Report Urges MNCs to Review Global Mobility Programmes to Control Costs

Multinational companies are now concerned about managing the costs of global assignments, especially since the total cost of moving a senior employee and his or her family abroad for a multi-year commitment – including compensation, benefits and housing – can easily cost three times base compensation, finds a survey by Mercer.


Many multinational companies have also identified finding qualified candidates for global assignments as a major concern, so attracting and retaining top talent is a primary goal for mobility programmes in 2013.


However, attracting the best candidates and managing costs can be contradictory goals.


"It is important to ensure that global mobility programmes meet both talent needs and business needs. Now is the time to elicit feedback from line managers and senior leaders to ensure that mobility programmes are doing the right things – and not just doing things right," says the Mercer report.


Housing costs can constitute one of the largest portions of total mobility costs and local housing markets can be volatile.


The recommend recommends the use of timely, accurate, neighborhood-specific housing cost data for “host” cities. Companies should set appropriate, reasonable-cost rental guidelines and communicate them clearly to expatriates and relocation firms before the hunt for housing begins.


The report also suggests asking questions like: Can you give an ROI for your mobility programmes? Would centralising or decentralising program management be more efficient and effective? What is the turnover rate of your mobile talent?


"Organisations must make sure they are pursuing goals that support the overall corporate strategy, and new analytics and metrics may be needed for 2013," says Mercer.


The report also recomments re-evalution of vendors. From relocation management firms to tax preparers to cost-of-living data suppliers to compensation managers, organisations should look critically at their vendors’ recent performance. It may be time to outsource, in-source or “re-source” some of the many special services that expatriates require, says the report.


Cost of Healthcare
In many countries, the cost of providing health care to expatriates and their families continues to accelerate at rates higher than local inflation. Now is a good time to review mobility health care and wellness options, says the report, adding that this aspect of living abroad can vary dramatically from country to country, but health care and wellness is a significant element of overall expatriate remuneration that deserves careful attention.


Companies should also look critically at why expatriates are working abroad. Are they on temporary international secondments to be repatriated after their objectives are met? Or are some employees locally hired foreigners or directly hired on one-way or indefinite assignments for a permanent role? For the latter employees, the report says, a more localised or “local plus” compensation package may be more appropriate than a traditional expatriate package based on maintaining ties to a home country.


Local plus adjustments may be particularly appropriate in Asia, where it is has gained traction.


According to the report, depending on the country, the expatriate’s role and purpose, and the availability of talent, it may make sense to hire locally rather than to send an expatriate from a home country. Or organisations may be able to “localise” existing expatriated employees by aligning their compensation and benefits package with local market levels. If expatriates have been in-country for five or more years, it may be time to consider localising them.


"Now is a good time to re-examine assumptions made when computing both cost-of-living allowances and hardship premiums based on differences between home and host locations. It may be appropriate to adjust cost-of-living differences in host countries based on assumptions about employees’ familiarity with host-location spending patterns that may already be addressed in other company allowances or in benefits in kind. Changing indices can be both cost-effective and realistic," says the report.


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