Flexible Programs: Pros and Cons for Best Practices

FLEXIBLE PROGRAMS: PROS, CONS AND BEST PRACTICES

Moderator

• Conor Schoemer, Mercer

Panelists

• Deanna Trevino, Rockwell Automation

• Tracy Toth, McDonald’s Corporation

• Joy Gulik, Illinois Tool Works, Inc.

• Jennifer Connell, Weichert Workforce Mobility

• Introductions

• What is a Flexible Policy Structure?

─ Segmentation vs. Flexible policy structure?

─ 3 dimensions of the model

─ Define Level of Flexibility

• Why have Flexible Policy Structure?

• Considerations of Flexible Policy Design

• Introducing Flexible Policy Structure into your Program

AGENDA

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W H A T I S F L E X I B L E P O L I C Y M O D E L ?

FROM SEGMENTATION TO FLEXIBILITYSEGMENTATION VS. FLEXIBILITY

• Different business case needs:

– different employee profile

– different business value

– different length of assignment

• A policy to cover each business case

=> a policy segment

• Decision tree is typically used to

identify which policy / segment applies

to each specific business needs

• Each policy element have a specific

purpose

SEGMENTATION

• For each policy definition the

purpose is covered through

structured guidelines

• Guidelines can determine the

Core elements and

potentially the Flexible

elements to support

international assignment –

from none to a very broad

range

• The range of choice available

can be limited within one

specific element or across

several or all benefits

FLEXIBIL ITY

THE 3 DIMENSIONS OF THE FLEXIBLE POLICY MODELC H O I C E

MA K E R

L E V E L O F C A S H

S U B S T I T U T I O N S W I T C H R A N G E

▪ Employer / Organization

▪ Employee

▪ Direct Line Manager

Define level of flexibility for each element of segmentation: How many

alternatives for the business and for the assignee?

FROM SEGMENTATION TO FLEXIBILITYDEFINE LEVEL OF FLEXIBILITY

H O W M A N Y A LT E R N AT I V E S A R E AVA I L A B L E ?

PER M AN E N T

T R AN S F E R

L O N G - T ER M

ASS I G N M E N T –

ST R AT EG I C

SH O R T - T ER M

ASS I G N M E N T

M O B I L I T Y

I N C EN T I VEN/A N/A

H O U SI N G

ED U C AT I O N

R EL O C AT I O N

H E AL T H C O VER

H O M E L E AV ECASH or

BUDGETTRIPS ONLY TRIPS or BUDGET

SINGLE COVERSINGLE /

FAMILY COVER

PREMIUM /

FAMILY COVERSINGLE OR FAMILY

COVER

Assignee

ChoiceBusiness

Choice

CASH or BUDGET

CASH or

BUDGET CASH or BUDGETBUDGETBUDGET

ADDITIONAL

ROOM

PHASED OUT

LESS EXP. AREA

BUDGET or

CASHBUDGET or CASH

10% TO 20% 0% TO 10%

T AL E N T

AS S I G N M E N T S

F L E X I B L E B E N E F I T S F O R A S S I G N E E SD O E S Y O U R O R G A N I Z AT I O N ' S M O B I L I T Y P O L I C Y A L L O W A N Y

F L E X I B I L I T Y ?

SOURCE: 2018 SPOT POLL ON FLEXIBLE BENEFITS FOR INTERNATIONAL ASSIGNEES – SPOT POLL INSIGHTS

Al though the ma jo r i t y

o f o rgan iza t ions do

no t a l low f lex ib i l i t y in

mob i l i t y po l i c ies , a

s ign i f i can t p ropor t ion

o f 44% i nd ica ted

tha t some type of

f lex ib i l i ty is a l low ed.

F L E X I B L E B E N E F I T S F O R A S S I G N E E SW H AT A R E Y O U R R E A S O N S F O R N O T H AV I N G F L E X I B L E

M O B I L I T Y P O L I C I E S ?

SOURCE: 2018 SPOT POLL ON FLEXIBLE BENEFITS FOR INTERNATIONAL ASSIGNEES – SPOT POLL INSIGHTS

77% o f o rgan iza t ions

concerned abou t

add i t iona l admin is t ra t ion

do not have spec ia l ized

technology too ls to

suppor t the add i t iona l

comp lex i ty

95% o f o rgan iza t ions

concerned abou t the

add i t iona l admin is t ra t ion

do not use Shared

Service Centers .

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W H Y H A V E F L E X I B L E P O L I C I E S ?

How do we get the right mix of ‘core / compulsory’ versus ‘flexible / optional’ benefits in

our mobility policy?

Flexibility and choice is all good and well!

Assignees want more choice about how to spend their assignment allowances.

Flexible Policy Modelwhat drives the needs?

Should we satisfy the business or the assignee needs?

Could we switch their shipping allowance for more home leave visits if that’s their priority?

We need to drive out policy exceptions to manage cost and allow us to operate efficiently.

But how do we ensure our assignment packages are managed efficiently and consistently applied?

Could we then simplify and pay a fixed lump sum

instead?

F L E X I B L E B E N E F I T S F O R A S S I G N E E SW H AT W E R E Y O U R O B J E C T I V E S F O R I N T R O D U C I N G F L E X I B L E

PA C K A G E S ?

SOURCE: 2018 SPOT POLL ON FLEXIBLE BENEFITS FOR INTERNATIONAL ASSIGNEES – SPOT POLL INSIGHTS

Compan ies tha t

in t roduced f lex ib i l i t y in

mob i l i t y po l i c ies a imed

to incent iv ize

ass ignees by

address ing the i r

i nd iv idua l p re fe rences ,

expec ta t ions and

needs , wh ich

o the rwise cou ld be

potent ia l bar r ie rs to

mobi l i ty .

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C O N S I D E R A T I O N S O F F L E X I B L E P O L I C Y D E S I G N

F L E X I B L E B E N E F I T S F O R A S S I G N E E SH O W M U C H F L E X I B I L I T Y D O Y O U G I V E Y O U R M A N G A E R S T O

D E C I D E O N W H AT A N A S S I G N E E ’ S PA C K A G E W I L L

I N C L U D E / E X C L U D E ?

More than 1 /3 o f

o rgan iza t ions

ind ica ted tha t

managers can

exerc ise some

d isc re t ion in mak ing

changes to the

ass ignment

package .

Others inc lude:

- B e t w e e n H R & a s s i g n e e

b a s e d o n p r e d e t e r m i n e d

f a c t o r s

- G l o b a l M o b i l i t y

r e c o m m e n d s a n d M a n a g e r

h a s u l t i m a t e d e c i s i o n

r i g h t s

- H R d e t e r m i n e s

- M a n a g e r a n d G l o b a l

M o b i l i t y w o r k t o g e t h e r t o

d e c i d e

F L E X I B L E B E N E F I T S F O R A S S I G N E E SW H AT W A S Y O U R K E Y C H A L L A N G E FA C E D W H E N I N T R O D U C I N G

F L E X I B L E PA C K A G E S ?

SOURCE: 2018 SPOT POLL ON FLEXIBLE BENEFITS FOR INTERNATIONAL ASSIGNEES – SPOT POLL INSIGHTS

81% o f

o rgan iza t ions

tha t d id no t f ace

b ig cha l lenges

outsource a t

least some of

the mobi l i ty

processes

88% o f

o rgan iza t ions tha t

repor ted

chal lenges w i th

t rack ing and

repor t ing do not

have technology

too ls suppor t ing

the admin is t ra t ion

o f f l ex ib le

packages .

FLEXIBLE MODELM O R E A N D M O R E C O M P A N I E S A R E E X P L O R I N G I F A F L E X I B L E

P O L I C Y C O U L D R E S P O N D T O B U S I N E S S E S A N D E M P L O Y E E S

I S S U E S ?

+ –

• Policy becomes a guideline only.

➢ Could be a way to reduce exceptions in cases

where exception is the rule

• Businesses and Employees have the

maximum flexibility to fit their perception of

the specific situation.

• Adaptability to local situation.

• Recognition of the various variables

impacting the compensation package.

• No time is spent in debating and

negotiations.

A D V A N T A G E S

• Flexibility can lead to uncontrolled impacts

on cost.

• Administration and tracking can be

challenging.

• Lack of consistency and equity all among

employees.

• Risk in arbitrary decisions.

D I S A D V A N T A G E S

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I N T R O D U C I N G F L E X I B I L I T Y

INTRODUCING FLEXIBILITY IN AN EXISTING MOBILITY POLICY

STEP 1

Identify your

company philosophy

positioning in terms

of flexibility

STEP 2

Identify the

purpose of each

benefits

according to your

company

segmentation

STEP 3

Set flexibility

level for each

benefits

Flexible modelM O R E A N D M O R E C O M P A N I E S A R E E X P L O R I N G I F A F L E X I B L E

P O L I C Y C O U L D R E S P O N D T O B U S I N E S S E S A N D E M P L O Y E E S

I S S U E S ?

In reality very limited companies have chosen

to go all the way down that road!

Importance to clearly frame the level of flexibility:

• Importance to set the framework of the flexible variables: clear definitions Core vs. Flexible and within

which limit.

• Policy flexibility to Business or Employee choice only?

• Flexibility to Cash vs Benefits elements? Taxability risks.

• Identification of location specific adjustment if needed.

• Keep it simple!

Questions and Thank You!