As the economy recovery slowly gains ground, the year ahead promises to be full of transition. Bearing this in mind, Mercer has compiled a checklist of 12 action items that multinational organisations should adhere to ensure their international assignment policies are competitive and aligned with business objectives in 2012.
“Signs of economic recovery, particularly in emerging markets and a continuing mismatch in talent supply and demand mean that multinational employers must continue to deploy workers outside their home countries. Yet, the total cost of moving a senior executive with family abroad can easily be three times base pay,” said Phil Stanley, Mercer’s Global Mobility Center of Excellence Leader for Asia Pacific.
The beginning of a new calendar year is an opportune time for employers to take a careful look at their overall global mobility strategy to make sure it matches business goals. Here’s what the HR executives can do to ensure optimum management of their international assignments.
Strategy versus reality
Many expatriation programmes grow organically. In some cases, stated policies are undermined by serial exceptions. Organisations should determine whether they are operating by rules. If exceptions have become the rule, it may be time to review policies.
Divide and conquer
Treating globally mobile employees as a homogeneous group who need similar compensation, benefits and support structures may mean that organisations are providing too much in some cases.
Companies should consider segmenting their expatriate population by type of assignee and type of assignment.
Consider “local plus”
Employers should take a critical look at why each expatriate is working away from the home country. Are some employees locally hired foreigners or directly hired on one-way or indefinite assignments?
Mark your bench
Compensation and benefit levels change dynamically based on many factors outside organisations’ control. Employers who have not benchmarked their expatriate programme to see what the market is doing may be wasting money. Benchmarking can be based on assignment locations, type of assignee or industry practices.
Tend to family matters
Unhappy spouses, partners or children can make expatriates’ lives tough. Organisations should consider whether they are spending enough energy to prepare expatriates and their family members for life in host countries. Stay in contact with them continually throughout the assignment.
Emergency Exits
The political upheavals and natural disasters of 2011 demonstrated ways expatriates can be put in sudden danger. Organisations should not wait until another disaster happens before reviewing their emergency policies for expatriates, including swift evacuation.
Localise
Depending on the country, the sensitivity of the project and availability of talent, organisations may find it makes sense to hire locally rather than send an expatriate from a home country. However, localising an expatriate may not always be appropriate and can cause potential business disruption and unwanted attrition.
Cost of Living Adjustment
Organisations should re-examine the assumptions made when choosing how to compute cost-of-living allowances. Changing the COLA index can be both cost-effective and realistic.
Equalise taxes
To minimise the financial impact of income taxes on the assignee, most organisations adopt a tax equalisation policy. Doing so requires a number of assumptions about hypothetical taxes.
Realistic housing policy
Expatriate housing is one of the highest-cost components of every assignment. Organisations should establish reasonable guidelines for assignment locations and make sure these are clearly communicated in advance to potential expatriates.
Stay updated
The global economic crisis has resulted in some gyrations in currency exchange rates and purchasing power between home and host countries. Organisations should adjust to such fluctuations.
Welcome repats
Even employers with mature expatriation programmes drop the ball when expatriates return from years of service. Returning can be as stressful as making a new life in a host country. There should be communication programmes in place to ease the transition back home.
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