Why is international benefit administration like a pile of LEGO on the floor?

Many studies suggest that Benefits are key factors for candidates to choose companies, to leave companies for better benefits or to stay with their current employers.... companies recognizing it try to find the best benefits to offer, and already at this point they may face challenges when they try to list their existing benefits to evaluate... because benefits are typically decided and administered locally, pulling together a list of them is a challenge on its own, because they may face terminology/language issues e.g. "you were looking for benefits, so I didn’t tell about allowances” or "oh, it’s just a perk, not a benefit”, etc.... and that’s just a list of the benefits, the tip of the iceberg of the complexity behind benefit administration. We didn’t even start look at the details...

This post is not aimed at sharing thoughts on how to choose the best benefits (we'll solve that problem another day:)), but rather at focusing on what drives the complexity of benefit administration.

So why is benefit administration so complex?

First of all, Benefits are typically locally decided

• Many local benefits following local market requirements, sometimes looking for opportunities raised/incentivized by local regulations
• Local vendors providing local solutions for the local policy… with no standardization driver across countries

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Sure, there are common themes across countries i.e. supporting the same purpose for the employees, but even so, one benefit purpose may be achieved with a large variety of potential solutions, approaches, policy designs, for example:

• Completely different benefit: ?child care support” may be achieved through allowances, vouchers, reimbursing kindergarten or even opening a child care in the office building
• Same benefit with different rules e.g. medical benefit may be paid by the company or by employee or sharing the costs, employee may be able to add dependents or not, and there are lot of mechanisms on how it actually works in real life: should employee go to a list of doctors/hospitals defined by the policy/vendor and not pay anything there or can go anywhere, pay and get refunded?
• Same benefit, same rules, still works differently e.g. furlough to support foreign employees travel home once a year... is it paid on their anniversary or same time for everyone once a year? Is it a flat amount, or does the company spends time and effort to check prices with a travel agency for each location the employees are from?

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All these policy complexities are then being implemented in locally defined solutions and a system landscape where benefits is usually not the core consideration:

• Each vendors use their own systems, forms, processes… and vendors may change every few years destabilizing the processes for the benefit administrator
• HRIS and HR Admin processes have major impact on how benefit administration is managed… but Benefits is not the focus of an HRIS platform selection and implementation
• Payroll is a major recipient of benefit data and vendors/payroll teams have their own rules on how to get them.. but benefits is just a subset of inputs next to job changes, personal changes, time data, etc…
• Vendors need to get paid, so Accounts Payable system and processes are critical… but Benefits are not the main volume generators for an Accounts Payable team… same with ?expense management system for certain benefits where employee is looking for a refund… such claims pale in comparison of all the travel and expenses transactions processed for a company
• In all this environment, benefit administration rarely has a system of record of its own... it’s amazing if there is, but Benefit systems are relatively new compared to HRISs, Payroll engines and Accounts Payable systems so not so widespread yet, leaving benefit administrators handle this complexity in a number of other solutions, mostly in offline excel files

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All this potential complexity of how a benefit is designed, executed… and a company may offer 5-10-30 benefits per country! Multiply that with the number of countries the company has presence in and we have dozens of plans to look at… it is like a large bag of LEGO spilled on the floor: random, colorful mess of benefit plans, policies, processes, vendors, solutions. It’s no surprise that Benefits COEs and Project Managers when start projects about their rationalization, migration, process improvement, system implementation may feel like stepping on them barefoot...

So how can this be managed properly? With my colleagues we developed a methodology for benefit administration related projects to "protect your feet”, see the patterns in the chaos, sort out the mess and find/build unique structures of benefit plans. Our next blog post will shed some light on it, but if you are interested in the details, please reach out to me and we can discuss.