Hiring More Local Nationals? Here's What You Need to Know About Benefit Equity
Our latest International NGO Benefits Trend Report revealed an important trend in hiring and benefits: a dramatic increase in the benefits provided to Local National (LN) employees. The reasons for this are likely two-fold.
First, while we do not have specific numbers being reported, Allegiant has seen a significant increase in INGOs strategically looking for locals to fill positions abroad rather than sending Expats or Third-Country Nationals. Our Trend Report showed that we now spend 17% of our time focused on LN benefits, compared to 2022, when it was about 2%.
Many in the NGO space will be happy about this shift because, as World Neighbors pointed out back in 2018, “The localization of aid and increase of local staff capacity has a host of benefits, including greater longevity of project impact, gaining local knowledge, and the growth of skills and opportunities for local populations.” Back then, some were worried this movement was losing steam, but more than half a decade later, we are seeing a shift.
In addition to the reasons listed above, there are other incentives to change hiring practices. For some organizations, the motivation to hire more LNs may be a financial decision — as we often point out, providing benefits to LNs costs a fraction of what other employee types cost. Meanwhile, hiring locals already acclimated to dangers like extreme heat or local air quality somewhat diminishes the risks associated with sending people with chronic conditions (such as asthma) to places impacted by environmental issues. This can not only protect the people you hire but ensure maximum productivity.
Second, INGOs have been continually emphasizing the need to provide benefit equity to all employee types. Our data show that this effort is proving fruitful. If you fall into the first group and are strategically employing more LNs as part of your global mission, then there is a lot you need to know about this move toward benefit equity. As always, Allegiant is here to provide guidance and support in navigating this challenge.
The business case for benefit equity
While providing benefit equity to your employees may seem like the right thing to do, it’s also important to acknowledge that there is a business case for doing so.
It’s important to note that benefit packages are just as important to LNs as they are to any other worker. We offer employee benefits to attract and retain the top talent needed to complete our missions. HR professionals know that keeping existing talent is almost always more affordable than recruiting new talent. Hiring a new employee can cost up to $20,000, by some estimates. Even if that number is significantly higher than what it costs your organization to hire a new employee, it’s still more cost-effective to keep your Local National employees happy with a robust benefits package than it is to replace them. In turn, reducing turnover helps improve productivity and reduces downtime.
Speaking of productivity, Allegiant has found that locally sourced health plans are often subject to mid-policy changes. This impacts operations and introduces unwanted distractions. On the other hand, globally sourced health insurance plans have the benefit of being consistent and flexible, improving employee well-being and business standards.
Additionally, it is important to understand that local policies are not all created equal. In many cases, the local markets have not caught up to global solutions for equitable benefits. It is important to weigh all options, including regional solutions and universal private solutions, particularly when you are trying to cover more than one geography.
In the INGO world, reputation matters. It is increasingly important that mission-driven organizations live their values. Nothing undermines an organization’s credibility faster than hypocrisy. By ensuring insurance coverage does not limit or exclude certain employee populations, you can bolster your organization’s reputation with employees and even donors.
Keep an eye out for these potential benefit equity pitfalls
Nothing worth doing is ever easy, and that includes providing benefit equity. There will be plenty of obstacles along the way, but if you know about them in advance, you can be prepared to address them.
Budget is often the first issue you will run into, even though insuring this population generally costs thousands of dollars less than insuring any other employee population. We never want costs to be the reason an organization does not offer a comprehensive benefits package. Still, the initial change can be a shock to an organizational system. We often work with clients to find efficiencies in other areas of their coverage to help offset the initial increase in costs due to providing equitable benefits across the employee spectrum. The key is to build a better business case for investing in our talent.
Local challenges also need to be addressed. Sometimes, access to providers is a problem, and payment issues create unnecessary barriers to care. Increasingly, however, technological solutions are helping to address many of these concerns.
Change management is always important. Be prepared to communicate with your employees about the change, and work to get the local staff on board with the bigger picture. Even if you think the benefits of a shift in coverage are obvious, you still need to be ready to clarify that with your employees because people are often wary of any change. For example, it is often the case that even though the benefits are richer, the local staff may be resistant to going to a universal carrier because they feel they are losing "local support." It’s important to share specific examples of how the new coverage can benefit individuals and their coworkers. For example, under a local policy, a premature newborn might have limited care, but under a universal policy that care may be unlimited.
After more than a decade of working with INGOs from across the globe, we know one thing for sure: It is rarely a straight line from where an organization is today to fully equitable benefits. Even if your initial efforts stumble — or even fail — we urge you not to give up. We may be biased, but it’s important to have experienced partners help you navigate the journey toward equity. As we like to say, “Every hero needs a sidekick.”