Giant telecommunications equipment group Ericsson is gradually building a group approach to its international benefits programme. But for the Sweden's largest private sector employer, the pensions revolution happening in its own backyard is claiming much of the attention of benefits manager Hans Eklund, based at group headquarters in Stockholm.
We are starting to develop a number of benefit guidelines or principles, which are general ones. These are designed to support rather than interfere with what happens at a local level."
Being a new technology business, Ericsson often finds itself introducing systems into countries where it has never been operational before. "These companies need guidance, as they usually have no idea as to what they need to do." Then there are the countries where local subsidiaries are long established operations and well dovetailed into their local environment.
Eklund's philosophy is that when it comes to employment-related benefits "there is no set or right way of going about it", but that does not mean that there are no better ways. Among the general guiding principles, in his view, are: "To divorce local plans from social security changes", and "try to use our chosen networks for quotes and international pooling, if beneficial, where the opportunities occur". He adds: "We have not said as yet that networks must be used."
But the framework is being laid for a more formal group approach on the constancy side. "We are about to set up arrangements with two international consultants. So if a local company wants to contact them, the agreement and terms are all in place." Eklund would then be copied in as to whatever results from such local moves.
Another major step in his view is to undertake an audit of the different major benefit plans. "We just want to know what is going on, and we started with five countries in 1998 and we hope to increase this to perhaps 15 this year, covering 80% of the international workforce." UK consultants are being used for this exercise.
A more pressing need internationally is to have "global pension plan"(GPP) to cater for Ericsson's considerable population of people working outside a domestic pensions framework.
"Our whole aim is to keep people in their local, domestic pension plan for as long as possible, when they are working outside. Normally people are out just for one or two years and that poses no problems." The GPP is for those staying outside their domestic plan for a longer period, perhaps permanently. It is also, and increasingly, for a category that the group refers to as "freelancers", these are people who are recruited directly to be sent to another country, so in effect they have no domestic scheme. "These are largely English-speaking and, besides Scandinavians, will include British, North Americans, Australians and Germans," says Eklund.
The plan is based on a Swedish international plan, but is being adapted so as to be useful to as wide a range of nationalities. "It will based offshore and we hope to introduce it later this year."
International assignments are centralised through Stockholm, which makes it easier to co-ordinate these benefits. "Everyone with an international contract is organised through here."
Another initiative on the international benefits side is to introduce more flexibility so that individuals have more control over the benefits, perhaps trading them for cash according to their needs. "This is something we are looking at with PriceWaterhouseCoopers through their expatriate cost management service." With so many expatriates in the group - the numbers are hitting 3,300 at any one time, so the belief is that if costs can be controlled, then savings could be significant in the long run.
Eklund would not be surprised to find that much the same applies to co-ordinating benefits across the group. "It will probably never be possible to have one global pension scheme for the group," he says. "So what may be more realistic is to pool your assets company-wide. So all those assets you have in trusts, funds or with insurance companies, can these be put together? Our audit is the first step to seeing what we have in terms of investments and assets managers and whether all this can be put together." The outcome could be an approved list of asset managers, but he knows that this will take sometime to come to fruition. The first step will be to analyse the consultant's initial audit report which he hopes to be able to do shortly.
An issue he believes will thrown up by the audit process is the actual cost of benefits throughout the group, as well as those in the individual countries. This will focus minds on the substantial costs that are involved in benefit provision.
On the relationship between the centre and the local operations, Eklund is very conscious of the need to get the balance right. Being deeply involved in how the Swedish pension changes are affecting the group, he knows the subsidiaries are facing similar challenges in their own countries. He regards this positive rather than a negative: "What we are doing globally is held back sometimes by domestic issues. But there are advantages in being deeply involved in one country, because you can learn from that and perhaps apply this globally. People are agreed about their overall benefit objectives, for example, that retirement income should be two-thirds or perhaps 70% of final pay, but the ways will be different in achieving this. Countries have to be given certain amount of freedom, as probably no one way is right."
But discussion and information-sharing are essential and he wants to set up a benefits network within the company to discuss these issues. "This would ensure a two way flow about what the corporate approach is."
Erklund sees scope for disseminating benefit information group-wide, perhaps using something like the Swedish website which gives the workforce access to pensions and insurance benefit details.
A major part of Ericsson's business is within Europe, of course. "With the arrival of the single currency, the trend towards harmonisation will accelerate." The pressure from European employers cannot be ignored. "The single currency will make the comparison of benefits and their costs much easier and, as a result, business will move to the less costly areas if they can. The taxation structures will come heavily under discussion.""