Reward and benefits: You say tomato…

Jessica Twentyman takes a look at the challenges facing HR professionals in charge of implementing rewards and benefits programmes to culturally diverse workforces.

When it comes to providing rewards and benefits to a globally dispersed workforce, it seems that multinational organisations increasingly opt for a centralised approach. So says HR membership association Worldatwork. In a ‘28795&from=presshome”>’recent survey of 460 organisations with operations across two or more countries, Worldatwork found that 53% favoured a centralised benefits system, up from 49% in 2004.

That’s not to say, however, that a ‘blanket’ approach, applied regardless of region or culture, is an appropriate course of action for multinationals to pursue.

A bottle of vintage champagne might be considered an attractive reward in some cultures, for example, but downright offensive in others, where religious beliefs prohibits alcohol. In fact, such organisations would be “wise to balance consistency with localisation,” says Adam Sorenson, global total rewards practice leader at Worldatwork.

Benchmarking

Benchmarking is vital, and assessing local needs and expectations cannot be done by guesswork alone, says Jana Mercereau, an international consultant at HR consultancy Watson Wyatt.

“We help many of our multinational clients assess what their employees in local markets need and want through implementing employee surveys to get a broad cross-section of local opinion,” she explains. “Without this, a few isolated complaints about rewards and benefits might suggest there is a wider issue than is actually the case.”

Flexibility, too, is very important, according to Lester Horner, UK total reward manager at IBM. The IT giant has 386,000 employees in 170 countries worldwide and about 40% of them are mobile workers.

“With such a huge range of demographics to contend with, the company can’t possibly hope to create global policies that will meet every single need and preference,” Horner says.

“So we operate a globally consistent framework in terms of reward and benefits, ensuring they comply with an over-arching design criteria, but also respect diversity and choice, not just on a country-by-country basis, but also on a person-by-person basis.”

Principles

Ruth Smyth, global head of HR at recruitment firm Alexander Mann Solutions (AMS), believes an effective rewards and benefits structure is about establishing a general set of principles and then seeing how you can apply them in a particular region.

“While we aim to support the health and wellbeing of employees globally, we also recognise that private medical insurance isn’t applicable to all markets – it may not be required, relevant or expected. Rewards and benefits don’t have to look the same across all regions, but it’s important they ‘feel’ the same,” she says.

There are also local labour laws to consider, says Amina Adam, an associate in the employment group at law firm Morrison & Foerster.

Adam and her team recently worked on a global rewards and benefits programme for one of the world’s largest manufacturers of healthcare products, which operates in more than 80 countries.

The process took the best part of a year, she says, because of the complexity in achieving legal compliance in each region.

Take, for example, performance bonus programmes: “In Puerto Rico and India we found there are laws in place that dictate a minimum bonus that a company can make to its employees. In France and Germany, meanwhile, it’s a legal imperative to consult with work councils before a bonus programme can be instigated,” Adam explains.

Sensitivity

Local knowledge and cultural sensitivity apply even to more incidental items, says Sheila Sheldon, director of European operations at employee rewards and recognition firm Michael C Fina.

“Our experience tells us, time and time again, that one size does not fit all,” she says. “In Brazil, for example, the cost of living compared to salary levels means that employees value a ‘useful’ reward over a purely ornamental one. Vouchers and food baskets, for example, are particularly popular there.

“People in the US will wear corporate jewellery products, such as a lapel pin or ring, with pride, but Europeans are more likely to prefer electrical items, such as a CD player.”

As these examples illustrate, rewards and benefits (like beauty) are in the eye of the beholder – or in this case, the recipient. It’s up to employers to ensure they live up to their name.

Case study: The British Council

With almost 75 years of promoting intercultural exchange between the UK and the rest of the world under its belt, the British Council has had more experience than most in tackling international issues.

In recent years, it has developed an approach aimed at meeting the needs of three different categories of employees, explains Sanjay Patel, the organisation’s head of pay and employee relations.

The first group is comprised of ex-patriot staff working in any of the 110 countries in which the British Council operates, who are offered the same pay structure and benefits as employees at the organisation’s London headquarters, with added enhancements where necessary.

“These might include compensatory elements for relocation abroad or for cost of living differences in the region where they’ve been posted,” Patel says.

The second group, comprising mostly country nationals (but sometimes foreign nationals already resident in that country), is offered a rewards and benefits programme based on benchmarking of the local labour market.

The third group, made up of teaching staff, is compensated on a system based on the global market for English language teachers, with some enhancements for more senior staff who are required to be more mobile and move around the various schools and programmes worldwide that the British Council operates.

“We’ve not experienced any major issues or resistance with this structure, because we make sure that members of each group clearly understand how we approach reward for their particular group,” says Patel.

But there are certainly some areas in which the organisation needs to be more flexible, such as annual leave, where there are huge variations in expectations globally, he says. “And trying to implement performance-related pay has proved unpredictable in terms of local reaction,” he adds.

Case study: Abbey (part of the Santander Group)

Spanish bank Santander entered the UK retail banking market with its acquisition of Abbey in 2004. Since Santander had previously focused its efforts in continental Europe and Latin America, some key cultural differences soon emerged as Abbey’s rewards and benefits strategy was gradually aligned with those of its new parent company, says Maria Strid, head of reward at Abbey.

“As a building society, Abbey had traditionally centred its remuneration on basic pay. As part of our transformation into a fully fledged commercial bank, and moving in line with the Santander model, the mix of fixed and variable pay gradually changed, and the overall reward package was enhanced,” she explains.

But some important differences remain. “An important cultural difference between the European and the UK workforce is the relative balance of male and female employees. In the UK, the workforce is split 65:35 between women and men. In Spain, the reverse is true,” she says.

“In light of this, Abbey’s employee proposition has been developed specifically to reflect the UK employee base and takes into account this difference.

“For example, we have launched a new benefit, ‘My Family Care’, a back-up support system for people with child or eldercare responsibilities, particularly to support the large number of women in our workforce, as they tend to be the primary carers.”

Work-life balance, too, is a significant employer issue in the UK – much more so than in other territories in which Santander operates.

“Abbey’s strategy, by necessity, is more developed than that of Santander’s,” says Strid.

“Our approach is based around flexibility – we provide a range of work options that employees can choose from to suit their individual circumstances, including part-time working, job-sharing and flexi-time, as well as annualised hours and career breaks.”

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