Daunting complexities that are associated with developing any employee benefits program multiply as companies continue to globalize.

Different countries' cultures, laws, regulations and health care structures as well as firms' desire to compete for top talent while keeping an eye on costs are just a few of the factors that must be taken into account.

Other factors that must be considered in determining multinationals' global benefits strategy include whether the internationally based employees are local or expatriates, if the business is new to the country or is well-established, whether the local operation is a startup or an acquisition, the size of its presence in a particular country or region, and the local employees' benefits expertise, according to experts.

Meanwhile, the Sarbanes-Oxley Act's financial reporting requirements in the United States are leading many companies to centralize their benefit operations after many years of decentralization. But many are finding the crucial first step of data gathering--to determine what they already offer--a difficult task to accomplish, experts say (see story, page 16).

"The first hurdle to get over is to understand that the world doesn't operate like the U.S. operates," said Richard Polak, president and chief executive officer of Los Angeles-based IBIS Advisors, an international HR consultancy.

Anthony Amato, vp of benefits and corporate travel for Silver Spring, Md.-based Discovery Communications Inc., which has 900 employees in 30 countries outside the United States, agreed.

"I think the biggest challenge is shaking off your U.S.-centric, or your U.S. thinking, your U.S. mentality" in developing programs in other countries. Sensitivity to the local culture and business practices is a must, Mr. Amato said.

Mark Wood, vp, human resources for Novato, Calif.-based BioMarin Pharmaceutical Inc., said, "There's a practical challenge of integrating the different ways of doing business in different countries with our kind of standard way of doing business here in the U.S.," whether that involves logistical, operational or compliance requirements.

The firm produces biopharmaceuticals for rare diseases and medical conditions.

"We need to constantly remind ourselves of the international requirements of what we do and remind our international folks of the international implications of what they do," said Mr. Wood, whose firm has 20 international employees in seven nations.

Ford Motor Co. has developed five "books" that outline its strategy and procedures for its compensation and benefit programs, said Michael Bush, Ford's Dearborn, Mich.-based director, income security programs, U.S. and global operations.

"We've tried to set up a system that is almost like a cookbook for the field," Mr. Bush explained. "It's all online now, and the HR people can pull this information up and see it."

Interacting locally

Firms must determine how their benefits programs intersect with the local national health system, said Bill Maloney, Phoenix-based worldwide partner with Mercer Health & Benefits, a unit of Mercer Human Resource Consulting.

There are differences even among countries with national health systems, "so consequently the benefits that an employer's going to purchase are going to reflect how that health system is set up," said Mr. Maloney.

For instance, while Canada and the United Kingdom both have national health care, in the United Kingdom, employers can buy supplementary policies that give employees better access to the national health system and reduce waiting times. In Canada, regulations "prevent that kind of private insurance," Mr. Maloney said.

Meanwhile, particularly in Latin America and Asia, "there's a great shift away" from having the government provide benefits, said Greg Arms, New York-based chairman and executive vp of Willis Group Holdings Ltd.'s employee benefits practice.

Jayne Lux, director of the Global Health Benefits Institute, an initiative of the Washington-based National Business Group on Health, said a U.S. wellness program could be extended to and successfully rolled out in Canada or Australia. "Can you then roll it out to Africa or Bangladesh, or one of the many countries that have what many would argue to have greater cultural and certainly greater language differences?" she asked. "I think the feeling now is, you can't."

In that case, the next step is whether to change the existing program or collaborate with local colleagues to develop something new, said Ms. Lux.

Competitive considerations

Competition for talent is a factor as well.

Suzanne Wamba, director, worldwide health and welfare benefits for New York-based White & Case L.L.P., which employs about 4,400 in 25 countries, said the law firm sees benefits "not only as part of remuneration, but as a very core component to attracting good talent."

In the United Kingdom, for instance, there is a "very established practice" of providing company vehicles to managers, "so to be competitive, any U.S. company operating in that marketplace has to offer a similarly competitive package of benefits," said Steve Rimmer, New York-based principal with PricewaterhouseCoopers International Ltd.