Among the key trends affecting the world today, accelerating globalisation, ageing populations, and increasing hyper-connectivity are having a profound effect on the employee benefit landscape. What does this mean for companies and providers today and tomorrow?
Long-term thinking is the very essence of employee benefits, thus it is crucial to incorporate future trends into planning and strategy. At the same time, there is no escaping the need to adapt to the immediate situation: social security systems under stress, exploding healthcare costs, and ever stricter regulation and compliance requirements – including for employee benefits. Multinationals and employee benefit providers must respond to both the immediate and the longer-term challenges.
Multinationals and the war for talent
As drivers of the trend towards accelerating globalisation (see box) most multinationals today confront similar challenges. To be successful, their business models must be tailored to each local market they operate in, and to do this, they need talented workforce locally. The consequences of the demographic evolution around the globe is also contributing to an ongoing shortage of qualified talent to staff multinational companies.
Furthermore, working globally means that multinationals also have to deal with increasingly diverse local and global workforces. While diversity is recognized as a positive advantage in the drive for innovation and creativity, it also calls for more differentiated working models and related employee benefit schemes.
Need for flexible, well-rounded benefit packages
Experience shows that to attract, retain and motivate the best staff, multinationals must adopt a more flexible approach to employee benefit design. Beyond this, the best schemes now enhance effectiveness and productivity, as well as loyalty, by incorporating elements that boost employees’ physical and mental wellbeing. This broader approach to a well-rounded benefits package often also includes back-to-work support programmes and continuing education.
It is worth noting here too that a solid Corporate Social Responsibility (CSR) programme can also be a magnet for good staff. Combined with improved overall employee satisfaction, a reputation as a socially responsible employer can significantly strengthen a company’s competitive edge in the war for talent. Accordingly, employee benefit plans will also need to comply with CSR criteria.
The challenge of flexibility
Flexibility becoming more and more a requirement ability to choose among the various options is not always self evident. Hence part of EB solution of the future will also be providing adequate education and information to employees and to empower them to take up responsibility for their own financial and retirement planning. From an employer point of view flexibility in financing EB plans will increase and will result in employees to complement the employer sponsored solution with voluntary retirement and protection plans. The workplace is hence becoming an important source of information for personal insurance and savings products. Forward-looking employers are calling on support for this from their benefits providers.
Using connectivity to increase convenience
Furthermore, as employees become more aware of the need to take greater responsibility for their own future financial security and risk protection, they look for more information. In today’s hyper-connected world, they now expect the convenience of easy access to data and instant information on their plans. In addition, in today’s world for ongoing efficiency improvements also employers are requesting increased convenience in the administration of their employee benefit plans in the form of Web access for new members enrolment, communication to members and claims handling.
New offerings from providers
Providers will continue to face increasing demands from their clients for more choice, flexibility and convenience. Governments and markets are also insisting on greater transparency and compliance regarding data- and risk security, solvency, and consumer protection and last but not least also on pricing. In response, employee benefit players are re-tooling their business models towards completing their value proposition with non-insurance elements while continuing in parallel improving the insurance elements. The one size fits all approach is no longer an option.
Additional non insurance elements (education, information, wellbeing activities and health management) will grow in importance and thereby also reshape the competitive environment of the EB providers.
The biggest trend of all: constant change – will continue, and employees, employers and benefit providers will need to keep adjusting to meet fresh expectations and challenges.
The multinational landscape
- Over 80,000 multinationals in 2010 (up from under 10,000 in 1970
- 90% based in the Northern developed economies
- 50% based in France, Germany, Netherlands, Japan, USA
- Multinationals’ foreign affiliates:
– employed 98 million employees
– generated USD 28 trillion in sales
– produced USD 10 trillion added value
– managed USD 82 trillion assets under management
For more information
please contact Swiss Life Network