ORC Sightlines

September 2004

Localization on the Rise; Policies Play Catchup

ORC’s 2004 Worldwide Survey on Localization Policies and Practices shows that the practice of treating expatriate employees on a local basis—that is, employing them essentially according to the same terms and conditions as employees originally hired in the location—has increased over the past two years and is expected to grow even more in the next two. Three hundred and eight multinational employers, most headquartered in North America or Europe, responded to the survey.

Less than a third of companies in the survey have a uniform formal policy in place governing these types of assignments. Many companies are in the process of writing policies for the first time or amending existing policies. The difficulty, as a number of participants noted, is to make a policy that is flexible enough to take into account complicated issues of immigration law, taxation, pensions, and loss of net income. The survey report provides data on how companies are dealing with these complexities, including:

For example, 22 percent of responding companies who pay employees on expatriate assignments according to local terms and conditions enroll them in the local pension plan, while 41 percent keep them in the home-country program. If local status results in a significant decline in the final pension from private and state sources, 38 percent of companies provide some additional assistance to the employee.

For more information on the survey, or to purchase a copy of the survey report for $300, contact Samantha Blackhurst, Samantha.blackhurst@orcww.com; 212-852-0308.

Higher Pharmacy Costs Can Yield Lower Total Health Costs

As employers grapple with escalating medical insurance costs, many have restructured their pharmacy benefits so that employees share more of the costs for prescription medicine. An unintended consequence of this strategy, discussed by members of ORC’s Occupational Safety and Health Physicians group at its last meeting, is that, as co-payments rise, employees with chronic conditions such as asthma, diabetes, or heart disease are less likely to comply with their doctors’ recommended drug regimens. As a result, various studies have shown, treatment for serious complications increases. For example, a RAND study of 30 large US employers over four years found that when prescription copays went up, use of drugs for chronic conditions decreased by 22-26 percent, while emergency room visits increased 17 percent, and hospital stays rose 10 percent. The bottom line is that increasing employee costs for prescription drugs can lead to higher total health care costs for employers.

Member companies that have implemented disease management programs have seen success in managing health care costs for chronic illnesses. These programs rely on patient education and financial incentives (e.g., lower employee copays, free lab work) to encourage employees with chronic conditions to monitor themselves and stick to their drug therapy programs. While companies with disease management programs report higher prescription drug costs as a result, they also experience decreases in lost time and in total health care expenses.

The ORC Occupational Safety and Health Physicians Group is a network of corporate leaders in the field of occupational medicine, drawing members from most innovative multinational Fortune 500 companies. The next meeting will be in February. For more information on the Physicians Group or on ORC’s other occupational, safety, and environmental forums, contact Linda Haney at 202-293-2980 or linda.haney@orcww.com. You can also read about these networks on our OSH web site at www.orc-dc.com.

State-of-the-Art HR Information Systems

At the joint meeting of ORC’s two HR information technology networks in September, members discussed the progress they’ve made on developing robust, value-adding systems and the problems with which they are still contending. Four major trends in the state-of-the-art became apparent:

ORC’s information technology forums are for executives and specialists concerned with the future developments in human resources that can be supported and advanced by effective information technology.

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