In terms of corporate profile Microsoft needs little introduction. In the past, swift growth and global expansion meant that the IT giant often had to implement quickly pensions and related arrangements for its global subsidiaries.
Today, however, the organisation is refocusing on key issues such as remuneration and supplementary employee benefits; in part because the global IT industry has had to react to the tech crash and subsequent market downturn in terms of how staff are remunerated.
Sandrine Bardot, compensation and benefits consultant for Europe, Middle East and Africa (EMEA), explains that the structure for looking at these issues in the EMEA region works through four full time regional consultants who directly report to Luca Valerii, EMEA head of compensation and benefits.
Each has their own geographic responsibility for one or more countries as well as functional responsibilities for organisational issues across the EMEA region.
Bardot is in charge of the European HQ in Paris and on a country basis France, the UK and the Nordic region.
Her additional ‘functional’ focus is on sales and marketing staff across the EMEA region, which includes compensation design and benefit plan discussion.
In total, Microsoft has some 11-12,000 employees in EMEA out of approximately 56-57,000 worldwide, with EMEA representing the largest workforce outside the US.
In addition, the EMEA compensation and benefits team can lean on resources from the US via the company’s international benefits team based in Redmond. The US team offers support on particular issues such as driving an overall Microsoft benefits philosophy globally, reviewing local projects and approving them from a budgetary standpoint.
“What’s happening is that we are currently reviewing the organisation and the way people are paid. This includes issues like changes from stock option to stock grant provision to employees. The compensation philosophy also includes benefits.
“It is very early days but we are starting to consider how benefits could be redesigned and audits are being carried out to enable us to co-ordinate this with the salary review. “In this way local HR teams can come up with requests in terms of benefits and we can plan for the necessary budget. “Then if we get approval we have the time to implement things. It’s more co-ordinated than in the past.”
Regarding pensions, Bardot explains that there is an overriding corporate philosophy in that local companies cannot change benefits and have to get corporate approval for any revision, although as she notes: “they would be the ones making the suggestions for any improvements.”
“For example, in France we are considering making some improvements to our “retraite par capitalisation” (individual funded plans), maybe by increasing or extending the contributions to adapt to market trends.
“In general though as a company we try to stay at the median market level in terms of provision and in some places, due to historical reasons or the small size of our operations in the country, we still have work to do on this front to be at the market level.”
As a principle, however, the company is, unsurprisingly, DC oriented in what it wants to provide for pensions, as Bardot points out: “If we want to introduce something in a country and it is allowed by law then we would definitely look at DC and then follow what the law permits in each country.”
US pension provision at Microsoft is via a 401k plan. And so it runs in Europe, albeit in a simplified fashion. In Bardot’s home country of France the company introduced a DC plan and the firm provides similar DC arrangements in the UK and Ireland, for example.
For historical reasons, some jurisdictions have less corporate pension cover than others, as she explains: “In Italy we only have provision for executives, but there are plans to extend that cover to other employees because the state system will not be as generous in the future.
“In the Nordic region we already have pension schemes and in Sweden, for instance, pension contributions are currently calculated on base pay and a portion of the on-target bonus.
“We would like to extend that to cover an employee’s full on-target bonus, which is of course an extended cost to the company. This is being reviewed at the moment.”
Another of the company’s main endeavours, Bardot says, is in communicating to employees exactly what they already have as part of their existing packages.
“If you ask people they don’t have any idea what their benefits are worth and lots of companies are trying to improve this because it can have a tremendous impact on staff morale.”
Consequently, Microsoft is developing a software tool known as the “deal calculator”, where employees can access via the web a valuation of most of their total benefits package.
“Employees will be able to see salary, bonus, healthcare, pension contributions and employee subsidies in one calculation.
“In France for example, healthcare is fully subsidised by the company, which is quite rare and we want to tell people this kind of information.”
Similarly, Bardot says that in the UK the company has done a lot of work done on flexible benefits and pensions arrangements. “The same is happening in France where we have a representative of La Mondiale, our pension provider, who goes to our subsidiaries on a regular basis and meets with employees on a one-to-one basis to discuss pensions and salary packages. The fact that this is on a confidential basis with someone who is not from the company is reassuring for employees and has been very successful.
“We’re thinking of extending that to our European headquarters also.”
On investment, Bardot says Microsoft tries to pool assets, wherever possible and cost effective, for retirement, life, death and healthcare insurance. “We don’t have to pool though if we don’t want to, although we are trying to work with brokers in order to have more external help on these questions.”
The company also tends not to impose guidelines from its US headquarters on investment for its local pension plans overseas, which operate on an autonomous basis, albeit with an accent on cautious investing.
“The investment offering tends to be quite conservative and in some ways it doesn’t fit with the profile of the company, which has an average age of 35 years, so they could probably afford more risk. In France we tend to offer monetary and bond funds along with one more risky fund, but which only has an asset mix of 30% stocks and 70% bonds. There is, of course, the issue though that people are much less well educated on these kinds of issues in Europe than in the US.”
For mobile employees, the company took an interesting step by integrating cross-border workers into a specific company called Microsoft Global Resources (MGR), based in Switzerland. “Wherever it is legally feasible all ex-pats are employed through MGR. So irrespective of where they work they are employed by MGR and receive their salary in Switzerland and have a pension scheme where if they move around they receive the same benefits and pensions cover.”
Bardot believes the move was less of a cost-saving exercise than a useful construct to have ex-pats in the same company: “This way we can ensure that an employee’s work history can be tracked in order that they receive the same terms and conditions and don’t lose out on acquired pension/benefits rights when they move.
“As a company Microsoft promotes mobility, but you always have to take care with the people you send overseas, for how long and under what conditions.”
Going forward, Bardot expects Microsoft to increase its focus on healthcare and pensions issues particularly: “They are the big benefits that we provide and where we can look at issues of people contributing more or having more flexible benefits, top ups, or even to contribute less for some things they might not want, then we will.
“Overall, we want to have a benefits framework that our employees can use in the best way for them.”

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