In the last 12 months I’ve been to 73 cities in 19 countries, working with our global clients about the advantages of using online benefit management and employee engagement software.
Along the way, I’ve picked up some interesting facts, figures and anecdotes regarding employee benefits management strategies. These are high-level observations and therefore should be taken with a pinch of salt.
I know how infuriating it can be to have your country or region generalized. For example, you can’t talk about the American economy in high-level terms:
- New York has been at the heart of the financial crisis and suffered accordingly.
- Northern California technology businesses have boomed.
- In Europe, you have a (technical) majority trying to forge closer ties while the UK, a short train ride from the European Parliament in Brussels, is a commitment phobic.
- And as for Asia, could you have a more unique and different group of countries?
So, bear with me, as I group the world into three areas and share with you what I am seeing in each of them.
United States
Somebody recently summed up to me the way a lot of American multinationals see the world.
Some 25 years ago, the U.S. companies had different benefits and payroll providers in each state. But throughout those 25 years, they have consolidated HR providers so that now they typically have one national payroll and one national benefit administration platform. They see the world in the same way they saw the states 25 years ago, and they expect to have one global HRIS, one global payroll and one global benefit solution.
Additionally, there has been a mass defection from on-premise HR to cloud-based HR solutions in the U.S. The leader seems to be Workday, but SAP and Oracle are investing incredible amounts to get ahead and remove the first-mover advantage.
What is clear is that multi nationals want a single global database that provides a consistent modern employee experience and as Software as a Service (SaaS) constantly improves without them having to move to a new provider. This move is driving a change in the way that companies are thinking about delivering many other services. It includes niche HR areas such at recruitment and benefits.
While this is interesting, the single biggest issue in the U.S. is the Affordable Care Act, also known as Obamacare. Depending on who you talk to, you get different views on whether it is a good or bad thing, and people have very strong views. There is also real uncertainty about how the Affordable Care Act will manifest itself in benefits strategies over the coming months and years.
Also, as a result of the financial crisis, there is an increased focus on governance, specifically with some of the recent high-profile data breaches. In addition to the significant reputation damage that companies face, I read a report recently that the average costs to large multi-national corporation’s due to data breaches is $3.5 million a year.
Asia
Countries in Asia are so ridiculously different it is difficult to find real trends.
Overall, Asia hasn’t been impacted in the same way that the West has throughout the global financial crisis. This may be a sign that the growth of the East, which was helped by Western consumerism, is now being driven by its own consumerism and growth of the middle classes. This has meant that recruitment and retention has continued to be a challenge.
There are then the have’s and the have not’s. You get a real sense of difference when you talk to the HR leadership of most western companies as opposed to local employers or even high tech Western companies.
Basically, if you are a “have not,” you don’t get the money to spend that the “have’s” do. This can be very frustrating, and I often hear that Western companies don’t understand the Asia talent market and what needs to be done to compete.
As with the U.S., medical costs continue to be a significant issue with health care costs increasing by more than 15 percent. Many companies are controlling these by implementing co-pay arrangements or requesting that the brokers charge a fee instead of taking large commissions.
While flexible benefits plans have been common throughout Hong Kong and Singapore, their adoption is speeding up across other markets. It seem like 2015 could be a boom year for flex in Asia.
The greatest concern: Whether China is covering a debt bubble — and what happens if it explodes. Could this be a new financial crisis?
Europe
Europe is coming out of recession, but growth is sluggish with the exception of few countries like Germany, the UK, Russia and Romania. With growth, comes pay increases, and for the first time, pay in the UK is matching inflation of 1.6 percent.
So, after years of shedding talent, it is starting to feel like the war for talent is back on.
Additionally, there have been two significant changes in the UK.
First, compulsory pensions have been introduced for all employees, and second, commission has been removed from the market. This is leading to an interesting change with many broking companies going out of business and a stronger reliance on technology to do the administration and engagement. This change should lead to greater innovation in the market.
Across Europe, I am also seeing a growth in two areas, the first is flexible benefits, the second is in the “mentality shift” of many European companies to do things “the American way” and be more centralized.
When it comes to the cloud and HR, much of mainland Europe is still not comfortable with that approach. However in some markets, such as the UK, Spain and Israel, I’m seeing very strong momentum moving to cloud-based HR solutions. Interestingly, SAP with SuccessFactors seems to hold the first mover advantage here.
Europe also has very strong state benefits and very strong unions. However, there is more recognition that the level of state benefits aren’t fundable. It will be interesting to see whether and what changes are made over the coming years.
Global predictions
As my travels continue throughout 2014 and beyond, below are three top benefit trend predictions I expect to see:
- As the world continues to become more “global,” companies will continue to try to provide a more consistent approach. When an employee moves between offices, they will expect to have a similar experience and benefit philosophy.
- Companies will keep challenging health care costs globally, including the Western world following some of the approach in Asia of having either total or an element of defined contribution medical programs as opposed to just defined benefit.
- As companies fight to recruit and retain the best talent, they will continue to be more inventive about how they use their significant benefit spend to differentiate their brand, both through the use of technology, plan design and the use of communication.
I will try to share more interesting stories, trends and statistics observed during my world tours of benefits. I believe that understanding benefits challenges and opportunities from the global perspective will help us all create a map to the future of benefits management and technology.
So what have you observed during your own benefits journey?