Evolving business needs and new market challenges are putting pressure on companies to adapt their approach to expatriate pay and policies.
Increasingly diverse global business scenarios and workforce demographics are driving the need for more flexible, business-enabling mobility policies and practices, reveals the Managing Variety in International Mobility survey conducted by ECA International.
While the survey revealed that companies are reporting increases in all assignment types, four out of five surveyed now use more than one of these to support an emerging variety of business needs for international mobility.
The short-term assignment, in particular, is gaining in popularity as a solution for filling skills gaps, accommodating temporary project work, providing career development opportunities and overcoming barriers to mobility.
Over 60% of companies globally expect to see a rise in the number of their short-term expatriates compared with 43% for long term assignments.
"As more companies from more parts of the world expand their operations worldwide, the business objectives and markets in which they operate have become more diverse," explains Lee Quane, Regional Director, ECA International - Asia. "This is putting greater pressure on those managing international assignments as they juggle an increasing number of variables, such as attracting talent while controlling costs."
Quane notes that companies need to rethink their existing global mobility strategies if they are to remain relevant and effective in supporting long- term business and talent priorities.
While cost containment is a major driver for global mobility policy reviews – especially since assignment costs are typically greater than those incurred at home – companies are having to balance this with providing expatriate packages attractive enough to secure and retain hard-to-source talent.
The difficulty of finding people with the right skills and mind-set to work away from home is prompting companies to widen their recruitment pools internationally, further increasing the number of nationalities they have to manage: over half now report that their assignee workforces comprise six or more nationalities.
This too is adding to the growing number of complex scenarios global mobility teams have to manage in terms of home-host pay and conditions for their expatriate staff.
Traditional expatriate compensation approaches, whereby the salary is based on home-country pay rates, are also under review. Businesses are increasingly looking into alternative methods to best meet variety in business objectives and country combinations.
A traditional expatriate package usually consists of three components; cash salary, benefits – such as accommodation, international schooling, utilities or cars – and tax.
In contrast, a local plus approach is based on a salary derived from local pay levels, which only supplemented by additional expatriate benefits and allowances. Typically the employee is also responsible for all tax liability.
Over 50% of companies reviewing expatriate pay intend to adopt local-plus pay packages basing salary on local pay rates and supplementing this with some additional expatriate benefits and allowances.
The trend towards using this approach is greatest among Asian based companies. Nearly 60% of Asian MNCs intend adopting it.
However, most companies did indicate that this approach would depend on the transfer location and employee’s seniority rather than be introduced across the board.