Benefits outside the U.S. are the most complicated thing an international HR person has to learn. Each country has its own mandated, or government required, social plans --- healthcare, "death" benefits, retirement, etc. However, in most countries government benefits are not enough to take care of people's needs.
Multinationals have provided supplemental or company benefits for local employees for years. One U.S.company that is a household name with an acronym of three letters has had operations overseas for 40+ years. When they set up their first operation overseas, they immediately put in company benefits ---- including a defined benefit (pension) plan. They didn’t think twice about it. As the company grew they continued to put in pension plans in each country. Eventually they realized the huge cost associated with what they had done. Their employees didn’t understand what pensions were or how they worked, nor did they really seem to care about them. A big cost and very little appreciation. To add insult to injury, other companies told them they had implemented pensions because they wanted to be competitive. It was like “follow the pack”.
After U.S. consulting firms ramped up their survey offerings overseas, they became the “bible” for international HR people. Many, including myself, dutifully compared company benefits with competitors and hastily put benefits in place where we were found lacking. I won’t soon forget communicating to employees in Spain that they now had a couple of new benefits ---- life and long-term disability insurance. I received emails thanking me, however, no one understood what they were. Not only that, they did not seem to care very much. When I explained that the majority of our competitors in Spain had these benefits, they still weren’t very enthusiastic. Was this another example like the above? Did a competitor start a benefit and all the others follow suit? Lots of lessons learned with that incident.
The same company had a large design center in Shanghai with almost 80 engineers. 90% of them were young men in their 20’s and early 30’s. When I visited, they always wanted to talk with me. A group of them took me to lunch on every visit. One day they started talking about a “housing fund”. I thought they meant the mandated government benefit. No --- they were talking about a supplemental company benefit. A couple of competitors had set up a separate housing account funded by both employee and company contributions. They all asked whether they could have one.
Understanding the background here is important. Housing was and is very expensive in Shanghai and other major cities in China. In addition, these were young men that wanted to buy an apartment and get married. The typical method for buying an apartment: 50% paid for by parents, 25% paid by employee and 25% financed. While the government housing fund was nice --- it didn’t grow very fast. So a few of our competitors were beginning to offer an additional fund to help employees accumulate money faster.
Now this benefit did not show up in any of the surveys for China. But the employees provided me with the names of companies that offered it, and I verified it when I returned to the U.S. There were only a few, but they were all competitors.
For those of you who don’t know --- retention is a big problem in China ---- especially for technical employers. I began to see the wisdom in offering this new benefit. After learning all the details and conferring with Finance, we put one in place. There was a huge reaction! I have never seen employees so excited about a benefit! I could hear wedding bells all the way from China! I didn’t think we would have to worry about retention for a while.
The point I want to make is that while competitive surveys are all well and good, we need to get our noses out of them and start looking around at other factors that may be just as important. Surveys are just one data point. Employee demographics are important. Listening directly to your employees is also a good way to get information. There may be other important issues to consider as well.
I’ve had a rule for years: Never use just one data point to make a decision ---- and hopefully have at least three. The more the better.
Let’s all take a vow not to become lemming-like and offer benefits just because other companies do.
Companies are not all alike, and there is nothing in my HR manual that says we all have to do exactly the same thing.
I would love to hear your thoughts.
Jacque Vilet, President of Vilet International, has over 20 years’ experience in International Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expat twice during her career. Her true love is working with local national issues. Jacque has the following certifications: CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology and an MBA. She belongs to SHRM, Human Capital Institute and WorldatWork. Jacque has also been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications. She lives in Dallas and has 3 four-legged children and one Chinese daughter (it’s a long story). She’s had a life-long love of animals and the ocean. So what is she doing in Dallas?
Image courtesy: sipseystreetirregulars.blogspot.com
Well written article to hopefully, remind all of us of the quote; "Wisdom is the reward for a lifetime of listening". To that end, the implication is that with that wisdom, we act on it in meaningful ways - much like this article's example.
Posted by: Michael Sato | 04/08/2012 at 11:45 AM
I think this tied in to the compensation philosophy that you implement locally. This is where it would be nice to have a competent local HR who is able to advise/update you on local issues as well as trusted local consultants who are willing to work with you on the legal side as well as market practices to tie in to the relevance of such benefit.
Reality however... is way different.
Posted by: Juliana | 04/16/2012 at 08:27 PM
Thank you Michael.
Juliana ---- you are so right! I've been fortunate in some companies to work with very talented compensation professionals. However, I have also worked in a few that didn't have any HR people outside the U.S. at all. It makes a big difference!
Posted by: Jacque Vilet | 04/16/2012 at 09:34 PM