Category Archives: Expatriates

Postings and discussions about expatriate programs and policies

Cutting Costs and Relocating Families With Children – An Optimistic View

Posted on June 4, 2009 by | 1 comment

Author:
Liz Perelstein –  School Choice International

 When companies are faced with the need to cut costs, education allowances are always an area of sensitivity.  Historically it was not uncommon for families to forgo an assignment unless their children got into the “right” schools, and the assumption was that companies would foot the bill for the entire education.  Often allowances included everything from school tuition and fees to transportation, meals and uniforms.  Assignees had no hesitation asking for exceptions for music lessons, exotic field trips to other countries, and it was not uncommon, certainly not unheard of, for a company to acquiesce.In today’s economic climate, when expatriate packages have diminished and localization is an increasingly popular approach when sending families overseas, there is a great deal of confusion about whether education allowances can be subject to the same type of austerity.  Localization plus packages usually continue to support schooling on assignment; for families otherwise being localized, support for schooling may be withdrawn more gradually or in stages.

While education has long been a sacred cow, it is not impossible to reduce corporate spending on education, and, in fact, local schooling may be desirable if we are to think about the real purpose of education, and the opportunity that a global assignment offers children.  In some communities overseas, children attending international schools are so sheltered from their host country that they never encounter a local person except for their maid and their driver.  To really learn about a country, many children may benefit tremendously from genuinely opening their minds to new cultures, languages and world views.

The key to including localization in corporate education programs is to do so thoughtfully, offering different approaches in different countries depending on whether or not local education is viable for an expatriate child, and it should depend on the country s/he comes from as well as the one s/he is going to.  An analysis of the local curriculum, customs surrounding education, as well as assessments should be compared with similar information from the home country at various age levels to ensure that children are not placed in a precarious situation.  Of course, exceptions for children with academic, physical or other special needs do need to be considered on an exception basis.

School Choice International has developed a web based tool called Global Education Explorer  which enables companies to compare this critical educational information across countries to ensure that policy decisions are grounded in research and information and not simply made in a vacuum.  If cuts in corporate education support are made thoughtfully and appropriately, our children can be our genuine future ambassadors in our quest for true globalization.

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Report from Mombasa – Africa Forum 2009

Posted on June 1, 2009 by | 8 comments

Warren Heaps photo

Author:
Warren Heaps – Birches Group LLC

Many of you will already know that last week, the second Africa Forum conference, sponsored by the African Development Bank, Birches Group LLC and ORC Worldwide, was held at the lovely Sarova Whitesands Resort and Spa in Mombasa, Kenya.  The conference was attended by representatives from leading employers in Africa, with delegates from Kenya, Tanzania, Uganda, Sudan, Democratic Republic of Congo and South Africa.  I was lucky to be one of the organizers and presenters at the conference, so I thought I would share some of the proceedings with you.

Keynote Address
The conference opened with a wonderful conversation with Dr. Sipho Moyo, Residential Representative for the AfDB in Tanzania.  Dr. Moyo spoke about what managers look for from HR in terms of support, ideas and insight.

Overview of African Markets
The keynote address was followed by an overview of African markets.  The presentation included statistics capturing the impact of the global economic crisis on Africa, through reduced GDP growth rates across the region, higher inflation (double digit levels in over 25 countries), and reduced trade.  There was also a discussion about the nature of the labour markets in Africa, and the key role leading employers across all sectors, including international public sector organizations, play in the market.  Finally, some summary market data was shared for all countries in Africa, with a special look at Kenya, Mozambique, Malawi and Nigeria.

African Cafe I
The next session was a series of small group discussions.  Three topics were selected by the group – Market Intelligence, Impact of the Global Economic Downturn, and Incentive Pay.  Each topic was featured as a discussion group, and  participants rotated through all three topics, thus having a chance to participate in all of them.  These were lively, interactive discussions, where participants were able to raise issues, share their experiences and learn from the experience of others.

Focus on East Africa
Since the event was held in Kenya, we turned next to an in-depth look at the East African market, focused on Kenya, Tanzania, Uganda, Rwanda and Burundi.  There was comparative data to highlight the similarities and also the unique features of each labour market in the region.

Building a Pan-African Workforce
A lively discussion followed led by Awinja Wameyo of AfDB, about the challenges the bank faces in building a workforce for their operations across 25 countries in Africa.  Topics of particular interest to the group included recruitment of professionals from the African diaspora, and the desire for diversity, and how best to achieve it.

Market Intelligence
Day Two began with an in-depth look at market intelligence, and how the Birches Group surveys are tailored to address many of the challenges faced in small, volatile markets, with such a wide range of practices.  Birches Group staff demonstrated the Indigo survey portal for the group as well.

We also spoke about the comparative framework — how to best determine the right approach to matching positions in the African market to survey benchmarks consistently.

African Cafe II
Next we had another series of discussions on topics chosen by those in attendance at the Forum:  Intra-Regional Assignments, Performance Management and Talent Sourcing.  It was a wonderful chance to share insights and learn from each other.

Untying Knots
Following lunch, we kicked off the final afternoon of the Forum with a stimulating presentation about Performance Management and Pay Design.  Gary McGillicuddy spoke about the Birches Group Community approach to performance management, which uses multi-rater feedback and the answers to three simple questions to manage evaluations effectively and efficiently.  Gary also spoke about the “Wedding Cake” of pay design, demonstrating that in an organization, time-based, competency-based and performance-based compensation systems can coexist to drive overall organizational effectiveness.

Employer Branding
The closing presentation was an overview of employer branding.  Curtis Grund of ORC Worldwide shared his personal experiences as well as a summary of the leading practices in employer branding.  Curtis also looked at some employer website to highlight best practices.

In Summary
The Africa Forum 2009 was a great opportunity for human resources professionals in Africa to discuss critical issues, learn about trends, and most importantly, share information with each other and form what we hope will be an ongoing network for sharing and collaboration.

We expect that Africa Forum will be repeated, next time in Southern Africa.  Stay tuned for more information about next year’s Forum.  We are grateful, also, to the African Development Bank, for lending it’s name and providing resources to make the Forum a reality.

Conference Presentations
If you were unable to attend the Africa Forum, but would like to receive copies of the presentation materials, please let me know by using the Contact Us link.  Just indicate your interest in receiving the Africa Forum materials.

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Birches Group

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Posted in Benefits, Compensation, Cross Cultural Insights, Expatriates, General, International Benefits

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Employer Mandated Health Coverage in Dubai

Posted on May 7, 2009 by | 2 comments

George Bashaw

Author:
George Bashaw – Atlas Global Benefits

On January 1st, the Dubai Health Authority (DHA) initiated the first phase of employer mandatory health insurance for expatriates and UAE nationals working in Dubai.  All expats new to Dubai must obtain a Health Benefit Contribution (HBC) compliant insurance policy.

Background

The population of Dubai has exploded from 300,000 to 1.5 million since the Department of Health and Medical Services (DoHMS) was created over thirty years ago.  Considering the growth and significant demographic changes in Dubai, the DoHMS has done an adequate job (World Health Organization ranks the UAE 44th).  Did I say something in “Dubai” is “adequate”?  The two words are mutually exclusive. In Dubai, they simply strive for the best.  Therefore, the DHA was established to accomplish this goal by 2015.  What does this mean for you?

Existing Plans

If you manage an existing health plan in Dubai, it is valid until it expires. Upon renewal during 2009, the new plan must be HBC compliant.  By January 1st 2010, all corporate health plans must be HBC complaint.

Payment and Administration

Who pays the HBC?  The employer pays the tab.  The HBC is a flat-rate for all employees, including UAE nationals and expatriates.  There is another hitch.  All HBC policies must be sold by authorized insurance companies. Since most employers will provide benefits above the notional standard, there is a group of authorized insurance companies waiting to sell you a top-up plan.

Choosing a Clinic

Not so fast.  All employees must choose a primary clinic to complete enrollment.  They can do so by visiting an OCP (Outpatient Care Practice)clinic in person, on the web www.dha.gov.ae, or through their employer.  Want the good news?  The employer may choose a default OCP clinic.

Employer Responsibilities

Just so there is no confusion on the rules, I copied this from the DHA website: 

  1. This is a mandatory system enforced by law – employers must comply
  2. Every employer pays a standard payment (HBC) to the DHA for every employee once a new HBC policy is introduced
  3. System will be enforced through a licensing system
  4. All employees covered by a corporate healthcare scheme by 12/31/08
  5. Employees not currently covered by an existing corporate health scheme must be provided with a HBC compliant scheme from 1/1/09
  6. Everyone covered by HBC compliant corporate healthcare scheme by 12/31/09
  7. Every employer is responsible for enrolling every employee with DHA
  8. This includes contractual responsibilities for dependents
  9. Every employee most register at a clinic before employer enrolls them with the DHA
  10. Employers to help employees register with a clinic

 Still have questions?

You are welcome to visit the DHA but I would rather you just ask me.

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Payroll for Expatriates – How Hard Can This Be?

Posted on April 18, 2009 by | 1 comment

Author:
Dave Leboff – Expaticore Services LLC

Why does it seem that expat payroll administration is so hard to get right? Why is it so hard to deliver pay correctly and timely to this class of 50 or 150 important employees when it seems so smooth for the other 10,000 or 100,000? The answer lies in the reality that payroll for expatriates often seems to be the second job of those involved.

Expat policies are developed with care and designed to compensate the employee fairly, facilitate mobility, be competitive with peer companies and are sensible economically. Policy development usually sits within the HR function. Executing that policy always requires the involvement of your payroll function which has to deliver and record expat compensation and benefits correctly and compliantly, in one or two countries concurrently – and often multiple two-country permutations.

Payroll professionals are talented, hardworking experts who handle thousands upon thousands of domestic pay transactions with 99+% accuracy. But their success is dependent upon the efficient application of rules to situations – many of them coded in the software they use. For example, limits for FICA or 401(k) contributions in the US require no effort by the payroll professional. They correct limits and computations are part of the tools they rely on.

With expatriates, the rules are not built in. For example, a US employee working on assignment in Mexico may have US payroll running every two weeks. In Mexico it may run every month. In Mexico there may be requirements to deliver 13th month and vacation pay as well as other legislated perquisites. How should this be reflected on the US payroll? Should the expat receive the extra Mexican benefits or should the payroll delivery be manipulated to eliminate them from the gross deliverable? There are foreign exchange interplays. Splitting pay is often involved. Paycodes and general ledger coding relevant to expat benefits need to be organized so that the underlying accounting gets done correctly.

As you can see from this simple example, payroll professionals must not only clearly understand how the company wants to address compensation and benefits for expats, they need to drive many decisions relating to how the compensation and benefits are delivered, how they are accounted for, how changes will be authorized and instructions presented to them. They need to ensure that there are proper codes set up so that items that may be exempt from tax in another jurisdiction show up as taxable in theirs if appropriate. They must understand when and how to “gross up” for taxes, which is not a simple process in many cases and software managing payroll around the world does not often have grossup capability built in.

So the next time you ask “why can’t the payroll department get the expats right?” understand that they are handling expat concepts that are unusual and complex. There are ways to reduce the burden on payroll professionals who deal with expatriates. We will continue to address these issues over time within this International HR blog.

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Posted in Compensation, Expatriate Taxation, Expatriates

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Reducing the Cost of International Assignments

Posted on April 17, 2009 by | 2 comments

mariblack

Author:
Mariana Villa da Costa – Littler Mendelson 

The current worldwide economic crisis is putting businesses under increasing pressure to control costs.  In spite of the challenging economic environment, however, companies are continuing to do business globally and even more small and medium enterprises are starting up international operations.  Along with this growth of international business operations comes the globalization of employment.  In addition to traditional “expatriate” assignments, more and more organizations are looking for alternative types of assignments which better address their needs, and have the potential to reduce costs as well.

Below are some ideas on how to tailor your approach to international assignments in today’s environment.

Examine Your Population 

For companies going global, look for early-in-career professionals who are seeking international assignments for their own professional development. This group is typically younger, and often anxious for the opportunity.  A lot of expenses associated with expatriate assignments are related to family members.  Since these assignees are often single, or married but have not yet started a family, many of these costs can be avoided.  Companies can create a developmental policy specifically for this situation, with allowances that are scaled back.

 “Volunteers” are a similar group – those employees that raise their hand to go overseas for personal reasons, or those with a lot of geographic flexibility.  Older employees, without the burdens of young children, are often in this category.  An added bonus – these are often the most experienced technical talent in an organization, and can be deployed effectively for technology transfer and other training missions.

Introduce Flexibility 

Expats are always keen to get cash and manage their own expenses.  Many companies have introduced lump-sum options in lieu of traditional expatriate allowances.  This allows costs to be capped, and also offers flexibility to the employees.  It is widely known that if the company gives the employee US$ 5,000 for housing, it is likely that the entire amount will be used for monthly rent.  On the other hand, if the cap for total housing expenses is US$ 20,000, the employee will allocate his expenses more wisely.

 Keep in mind, however, that in some locations, lump sums will not be very tax-effective, and could actually result in higher costs.

Proactively Manage Your Assignments

Another issue facing companies is so-called “permanent expatriates.” These are employees occupying important positions in highly desirable locations of the foreign operation for many years, who for a variety of reasons have not been reclassified as locals. The company needs to establish, in their internal policy and in the international assignment agreement, clear guidelines that outline when such a localization would take place, and then follow the guidelines.  Our experience shows that many organizations have policies for localization, but few companies actually use them!

Use Tiered Policies 

Many companies use a tiered approach to international assignments.  Depending on the type and reason for the assignment, the terms and conditions for the expat package vary.  For example, local or “local plus” packages are used for development or volunteer assignments; expat “lite” might be used for moves in markets where talent is widely available or early localization is desirable; and full expatriate packages would be used for senior level executives and leadership positions.  Regardless of the pay approach, though, companies must always be mindful of the career planning issues of managing expatriates.

Consider International Pay Scales

For employees in managerial positions, and executives that are going to a foreign location to develop and assess business, and that likely will undertake future assignments, the use of a single global pay scale is another idea.  The design of such a scale needs to account for the rates in which the company competes for this key talent.  In addition to pay, benefits and some allowances might be included as well.  

Summary 

Managing a global workforce prudently can be an important factor in the success or failure of a company doing business internationally.  Therefore, it is wise for companies to cultivate and develop new strategies to ensure their international compensation program is strategically aligned to their business, and also designed with costs in mind.

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Mariana Villa da Costa

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Littler Mendelson

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Repatriation Survey Request

Posted on April 15, 2009 by | Comments Off on Repatriation Survey Request

Friends

Below is a request from Stacey Peterson, a doctoral student at Florida Institute of Technology, seeking your help in identifying potential respondents for a survey she is conducting.  If you, or anyone you know would be a likely respondent, please forward the information.

Thanks,

Warren

===================================================

I would like to invite you to take part in a research study titled Repatriate Knowledge Sharing Environment: Measure  Development, which is associated with Florida Institute of  Technology.

The primary investigator conducting this research is Stacey M. Peterson, whose interests in this area grew out personal experiences as the daughter of a repatriate (i.e. employees who  have been relocated to a foreign country on assignment for a number of years and return to the home country upon completion) and doctoral work in the field of international business  practices.

This study investigates how the social dynamics of an organization’s culture may affect the utilization of repatriate international knowledge.  Repatriate Survey data will expand understanding and identify the factors necessary for a favorable knowledge sharing environment for repatriate knowledge.

To be eligible for this study, you must:

  • Work at an organization which employs repatriate employees (you do not need to be a repatriate)
  • Be employed at your current organization for a minimum of four  months
  • Participation in this study consists of answering a number of questions in an anonymous survey and will take approximately 20- 30 minutes.  Your personal information will not be recorded and, therefore, will not be connected to any of your responses. Additionally, your participation is voluntary and you may withdraw from this study at any time.  Your responses are greatly appreciated.

If you meet all the criteria and wish to participate, please access the survey through this link (or copy and paste the link in your address line):

http://www.questionpro.com/akira/TakeSurvey?id=1198397

You are kindly encouraged to forward this email to additional colleagues who meet the criteria.  Your participation in this research study is extremely valuable.  Your responses can help increase an understanding of the social dynamic influencing the use of repatriate international knowledge.  This, in turn, can then be successfully leveraged to give organizations an advantage when operating in the global marketplace.

If you have any questions, the researcher can be reached at sfehir@fit.edu or by phone at +1.321.674.0184.  Your time and assistance is greatly appreciated.

Stacey M. Peterson
PhD student
Florida Institute of Technology
Melbourne, FL 32901

Email: fehirs@aol.com or sfehir@fit.edu

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