Most Multinationals Lack Timely Financial Information Related to Employee Benefit Spending

Multinationals – which often spend hundreds of millions of dollars on employee benefits annually - lack timely financial information related to employee benefit spending.

In fact, seven out of ten global or regional benefit managers have limited or no access to the right information, according to Towers Watson’s 2014 Current and Emerging Global Benefit Themes research.

"The underlying information exists, but needs to be extracted in a structured manner from finance systems, which is often the difficult part," says Mark O’Brien, senior consultant at Towers Watson. "Nowhere else within their businesses would such a lack of management information or oversight be acceptable."

Notwithstanding, Towers Watson sees more advanced multinationals allocating the resources necessary to address this so they can use information on benefit spend to help identify risks and opportunities, make decisions and prioritize their activities to increase the return on investment from their benefit plans.

The Towers Watson research also shows that two-thirds of multinationals are at the early stages of developing their global benefits strategy and management approach.

This means they are either just getting started or narrowly focusing on a single global benefit management area.

"The most effective strategies integrate a number of different aspects, but that companies often lack the experience to develop fully effective, integrated strategies," said O’Brien.

Focus shifting

The research also confirms that multinational companies’ benefits and pension focuses are shifting.

For example, multinationals are moving from a primary focus on defined benefit (DB) pensions to a more balanced view across a broader range of benefits, in particular, defined contribution (DC) plans and employee health.

According to the research other focus areas are more enduring over time, such as the management of financial risk, benefit spend optimisation and the effective handling of corporate transactions.

“The relentless corporate mandate — do more with less — means the organisational and operating models of the benefits function must evolve to reflect and achieve this goal," says O'Brien.

O'Brien notes that multinationals that have a clear focus, ordered priorities and which use third-parties thoughtfully are more likely to meet this challenge of being more efficient and effective.

The research also suggests more mature organisations draw on their own - and other companies’ - global benefit experience to adopt or adapt techniques, organisational structures and operating models which fit their unique circumstances.

"Multinationals that ask themselves the most challenging and strategic questions, and address them, are typically the companies that achieve the greatest value from their employee benefit programs and spending," says O'Brien.

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