According to Mercer, 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. However, attracting the best candidates and managing costs can be contradictory goals.
To help HR professionals balance these goals while managing a globally mobile workforce, Mercer offers these tips:
1. Aim before you fire. Global mobility programs should meet both talent needs and business needs. Elicit feedback from line managers and senior leaders to ensure that mobility programs are doing the right things — and not just doing things right. Use focus groups, interviews, and market research to get unbiased, current input on the program’s strengths and weaknesses.
2. Knock the barnacles off processing expatriate assignments. Look critically at the entire process of selecting, recruiting, enrolling, orienting, compensating, housing, managing, and repatriating expatriates. Consider some of the excellent software tools available to document and streamline administration processes, rather than using spreadsheets that vary by country.
3. Rationalize housing policies. Housing costs can constitute one of the largest portions of total mobility costs and local housing markets can be volatile. Use timely, accurate, neighborhood-specific housing cost data for “host” cities. Set appropriate, reasonable-cost rental guidelines and communicate them clearly to expatriates and relocation firms before the hunt for housing begins. Consider elevating the approval process so that more-senior managers must approve exceptions to stated policies.
4. Match expatriate programs to talent management strategies. Define specific competencies for global leaders and then ensure that their global mobility programs build “bench strength” to fill future leadership slots. As the company expands in other countries, it will become increasingly important for senior executives to 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.
5. Measure what needs to be managed. It may be a cliché, but “you can’t manage what you don’t measure.” Ask questions like: Can you give an ROI for your mobility programs? Would centralizing or decentralizing program management be more efficient and effective? What is the turnover rate of your mobile talent? Organizations must make sure they are pursuing goals that support the overall corporate strategy, and new analytics and metrics may be needed.
6. Reevaluate vendors. Are vendors fulfilling their service-level agreements? Would you hire the same vendors if you had to choose them today? From relocation management firms to tax preparers to cost-of-living data suppliers to compensation managers, organizations 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.
7. Rethink how health care is supplied. In many countries, the cost of providing health care to expatriates and their families continues to accelerate at rates higher than local inflation. Review mobility health care and wellness options. 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.
8. Consider “local plus.” Look critically at why expatriates are working abroad. Are they on temporary international assignments 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, a more localized 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 they have gained traction.
9. Localize when it makes sense. 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 organizations may be able to “localize” 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 localizing them.
10. Recalibrate indexes. Reexamine 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. Looking carefully at the rationale for supplying hardship premiums may allow them to be reduced over time.