- A global benefits policy reinforces company values, showing employees they are cared for.
- Offering a consistent global benefits package fosters a unified company culture.
- Timing Matters: Implementing a global benefits program during hyper-growth strengthens culture, productivity, and employee well-being.
- Crafting a flexible benefits package balances global strategy with individual local needs for employee well-being.
Creating a benefits package for prospective employees is not just about competing for top talent. It’s also about building corporate values and showing employees that the company truly cares about their wellbeing, in and out of work.
Since global teams are inherently distributed teams, it is essential to communicate that all employees are part of One Company and One Culture. When everyone is treated the same, everyone feels they are part of the same team, company-wide.
A good benefits plan plays a major role in creating an inclusive atmosphere that breeds success. With planning and support from local partners, it can also be a powerful tool in building brand awareness.
A global benefits strategy is a business’s go-to plan to provide the best, most competitive benefits across multiple jurisdictions while keeping within budget and complying with local regulations.
Key elements of a global benefits strategy
Make sure you have access to ironclad expertise concerning local employment and benefit laws.
In-depth cultural sensitivity is crucial for knowing how to build benefit packages that actually appeal to local talent.
Make sure you have strategies to balance the best possible benefits with realistic cost expectations.
Your data analytics capabilities play a crucial role in giving you an ongoing understanding of how your benefits are being perceived and used by employees.
How to create a global benefits strategy
- Define your budget. Make sure to figure out what your budget actually is before building your benefits packages. To do this, you’ll likely need to balance the costs of legally required benefits together with the benefits you’d like to offer.
- Understand local laws and regulations. Speaking of legally required, before going about setting up your benefits strategy, you’ll need to make sure you have a crystal-clear understanding of local laws and regulations concerning these benefits and perks.
- Take into account cultural differences. Its not just laws and regulations you need to take into account. Culture plays a major role in framing employees’ preferences when it comes to top sought out benefits.
- Evaluate your competitors’ offerings. Take a look at what your competitors are offering to appeal to prospective employees. Use this information to determine your own offerings – and, of course, how to go above and beyond to get the best talent.
- Outsource your benefits strategy. Legal expertise and cultural sensitivity are difficult concepts to navigate all on your own. Using boots-on-the-ground experts can help you smooth out your benefits strategy.
- Use software wisely. And speaking of keeping things smooth, the right software can make all the difference when it comes to you streamlining your benefits strategy and keeping full visibility of employee compensation.
When should you implement a global benefits program
The best time to implement a global benefits policy is during the period of hyper-growth when the company is building its culture and putting into practice the values that will define the company for years to come.
An effective benefits package will increase employee productivity, align practices with shared objectives, and foster a sense of teamwork. They can help employees deal with work/life balance issues – which can be acute for companies with a distributed workforce – and reduces instances of burnout.
Studies show that benefits increase employees’ sense of well-being, which in turn allows them to focus on their work and feel less anxiety about their future. That’s why many companies offer comprehensive health insurance policies and pensions. When that security is shared among the entire workforce, people are more inclined to cooperate and to look out for the interests of their teammates, and ultimately the success of the company.
On the other hand, when people feel that others are shown preferential treatment in important matters such as pensions, they may feel a psychological barrier to cooperation and less invested in the success of their co-workers.
The benefits package can be a major tool for communicating those values to all new employees. They will begin their careers at the company with the sense of mission those values inspire them, including a sense of community and common purpose.
Papaya’s suggested benefits
The challenge of creating an effective global benefits package is finding the balance between global strategy and the individual needs of people in each local area. Benefits providers in different countries will be different, so even the most well-intentioned global plan will still have to be highly localized and require flexibility.
As a general guideline, Papaya Global recommends the following elements to cover the overall well-being of each employee and provide perks that employees can use on an ongoing basis. In countries where the local law is above the indicated standard, employees must receive at least the minimum required by law.
Creating space for parents to bond with their newborns is essential to empowering healthy, thriving families. Maternity should be at least three months (unless the law requires more). In many countries, maternity leave is paid by social security.
Paternity leave should be at least 10 days covered by the company unless the social security in the country covers paternity leave as well.
Papaya has seen a growing trend of longer maternity and paternity periods – in many cases as high as six months fully-paid – in recognition of the vital importance of bonding and caring for a newborn as a family. It is highly advisable to supplement the period paid by local social security so that the employee can lengthen the maternity or paternity period.
This brings peace of mind to the families and cultivates loyalty on the part of the employee.
One of the greatest stress points for employees is worry about getting sick or injured and not being able to afford medical care. Many countries have some level of state coverage for all residents. However, in some countries, the state covered is limited.
Papaya recommends ensuring that all employees have sufficient coverage, whether it is provided by the state, privately by the employer, or through a combination of the two so that each employee receives proper medical care in all circumstances. We recommend spending up to $200 USD to ensure each employee is covered.
We also recommend providing the coverage itself, not simply giving an allowance to the employees, because the coverage they receive will be inferior to what a company can purchase collectively for its workforce.
In many countries, providing life insurance and long-term and short-term disability insurance for all employees is mandatory. For those countries where it is not a statutory requirement, Papaya strongly recommends providing private coverage in each of those areas to make sure every employee is covered.
Life insurance provides a designated beneficiary with financial support in case the employee dies. It removes concerns that their dependents will be left on their own with no means for support.
Short-term plans protect an employee from loss of income in the event of illness or injury. While standard health coverage covers the costs of medical care, short-term disability insurance covers a significant portion of the income lost if the employee is unable to work. Most short-term plans cover periods of 3-6 months.
Long-term plans continue to protect the employee when the short-term plan runs out, providing peace of mind that in the evidence of a serious illness or injury, the employee will continue to receive an income no matter what.
Retirement planning plays a huge role in financial security. Most corporate pension plans consist of a monthly contribution from the employer and the employee. The payments go into an investment fund that earns money for the employee during the period of work and is available upon retirement.
If there is no mandatory requirement for employer pension contributions, Papaya recommends offering a private pension with a contribution of a minimum 3% of the employee’s monthly pay. Many countries offer tax relief on pension contributions, allowing the employee to benefit more from the employer’s contribution.
Paid time off policy
Time off helps employees recharge their batteries and plays a key role in a healthy work-life balance. PTO often consists of a transparent and uniform policy of 20 days per year (unless more is required by law), with up to 7 days that can be carried over to the following year.
Encouraging employees to develop their talents and interests outside of work build employee trust. Second language courses or other forms of study paid for by the company (based on company policy) demonstrate support for the value of self-improvement.
Offering an extra day off on birthdays and a monetary gift card can help employees feel the company wants to share in making the day special.
A monthly allowance for meal vouchers is an effective way to reduce employee stress and increase productivity.
Offering a gym on-site or $550 annual (equivalent budget for all locations) reimbursement for gym membership or other fitness activities can help establish physical health as a company value, increase employee energy levels, and reduce the number of sick days taken.
Allowances are no substitute for actual benefits. The buying power of an individual employee is far lower than that of a company, especially when it negotiates with a local vendor on behalf of all its employees in a particular country. Collective spending reduces costs for the company and for the employees.
Most importantly, allowances do not communicate that the company truly cares about the employee, which is one of the most important objectives behind offering a set of global benefits.
Implementation will be highly localized
Creating an effective global benefits policy is one thing. Supporting it is another matter entirely. There is a great deal of administrative work necessary to launch the program, and it starts with understanding local labor and tax laws.
Labor laws in many countries can help your company deliver a higher level of benefits across the entire global operation. For example, most European countries offer comprehensive health care for all of their citizens, paid for through the social contributions that are withheld from their paychecks along with their taxes. Some countries, such as Japan and Canada, provide for paid maternity leave through their social security services.
In the US, in contrast, there is no paid maternity leave, and employers are required to provide health care for their employees. American companies with more than 50 employees have to provide health care for their employees’ families, as well.
In short, government subsidies can make it easier to deliver benefits in some places. But companies that believe that something is important – that new mothers at the company get appropriate leave, for example – will find ways to bridge the gap globally.
Tax ramifications – benefits in kind
It is also important to consider the tax ramifications to the employee that go with certain benefits.
Taxes on perks such as meal vouchers and gym membership are different in every country. Some countries only tax the employer while others tax both the employee and the employer. Another group of countries (including Germany) provides a tax deduction to companies that offer meal vouchers.
Many countries classify food vouchers and similar types of perks as Benefits in Kind (BiK), which are benefits that are not included in an employee’s income. Other types of BiKs include company cars or counseling services. Some BiKs are taxed in certain countries and not in others. When taxes are levied, it is usually for the amount it costs the company to provide the benefit.
The same is true for gym membership. The taxes vary widely, and the way the benefit is delivered can make all the difference. In Canada, gym membership for employees is taxable. However, if the company has a business arrangement with a gym allowing employee access, the employees might not be taxed – if the company can prove that the business is the main beneficiary, not the employees.
Whether or not a benefit is taxed, it typically lowers the overall social security contribution from both the employer and the employee because the perk substitutes for money that would otherwise be part of an employee’s salary, which serves as the basis for calculating social security payments.
Comparing benefits in the US, UK, and France
|12 weeks minimum
|16 weeks for 1st and 2nd child. 26 weeks for 3rd child
|Coverage up to 80% of costs
|Various optional private pension plans available, most commonly 401(K) plans
|Optional pensions with both employer and employee contributions,
|Employers must set up and contribute to an occupational pension plan for employees
|Paid Time Off
|28 days per year
|Meals are excluded from taxes if they are provided on-premises.
|Free meals of meal vouchers are exempt from taxes if they are served in a workplace canteen.
|Vouchers are tax-free if they are below a certain threshold and if the employer contributes 50-60% of its value.
How to manage your global benefits strategy
Your global strategy is likely to shift over time. And that’s why knowing how to manage your strategy is so crucial. Here are just four of the points you’ll need to consider:
Budget and ROI
Make sure you have a clear understanding not only of your budgetary restrictions but also the return of investment concerning the benefits you’re offering your employees. For example, if you’re offering your workers discounts on health and fitness services and no one is taking advantage of these, you may want to consider removing this benefit – or replacing it with another altogether.
Continue benchmarking your benefits against those offered by competitors to ensure that what you’re offering remains attractive to potential hires.
Differences in regulations will make standardizing your global benefits strategy difficult. Still, make sure to standardize these processes as much as possible. This will make streamlining your global benefits much easier.
Economic conditions change over time. Make sure all the global benefits you offer can be maintained for the long term.
Papaya supports global benefits in over 160 countries
Benefits are a powerful tool for employee empowerment. When they are well-communicated and reflect the true values of the company, prospective employees can look through the list of benefits and feel a sense of belonging.
Papaya can help your company navigate the complexity of benefits, payroll, and payments for a remote workforce, whether within the US or overseas. Papaya’s end-to-end solution supports all types of global workers (payroll, EOR, and contractors) in over 160 countries. The automated, cloud-based SaaS payroll software streamlines the entire process – from onboarding to ongoing management to payments across state or national borders. Contact us for a strategic consultation.