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April 24, 2000
Benefits for International Workers a Patchwork, According to Survey
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vey Finds Many Companies Rethinking the Way They Reward Internationally Mobile Employees (IMEs)

Despite a growing reliance on internationally mobile employees (IMEs), few companies have developed truly international benefit packages for these global workers - providing, instead, a loose patchwork of compensation, benefit, training and other programs. This may soon change.

According to a recent Towers Perrin survey, companies are recognizing that they need a global benefit structure to support the unique requirements of global employees. More than two-thirds of the 130 companies surveyed in the report indicated that they were reviewing or considering reviewing their approach to benefits or rewards for IMEs.

Three categories each quite different

The survey, entitled Benefit Policies for Internationally Mobil Employees, gathered information on approximately 30,000 international employees in over 20 countries. The survey found that benefit packages and delivery systems varied substantially for three categories of IMEs.

The categories are:

  1. Traditional - defined as long-term but temporary transfers.
  2. Globalists - international career employees.
  3. Permanent transfers.

Compensation packages to these categories of workers were based on a home or host country approach, with traditional transfers staying mainly with a home country compensation package while permanent transfers were folded into the host country program. Less than 20 percent of companies surveyed used an international approach to design, even for highly mobile individuals.

Finding the right mix of reward elements for IMEs is proving to be a real challenge for many companies. It is especially difficult for companies that have thousands of people comprising many nationalities transferred to a large number of countries. Inevitably, compensation and benefit issues arise among IMEs and between IMEs and local nationals at the same location.

"Although many companies do have well-intentioned efforts under way to update and simplify their approach, they are struggling to communicate and administer the existing complex rewards packages to their employees," stated Tom Tilghman, a senior consultant at Towers Perrin.

Key findings of the survey:

  • Almost half of the respondents experienced an increase in IME benefit costs over the past three years, reflecting wider use of benefits such as medical plans.
  • Almost two-thirds of respondents cited an overwhelming need to review their approach to benefits and rewards.
  • Only a small number of companies use a multinational pooling arrangement for nonretirement benefits. Thus, missing an opportunity to reduce costs.
  • Seventy-one percent of respondents had formal benefit policy guidelines. The remainder had no formal policy. Thus, leaving their IMEs vulnerable to inconsistent treatment.

"With all of the M&A activity and global expansion projects under way, multinationals continue to rely immensely on their international transfers," noted Towers Perrin consultant Jeany McGurn. "Many companies insist on international experience for their senior team and other key workers; therefore, understanding the complex delivery and support systems for this international group is more important than ever. In order to encourage a truly global mindset among their employees, companies have to look to developing a global approach to rewards that are attractive to IMEs and take their unique personal requirements into account. Formalizing policies and improving communication and delivery systems may also improve their bottom line."

For a copy of the full survey report, please call Towers Perrin at 1-800-525-6741.

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