T
raditional international assignments are long-term in nature and policy content is predicated on the return of the assignee and any accompanying family to the home
country. Home-based, balance sheet-style approaches to international assignment rewards are designed to keep employees ‘whole’, meaning they should be no better or worse off financially as a result of their mobility. However, with all the various compensatory
allowances included in the home-based package, employees are usually financially better off. Home-based assignment packages typically cost organisations around three times that of employing a local on host country terms. So, what are the alternatives if employers want to try to reduce assignment costs?
HOST-PLUS ARRANGEMENTS Host-based pay has long been an alternative to the home-based balance sheet. Typically, this style of compensation is based on the local market salary and so using it brings equity with local peers, rather than home- based colleagues. This approach works effectively as a means of
attracting and retaining mobile talent in countries with high pay. However, this can have the disadvantage that employees are not keen to repatriate if their net pay on assignment is significantly higher than it would be when they return home. This can damage employers’ ability to keep employees globally mobile and to facilitate the transfer of skills and knowledge. The host- based approach is also unlikely to be effective as way of attracting and retaining talent in low-pay countries. Host-based pay is not usually delivered in its pure
form; that is, exactly as it would be received by local people. Usually, allowances are given to recognise that assignees have home-country housing responsibilities and that accompanying children require education in a system that is compatible with their home country. As such, host- based pay is usually termed ‘host plus’, with the ‘plus’ elements also including in some (although not all) cases assistance with temporary accommodation, removals, home search, home leave and preparatory training. Host-based packages are designed to recognise the
temporary nature of the transfer and that assignees will repatriate to their home country. As such, they also take into account tax, pensions and social security issues. Tax briefings and preparatory support are usually given and employees pay local taxes. Where possible, social security and retirement benefits remain in the home country. Medical plans are also usually included in the policy.
This is typically either a local plan or an international plan, but the home country plan might be applied. It is important to remember that depending on the host country, the cost of using host-based compensation
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GLOBAL MOBILITY
POLIC Y DE SIGN
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