for each survey, as compared to the US where I was able to gain lower 2nd copy costs and often times managed to wheedle discounts or “anticipated” participation rates.  Such tactics are not as readily available overseas.

Availability of locally-grown survey data is another challenge.  I have tried to locate such sources, even those provided in the local language, in order to create a greater “buy-in” sense from management, but with very limited success.   Even global companies with non-US headquarters tend to use the multi-national consulting firms.

Accessing International Resources

Should you require information for international compensation practices, below are a number of useful sources, each of which can be tapped via a Google search.  Note: many of the non-US sources focus on limited employee segments or functional areas, which may limit their usefulness during a general search.

Towers Perrin Mercer Culpepper
Hewitt Associates PwC CSi Remuneration
(AUS)
AON Hay Group VenCon Int’l
Reseach (GER)
Radford McLagen Economic Research
Institute
IPAS TymWork (SWE) Western Management
Group
Taylor Root (UK) CFA Institute EuroComp
(Western Mgmt)
Federation of
European Employers		 Executive Resources
Limited		 Watson Wyatt
Birches Group LLC Euro Remuneration
Network (GER)		 Organization Resources
Counselors (ORC)
Ernst & Young Croner Reward (UK) Robert Walters (UK)
Baumgartner & Partner
(GER)		 Interconsult Ltd
(UK)		 Australian Institute of
Management

Should you only have a few positions (2-3) in a given country you can reduce costs through individual job pricing, vs. the purchase of an entire survey.  More than a few positions though, would render this tactic economically unfeasible.  A few notable sources (though others from the above list may also be able to help):

  • ER Limited
  • ORC
  • Birches Group

Note that I have not included sources from the current vogue of online surveys, like PayScale and Salary.com.  To my mind these sources still have credibility problems to overcome before they would be accepted by senior management as a viable resource.

Another effective strategy for reducing costs is to age current data forward, coupled with the use of biennial purchasing.  However, if utilizing this strategy have a care to limit its use to countries with stable economies.  Using such standard growth figures would miss the mark in countries showing greater volatility.

The Cost of International Operations

Too many HR practitioners and their Managers fail to take into account the expenses involved in keeping their international compensation programs competitive, especially where the organization has a small footprint in a given country.  For companies new to the international scene, and for those with small populations in several countries, the shock of survey costs could be daunting.  Many times the result is a reluctance to purchase the data, in some cases letting matters on the ground continue to fester – potentially overspending and / or creating debilitating equity problems for themselves.

Call it the cost of doing business, but if you’re going to maintain effective operations overseas, and you want to provide a competitive reward package (of course you do!), it would be unwise to shortchange the process by guesstimating or otherwise trying to make-do without credible information.

The cost of surveys is a fraction of the possible financial impact that could result from retaining non-competitive reward programs.

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HR and Reward Challenges in Developing Markets – Beyond BRIC

Posted on January 20, 2010 by | 5 comments

 

Author:
Warren Heaps – Birches Group LLC

We are all hopeful that 2010 will be a better year for business than 2009. When that hoped for upturn finally takes hold, where will your company find growth?  If your company is like many others, the answer to that question points to developing markets in Africa, Asia and Latin America, where growth rates are higher and opportunities are great.

Growth is Robust
Post-recovery estimates from the IMF for 2010 indicate worldwide GDP growth of 5.7% is expected, while GDP growth in developing countries is expected to climb 9.5%.

Regional comparisons are even more dramatic:

  • Sub-Saharan Africa – 9.6%
  • Latin America & Caribbean – 10.5%
  • Middle East – 14.9%
  • Central and Eastern Europe – 1.4%
  • Euro Zone – 3.6%

As you can see from these figures, growth in the developing world is expected to be almost three times greater, on average, than in the Euro Zone.  Investors have already discovered this; according to Bloomberg Business Week, the top ten performing stock market indices since December 31, 1999 are all developing markets, ranging from 901% gain in Ukraine, to just 318% in Brazil. With potential like this, it’s not surprising that more and more companies are focusing on new markets in these regions.

HR Challenges
The landscape for operating in developing countries is different from what many companies may be accustomed to in Western Europe, the US and elsewhere in the developed world.  For HR, the most prominent challenges are in two areas – talent and reward.

The Talent Challenge
Developing country markets are smaller than big developed country markets.  Fewer employers participate in the market, and not all sectors are represented, but those that do are all vying for the same people – the best talent.  Highly educated professionals are often in short supply, especially those with advanced degrees which are often obtained in the US or Europe.  While professionals may have training and education in a particular occupation, it is very common for these individuals to switch occupations for advancement opportunities.  They become generalists rather than specialists, and switch between sectors often as well.

Leading Employers Play a Key Role
Certain employers are found in a lot of developing countries, and help to define the labor market.  These employers include companies from the banking; consumer products; oil, gas and mining; and telecom and technology sectors.  Many of these companies are global multi-nationals which have been operating in developing countries for many years, and have a lot of experience with the conditions.  The other major players are international public sector organizations.  This group includes employers such as embassies, development banks, multi-lateral agencies such as the UN, and leading international NGOs.

Know Your Competition for Talent
Many private sector companies are surprised when we suggest they consider the international public sector as part of the group of leading employers with which they compete for talent.  After all, what do oil companies or banks have to do with embassies or the World Bank?  The answer is a lot!

International public sector employers are involved in a lot of the same activities as private sector companies.  For example, an MBA graduate being recruited by a consumer goods company for a brand manager role is the ideal profile for an embassy public information officer.  The engineers that the oil sector seeks can be deployed as project managers for infrastructure development funded by the World Bank, or an NGO such as the Global Water Project.  In addition, of course, there are occupations that are common to all employers, in areas such as administration, finance, human resources, IT, etc.  The lesson is to expand your focus in developing countries to include not only companies outside your sector, but some of the relevant international public sector institutions as well.

How Can I Be Competitive?
The second significant challenge for companies in developing markets is figuring out the reward structure.  Compensation schemes are different in each country, but there are some common themes across developing countries which differ from more developed countries.  For example, the span of salary ranges is often much wider than the typical 50% to 67% often found in developed countries.  The differential from one grade to the next can vary dramatically depending on the levels — often the jump from manager to executive can be 35% or more.

Base Salary is Just the Beginning
It is quite common to provide cash allowances, such as 13th and 14th month, as well as transportation allowances or housing allowances in many countries.  In addition, in-kind benefits such as beverages or meals, transportation (commuter buses) and subsidized loans are found in many markets.  The value of allowances and in-kind benefits can be substantial, ranging up to 30% or more in some countries.

Good Market References Are Important
One way to ensure a competitive position in the market is to establish your position with reference to the leaders, using a high-quality compensation survey.  The survey should include values for base salary, cash allowances, in-kind benefits and short-term incentives.  In addition, you’ll need to be aware of the social benefits and other statutory pay practices, how pensions and insurance are provided, and how the income tax scheme influences how compensation is structured.

In Summary
Developing markets are exciting, diverse and challenging.  Human resources professionals need to become aware of the unique market dynamics in smaller developing countries, including the role of leading employers and the complexities of how rewards are provided.

Note:  Birches Group conducts total compensation surveys in 147 developing markets.  Visit our website for more information.

More About Warren

Warren Heaps

Warren on LinkedIn

Developing Markets Compensation and Benefits Group on LinkedIn

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Posted in Africa, Compensation, Developing Markets, Global HR Expertise, International Expertise, Talent Management

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The Gift of Time

Posted on January 11, 2010 by | 2 comments

Imported Photos 00033Author:
Yendor Felgate – Emergence Consulting

I am continually reminded in my coaching that folk remain under pressure as we enter the new year. Rather than refreshing over the holiday period, many of us have brought our work, life and family challenges straight into the new year.

We probably don’t sufficiently acknowledge in difficult times that it requires huge amounts of additional energy and effort to produce the same results. This means that if we do not change the way we work and live, time will vanish even faster and we will not achieve as much.

In an effort to work smarter and enjoy the journey more in our never ending search for better results, I offer two approaches that have benefited me personally.  The first refers to the gift of time and the other is about living in the moment.

“Stop, Start, Go” Test

I often ask people what they can stop doing.  This tends to be an uncomfortable question.  Few of us seemingly want to stop being ridiculously busy.  It is almost as if being busy is the same as being valuable.  Being busy in this sense is both addictive and a habit.  As with all addictions, it is seductive and comes at a price.

The test is an easy one.

  • List all your activities for the last week.
  • Identify those activities that directly relate to your purpose or objectives.
  • The rest you can stop.

The difficulty is implementing this. The world will simply not understand at first what you are doing. However, keep going, they will catch on.

This is a tremendous team building opportunity.  Not surprisingly, people respond better to this than the traditional approach of being told to do more, or being harangued about needing to improve.  It does, though, require a willingness to simplify.

Simplicity is about having clarity on what is really important, rather than dumbing down.

Stop

The next hurdle is being told that there is nothing that can be stopped.  Let’s test this.  We ran the stop, start, go test on executive meetings at a banking client.  By simply doing away with unnecessary meetings and reducing meeting times, we gave back 20% of executives’ time.  How valuable would this be to you and your organisation?

Some other thoughts on stopping:

  • Stop emailing instead of doing real work
  • Stop doing things in triplicate
  • Stop being accessible 24/7
  • Stop asking your team leader to sign or see everything
  • Stop rework
  • Stop second guessing others
  • Stop worrying about things you have no control over

Start

Start saying “NO” to things that are not important.  The discomfort arises when we ask people when last they said ‘no’ to anything.

The conversation often starts with I cannot stop anything (you already know the answer to this) and ends with I cannot remember when last I said ‘no’.  Start saying “YES” to important things, but just be clear on what this is.

There is of course an art to saying “NO” and includes things like:

  • Not taking other people’s monkeys
  • You cannot live other people’s lives for them
  • Empowering others to make their own decisions
  • Sharing knowledge and information for others to implement

If people understand that you are trying to help them to help themselves, saying “NO” is easy.  Just remember, ‘no’ means ‘no’.

Go

The point is not to fill the time you have freed up with more work.  The “GO” aspect is about getting and keeping your balance.  You get the balance that you deserve.  In other words, if you allow work to intrude, you end up working.  The “GO” adage is go live your life.

This is almost impossible unless you live in the moment.

Living in the Moment

Living in the moment is a coaching term that refers to acknowledging and being present – the here and now.  When I ask this question, I am often told that “of course I am here and focused”, “just let me check my email”.

I think being able to parallel process is a wonderful gift, but the larger skill is ensuring people receive your full attention.  If you are not sure what this means, then watch children at play.

By being in the moment, you make better decisions, people respond better and you are more alive to possibility, than by keeping half your mind on the next meeting, and the next…….

I look forward to hearing your stop, start, go stories, so please share them with us.  Here is to the possibility of living in the moment this year!

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Posted in General, Global HR Expertise, Leadership Development

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International Employment Law “Quick Facts”: Brazil

Posted on January 7, 2010 by | 26 comments

Author:
Mariana Villa da Costa – Littler Mendelson

Happy New Year readers!  We are excited to launch a new series of posts on the basics of global employment law called “International Employment Law Quick Facts.”    The series will bring basic, but important information on what an employer needs to know when hiring someone in a different country, using an easy to follow Q&A format.  We will capture information such as definition of employer and employee, requirements for written employment agreements, consequences of discrimination and harassment in the workplace, minimum wage requirements, etc.

We will kick off 2010 with the first country in the series – my native country of Brazil.   I would be more than happy to get suggestions from you, readers, on which other countries you want to see next!  Add a comment, or send me a note to let me know your suggestion.  We will try to publish upcoming installments in this series based on what you request, so keep checking back!

Q. What are the definitions of employee, employer and independent contractor?

A.

Employee:  The legal definition of employee by the Labor Code is  every individual (natural person, never a legal entity) that personally renders services on a non eventual basis (continuity), under the employer subordination (obedience to rules and orders given by the employer), and that receives a salary.  If one of these requirements is not present in the relationship, it is not an employment relationship.  As in most countries, it is very important to correct classify the relationship to avoid the common issues with independent contractors vs. employee definition.

Employer:  An employer is the sole-proprietorship or joint-proprietorship company that, in assuming the risk inherent to the economic activity, hires, remunerates and manages the personal provision of services.

Independent Contractor:  The difference between employee and an independent contractor lies on the requirements that one must have to be an employee.  An individual will be considered an independent contractor and, therefore, will not be covered by the labor legislation, if he or she has independence to perform the work and it is not subordinate to a company’s directives and regulations, and there is no exclusivity in the relationship between the parties.

Q. Is it necessary to have written employment contracts in Brazil?

A. According to the Brazilian law, the execution of an employment contract is not mandatory; however, it is important to note that this is common procedure in Brazil and should be observed as a good practice.

Q. Are there any specific rules in regards to the duration of employment contracts?

A. In Brazil, and due to the principle of continuity, the general rule is that the agreement is entered between the parties for an indefinite term. The agreement for a definite term is an exception to the general rule and should be entered in writing.

According to the Labor Code, an employment for a definite term can only be executed in a few circumstances:

  • A maximum of two years, provided that the nature of the work justifies the transitory nature, or the if the contract is for the performance of temporary business activities; or
  • A probationary or trial period (cannot exceed 90 days and must be in writing).

Q. Are there any rules in regards to discrimination in employment?

A. Yes, the Brazilian Federal Constitution prohibits discrimination, although it does not define what that is.  It simply says that any difference in salary or unequal treatment in relation to recruitment and employment is prohibited.

Q. What are the rules regarding working hours?

A. In Brazil, the Federal Constitution and the Labor Code provides that the maximum hours per week are 44 hours, or 8 hours per day.

An employee cannot work more than two overtime hours per day since the workday cannot exceed the legal limit of ten hours; however, the law provides some very exceptional situations for overtime in the excess of two hours.

The minimum additional overtime pay is 50% of the regular hourly rate, but it may be higher if established in a collective agreement.

Employers must allow an interval of 11 hours of rest between two working days.

Q. Are there any minimum wage requirements in Brazil?

A. Yes, the Brazilian Federal Constitution has established a system of national minimum wages.  The minimum wage is fixed every year by law, but some categories also put in place their own professional minimum wage that cannot be inferior to the national one.

Q. What are the rules regarding the terminations of contracts?

A. Employers in Brazil may terminate contracts in Brazil with or without a cause, provided that all termination and severance amounts are paid.

The only exception is that the employer cannot terminate an employment contract when the employee is under a provisional job tenure, for example, female employees during and after pregnancy, and employees who are union leaders.

In Summary

I hope this quick summary can be used as a road map for employers doing business in Brazil.  Please post your questions and comments.

Important Note:  This posting is intended to provide a brief overview of employment law in Brazil.  It is not intended as a substitute for professional legal advice and counsel.

More About Mariana

Mariana Villa da Costa

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Littler Mendelson

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Posted in General, Global HR Expertise, International Employment Law

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Five Secrets to Reduce Benefits Cost, Part 2

Posted on December 18, 2009 by | Comments Off on Five Secrets to Reduce Benefits Cost, Part 2

Author:
George Bashaw – Atlas Global Benefits

I developed five secrets to lowering your benefits cost without changing your plan design or carrier. Out of the five, I am confident at least one will help you. I posted the first one last week.  Here is number two:

Secret Two:  Duplication of Coverage
Every year, I find a new plan that has duplication of coverage, where a company is  paying for a benefit more than once.  This is most common in very large companies, and ones that that have experienced multiple mergers.

Case Study: Duplication of Coverage
Last year I discovered that a new client had three  Employee Assistance Plans (EAPs).  Of the three, they only knew about two of them, and communicated only one to the employees.  One EAP plan was a rider attached to a long term disability contract.  Another was a rider attached to the international expatriate medical coverage.  The third was a standalone EAP plan.

We decided to scrap the standalone plan and keep the two riders.  We felt the rider on the expat plan served the international employees needs far better than the other two plans.  Further, we decided to keep the rider on the LTD plan.  Even thought it was a rider, it was a good plan and it was less expensive than the standalone plan.

Financial Impact
Cleaning up the duplication of benefits in the scenario above took about two hours to analyze and saved my client about $50,000.  Even though the savings was insignificant in comparison their total benefits cost, we would not have reached our goal ($500,000 of total savings) without eliminating the duplication of coverage.

Scour Your Plan Designs
Have someone take the time to look at all your plans and see if you can find a duplication of coverage.  Who knows, you may be paying for something two or three times.

I would love to here where you have found duplication of coverage.

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Posted in Expatriates, Global HR Expertise, Insurance, International Benefits

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Expat Selection: It’s Not Just Skills

Posted on December 2, 2009 by | 4 comments

Author:
Bruce Alan Johnson and R. William Ayres – Bruce Alan Johnson Associates (Pty) Ltd

Bruce Alan Johnson

Bruce Alan Johnson

Bill Ayres

[Editor’s Note:  We are happy to welcome Bruce Alan Johnson and Bill Ayres as Guest Authors.  Bruce and Bill have extensive experience working with companies to help understand how business is conducted in different cultures.  They are the co-authors of the book Carry a Chicken in Your Lap: Or Whatever It Takes to Globalize Your Business]

A large American corporation sent a senior executive to reside in an African country known for its wide religious tolerance, as the general manager of the company’s regional operations.  Managerially speaking, the man was qualified. But he brought with him a zealous sense of religious superiority that manifested itself as rigid intolerance.

In his first week on the job, he screamed at Muslims who were in a corner observing one of the five prayer times of the day, and then at Sikhs whose heads were traditionally wrapped.  By the next week, more than a hundred employees had walked off the job.  Some of them brought in government authorities to the site.  In the meeting that followed, the executive said that he would accept crosses as jewelry and pins, but no other expression of religious identity!  Even though the officials tried to explain the supreme importance of religious diversity in their country, the response was an arrogant assertion of “rights” that the executive claimed he had.

Of course he had no such rights, and a week later the government informed the American corporate headquarters that this executive would have to be removed at once, or all government contracts with that company would be canceled and official hearings would be held for the aggrieved workers.  He was recalled, another casualty of the mistakes companies make in sending the wrong people overseas.

Cultural Fit is Important in Expat Selection
Every time we talk to an audience about sending people overseas, we start with one fundamental point: not everybody can do this. Not everybody will be successful in Copenhagen just because he or she did well in Cleveland or Calgary. Furthermore, no magic, single thing guarantees success. The world is a complex place. It would be surprising if we didn’t need complex abilities to deal with it.

But what if you’re coming the other direction—sending people to the United States?  Over the years it has become quite plain that the most costly mistake made by companies sending people to the US has been the blind belief that there are dollar signs instead of “S’s” in the name United $tate$.  The second error lies in believing that a country as stunningly diverse as America is in fact an homogenous market.  America is not just 50 states—it spans 11 time zones, from the westernmost tip of Alaska to eastern tip of Maine.  And its people are so diverse in culture and outlook that domestic companies usually take great care to make sure that the right Americans are matched to the appropriate areas of the country for sales and marketing.  A person who sells successfully in Mississippi will almost certainly be rejected by the more harried residents of New York.

Recently a Middle Eastern company of considerable wealth sent a two-member team to New York City to head their American office.  Not only had neither member of the team ever been to America—both made vehement anti-Semitic remarks almost every day.  Needles to say, they were strongly resented by most New Yorkers, and failed completely.  They were recalled at considerable expense, the company’s reputation in the States tattered.

HR Should Take the Lead!
When it comes to finding the right people—and avoiding the wrong ones—human resources needs to play a critical role.  The reason is simple. Understanding the keys to choosing the people most qualified for overseas assignments is something that most line managers aren’t well equipped to do. Managers’ primary purpose is to get the job done.  Often, this does involve deciding who’s going to do what.  But in the international arena, those decisions are not based on how well you know the technical field or the business goals. They’re based on what you know about your people.

This is where HR can and should play a key role. Arnold Kanarick, who headed HR at The Limited and Bear Stearns, pointed out, “HR isn’t about being a do-gooder. It’s about how do you get the best and brightest people and raise the value of the firm.” Good HR offices are staffed with trained professionals who know how to evaluate aspects of a company’s people to assist tremendously in choosing the right people to send overseas.

To do that requires recognizing a fundamental reality: the world is a very complex place that does not lend itself to packaged solutions.  The primary challenge is finding people who can deal with differences—but what kinds of differences vary widely, depending on where your organization wants to go and what it wants to do.  There are no simple tests or easy systems for scanning personnel files.

So what should you be looking for?  Here’s a profile of what a potentially successful overseas assignee should look like.  Key characteristics include:

  • Matching demographic characteristics (gender, race, religion) to the place they’re being sent.  Different cultures react differently to different sorts of people.
  • Open-mindedness toward difference.  Can the people you’re sending work well with others who are different?
  • Language facility.  People who have no facility whatsoever for learning foreign languages—or, worse still, who actively resist even a modest attempt—should not be sent overseas.
  • Language assumptions.  Anyone who thinks the world speaks English (or their native language), or that the world ought to speak English, should stay at home.
  • Acceptance of the world as you find it.  Anyone infected with the desire to change other parts of the world to be more like their home will definitely do a poor job of representing your business.
  • Tolerance of different ways of doing business.  Just because you didn’t think of it doesn’t mean it’s wrong.
  • Time-change tolerance.  The more difficult it is for people to adjust to jet lag, the effects of travel, and time-zone differences, the less they probably ought to do it.
  • Cultural-time Flexibility.  People who understand that different cultures think differently about time, and who can adapt themselves to those cultural differences, will do much better overseas than those who don’t.

So how do you find employees who fit this profile?  There are two keys here: know what you’re sending them into, and know your people.  Choosing people to send overseas can’t be done with a one-size-fits-all checklist.  But a good HR department that does know the firm’s employees, and that does its homework, can make a tremendous contribution in helping companies get the right people in the right places overseas.

More About the Authors

Bruce Alan Johnson Associates

Carry a Chicken in Your Lap: Or Whatever It Takes to Globalize Your Business

Bruce on LinkedIn

Bill on LinkedIn

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Posted in Cross Cultural Insights, Expatriates, Global HR Expertise, International Expertise, Relocation

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Creating A Global Benefits Strategy

Posted on November 25, 2009 by | 3 comments

Author:
David Bryan – Norfolk Mobility Benefits

Editor’s Note: We are pleased to welcome David Bryan as a Guest Author.  David has extensive experience in international employee benefits, and is currently a Marketing Consultant for Norfolk Mobility Benefits in Naperville, IL.

Change is constant, particularly in the realm of international employee benefits. There is a social time bomb ticking — the number of employees paying into various social security systems around the world is diminishing while the number of recipients is increasing. To defuse this situation, many governments are reducing benefits while raising taxes, thereby shifting the burden to the employer.

Today’s multinational employer is evolving into the transnational of tomorrow as corporations do away with defined headquarters and instead move to regional centers of operations. To meet these and other changes, benefits professionals are implementing global benefits strategies (GBS).  Yet, in recent surveys in which I have participated, nearly 78% of multinational firms have no formal international employee benefits strategy!

Designing Your Strategy
There appears to be more centralization of core corporate functions in light of the global economy.  While authority for certain functions may be retained on a local or regional level, strategy setting is still at HQ.  In the end, as long as the global corporate benefit strategy is being deployed, certain aspects, for example the selection of vendors/contracts, can be left to the local operations.

A Global Benefits Strategy will provide for some of the following benefits:

  • A blueprint of your company’s decisions describing what employee benefit strategies should be deployed for the enterprise.  It is a living, breathing document that needs to be adaptable to change.
  • Agreed-upon policies to create universal understanding and, hopefully, support from the local subsidiaries.
  • A framework for future benefits changes and enhancements.
  • A written strategy which allows employees to see how certain benefits decisions were made, and is very helpful when new stakeholders are brought into the process.
  • Strategies to manage costs; global benefit costs are substantial.
  • An organization-wide reference when trying to understand or drive employee benefits decisions and planning.

Key Elements of a Global Benefits Strategy
Global benefits strategies can take many forms, and range in length and depth, but most successful strategies will include many of the following elements:

  • Global Benefits Committee – This team should consist of representatives from HR, legal, treasury/finance, risk management and, when possible, various global business units. Initially, the committee should meet frequently and agree upon a system of review and evaluation for the work as it progresses. Remember: the more senior the committee representation, the stronger the strategy’s influence on upper management.
  • Statement of Objectives – The team should develop a written, agreed-upon statement or set of statements that defines the overall objectives of the GBS. Some statements try to benchmark by using outside data from consultants (e.g., having benefits at or above the 50th percentile). While data may be readily available in some countries, it may not be in others. Benchmarking can be a useful measurement tool, but benefits professionals need to be aware of the need to obtain consistent criteria across countries.
  • Policy Guidelines – Policy guidelines provide specifics about the various benefits and levels of benefits that support and are tied to the GBS statements. For example, life, accident, disability, medical, retirement and savings plans are outlined with target levels of coverage; and integration with social plans is detailed. Keep in mind, though, that too much detail can lead to guidelines that cannot be applied globally. With medical plans, for example, specific co-insurance percentages may not apply when a supplemental medical plan in a particular country is based on a schedule of fees.
  • Implementation and Review – After agreeing on its strategies and supporting guidelines, the GBS committee must put certain processes in place to activate the plan. Typically, an announcement from a senior-level executive to key, local employees helps gain attention and buy-in. Local buy-in should be targeted to management, HR and, in many countries, should include the Works Councils or unions. This step is critical to successful implementation of any global benefits strategy.

Reaping the Rewards
After the announcement of the new global benefits strategy, a benefits audit is often conducted to educate the central benefits staff about what plans are in place.  For a new company, implementing a GBS is easier than for a well-established firm that must harmonize many plans to create a unified and consistent global benefits strategy. The benefits professional’s role is essential at this stage. Many consultants and insurers offer software packages to assist in this process, although many corporations devise their own audit form to meet their specific needs.

Set procedures need to be in place to implement, review and enhance local plans. Usually, one individual has a certain dollar amount of approval authority to exercise any latitude permitted by HQ (for new and/or enhanced benefits). The more senior the individual, the more authority. Local benefit needs — and wants — must be measured against predetermined criteria. This authority can be with corporate, local or both, as set forth in the GBS.

Along with these approval procedures, established communication chains must be followed. In cases of mergers, acquisitions and divestitures, reliable benefits data (pension reserve, for example) must be readily available. Pre-established lines of communication will help in this type of scenario.

In most instances, resources are scarce, resulting in a decentralized approach.  In spite of this, there have been more than a few “ideal” GBS roll-outs.  An announcement, then an audit, followed by site visits from benefits staff to bring the local plans into compliance with the new philosophy is a typical, effective approach.

Taking the First Step
While global benefits strategies can be similar, each company must tailor one to fit within its industry and corporate HR philosophy. The first step in this process is creating a shared vision for a GBS that is flexible, simple, legal and tax compliant. Further, it should integrate governmental social plans with new or existing supplemental plans provided by the company.

A multinational enterprise must look after its global employee benefit plans.  We all are under the budget microscope.  However, a well-articulated global benefits strategy will enable HR to manage benefits resources globally and ensure a compliant and competitive benefits approach in every country.

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Preparing Your Company for a Global Pandemic

Posted on November 23, 2009 by | 2 comments

Author:
Mariana Villa da Costa – Littler Mendelson

Over the last decades, we have seen new infectious diseases appear, some of which could kill millions of people within days: mad cow disease, bird flu, SARS, Hantavirus, Ebola, dengue fever, and most recently, spread of the H1N1 “swine” flu.  In 2009, the World Health Organization declared H1N1 a pandemic.  As of November 15, WHO reports that H1N1 is present in over 206 countries and territories globally, and over 500,000 cases have been documented.  The pandemic raises many HR issues, especially for global employers.  Why?

The workplace is an ideal place for spreading disease, from the common cold to the serious swine flu, as people are in a close daily contact, sharing printers, telephones, eating together in the office’s kitchen, and, most of the time, breathing the same, re-circulating air.  Every company strives to keep its employees healthy and safe, not only for their own benefit, but also to ensure its operations continue full force.  Let’s highlight a few of the issues companies need consider when preparing a plan to address a global pandemic:

Go global, but do not forget local!

Companies can draft a global, standard pandemic plan, but you still need to account for different laws and regulations in the specific countries or regions where you operate. So make sure your company reviews any local employment and health laws before implementing the plan, in order to avoid potential legal issues and liabilities.

What’s in the plan?

Every global pandemic plan must address at least these issues:

  • Communication – Procedures on how an employee must inform their employer of a disease and steps the company needs to take to ensure immediate safety for the sick employee and the other employees.
  • Discipline – How the company should deal with employees who refuse to go to work for fear of getting sick, and measures for abusive and unfounded absences.
  • Privacy – How the information about a sick employee or a sick family member must be managed, including required government reporting.
  • Shut Down – If a shutdown of the company facility becomes necessary because of the spread of a contagious disease, the company needs to define, according to domestic laws, how employees will be paid and alternative ways to keep the employees working.
  • Travel issues – Your plan should address issues related to employees traveling for work to risky locations.  The plan should cover the conditions when travel should be deferred or suspended. It should also address how employees traveling for personal reasons should deal with a potential contagious disease in order to protect the rest of your workforce.

Adapt, adapt and adapt!

Once you have your broad global pandemic plan, consult a local or international lawyer to draft specific provisions and re-write any conflicting ones, just like most companies do for their other global policies, such as Codes of Conduct, discrimination and harassment policies.

Tell your employees!

Communication is key.  Make employees aware of the implementation of a global plan by preparing presentations and/or training on the issues addressed by the plan. Use simple, common language to make sure employees understand the plan and are not alarmed by it.  Be sure to communicate the plan in all the common local languages in each country.  Encourage employees to take the information home and share it with their families.

Get Involved Now!

HR staff plays a key role in creating and implementing a plan to respond to a pandemic.  In addition to helping draft the plan and organizing implementation of it, Global HR must also focus on:

  • Education – Develop plans to educate employees in the prevention and spread of contagious and potential pandemic diseases in the workplace – signs, training, providing hand sanitizing, etc.
  • Partnership with the Community – Work closely with local health departments and other officials to take advantage of their resources, and secure a role for your company in community prevention efforts.
  • Awareness – Make employees aware of the resources available to them for prevention and cure under the company’s health care plan or clinic, national health insurance, and other resources.
  • Policy Updates – Review and update sick leave policies to address a pandemic situation (for the employee and to take care of sick family members).

As you can see, there are many things to consider in developing a plan to address a global pandemic.  I hope this article provides you with a good start in developing a plan for your company.  Don’t forget that any global plan must be carefully prepared and reviewed by local or international counsel to avoid any liabilities for the company and risks for the employees.

Have you already developed a plan for responding to a pandemic?  Share your comments to enrich the information in this post!

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Posted in Benefits, General, Global HR Expertise, Insurance, International Benefits, International Employment Law

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Red Flag for Global Recognition Programs

Posted on November 15, 2009 by | 9 comments

bio_400x400 Author:
Chuck Csizmar – CMC Compensation Group

When designing programs to recognize and reward an employee’s extraordinary achievements it’s important to understand the cultural implications of these programs.   Companies with a truly global operating mindset, vs. domestic-oriented organizations with international operations, will take into account national and cultural differences that distinguish its widespread employee populations.

One size rarely fits all.

You might think that the positive aspects of employee recognition programs are a universally accepted principle, but that’s only partially correct.  Important differences exist.  In some cultures / national identities the role of the team is such a core element of employee identification that seeking out an individual contributor for recognition would not be a welcome practice.  Some employees might be reluctant to step forward, or to be pushed into the spotlight.

In other countries you will find that the perceived value of cash as a recognition award varies a great deal.

Case study

A former employer of mine once implemented a global Spot Award program for its worldwide employees – without including their international HR community in the planning discussions.  Finalized program elements and procedures covered employees in over 20 countries in exactly the same fashion.  The premise was to provide immediate (read that, fast) recognition and financial rewards (Spot Awards) for those employees who demonstrated performance above and beyond their normal job roles.  Nominations for awards would come from an employee’s manager, though employees could recommend co-workers as well.

While the program was deemed a success in the US (though defined by only the dollars spent), it was much less successful elsewhere among the company’s far-flung international operations.

Lessons Learned

The first problem was that Managers outside the US placed a much more conservative financial value on so-called “extraordinary” employee contributions.  Or put another way, the US Managers were more generous in their payment awards than elsewhere.  The result was that the cash payments on a per-employee basis were widely skewed to the US employee.  Notwithstanding the vagaries of the various currency exchanges, the international offices did not spend their allotted recognition reward monies as frequently or as generously as their US counterparts.

I recall one scenario where a US employee received thousands of dollars for a particular project effort, while their European counterpart was given a non-cash award (recognition dinner).  This created more than a few awkward moments when the two employees shared experiences.

The second challenge was that many international employees did not want to be individually spotlighted by the recognition program.  They were willing to receive the award, but would rather the recognition be confidential.  Given that Corporate had planned an internal communications campaign to highlight individual award winners, that reluctance proved quite a hindrance.

Compounding the preference for anonymity was the desire for team over personal awards, as individual employees proved resistant to receiving the planned fanfare or preferential treatment – especially in front of their co-workers (team members).

The bottom line was that the recognition and reward program recognized a smaller than anticipated number of non-US employees, less reward money was spent per international employee, and Corporate Communications was hard pressed to find international employees amenable to being highlighted for the program.  Not exactly what the program designers had intended.

Corrective action

The answer seems straightforward, does it not?  If a global program is to affect all employees, then possible national or cultural distinctions among groups should be addressed, well in advance.  However, that would mean including representatives from those groups in the design and communication phases of the project.  Such a simple step seems a difficult one to take for many corporate plan designers.  Why?

When they have the bit between their teeth developing a program that affects the majority of employees, management is often reluctant to change course to include the differing sensitivities of small populations, especially if those populations do not speak with one voice.  What they prefer to do is have local representatives “tweak” the round peg into the square hole.

How does that work for you?

 

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Posted in Compensation, Cross Cultural Insights, Global HR Expertise, International Expertise, Leadership Development, Professional Development

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Directory of Links for International HR

Posted on November 11, 2009 by | Comments Off on Directory of Links for International HR

heaps_warren1Author:
Warren Heaps – Birches Group LLC

For some time, we’ve had a Links page on the International HR Forum Blog, but it has been perpetually under construction.  Well, it’s now time to finish the construction, and make the Links page a valuable resource for international human resources practitioners.

This will be an ongoing effort to gather, vet and categorize potentially dozens or even hundreds of web sites.  To get things started, we would like to invite you, our readers, to tell us about your favorite online resources.  We’ll take care of sorting through all the suggestions, setting up logical categories and making the Links page a useful reference.

So please, send in your suggestions now!

Just type in the information in the box below, and click Submit.

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