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About the survey
Mercer collected information from 114 multinational organizations about their global benefits governance structures. Almost half of the participating multinationals are headquartered in the Americas, a third in Europe and the remainder in Asia Pacific.
The respondents
The respondents are from a wide range of industry sectors, with high representation in manufacturing, chemicals/pharmaceuticals, technology, financial services and energy/ mining. They represent a range of differently sized multinationals, with about half having more than 25,000 employees.
Survey responses cover retirement benefit plans, health care and medical plans and insured risk plans.
Highlights
Only 16% of respondents to our survey believe that their existing global benefits governance structures are sufficient to meet current and anticipated future needs.
Respondents recognize that governance is critical where benefit programs have an impact on their businesses. Eighty-one percent indicated that their benefit plans are financially material, while 93% said they are strategically or reputationally material.
Most organizations are considering changes to their structures and procedures to enable them to meet their management and oversight objectives; however, many are struggling to implement changes effectively.
- Respondents recognize that risk management is the key to effective oversight of their benefit plans worldwide, with 60% requiring more information about their risk exposure and 77% seeking to establish a more robust approach to risk management globally.
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- Organizations are also planning or considering changes to their structures in order to reduce costs (52%) and adopt best practice governance (66%).
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- Headquarters currently plays a significant role in relation to plan design, funding (including decisions to insure risk benefit plans) and investment of plan assets. It is less involved in vendor management, member communications and program administration.
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- Nearly half of respondents are considering action to introduce or strengthen global committees, and more than three-quarters are considering changes to policies or reporting processes to improve the effectiveness of their global governance.
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- A relatively small proportion (between one-third and one-half) of those considering enhancements to their structures have committed to those changes. There is work to be done to secure the necessary organizational support for the investment in benefit plan governance.
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- Lack of access to reliable and timely information is a barrier to the achievement of governance objectives; more information on a variety of topics is required in roughly half of cases.
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- Resource constraints also present challenges. A shortage in global resources is an issue in 75% of cases, and lack of local resources is a barrier in 62% of cases.
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Additional organizational commitment and increased investment in benefit plan governance are needed to effectively manage the potential material risks that benefit plans present. Survey respondents recognize this and are planning changes to move their frameworks forward.To ensure progress, a number of actions should be considered:
- Conduct an inventory of benefits plans around the world (or update existing data, if an inventory has been done but is out of date). Until companies know what they have, it will be difficult to identify the right governance strategies to manage those plans well.
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- Understand and quantify benefit plan-related risks. A detailed assessment of risk will help in setting priorities and in building the business case to secure organizational commitment to investment in governance.
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- Educate key stakeholders, who might include executive management and board or board committee members. Those who control resources and who can provide leadership support for a governance initiative often aren’t close enough to the issues to understand their importance.
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- Use the inventory information and risk assessment as the basis for a compelling business case to build on stakeholder awareness to achieve active stakeholder support.
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- Develop a plan for design and implementation of the necessary structure and procedures that recognizes the long-term efforts that will be needed to manage change.
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Based on our survey data, we can extrapolate that plans are material for most multinational organizations, while existing structures are sufficient for only a few. Some organizations are already taking steps to bridge the gap. Along with our survey findings, we also provide our recommendations for action to realize the potential cost and risk management benefits and the achievement of best practice ideals.
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