a false economy to use transfer policies that are too light in terms of support. Employees must be engaged and productive in their
roles. Policy content should therefore not only reflect the rationale for the assignment and its temporary or potentially permanent nature, but also ensure that employees and their families can hit the ground running and deliver strategic outcomes for their employing organisations. Regardless of the compensation package option selected, it therefore makes sense to offer some preparatory training, such as cross-cultural training and language support. A further issue to consider is that of equity. For the
benefits are all locally based, but the package is uplifted with the ‘plus’ elements of assistance such as housing, education and sometimes limited home leave, as well as tax briefings/preparation, to attract individuals to accept the role. The ‘plus’ elements are therefore likely to be greater than for one-way plus moves.
WHAT ARE THE DIFFERENCES? At first glance, it might seem that the differences between all these arrangements are minimal. The key issues to note are the differences in the treatment of social security and retirement benefits (home-based for host plus, but local for one-way/plus and local plus transfers) and the likelihood of providing ‘plus’ elements to support the transition to the new location or to attract people to the role. Under host plus arrangements, a range of ‘plus’ elements of support is likely to recognise the intention to return home at the end of the assignment. Under one-way plus/local plus policies, the level of
support to get to the host country and settle in is likely to be lower than for host plus arrangements. Ongoing support with factors such as housing, home leave and education assistance are also far less likely to be covered. Housing and education assistance are expensive elements in policy and without their provision costs would be expected to be far less.
WHICH POLICY TO CHOOSE? The choice of policy used must be considered very carefully. Organisations must attract, motivate and retain the very best talent if they are to be competitive. Policy options for transferring employees and their families abroad must be appropriate to meet this objective. It is
application of policy to be seen as fair, it is important to ensure that individuals understand why a particular approach is being applied to them and how this compares with that is offered to others in similar situations. Fairness and transparency are crucial to motivation and engagement. Whichever approach is taken, it is critical to communicate effectively. Certainly, the long-term social security and retirement benefit implications must be taken into consideration and explained carefully. Employment contract implications must also be considered and explained. Employers have a wide range of policy options
from which to choose. Flexibility is key to success in attracting, motivating and retaining a range of diverse candidates and widening the talent pool. Policy design should therefore embrace the notion of flexibility as far as is feasible.
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39
GLOBAL MOBILITY
POLIC Y DE SIGN
GLOBAL MOBILITY MINI FACTSHEET: RELOCATION POLICY DESIGN/IMPLEMENTATION
Short-term assignment policy design
GLOBAL MOBILITY MINI FACTSHEET: RELOCATION POLICY DESIGN/IMPLEMENTATION
Long-term assignment policy design
The use of short-term assignments and policy which sets out the terms and conditions that apply to this assignment type is increasing.
Short-term assignments are typically
defined as taking between three months and one year, although six months might be deemed the minimum linked to taxation issues.
Organisations typically have a policy that sets out the terms and conditions that apply to employees and their families undertaking long-term international assignments.
These are typically defined as taking between one and five years.
REMUNERATION OPTIONS A home country, host country or global approach may be taken to determine remuneration. Policy design should reflect assignment purpose. The use of long- term assignments for strategic positions at senior level may attract different allowances and benefits from assignments being used to fill operational skills gaps or as developmental opportunities. At the end of the long-term assignment, assignees usually return to their home country. Alternatively they may move on to another assignment. These issues can influence the choice of remuneration approach. Different approaches may also be used according to grade/salary level and for different combinations of home and host locations.
HOME-BASED PAY The most commonly used remuneration system is home-based pay, known as the balance sheet. Under this approach assignees retain equity with their home country peers. Assignees’ salaries remain linked to home pay scales and adjustments are made to the remuneration package to ensure home- country spending and savings patterns
REMUNERATION OPTIONS A home-based approach to pay is usually taken. This is because assignees are only working abroad for short periods. Upon completion of the assignment, the employee usually returns home. Host-based and global pay approaches
are less likely to be used for short-term assignments. However, if the assignment is planned for a year, a host-based pay system might apply. A series of short-term assignments
can form part of graduate mobility training programmes or as part of
are maintained. Tax equalisation is used so that the assignee pays no more (or less) tax than at home. Besides salary, this approach typically
includes allowances/benefits in relation to: training and preparation; housing and removals; travel, transport and home leave; family support including children’s education and dual careers; medical, health, security and welfare issues; cost of living, location, mobility and other premiums/allowances; and support with compliance. Under this approach assignees are,
theoretically, no better or worse off by working abroad than had they remained at home. When assignees repatriate their salary can easily revert back to the home country pay scale.
HOST-BASED PAY Host-based pay refers to local pay: the remuneration that international assignees receive mirrors that of local employees. Under this approach equity is maintained with locals in the assignment destination. A pure approach whereby assignees
receive nothing more than locals is rarely adopted. Normally a host- plus approach operates to reflect the additional costs and responsibilities of living and working away from the home country. Some additional support is usually given such as with housing and children’s education. This approach can work well if cost
adjusted net incomes in the home and host countries are relatively similar. If the local net salary is too low, compared to the home net salary, the assignment will be unattractive; if it is too high then the assignee may not wish to repatriate. Using this approach will require consideration of home and host tax, cost of living, social security and pensions issues.
middle manager leadership development interventions. Under these, assignees may progress from one assignment to the next and/or have just a short debriefing period back home. Global pay structures might be
applied to mobile graduate trainees and others undertaking successive short-term assignments but this approach is uncommon.
ALLOWANCES & BENEFITS Short-term assignments are
usually
undertaken unaccompanied. Allowances/ benefits provided reflect this. Assignees undertaking short-term assignments to fill skills gaps and/or train local staff are likely to have different allowances and benefits from graduate trainees on developmental short- term assignments. Graduate
trainee
programmes are likely to provide fewer benefits than for more senior staff and those moving for operational reasons. Besides salary, short-term assignment
policies typically include allowances/ benefits in relation to: housing (such as serviced apartments); travel and local transport; medical, health, security and welfare issues; cost of living, location and mobility allowances; and support with compliance. Short-term assignees must complete
their assignment objectives quickly and their productivity will be hampered if they are not able to operate effectively in their new culture. Cultural training should also be provided.
COMPLIANCE One of the key issues in managing short-term assignments relates to the number of days spent in the host country. Policy should address tracking days spent in the host country for tax and immigration purposes.
GLOBAL PAY Under a global compensation approach, assignees retain equity with other expatriates. This approach may be used when employees are continually globally mobile, moving from one assignment country to another, and they do not repatriate to a home country base. These remuneration structures can be
complex as they need to enable assignees to move between countries which may have very different salary norms, cost of living environments, and tax regimes.
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POTENTIAL DRAWBACKS Assignees need to adjust to their host country culture if they are to be fully productive and gain cultural competencies. Short-term assignments do not always provide sufficient time for this. Short-term assignments are
also
disruptive to family life and this can affect the profile of employees willing to undertake them, with consequent negative effects on assignee diversity.
FAMILY SUPPORT When assignees leave family behind, this can be beneficial for dual career couples who can continue in their respective careers. It also means that children’s schooling is not disrupted. However, family separation causes stress and can damage relationships. Organisations should support families
to reconnect. Employee assistance programmes can prove beneficial in supporting employees separated from their families when they are on assignments that are too far from home to enable trips back. Longer short-term assignments (such
as those planned for a year) may be accompanied by the family. If so, the policy will reflect this in respect of factors such as children’s educational provision.
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To access the Mini Factsheet series visit
thinkglobalpeople.com and find out about events, webinars and podcasts. Contact us
info@thinkglobalpeople.com
For comprehensive information on managing Global Mobility visit our sister website
relocateglobal.com
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© 2024: Relocate Global & Think Global People
© 2024: Relocate Global & Think Global People
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