Multinational Companies Seek to Limit Expat Benefits

Expat Globe

The benefits afforded to expats by the offshore subsidiaries have always been generou and one of the keys reasons cited by expats for moving abroad. Now, however, multinational firms are clamping down on overly generous benefits.

"More and more companies want to have a better line of sight and at least some control over the benefits decisions made by their local operations," said Amol Mhatre, global benefits strategy and solutions leader at Aon Hewitt. "While financial drivers play a big role, companies want to do this for a variety of other reasons, including managing reputational risks and resource constraints on the ground. Companies that want to design more sustainable benefits programs need to implement a more formalized governance structure to manage financial and operational costs and risks."

Key findings from the report include:

88 percent of companies say that employee benefits are on the agenda for boards and senior management of their companies due to the costs and risks of benefit programs.

Approximately 70 percent of employers say that they are leveraging their global scale to reduce costs of benefits operations and are implementing stricter controls and corporate oversight in both mature and emerging markets.

More than 90 percent of companies expect to have corporate benefits policies in place over the next three years. However, less than 60 percent of organizations are certain that their local benefit plans will be aligned with corporate guidelines.

On average, only about 40 percent of companies have formal structures in place. Of this group, an average of 65 percent said that protocols such as this are effective. On the other hand, only 16 percent rated their governance protocols as effective when established informally or in an ad hoc manner.