5 Considerations to Successfully Scale Global Benefits

In today’s talent market, a well-crafted benefits program is table stakes for scaling, high-performing companies. As your organization grows, balancing the need to attract and retain top talent while managing benefit costs becomes increasingly complex. 

People and finance leaders in The Circle said they expect their benefit renewal rates to increase an average of 11% in the coming year. While this is tough to swallow, it’s on par with prior trends: 62% said their company’s annual average benefit renewal over the past three years was between 5% and 10%. The increase in costs can result from external factors like higher insurance premiums or simply a company offering far more benefits than employees use. 

During a conversation with CHROs and CFOs in The Circle, David Stark, Chief Medical Officer at Morgan Stanley and advisor at Fijoya; Elle Meza, advisor at Juno and former VP at Crunchyroll; and L. David Kingsley, Chief People Officer at Illumio, discussed ways to align a company’s benefits program with its growth stage, how to shift from global parity to health equity, and the trade-offs of self-funded health plans.

1. Shift Away From Global Parity to a Focus on Health Equity  

To open the conversation, the VIPs were asked if companies can scale global benefits in a way where they can achieve parity. And the quick consensus was no. 

“We can’t achieve global parity. It’s almost impossible, and it’s not what people want. We need to focus on health equity and make sure everyone has access to the benefits that are most important to them.” – Elle Meza, advisor, Juno

This sentiment has contributed to a shift from global parity to global minimums. At Morgan Stanley, the benefits team has moved from a regional operating model to a “think globally and act locally” centralized model during the pandemic. They have developed certain minimum standards for all 80,000 employees in 40 countries while allowing each region to customize some of their offerings to their geographical location. For example, Morgan Stanley provides every employee with 16 weeks of parental leave, along with an additional 3-6 weeks for the birth partner. They provide similar company-wide minimums for caregiver leave, along with mental health and well-being benefits, for all of their employees.

2. Have a Clear “Why” Behind Your Benefits Decisions

It’s important to have an overarching benefits philosophy that supports your culture, or the kind of culture you’re actively creating. Knowing the “why” behind your benefits decisions allows you to be transparent with the talent market about who you are as a company and what you do or don’t offer to your employees as a result. 

At Illumio, David Kingsley and the team have aligned their benefits around their company mission and the fact that they are a pre-public company that is focused on investing in innovation and the business itself, versus attempting to keep up with public companies who index heavily on perks and benefits befitting companies who are at a very different stage of their journey. 

“This is a growth-stage company, and we want to make sure that while our employee experience makes sure that people are looked after, we’re able to retain the feel of what it is to be in a company that is still very much in ‘build and create’ mode.”– L. David Kingsley, Chief People Officer, Illumio

In a prior company years ago, David Kingsley’s team had a potential sales hire assume that the company would pick up the car allowance that was part of his previous employment package at a tech giant. The team replied that their company didn’t offer car allowances for anyone, and it would not be making an exception for the candidate. “We certainly recruit people from larger companies, but we need to be clear that we are making investments in different areas of the company at this time,” said David Kingsley. “It’s important that folks joining a pre-public company not only understand that, but also embrace that the company operates differently as we focus on investment and building for the future. Our candidates need to be in for the speedboat versus the cruise ship experience,” he said.

By framing it like this, David Kingsley and his team were  able to steer the conversation around to what the company did offer and the (far greater) upside that existed. And sure enough, the salesperson ultimately joined the team.

3. Pay Close Attention to Current Benefit Utilization 

In the tech industry, there is a benefits spectrum from what a company is required to have, to what it needs to be competitive in the talent market, to best-in-class offerings that go above and beyond. The default is often to keep adding more benefits and perks, but Elle stresses the importance of maximizing current benefit utilization first. 

To help her determine engagement and utilization benchmarks, she will often reach out to her network and peers in communities like The Circle to hear percentages from those at companies of a similar size. “This is real data in real time,” she said. “Your peers can also share the backstory of how it’s going and any relevant pitfalls.”

Elle uses these figures and her team’s insights to take a data-informed, rather than a data-driven, approach that will help her company make the final decisions around successful benefit utilization rates. Defining engagement within the context of the benefit is critical. For example, a 2% benefit utilization rate might sound unsuccessful on its own, but if it is for family-forming benefits, that can make sense across an entire company – especially if the employee population skews younger. Whereas, utilization rates of preventative healthcare benefits should be much higher across the workforce, regardless of demographics. 

“When I research what seems on the surface to be low benefit engagement rates, I often find we have a great benefit and we don’t need to add anything to it or take it away. We just need to realign the conversation to make sure it is better utilized.” – Elle Meza, advisor, Juno

When a benefit is underutilized, both Elle and David Stark’s teams are leveraging AI tools for care navigation and to match the right solution to the right person. Often, there are those “hidden benefits” that employees might not be aware of; Generative AI can play a key role here and, in the process, help a benefits team scale its reach and impact without adding to its head count. 

4. Beware of Benefits Bloat

One trend that benefits leaders have noticed over the past 10 years is the uptick in the number of point solutions that cater to increasingly specific life stages, disease states, and health needs. “Now we have point solution fatigue,” said David Stark. 

Over the past two years, companies have felt a greater need for efficiency, taking a hard look at their vendor-based services to determine the most important ones for their organization. This reflective period can present an opportunity, David Stark said. Morgan Stanley’s effort to solve for efficiency pushed them to develop their consistent, minimum health standards across the globe. In the process, they looked at reducing the number of individual contracts with vendors while providing employees with a more personalized benefits offering.

It also led David Stark to start advising Fijoya, a new marketplace platform that addresses the frustration of a one-size-fits-all approach to health benefits and offers a selection of healthcare services from a range of vendors. With a marketplace like Fijoya, companies contribute funds to an employee’s benefit account and employees can determine how they use those funds. This is an alternative to the more traditional defined contribution plan where a company determines which benefits employees can choose.

“The move to personalization allows employees to match benefits to their needs better than a company selecting their benefits for them.” – David Stark, Chief Medical Officer at Morgan Stanley and advisor at Fijoya

5. Explore Self-Funded Health Plans

Along with evaluating their benefits, many growth-stage companies are considering — or at least intrigued by — self-funded health plans. Self-funded plans are where the employer pays for employees’ claims directly, instead of paying premiums to an insurance company. This pay-as-you-go model has the potential to deliver savings to the company if the employee claims are lower than what the insurance will cover. But it also puts the risk and responsibility on the employer and could have serious financial consequences if employees’ claims are higher than anticipated. 

Self-funded health plans have benefits for employees, too. The traditional insurance-funded model often has higher premiums based on the risk profile of the entire group, and only offers what the insurance company includes in its plan. Whereas, self-funded insurance has more optionality and can reduce the amount employees contribute to their health plans because of its more targeted risk profile.

Elle has led this transition from insurance-funded to self-funded plans at six different companies. Her advice is to bring the finance and people teams together on this from the start. (There is a chance no one in the finance team has worked on this type of plan before, and their department is the most impacted by the introduction of this model.) 

In Elle’s experience, a good time for growth-stage companies to explore self-funding is when they have 800 to 1,500 employees, so they can gather more predictable claims metrics from a substantial employee base. She suggests starting with dental and vision benefits because that allows companies to “dip a toe in the water” with offerings that are less expensive than medical benefits. This patient approach also allows time for the the finance team to adjust to the change in how they accrue and spend their benefit dollars. 

To help determine if your company is going to move to self-funded insurance, take these factors into account:

• Your company’s timeline – this is typically a five-year or more commitment
• Your company’s stop-loss premium, which is an insurance purchased by employers who do not want to assume 100% of the liability for losses in a self-funded plan
• The amount of risk your company is willing to take
• How much cash your company has
• The company’s growth trajectory
• The five-year averages for insurance costs

Circle members noted that they did not have to expand their People team size to implement and manage self-funded plans long term. However, they recommend using a benefits broker for support during the plan transition. 

Self-funded health plans are surrounded by a lot of myths and Circle members had many questions for each other to dispel them, especially around expected cost savings. People leaders shared many learnings during the conversation from when their companies moved to a self-funded plan. One company projected significant savings, but experienced a spike in claims that significantly cut into those savings. Another saved money in the second year – thanks, in part, to adding stop-loss coverage – but didn’t see savings they considered meaningful in future years. A big unknown for companies can be the health of their employees, as they don’t always have that health data when they first move to self-funded. But once employers gather this during the first five years, it can help them financially plan for the long term rather than year-by-year.

The Takeaway:

With the cost of benefits increasing, people and finance leaders are understandably focused on how to maximize their company’s benefits at reasonable costs in the coming years. Growth-stage companies expanding internationally must have this conversation on a global scale, making it even more complex. But every challenge presents opportunities. In this case, people leaders can shift their company’s focus from global parity to health equity, confidently invest in the best benefits for their team and their business, and ensure these benefits are used to their full extent by employees. 

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