10 suggestions to improve your global program.
By Ed Hannibal
Recent research from Mercer reports that most 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. The goal of most relocation programs is to attract and transfer the right employees for the right amount of time—all while controlling costs. Here are 10 ways to help navigate the global mobility landscape.
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 competitors. Employers need to know where their mobility programs fit in the competitive landscape, and decide how to adjust outlying elements. As the general economy emerges from an austere, cost-cutting time, some employers may find they have reduced too much to remain competitive. Other employers that have not benchmarked their plans for years may find that they are overpaying in areas such as incentive premiums or housing for mobile employees. That variation may be justified, but employers should at least know its direction and extent.
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. Such companies supplement surveys with interviews and focus groups. Having an unbiased party involved will garner more honest responses.
3. Expand your map. Many employers are pushing beyond typical expatriate locations of Hong Kong, Shanghai, London, and Dubai to less typical ones. As the global economy recovers, traditional expat cities are no longer central. Companies are investing where the gross domestic product (GDP) is expected to grow at above- average rates such as the emerging “MINT” countries of Mexico, Indonesia, Nigeria, and Turkey as well as Eastern Europe and second-tier cities in China. Make sure to incent your employees and have the proper support programs in place for transferees to adjust to—and succeed in—non-traditional host locations.
4. Find the right balance. While managers may be pushing for more flexibility with decision-making, it can lead to greater complexity in managing your program and less equity among expatriates. Exceptions to policies will occur, but be sure managers track them—and list reasons for them. Give your leadership clear metrics to understand the balance of priorities. Important metrics to track include total program costs, average cost per assignee, and turnover among assignees within two years after their assignments. Today’s technology offers the ability to track these metrics automatically as well as reporting.
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. Align expatriate programs to talent management strategies. As your company expands in other countries, it becomes increasingly important that senior executives have hands-on experience outside their own home countries. Even if they are solid managers in their home countries, they may flounder in international settings unless they have prior experience as an expatriate. Build a pipeline of potential leaders by placing talented employees in important geographies so they can earn critical skills for leadership development. This may require some forecasting. Be sure to calculate how long current leaders are expected to serve in their roles, what skills their successors will need, and where to invest in staff across the globe.
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. Some organizations will outsource the task of tracking employees’ locations and duration of time abroad to large travel agencies or relocation firms – but this approach will work only if all employees are required to make their travel plans through the designated agency. It is critical to also manage remuneration. Consider regular expense- reimbursement programs or a policy based on serviced flats accommodations with cost-effective per diem expenses.
8. Consider “local plus” as a compensation program. Are some of your expatriates hired locally or directly hired on one-way or indefinite assignments? If so, a “local plus” compensation package may be more appropriate. This program supplements local salaries with a handful of allowances. This approach has gained traction in Asia in recent years.
9. Localize when stay is extended. If your transfer has been in country for five or more years, it may be time to consider localizing them. This means aligning expatriated employees’ compensation and benefits package with local market levels.
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. Consider segmenting allowances for different levels of employees. Most cost-of-living indexes embed assumptions about employees’ familiarity with host location spending patterns. And if an organization has not revisited their allowance methodologies for a few years, they can result in overly generous cost-of- living allowances in many host cities. Global mobility experts have as many as six different indexes to choose among, and they vary by how efficient employers expect their assignees to be when shopping in their host cities. Changing those indices can be both cost-effective and realistic.
Ed Hannibal is global leader for Mercer’s mobility services.
Navigating the Mobility Landscape
10 suggestions to improve your global program.