April 17, 2014

Startup HR:Global Benefits Case Studies & Open Forum @AT&T Park

Edward Cha, VP Global Benefits Practice Leader, ABD Insurance & Financial Services, Inc.

Zaina Orbai, Director of Human Resources, Yelp, Inc.

Speakers

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Edward I. Cha

Vice President, Global Benefits Practice Leadered@theabdteam.com

Ed is responsible for the development, communication, and management of international programs and serves as a strategic consultant to ABD’s multinational clients on broad benefits issues.

He has been consulting with multinational and global firms for over eight years, with a focus on international employee benefits and foreign mergers & acquisitions. Previously, he was National Practice Leader, Client Services in the International Employee Benefits Practice for Wells Fargo Insurance, Inc. and Client Management Partner for Mercer LLC.

Ed earned his bachelor’s degree in mathematics with a minor in chemistry and a master’s degree in applied mathematics from the University of Illinois at Urbana-Champaign.

Zaina Orbai

Director, Human Resourceszorbai@yelp.com

Zaina joined Yelp in 2011 and oversees global HR Operations including Compensation, Benefits, Mobility and Compliance programs. She built the Yelp HR Operations function from inception to current.

Previously, Zaina worked for 10 years in the Retail & Consumer space and held several HR and management roles at Levi Strauss, Target and Mervyns. She has had the opportunity to work in a range of HR functional areas such as recruiting, talent management, employee relations, information systems and most recently compensation and benefits.

Zaina completed her Global Professional in Human Resources (GPHR) certification from HRCI. Zaina earned a bachelor's in business with a minor in management information systems from California Polytechnic University, SLO and an M.B.A. from the UCLA Anderson School of Management..

Goals for Today1. Learn something new that you can take back

to the office and use.

2. Network with peers to share best practices

3. Have fun!

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Intro to Global Benefits1. Managing benefits globally takes time and money

1. 1 employee vs. 100 employee in a given country

2. What are you trying to accomplish?1. Cost savings?

2. Ensure employees have adequate benefits?

3. Resolve attraction and retention issues?

4. Is there a global benefits philosophy in place?

3. Going from reactive to proactive management

4. Cultural Aspect

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The Big Picture• Global benefits are complex – but it doesn’t have to be.

• Over analyzing the situation• Story 1 – 2 employees in Brazil with little to no headcount growth.

• Under analyzing the situation• Story 2 – 2 employees in Brazil with potential for large growth.

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Case Study 1How are well-being programs implemented in different countries across different regions?

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Case Study 1• *Prices are only illustrative and can vary by provider, countries

included and headcount size.• Bronze: EAP & Work-life Services (support on adoption,

education, child care, etc…) = ~$1.50 pepm (per employee per month)• Silver: EAP, Work-life Services and Wellness Coaching = ~$2.00

pepm• Gold: The Bronze or Silver Package + a selection of below

services• Additional services:• Health risk assessment - $.50 pepm• Training/Seminars - $400/hour• Orientation Sessions - $350/hour• Crisis Support - $350/hour (minimum 4 hours)• Health Screenings - $120/participant (minimum 20 participants)• Tobacco Cessation Seminars - $1,450 (two, two-hour sessions)• Drug and alcohol testing – custom• Expatriate Services – custom• Interactive Self-Assessment Tool – custom• Life/Career Coaching – custom• Peer Support Groups – custom

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Case Study 2What supplemental benefit options are available in a given country for employers to provide and how does a company decide what the best options are for them?

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Case Study 2

Options to explore:1. Allowance/Cash Stipend

2. Reimbursement

3. Locally placed insurance products (e.g. local medical insurance)

4. Global insurance products

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Case Study 2

Allowance/Cash Stipend

Pros• Easy to facilitate (inform the payroll provider)• Easy to manage (you only manage the amount provided)

Cons• Generally not tax efficient (no tax breaks)• No guarantee the employee will actually use the money for benefits

(e.g. purchasing medical insurance or life insurance)

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Case Study 2

Reimbursement

Pros• You know the employee is securing benefits

Cons• Depending on how it’s done and individual country tax laws, it may or

may not be tax efficient• You may not have control over the level of benefit or plan design.• Cumbersome to administer (obtain invoices, pay invoices)• Possibly dealing with multiple individual plans

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Case Study 2

Locally Placed Insurance Products

Pros• If tax breaks are available, employer/employee would be eligible.• Benefit plan design is controlled by the employer• If the population is large enough for a group plan, medical underwriting

may be waived.• Can utilize a local broker to manage

Cons• Setting up benefits takes time, money and effort.• Continual monitoring and management, even with a local broker in

place – there are items the employer must handle.

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Case Study 2

Global Insurance Products

Pros• Benefit plan design is controlled by the employer, can have multiple

plan designs.• Easy to administer and enroll employees and dependents• No medical underwriting for groups larger than 20 employees across

any number of countries. E.g. 1 employee each in 20 countries. Typically this would be 20 individual plans.

Cons• Generally not tax efficient (no tax breaks)• Typically not admitted insurance (does not comply with local laws and

legislation)• Generally more expensive (but not always)

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Case Study 3What are some of the major challenges employee's face while traveling internationally?

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Case Study 3

• Potential challenges:• Substance Abuse

• Family/Friends/Relationships

• Repatriation (coming back to the home country)

• Kidnap & Ransom

• Political Risk

• Natural Disasters

• Potential solutions:• Global Employee Assistance Programs (EAP)

• Global Business Travel Accident Plans with Medical Riders

• Global Security and Evacuation Services

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Case Study 4What strategies are used for conducting a gap and needs analysis for global benefits programs?

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Case Study 4

Example Process:

Step 1: Global Benefits Inventory

Step 2: Global Benefits Benchmarking

Step 3: Coordination of Quotations

Step 4: Implementation

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Case Study 4

Step 1: Global Benefits Inventory

Key Data to Focus On:• Core Supplemental Benefits (generally, the most expensive

discretionary cost)1. Medical/Healthcare (Dental & Vision)2. Life Insurance3. Short-term disability4. Long-term disability5. Retirement

• Gather material plan information, e.g.:– Plan design (2x base annual salary, 60% of salary, etc.)– Insurer/Provider– Renewal Date– Premiums, Commissions or Fees– Notice Periods to Cancel– Cost-sharing percentage, if any

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Case Study 4

Step 2: Global Benefits Benchmarking

Key Data to Focus On:• Core Supplemental Benefits

1. Medical/Healthcare (Dental & Vision)2. Life Insurance3. Short-term disability4. Long-term disability5. Retirement

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Region CountryTotal

HeadcountHigh-level Recommendation(s)

Provided Medical / Typical Market

Provided Life / Typical Market

Provided Short-term Disability / Typical

Market

Provided Long-term Disability / Typical

Market

Provided Retirement / Typical Market

Americas Canada

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Possibly add dependent life cover and a retirement plan. With over 20 employees, it will be common to provide a retirement plan and may become an attraction and retention issue in the future.

Private Medical Insurance / Private Medical Insurance

1x annual salary with 1x AD&D, no dependent life / 1-3x annual salary with 1-3x AD&D & Dependent Life

75% salary / 66.7% salary

75% salary / 66.7% salary

None / Varies, but around 3-5% into a defined contribution (DPSP/RRSP)

Core Benefits that are Supplemental/Discretionary/Company Provided

High-level Global BenchmarkingBelow Market

Slightly Below MarketGenerally At Market

Slightly Above MarketAbove Market

Requires further information

Case Study 4

Step 3: Coordination of Quotations

Step 4: Implementation

E.g. for Ireland:• Obtain Irish Company’s name and address• Obtain Company contact – name, email, phone (whether local or in

Ireland)• Decide on subsidy (cost share) level for employees and dependents• Complete application forms for new members• Complete bank mandate• Present via web conference or in person at client’s office

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Case Study 5China - Where there is already provincial coverage, do companies tend to provide additional health insurance?

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Case Study 5

Factors to consider whether or not to provide additional medical benefits other than social security or statutorily mandated (process can easily be applied to most benefits):

1. If there is a social healthcare system – how good is it?

2. What do major benchmarking sources states is typical practice?

3. What do people on the ground today state is typical practice?

4. What can your firm even offer due to headcount size? Can you even get a group plan?

5. What if the employee has a pre-existing conditions and gets rejected on an individual policy?

6. Bottom-line – if the employee gets hurt, will they have some type of coverage?

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Case Study 6What are the "next big things" in global benefits after captives, global wellness, actively managed pools, etc.?

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Case Study 6

Improving on:

1. Global medical, life, disability and retirement programs.

2. Global online, on-boarding and enrollment systems.

What is on your international wish list?

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QUESTIONS?

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KEY LEARNINGSTO DATE

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GLOBAL FOOTPRINT

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1. Product & mission

2. Growth opportunities

3. Good place to work / Smart people

4. Compensation and benefits

EMPLOYEE VALUE PROP

MORE & MORE COMPANIES ARE “BORN” GLOBAL

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IT’S AN EVOLUTION

THE BASICS

Meet statutory & regulatory requirements

Allowances/Stipends/Reimbursements

THE WORKS

Healthcare Programs and Plans

STANDARDIZATION VERSUS LOCALIZATION

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IT’S A BALANCEDiscuss with management team:

• Type of talent needed?

• Number of employees?

• Testing or growth phase?

• Expats versus local employees?

• What do local employees value?

• Understand cultural norms

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UNDERSTAND LOCAL DIFFERENCES

COMMON VARIATIONS ACROSS COUNTRIES

• Government-provided benefits

• Government-mandated benefits

• Voluntary (not discretionary) benefits

• Market practice benefits

• Tax treatment of benefits

FINALLY…

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PARTNER WITH EXPERTS• Benefits Broker

• Third-Party Administrators

• Tax firm

• Employment law firm

• Immigration firm

• Mobility management company

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QUESTIONS?

Merci

Danke

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どうもありがとう

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Grazie

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Cheers

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THANK YOU!