A majority of multinational employers intend to increase the number of employees they send on both long-term and short-term global assignments over the next two years, according to a Mercer survey.
While some employers have large, mature mobility programs with hundreds of expatriates in dozens of countries, others have small, newer programs. Yet all want to attract the right employees and send them on the right type of assignment for the right amount of time – all while controlling costs and the amount of effort it takes to administer their programs.
To help companies better manage an expanding globally mobile workforce in 2014, Mercer suggests 10 resolutions:
1. Step back and get some perspective
Knowing where your assignment policies stand versus those of your peers is an important first step in maintaining an effective global mobility program. Some of your policies may vary significantly from those of your peer companies. That variation may be justified, but you should at least know its direction and extent. Also, the first of the year is a good time to check with leadership to confirm whether your global mobility program is meeting their strategic and operational objectives.
2. Get assignee feedback from the right source
Surprisingly, assignees rarely express dissatisfaction about their compensation and allowances in opinion surveys. But issues that typically bother them most – poor communications, lack of relocation support, ineffective service providers, and repatriation planning – cannot be fixed simply by spending more money. To get candid feedback that can result in meaningful policy improvements, consider using a third party that will keep assignees’ responses confidential.
3. Look at your map, then ask directions
Many employers are pushing beyond typical expatriate locations, such as Hong Kong, Shanghai, London, and Dubai to less typical ones (sub-Saharan Africa, smaller cities in China, Eastern Europe). Ensure that you have the proper incentives in place to support programs in non-traditional host locations. And look carefully at expatriates’ home countries; if they are leaving a relatively low-wage country such as India, the traditional “balance sheet” approach to compensation may not be appropriate.
4. Check for the right mix of flexibility, complexity, and equity
Flexibility can be built in at the business level (so managers can decide on certain optional compensation elements for expatriates) or at the individual level (using lump sums that expatriates can spend as they choose).
While managers may be pushing for more flexibility, it can lead to greater complexity in managing your program and less equity among expatriates. Be prepared to give your leadership clear metrics to understand the balance of priorities.
5. Scout host neighborhoods for new expatriates
Housing costs are often the largest discretionary portion of total mobility costs (after salary and related taxes), and local housing markets can change significantly during the year. For expatriates heading out in 2014, be sure to use timely, accurate, neighborhood-specific housing cost data for “host” cities.
Set appropriate rental guidelines and communicate them clearly to expatriates and relocation firms before they search for housing. Consider moving your approval process farther up the chain of command so that senior managers must approve exceptions to stated policies.
6. Match expatriate programs to talent management strategies
Define specific competencies for global leaders and then ensure their global mobility programs build “bench strength” to fill future leadership slots. As your company expands in other countries, it becomes increasingly important that senior executives have hands-on experience outside their own home countries.
For each assignment, consider whether it is growing the business, developing global leaders, or filling a critical skill gap, but do not leave talent mobility to chance.
7. Track your business travelers and short-term assignees closely
As governments seek new areas of potential tax revenue, employers need to know precisely how many days per year their business travelers and short-term employees are situated in which locations, both domestically and internationally. It is critical to manage not only their presence, but their remuneration. Consider whether they should be on regular expense-reimbursement programs or set up in serviced flats with cost-effective per diem expenses.
8. Consider “local plus” as a compensation program
Are some of your expatriates locally hired foreigners or directly hired on one-way or indefinite assignments? If so, a “local plus” compensation package (adding a handful of allowances to local salaries) may be more appropriate than a traditional home balance sheet package premised on maintaining home country ties. Local-plus adjustments may be particularly appropriate in Asia, where this approach has gained traction in recent years.
9. Localise when ties to a “home” country are loose
It may make sense to hire locally rather than to send an expatriate from a home country depending on the country, the expatriate’s role and purpose, and talent availability. Or you may be able to “localise” existing expatriated employees by aligning their compensation and benefits package with local market levels. Look critically at the duration of your longer-term expatriates’ tenure in their host countries – if they have been in-country for five or more years, it may be time to consider localizing them.
10. Tweak index-based allowances
Re-examine assumptions made when computing cost-of-living allowances and hardship premiums based on differences between home and host locations. Most cost-of-living indexes embed assumptions about employees’ familiarity with host location spending patterns. Changing those indices can be both cost-effective and realistic. In an increasingly global economy with younger workers, you may be able to reduce them over time.