Author Archives: Warren Heaps

Developing Markets Compensation and Benefits Group on LinkedIn

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Posted in Compensation, General, Global HR Expertise, Performance Management, Talent Management

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NFTC International HR Conference Report – Part II

Posted on April 1, 2010 | 5 comments

Author:
Warren Heaps – Birches Group LLC

Alan Freeman and I both had the pleasure recently to attend the Houston International HR Conference sponsored by the National Foreign Trade Council (NFTC). This is the second in a series of posts summarizing the proceedings of the conference. We hope this will allow our readers to benefit from the learnings of the conference, even if you were not there personally.

Here are some highlights of some presentations at the conference that touched on various aspects of Expatriate Program Management.

Reducing Expatriate Program Costs
Expatriate program costs are an important topic for discussion whenever international HR folks get together. A presentation by Morgan Crosby and Harry Gram of Airinc focused on two areas that have a big impact on program costs – Housing and Alternative Policies.

Expatriate Housing
Housing is one of the most costly elements included in an expatriate package. It’s not uncommon for rental amounts to reach $4,000 to $5,000 per month, or more, and that’s not including the associated tax gross-up costs. In assignment locations with a broad range of acceptable housing for expatriates, the reason for such high costs is often the standard used. By standard, we mean the size and quality of the property, and most importantly, the neighborhood.

Morgan gave an example for London, where a company could save about 15% per year by substituting high quality housing in the London suburbs for apartments in the most prestigious locations such as Belgravia and Knightsbridge. This usually means that expats will have to commute a bit longer to work, and occassionally, it may mean they will be further away from international schools. But the housing in the alternative locations is perfectly acceptable and compares favorably to many different home country housing standards.

Alternative Policies
Another opportunity for cost savings is the use of reduced or modified policies in certain situations. Many companies are introducing development programs to offer staff the opportunity to gain international experience early in their careers. These employees are often very willing to take assignments with fewer of the ‘bells and whistles” associated with full expatriate packages.

Companies can respond to this by offering “reduced” expatriate packages. For example, a lower housing standard; reduced relocation assistance; and efficient purchaser COLAs. And, since the target population for these development programs are frequently young people, they often do not have school-age children, and some may be single, reducing the cost for spousal benefits and education assistance to nil.

Summary
There is an ever-increasing effort to reduce the cost of expatriate programs. These suggestions are just two of the alternatives companies may consider when looking to generate savings.

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Posted in Compensation, Expatriates, Global HR Expertise, Global Mobility Services, Relocation

Tagged expatriate, Expatriate Housing, expats, Flexible Assignment Policies, International Assignments, international hr

NFTC International HR Conference Report-Part 1

Posted on March 23, 2010 | 3 comments

Author:
Warren Heaps – Birches Group LLC

A few weeks ago, I had the pleasure to attend the Houston International HR Conference sponsored by the National Foreign Trade Council (NFTC). The conference was well-attended; over 150 delegates, both corporate staffers and suppliers were there. My colleague and contributing editor, Alan Freeman, was also there. We would like to share some of the highlights from the conference proceedings. We hope this will allow our readers to benefit from the learnings of the conference, even if you were not there personally. This is the first installment of our report.

Global Wellness
One of the most interesting and innovative topics at the conference was Global Wellness. Two companies, Chevron and Intel, presented their experiences with the development and implementation of wellness programs in the US and in various global markets. While each company took a slightly different approach, there were many similarities in their experience.

Chevron’s Experience
Chevron is one of the world’s largest integrated oil companies, with operations in over 100 countries. The company identified cardio-vascular health as a primary risk factor in their population and decided to focus on health awareness and improvement programs to address this risk. Chevron began their program with pilot tests in the US, Nigeria, Angola and Thailand, among others.

The wellness program consists of a health assessment conducted by a third-party, measuring basic health statistics such as blood pressure, cholesterol levels, body fat index, and similar risk factors. Employees are then provided with coaching on lifestyle and behavioral changes they can adopt to reduce their risk for cardio-vascular disease. Some of the changes are typically smoking cessation, exercise, weight reduction, stress reduction, sleep and healthier food choices in their diet. In addition, the company worked with it’s vendors in the the target countries to introduce heart-healthy options in their food service programs, introducing both new menu choices and some items with substitute ingredients or modified recipes, such as reduced sodium content.

The program has been a strong success, and is now being rolled out in additional countries. There were many learnings from the pilot experience, but here are a few that I thought were particularly powerful:

Cardio-vascular disease is often thought of as an illness that strikes mainly in developed countries. This was, in fact, the initial reaction in Nigeria. In fact, however, the World Health Organization reports that 82% of deaths from cardio-vascular disease are in low- and moderate- income countries, and affect men and women equally. Chevron’s employee demographics, which include large numbers of men in their 50’s, are a primary risk group.
The counseling sessions which followed the health assessment needed to be tailored to local conditions and culture. Suggestions for changes to diet, for example, had to be adapted to reference the typical food choices available in country.
The communications to staff were adapted to the individual market. While there was a consistent message, the images and illustrations were chosen to reflect the population of the particular country, so employees.
There were measurable results that indicate the program is helping to reduce risk for cardio-vascular diseases amongst the participants. As the program continues, Chevron will develop statistics to demonstrate specific financial and other impacts; but in the US, there is already strong evidence among a group of staff who have consistently participated in the program since it’s inception that it’s working.

The Intel Experience
Intel Corporation is the world’s largest manufacturer of semi-conductors. They rolled out a wellness program in the US and several overseas markets, including Malaysia, Israel, Costa Rica and China. Initially, Intel staff examined several years of health surveillance data to confirm that staff were properly protected from the chemical processes used in the semi-conductor fabrication process. The study indicated there was no effect from the work environment, and that rather, lifestyle behaviors were the larger risk areas for Intel employees.

Some stress-reduction programs were introduced, but it wasn’t until Intel CEO Andy Grove had a medical event that the focus on wellness was renewed and elevated in the company. Building on a substantial array of existing services, such as occupational medicine, on-site clinics and various online resources, Intel began to introduce a more dynamic program to help improve employee wellness.

The Intel program is a 3-Step Wellness Check, including a Biometric Health Check, a Health Risk Assessment, and Wellness Coaching. The Coaching is provided face to face in most major locations. In China, the coaching is provided in person by prominent local physicians. Follow-ups are also integrated with the local EAP. These design changes were made based on the recommendation of the local committee responsible for implementation of the wellness initiative in China. It has proven to be very effective, and Intel plans to continue rolling out the program to additional locations over the next few years.

Observations
I was quite impressed by the efforts of these two prominent global companies in the area of employee wellness. In both cases, the companies have a long-established focus on employee safety; the wellness initiatives are consistent with this focus and enhances this commitment.

What is especially impressive is the success in introducing the program not only in the United States, but also in overseas markets, mainly in the developing world. While it’s still too early to draw any major conclusions about the long-term impact of these programs on company health care costs, other related items such as absenteeism, and overall impact in the community, the preliminary data indicates positive impact for the companies, their employees and the community.

What Are You Doing to Promote Employee Wellness?
Global Employee Wellness is a new area of focus for companies, and there is a lot still to be learned. What is your company doing in the area? Please share your comments and experiences with us!

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Tagged Benefits, Developing Markets, emerging markets, Global HR, International Benefits, international hr, wellness

Third Culture Kids – Maintaining Stability in a Life Without Roots

Posted on March 21, 2010 | 3 comments

Author:
Megan Wu, GMS – Santa Fe Relocation Services (Shanghai, China)

[Editor’s Note: We are delighted to feature this article about Third Culture Kids by Guest Author, Megan Wu. Megan is herself a Third Culture Kid, and is now raising one of her own in Shanghai. In addition, she serves as Relocation Services Manager for Santa Fe Relocation, a leading relocation provider.]

The business of global mobility is all about helping people who find themselves in a foreign country and a different culture. Many assignees are families and with that comes a lot of worry on how the children will adjust to the move and the new surroundings.

When a child is moved from one culture to the next they instantly begin forming their own “third” culture to incorporate all the new and the old that they come in contact with, making them “third culture kids” (TCKs). A third culture child is someone who has grown up in a culture not their own. They feel that they no longer can completely assimilate with their home culture, and as they are a foreigner, cannot completely assimilate with their host culture; therefore forming their own third culture. How each child handles this cultural jumble does of course depend on each child’s personality, duration of stay, age, parental attitude, etc.

I am one such TCK, after moving to Shanghai in 1998 at the age of 15. I have lived in Shanghai for 12 years. Now that I am the mother of a 3 year old girl and facing questions on how to best raise my daughter in Shanghai, I have thought a lot about the importance/disadvantages/advantages of being a third culture child. Since my daughter is growing up raised by an American parent, living in China, she is very much growing up in the “third” culture that I myself have created. and all the benefits and challenges that come along with it.

Cultural Acceptance and Diversity
Growing up abroad has given me a greater understanding of other cultures. I have had the chance to come in contact with children from different cultures in school, and now in an international work environment. My friends and colleagues are from many different countries around the world, opening my eyes to different cultures. I have become more aware of the fact that there are different ways of celebrating, smells, tastes etc. This has given me the flexibility and a sensitivity that can be more difficult to obtain when living “at home”.

Learning and hearing foreign languages is also an important factor in the cultural growth of TCKs. The hopes of many parents is that the children will be able to learn at least one or even more languages while being abroad. This is not so easy. After several years in China, I did not speak more than basic Chinese, as most of my world was based in English – at home and in school. My understanding was more than basic, as Chinglish (Chinese and English mixed) was a common “language” at school and I achieved some comprehension of the language this way. It was not until I began studying Chinese seriously at University that I could combine all the conscious and subconscious knowledge I had to actually advance to fluent Chinese.

Based on my personal experience, and similar experiences of friends, I believe it is critical for parents to ensure that there is some aspect of the TCKs life that is submerged in the language they should learn – be that extra language lessons, a special activity or even just spending time with a maid/nanny that does not speak your own language.

Cultural Roots
The flip-side to being culturally aware and flexible is a sense of lacking cultural roots. Growing up, I was asked if I felt rootless every time I returned home for the summer, but could not quite understand the implications until much later. I always felt that I had stability of where I came from and what I stood for. This may not have come from my culture but rather from my family. Wherever my family was – this was home and I know what social/cultural rules applied. To me this has emphasized the importance of having consistency in the home environment – not only in terms of rituals, but also in terms of rules and values.

It was only upon my return to the US after graduating from high school in Shanghai and starting US University that I discovered what the effects were of my overseas experience. My lack of understanding of common conversations such as TV shows and politics was embarrassing. My gap of knowledge in the modern culture with regards to TV shows, commercials, programs/activities growing up, and that my peers did not understand my experiences, was a constant reminder of my time away from “the norm”. Reverse Culture Shock does exist and in my case, resulted in my decision to embrace my overseas experiences, return to my life a nomad and move back to China. Every child deals with reverse culture shock differently, of course. Some will see their return “home” as yet another adventure.

Social Skills
Going to school in a foreign country puts great emphasis on your social skills but also builds you empathy. At any international school around the world, each student will have been “the new kid” at one time or another. Generally I have found that TCKs will have a sense of openness and confidence in handling new situations simply because they have to! During school they will inevitably say many goodbyes to good friends; they have to make new friends continuously. This can lead to many good friends all over the world that will last for a long time, but can also create a situation where a protective mechanism is built up where “out of sight is out of mind”, leaving the TCK with few friends from a specific period in their life.

Reflections
Looking back I do feel that the advantages of being a TCK far outweigh the disadvantages. I will always be unique. In my role as a relocation professional, I will always have a different way of perceiving the world and a different understanding of the challenges that face our clients, especially the children.

Resources
There are plenty of resources either from the web or books where you can better understand your Third Cultural Kid. Here are a few websites that might provide you with more insight:

Whatever you do as a parent, the most valuable suggestion I can give you is: Tell your child that their life will be different, the lessons they learn along the way as a TCK will be valuable tools in their adult life, and most importantly they are not alone.

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Posted in Cross Cultural Insights, Expatriates, Global HR Expertise, Relocation, Repatriation

Tagged expatriate, expats, international hr

“Think Globally, Act Locally” for Compensation Design

Posted on February 28, 2010 | 2 comments

Author:
Warren Heaps – Birches Group LLC

A recent post by Chuck Csizmar focused on the “Easy Road to Global Compensation Success.” In his post, Chuck emphasized that taking a headquarters-country approach to managing compensation systems around the world might not be best, despite some perceived administrative advantages.

“Think Globally, Act Locally”
To steal the popular phrase used to describe environmental strategies, it’s really important to recognize that markets are different around the world, and company compensation programs should reflect a balance between global corporate philosophy and local practice and culture. Successful companies already recognize this when deciding which products to make and sell, how to market and promote them, pricing strategies, etc. So, it should not be surprising to find out that local reward practices differ from country to country.

Salary Scales – A Simple Example
Let’s look specifically at salary scale design to illustrate why local practice matters. Employers use salary scales to define the range of pay that is associated with particular grades or bands within their organization. The definition of the grading scheme should be global; there should be consistent measures of contribution used to determine job level, regardless of market, and they should reflect the corporate culture as well. But should there be one universal salary scale across multiple countries? I believe the answer is no.

Why?
The basic approach to designing a salary scale is defined by the span (difference between minimum and maximum) and the inter-grade differential, or IGD (increase from one grade to the next, usually measured at the midpoint). The table that follows shows two typical salary scale designs, for the United States and Kenya:

*Grade*	US		Kenya
*Grade*	*Span*	*IGD*	*Span*	*IGD*
Support (4-7)	50%	15%	400%	27%
Professional (8-10)	50%	14%	400%	27%
Manager (11-12)	50%	15%	250%	54%

You will notice several differences, including:

Spans in Kenya are much wider than in the US
Spans in the US are consistent between employee groups (although in some models there can be slight variations, usually wider for higher levels)
There is a much higher IGD between Professional and Manager in Kenya, than between Support and Professional; in the US, however, the IGDs are consistent

You can see the differences more dramatically when looking at a graphical representation of the scales in the two figures that follow (click the graphs to open full-sized views in a new window):

US Salary Scale Example

Kenya Salary Scale Exampe

One of the most dramatic differences is the big jump in Kenya between grades 10 and 11, and 11 and 12. In fact, we see this pattern in many developing countries around the world. The shape of the scale midpoints (the pink line) looks like a hockey stick, with the Managers grades (11 and 12) forming the head, while the other grades form the handle of the stick. Contrast this to the shape of the line in the US, which illustrates a more even rate of increases across all levels.

If you dig a little deeper into the numbers, you can identify some reasons why the scale designs in these two countries differ. For example, the market movement for salaries in the US averages around 3.5% (maybe even less last year). In Kenya, market movement in 2009 was over 20%.

With market movement over 20%, if the spans were like the ones in the US, employees would move through the band too fast, and quickly reach the maximum. The wider spans in Kenya also indicate there is great variation in pay levels in the market for the same positions. The Kenyan scale also illustrates that there is a much higher level of difference between the higher paid and lower paid staff, compared to the typical US scale (note: The US scale in this example excludes Senior Executives and CEOs).

There are many other examples of differences in how compensation is defined in a country, which elements are included, and how companies choose to adapt their rewards policy to reflect local culture and practice. Compensation and human resources practitioners are well-advised to become knowledgeable about each market and adapt their company practices accordingly.

What experiences have you had managing compensation in different markets? Share some by adding your comments.

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What Kids Say About International Assignments

Posted on February 22, 2010 | 11 comments

Author:
Michael F. Tucker, Ph.D, CMC
Tucker International

Some years ago, Art Linkletter had a featured segment on his television show “Art Linkletter’s House Party” called “Kids Say the Darndest Things.” Bill Cosby hosted a later version, and there were also similar series in the U.K. and Australia.

We at Tucker International have found this to be true today when we listen to kids accompanying their parents on international assignments. The following are some of the things we have heard from them during our intercultural training programs for them and their families.

The Turtles, the Cat, the Dog and the Orangutan
A ten-year old boy going to Indonesia insisted that he was only going to go if his two turtles, cat and dog went… unless his parents promised him a baby orangutan.

Mom’s Happy – Dad’s Happy, What About Me
A ten year old boy had this to say about the ease of the move: “My mom’s happy; she gets a maid. My dad’s happy; he’ll get a lot of money. I’m the only one in our family who feels sad about going. It will be easy for them. They are old!”

My Mom the Grandma
A ten year old girl summed up her feelings about how long she would be away from the U.S.A.: “When I get back, my mom will probably be a grandma.”

Boy Am I Lucky
A teenager’s view of the move: “I hate it. Everybody keeps telling me how lucky I am to get to live overseas. But they don’t have to do it… I do.”

The Pilgrims and the Indians “Over There”
A seven-year old girl from the UK moving to the Southern USA was listening to the story of the first Thanksgiving. When the part came up about the Pilgrim Fathers having the neighboring Indians for dinner on the big day, a look of horror came across her face. The youth trainer asked what “was the matter,” and the little girl replied, “Ohhh, the Pilgrims ate the Indians for dinner!”

My House, My Pet, Am I Next?
A nine-year old boy broke into tears as he was explaining the family’s international move: “My parents are selling my house and my dog, I think I might be next!”

We’re Not Really Moving?!!
On the first day of the pre-departure training program, (the family was departing on their assignment the following week), a twelve-year-old girl was asked how she felt about moving to Switzerland. She said “I don’t know. I haven’t really thought about it. I am not sure we are really moving.”

Some of these stories illustrate the need to provide high quality intercultural training for kids. Young people, generally ages seven and above, are very sensitive to changes associated with international relocation. They are sometimes left out during the international assignment decision and preparation process. It is very helpful to counsel and educate them on how to handle changes that greatly affect their lives.

Intercultural training can reduce fear and stress and create a more realistic and optimistic view about the international move. The results are young people about to become “third culture kids” who are happier, more supportive, adjust easier and have a willingness to culturally engage themselves in the country of assignment.

The best practice followed by many successful organizations is to provide intercultural training for assignees and their families. Many studies show that if the family fails to adjust successfully while on assignment, the likelihood of a failed assignment is high.

Does your organization include children in pre-assignment inter-cultural training? What has been your experience with children of assignees?

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Posted in Cross Cultural Insights, Expatriates, Global HR Expertise, Global Mobility Services

Tagged expatriate, expats, Global HR, international hr

What Would You Do As A New Compensation and Benefits Manager?

Posted on February 15, 2010 | 9 comments

Author:
Warren Heaps – Birches Group LLC

A few weeks ago on LinkedIn, Ravinder Bhan asked the following question:

“You have just joined a company with more than 15, 000 employees as a (Compensation & Benefits) manager. What are the first three things you would do to make a lasting impact at the organization?”

As soon as I noticed this question, I was compelled to answer it. Here is the answer I posted:

“This is truly an excellent question. For C&B to be an effective business partner and not just another run of the mill HR function, as you state above, it requires an immersion in the business.

To that end, here are my three things:

Understand the business. Talk to the business leaders, their deputies and employees. Learn what the company does. Don’t just sit in corporate and get opinions from those at HQ – go into the field and see what happens there. If it’s a manufacturer, visit a factory. Spend time with the sales force, meet some customers. And if the company is global, and you are responsible for international as well, get on a plane and follow the same steps in the key operations overseas.

Take inventory. Compile information about how the company manages C&B. Hold off on judgement – instead, focus on gathering information and getting a complete picture of what are the prevailing practices. Talk to managers about what’s working and what’s not. Learn the HRIS system and do some analysis yourself. Speak with the incumbent consultants to understand their role and their perspective about the company’s practices. Find an industry group of peers and get involved, and do some benchmarking.

Formulate your strategy for impact. To do this, look for opportunities to make changes that will improve efficiency and eliminate bureaucracy; programs to empower managers to manage rewards, and hold them accountable to do so; initiatives to support globalization (if applicable); develop dashboard metrics for management to measure effectiveness of C&B programs; and finally, cost-saving steps, such as multi-national pooling of insurance and strategic relationships with providers.

Of course, the above is not a one-year plan — it would take two or three years to achieve. But there would surely be a lasting impact.”

There were other answers to the question, about 15 all together. I was flattered to be cited as the Best Answer (many of the other answers were excellent as well). If you want to, take a look at the whole Q&A on LinkedIn. But the timing coincided with the Olympic Games, so I sort of felt this is my gold medal. Those of you who know me, know for sure that there is no way I will ever get a real Olympic medal :-).

These days, there is so much being stated about how HR needs to “get a seat at the table” and “become an effective business partner,” I thought sharing this topic with our readers would be beneficial. In particular, I am keen to understand what your first three things would be if you were to find yourself in the situation described above?

Would you follow the same steps that I outlined? Why or why not? What else would you do? How would your actions be influenced by the culture of country where you operate?

Please tell me your thoughts by leaving a comment. I am very anxious to read some more “Best Answers!”

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