Category Archives: International Expertise

Red Flag for Global Recognition Programs

Posted on November 15, 2009 by | 9 comments

bio_400x400 Author:
Chuck Csizmar – CMC Compensation Group

When designing programs to recognize and reward an employee’s extraordinary achievements it’s important to understand the cultural implications of these programs.   Companies with a truly global operating mindset, vs. domestic-oriented organizations with international operations, will take into account national and cultural differences that distinguish its widespread employee populations.

One size rarely fits all.

You might think that the positive aspects of employee recognition programs are a universally accepted principle, but that’s only partially correct.  Important differences exist.  In some cultures / national identities the role of the team is such a core element of employee identification that seeking out an individual contributor for recognition would not be a welcome practice.  Some employees might be reluctant to step forward, or to be pushed into the spotlight.

In other countries you will find that the perceived value of cash as a recognition award varies a great deal.

Case study

A former employer of mine once implemented a global Spot Award program for its worldwide employees – without including their international HR community in the planning discussions.  Finalized program elements and procedures covered employees in over 20 countries in exactly the same fashion.  The premise was to provide immediate (read that, fast) recognition and financial rewards (Spot Awards) for those employees who demonstrated performance above and beyond their normal job roles.  Nominations for awards would come from an employee’s manager, though employees could recommend co-workers as well.

While the program was deemed a success in the US (though defined by only the dollars spent), it was much less successful elsewhere among the company’s far-flung international operations.

Lessons Learned

The first problem was that Managers outside the US placed a much more conservative financial value on so-called “extraordinary” employee contributions.  Or put another way, the US Managers were more generous in their payment awards than elsewhere.  The result was that the cash payments on a per-employee basis were widely skewed to the US employee.  Notwithstanding the vagaries of the various currency exchanges, the international offices did not spend their allotted recognition reward monies as frequently or as generously as their US counterparts.

I recall one scenario where a US employee received thousands of dollars for a particular project effort, while their European counterpart was given a non-cash award (recognition dinner).  This created more than a few awkward moments when the two employees shared experiences.

The second challenge was that many international employees did not want to be individually spotlighted by the recognition program.  They were willing to receive the award, but would rather the recognition be confidential.  Given that Corporate had planned an internal communications campaign to highlight individual award winners, that reluctance proved quite a hindrance.

Compounding the preference for anonymity was the desire for team over personal awards, as individual employees proved resistant to receiving the planned fanfare or preferential treatment – especially in front of their co-workers (team members).

The bottom line was that the recognition and reward program recognized a smaller than anticipated number of non-US employees, less reward money was spent per international employee, and Corporate Communications was hard pressed to find international employees amenable to being highlighted for the program.  Not exactly what the program designers had intended.

Corrective action

The answer seems straightforward, does it not?  If a global program is to affect all employees, then possible national or cultural distinctions among groups should be addressed, well in advance.  However, that would mean including representatives from those groups in the design and communication phases of the project.  Such a simple step seems a difficult one to take for many corporate plan designers.  Why?

When they have the bit between their teeth developing a program that affects the majority of employees, management is often reluctant to change course to include the differing sensitivities of small populations, especially if those populations do not speak with one voice.  What they prefer to do is have local representatives “tweak” the round peg into the square hole.

How does that work for you?

 

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Posted in Compensation, Cross Cultural Insights, Global HR Expertise, International Expertise, Leadership Development, Professional Development

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Directory of Links for International HR

Posted on November 11, 2009 by | Comments Off on Directory of Links for International HR

heaps_warren1Author:
Warren Heaps – Birches Group LLC

For some time, we’ve had a Links page on the International HR Forum Blog, but it has been perpetually under construction.  Well, it’s now time to finish the construction, and make the Links page a valuable resource for international human resources practitioners.

This will be an ongoing effort to gather, vet and categorize potentially dozens or even hundreds of web sites.  To get things started, we would like to invite you, our readers, to tell us about your favorite online resources.  We’ll take care of sorting through all the suggestions, setting up logical categories and making the Links page a useful reference.

So please, send in your suggestions now!

Just type in the information in the box below, and click Submit.

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10 Rules of the Road for Your Expatriate Program – Part II

Posted on October 19, 2009 by | 7 comments

bio_400x400 Author:
Chuck Csizmar – CMC Compensation Group

Last week I posted the first five of ten “Rules of the Road” for managing your expatriate program.  I hope you enjoyed reading them.  In this post, I’ve included the five remaining rules.  Enjoy!

Rule #6: Always have a Backup Candidate
It is very important to avoid a scenario where management believes that only one person is capable of handling the assignment.  If all your plans are dependent upon one candidate, and your choice discovers this (they usually do), the assignment from that point will likely become more contentious, problematic, internally disruptive and ultimately more expensive.  You will have lost leverage when trying to apply Company policies, demands for exceptional treatment will increase, costs will rise as a result and the likelihood of equity issues with other employees will increase.

Having a second choice will enable you to more easily finalize an equitable package of terms and conditions, test the candidates’ genuine interest in the overseas assignment and lower inflated egos down to earth.

Rule #7: Do Not Play “Let’s Make a Deal”
Everyone tends to lose on this slippery slope.  The expatriate community is a small group that will eventually learn of any special deals someone received that others did not.  While the expatriate policy document should provide a “safety valve” for approved discretionary exceptions covering extraordinary circumstances, be mindful of creating precedents where the sole reason is to placate an employee (or their spouse).  This problem can be a major dissatisfier for the rest of your community.  Explore cost sharing and trade-offs with the expatriate to mitigate the perception of inequitable treatment.

Certain employees, especially those with a sales background or like temperament, may view many aspects of the assignment terms and conditions as negotiable, simply because it is in their nature to question or challenge what they consider is the Company’s “initial offer”.

A word of caution:  if the employee considers the international assignment less as a wonderful career opportunity and more as a “favor” to the Company, the warning signs should be posted that this might not be a good match.

Rule #8: Have a “Hand-Holder” in Place
Another key to a successful assignment is to provide a ‘go-to” person in the host country for the myriad questions that will crop up as soon as the assignee arrives.  Set up a local contact point for host country issues, expatriate experiences and administrative fulfillment of the assignment terms.  Insist that the assignee utilize this person, not their manager, co-workers or even well-intentioned HR people unfamiliar with the expatriate program.  This go-to person should have the authority to make decisions, to “handle” whatever the question might be.

While this sounds like an easy step do not assume that anyone would automatically take this task to heart.  Left to their own devices, host country employees often find it difficult to invest the time to help assignees understand local business conditions and culture.  Thus you need to make it someone’s responsibility.

Likewise there should be a contact person in the home country as well, a designated individual prepared to handle policy interpretations, provide advice on navigating procedures and assuming responsibility for the home administration of the assignment terms.

Rule #9: Do Not Forget That They’re out There
A successful assignment requires constant attention from both the home and host country contacts.  Communication should be frequent, as should the “check-up” calls to gauge the assignee’s temperament.  For example, does the assignee understand the COLA calculations, have any payroll or currency exchange issues arisen, is the family acclimating well, are there issues the assignee would like to discuss?  A key source of dissatisfaction for assignees and their families is a feeling of being “out in the provinces” and therefore out of touch with what is happening back at the office they have left.  Make every effort to ensure that they do not feel marginalized, taken for granted or forgotten.

Make sure the assignee has a Mentor (as compared to a hand holder) back in the home country as well, a Senior Management-level individual charged with representing the assignee’s career interests during the assignment.  This person should schedule periodic career discussions with the assignee.

Rule #10: Have an Exit Strategy
All too frequently companies are at a loss as to what to do with expatriates who have successfully completed their assignments.  It is not uncommon for assignees to leave the Company upon their return from overseas or within the following year, because either no suitable position was available in the home country or what was available was a diminished or less visible role.

After incurring the huge expense for an employee to develop deeper and broader competencies on the international stage, it is a wise business practice to pay close attention as to how best to utilize that increasingly marketable (and therefore valuable) talent when the assignment ends.  Without due care and planning the career cycle of an assignee is left as an afterthought, one that usually crops up late in the assignment;  meanwhile the assignee has been worried (and thus distracted) for a much longer period of time.

While there are no guarantees that future positions will be available back home for employees presently working overseas, the international assignment letter should at least state that the Company will attempt to secure a “mutually agreeable position of similar stature” upon completion of the assignment.  It is in the best interest of the Company and the assignee to carefully plan for a successful repatriation.

Follow though
Well, that’s my list of ten rules.  The road ahead has curves, dips and more than its share of bumps and potholes.  However, if you manage to keep these sign posts in mind (commit them to memory, post them on the wall, send and resend them to managers), the experience does not have to be an endurance course for all concerned.

You will need to keep at it though (persistence is its own reward), because there is no pill or “Easy Button” that will magically ease the journey.  There is no cure for the realities that expatriate assignments will always be costly, procedurally complex and a personal as well as professional risk for those involved.  But by adhering to your own “rules of the road” your expatriate program can reap significant benefits: lower assignment costs, business objectives achieved, satisfied employees and host management, retained and developed talent and ultimately greater overall business success.  It can be done.

More rules?
Do you have rule that I did not include in my top ten?  Please, leave a comment and share your insights with the community.

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Posted in Compensation, Expatriates, Global HR Expertise, Global Mobility Services, International Expertise, Professional Development, Repatriation

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10 Rules of the Road for Your Expatriate Program: Part I

Posted on October 9, 2009 by | 7 comments

bio_400x400 Author:
Chuck Csizmar – CMC Compensation Group

Even a properly handled international  assignment is a complex beast; the procedural morass that confuses as well as frustrates, the emotional stress placed on the assignee and family, the myriad details that could go wrong (and often do), and dealing with career risks inherent with being “out there”.  And, to top things off, the entire enterprise is extremely expensive!

Even in today’s economy, though, the need to send employees overseas remains strong, and for good reasons – skill development, setting up a new business venture, organizing an acquisition, transferring knowledge through training and development, filling a skills gap, etc.  It is more important than ever to ensure a successful assignment, since failure is very costly and potentially damaging to the business.

To help you manage your assignments successfully, I’ve put together a list of ten “rules of the road” to keep your expatriate program running smoothly.  The first five rules follow below.  Next week, I will post the other five (so watch for them!).

Rule #1 – Have a Policy and Use It
It is tempting for companies new to the international assignment experience to delay the development of written policies and procedures.  With a thought of “we only have one or two people overseas” they deal one-on-one with individual employee situations and make decisions on the spur of the moment that affect only that one assignee.  Such a practice ignores the advantage of standardized practice, and sows the seeds for future problems.

Documentation establishes standard practice, provides a managerial consistency that deflects exception requests and restricts (but does not eliminate) the “everything is negotiable” mentality.  No matter the size of your expatriate program, making ad-hoc or one-off special arrangements without broader consideration of other existing or future expatriates is always a recipe for trouble.  While attempting to placate an assignee, keep an eye that your decision does not aggravate others by creating a perceived atmosphere of special treatment.

Establishing and requiring adherence to an international assignment policy will also help the company lessen the impact of so-called “stealth expatriates”,  employees working in another country without being part of the formal mobility program.  Oftentimes, well intentioned managers with a get-it-done attitude often send people abroad without going through formal channels.  This casual approach to a complex issue usually results in a high rate of assignment failure, as well as additional complexities and the risk of costly penalties (i.e., compliance with tax and visa regulations).

Rule #2 – Require a Business Case to Justify the Expense
Your procedures should require that requesting managers be informed of all projected costs associated with an assignment before an approval will be considered.  Oftentimes a break down of these costs is buried among several budgetary line items, not readily evident to the casual observer.  An inexperienced manager is usually unaware of the true costs involved.  As a rule of thumb, an assignee with family will cost about 3 times salary per year, while an individual assignee would cost 2 times.  You should require the requesting manager to sign off on the expense projections – making their approval visible within the organization.

The business case should also demonstrate why an assignee is required (vs. a local employee).  What is the operational advantage for the business and how success would be measured?  Does the proposal show how the expense will ultimately deliver an appropriate ROI?  Soft answers such as “developing talent” and “global exposure” should rarely be included in the top tier of business justification, unless cost considerations have been relegated to a lower level of importance.

Rule #3 – Stick to Your Approval Chain of Command
Establish a clear hierarchy of who is required to approve both the assignment itself (not simply who supports the request) and the associated terms and conditions.   You should operate on the presumption that managers, especially those with a tendency to use “stealth expatriates”, should repeatedly be made aware of who this “gatekeeper” is and what the requirements are for approval.  A firm hand here will avoid repeated requests searching for someone to say “yes”, while providing an opportunity for the company to speak with one voice.

You should be cautious when dealing with demanding senior managers who support the request but in fact lack the authority to approve the assignment.  If not forced back to the Corporate Gatekeeper for adjudication and confirmation, these senior managers could potentially disrupt the process by their inadequate understanding of particulars, by confusing and aggravating the candidate (or family) with mixed messages and by agreeing to terms and conditions for which they are not authorized.

Note: Once an unauthorized  management representative commits assignment terms and conditions to an expatriate candidate, it will be difficult to correct any errors without compromising the initial goodwill established with that employee.

Rule #4 – Consider Non-Traditional Assignments
While the traditional expatriate assignment typically lasts from one to three years or more, evidence is growing that companies are increasingly using shorter assignments as a means to reduce costs, attract more candidates and reduce the failure rate.

Obviously, the shorter the assignment the lower the ultimate expense will be (taxes, allowances, gross ups, etc.).  However, shorter assignments are also more attractive to candidates who would otherwise have passed on being overseas for several years, usually for family or career reasons.  This opens up a new pool of potential candidates as well.

If the company’s goal can be defined in narrower terms (knowledge transfer, specific projects, filling a skill gap, etc.) a shorter assignment, or even a series of extended business trips might be a more reasonable strategy for the business case.

Rule #5 – Select Employees Who Will Become Good Ambassadors
Whatever the technical capabilities of the person you select for an overseas assignment it is critical that they (and their families) have the right persona for the role they will play as ad-hoc “ambassadors” for your company.  While capability of performing the assigned role is paramount, assignment failure often occurs when the assignee or members of their family are unable to adjust to living in a foreign environment.  Having a flexible nature, as well as at least a taste for adventure will go a long way in making everyone comfortable.

The assignee should live / reside as their local counterparts do, not as the expatriate is accustomed back home (style and size of house, neighborhood, distance to work, etc.).  Cultural sensitivities should be considered, so the assignee may “fit” in with like jobholders.  Your intent should not be to replace an expatriate’s home country style of living.  Working relationships sour quickly if an expatriate Manager or Director lives markedly better than the local Vice President.

Provide cultural orientations and if necessary language lessons for all family members.  Institutional differences (banking, medical care, driving, local bureaucracies, etc.) should be explained in advance.  Surprises should be minimized, as they are usually negative experiences.

Note: Simply because the locals speak English is not a reason to avoid properly preparing the expatriate for the overseas experience.

In Part II of this article, in my next post, I will discuss the remaining five rules of the road for an effective international assignment program.

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How Effective Are Your International Pay Programs?

Posted on September 22, 2009 by | 1 comment

bio_400x400Author:
Chuck Csizmar – CMC Compensation Group

Has anyone ever asked you this question?   Did you have an answer?

To clarify, the question is whether your company’s international pay plans and practices are operating the way they were intended, and whether you are satisfied with what they have delivered.

When I ask a client this question, the typical reaction is a deer-in-the-headlights return stare, followed by a puzzled frown, perhaps a cough, then – maybe – some mumbled explanation of their employee turnover  situation.

In other words, they don’t have a clue.

A Huge Missed Opportunity

Why is this question important?  The client’s reaction would be humorous if there wasn’t a cash register ringing in the background.   If the method by which you reward your employees for their performance is not working, in any country, your company is wasting money like a silently dripping faucet – or worse.   This money is draining directly from your bottom line and your program flaws are likely also causing resentment among your employees.   Such a waste is also an avoidable expense, one that you can control.  Squandering payroll dollars and upsetting your employees is a dangerous and expensive combination for any organization.

If you consider that upward of 40% to 60% of your revenue goes right back out the door in some form of employee pay (excluding benefits), then the magnitude of your vulnerability should hit home.

Management time, though is too often misdirected by worrying about whether next year’s average pay increase will be 2.5%, 3.0% or 3.5% of payroll – or whether distinctions should be made on a country-specific basis.   However, the 800 lb. gorilla in the room is not the increase percentage, but the payroll itself – that huge amount of fixed and variable pay expense already budgeted.  That is the figure that should receive the lion’s share of attention.

What do you mean by an “Effective Program”?
Each Compensation program that you have in place (or set of practices) was likely designed or intended to perform a certain function.  For example:

  • Salary Structure or pay hierarchy – to offer the opportunity to earn competitive base pay
  • Incentive Plan – to reward employees for achieving job-related objectives above and beyond their normal duties
  • New Hire / Promotional Guidelines – to staff the company with the right caliber of employees
  • Pay-For-Performance – to recognize and reward higher achieving performers for their contribution to the company

How do you know if you need to be concerned about these programs / practices?  There are signs for those prepared to look.   Some examples:

  • Poor documentation of job responsibilities:  No one likes to write job descriptions, including me, but their absence, antiquity or inaccuracy can create an environment of blurred responsibilities, grade and title inflation and over staffing.  The direct result is an increase in fixed costs.
  • Absence of a Procedures Manual:  You can not expect managers to follow a consistent company process when they have little or no guidance.   They will fill the vacuum with chaos and damaging precedents, each of which is an expensive end product.
  • Dashboard metrics not in place:  To understand success you need to measure it.  If you haven’t established criteria to track the who, how and why of your compensation programs, then you won’t be able to understand whether your programs deliver desired results or not.
  • One size fits all:  Where the company has decided that each national program should look like the one at headquarters (different country), for ease of administration and communications
  • Poor visibility of pay decisions:  Proper rewarding of good performance should be a celebration in the open sunshine, not hidden in a closet hoping the boss won’t notice.  If a manager can grant pay increases without at least one additional level of signature, then the opportunity for improper (wrong amount, wrong employees, wrong reason) pay increases will flourish.
  • Toothless Performance Appraisal Process:  If your process of rewarding employees focuses more on activity than results, if it does not measure performance, if objectives / work routines are not tied to business needs, or if the appraisal document is viewed as an administrative headache, chances are the monies coming out of that process are a) providing little motivation for future performance, and b) are viewed more as delayed compensation than true pay-for-performance.
  • Limited Reward Differentials:  If the reward difference between a high performing employee and “Joe Average” is less than 2% you’re better off to consider across-the-board increases rather than go through the painful process of actually assessing individual performance.   If your plan essentially rewards everyone (is that really pay-for-performance?), then you’re not going to have enough money to properly reward those most critical to business success.  And who do you think will leave in a huff?  Not Joe Average, that’s for sure.
  • Weak Budgetary Controls:  Is there anyone assigned to watch the compensation purse strings in your organization?   Someone to say “that’s too much” or “you can’t give that large an increase”?  Someone perhaps to limit the growth of fixed costs?  Absent the presence of limiting factors (“controls” is such a harsh word) your costs will rise, as undisciplined managers in an unstructured environment will increase pay decisions in order to be liked by their employees.

Steps to take now
So what can you do?   You can find out.   You can ask questions.   You know the warning signs now, so avoid complacency and do not simply wait for the fire alarms to ring.  Become an advocate for systemic change, for policies and processes that improve the way your company rewards its employees.

By the way, have your internal audit folks ever scheduled your compensation programs for a checkup?  If so, it’s usually the HR documentation of processes that get a look, not whether those processes are effective or are even damaging the business.  They tend to look in the wrong direction.

Will a comprehensive review of your pay programs ensure that you will save money?  Improve your pay programs?  Improve retention and morale?  Unfortunately, there is an “it depends” answer to those questions.  The review will highlight your weaknesses and vulnerabilities, and show you the pathway to efficiency, cost savings and the effective use of your payroll dollars.  But by itself a comprehensive review can do little more than show you the way.   To reap success from your study, Management must be willing to make critical decisions that differentiate pay on the basis of employee value and performance.

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How Do I Develop Expertise and Gain Employment in Global Mobility?

Posted on September 17, 2009 by | 5 comments

edit-Alan Biz Mug Shot 1Author:
Alan Freeman – LOF International HR Solutions

One of our readers recently asked, “I have been working in the HR field for the last few years and would like to break into the Expat Management/International Mobility field in Global HR.  What is the best way to gain experience that will make me stand out to an organization that is recruiting global mobility staff?”

First, thanks very much to the reader for posting the question.  We truly appreciate receiving input from and creating dialog with our colleagues.

To begin with a broad response to the question, please take a look at my June 25, 2009 entry, “How Can I Develop Global Human Resources Management Expertise?”.

Since the question focused specifically upon expatriate management / “Global Mobility”, some additional considerations include:

  • Become a member of ERC Worldwide, use their resources, attend their meetings and become involved with their local affiliate groups’ meetings as well.  You also should consider obtaining the GMS certification.  ERC also posts career opportunities on their web site and you should monitor those.
  • If you are based in Europe, or are in Europe frequently, consider becoming involved with EuRA.
  • If you are currently employed in an organization that has a international assignments / Global Mobility program, get to know the staff responsible for the program – especially those with managerial responsibilities.  Take them to lunch, ask their advice, learn what you can from them and, perhaps most importantly, volunteer to help them with their work.  In today’s environment, they’re likely to be rather overworked and would welcome some help!
  • Seek employment in corporations with established international assignment / Global Mobility programs, network with the global mobility management staff in those companies, keep an eye on job postings on their web sites.  ERC’s members roster, their job postings board and involvement with the meetings mentioned above are ways to identify target companies and, possibly, specific opportunities.
  • Do the same as above with the various global mobility service providers such as Bristol Global Mobility, Cartus, Prudential, SIRVA, MI Group, AIReS, Crown, Primacy, Lexicon, Plus Relocation, Weichert, Altair, Brookfield, etc.  There are many more and you can find them via the ERC resources listings.  Please keep in mind, however, that in the current economic climate, the overall relocation business has slowed significantly so hiring in the industry has as well.
  • Seek out and participate in global mobility meeting groups in your area. For example, in Northern California, the Western International Personnel Association (WIPA) and Bay Area Professionals in Relocation Management (BAPRM) have a strong orientation toward global mobility.  There are many other such meeting groups around the country.  Global HR News hosts conferences in many locations across the US and abroad.
  • Consider joining the Forum for Expatriate Management, and the many LinkedIn groups that focus upon Global Mobility.  Track the discussions, and tap into the information and leads that appear in these forums.
  • Keep an eye on job listings at Blue Sky and Signature Source, make contact with the principals in those firms to “get on their radars”.  They are search firms that specialize in Global Mobility.
  • Take advantage of specific classes, seminars and webinars.  For example, ORC Worldwide, AIRINC and Mercer – the top three providers of international assignment package data – offer regular training programs. Also, please sign up for the remaining five sessions of the IOR Global Services webinar series that started on Sep 15 (I’m leading the Sep 29 session).
  • Read, read, read – there is a great wealth of books, periodicals, white papers, research reports, etc. that has become available over the years. You’ll find items on Amazon.com, at the SHRM bookstore, at the World at Work bookstore and within the ERC website.

So to summarize, learn as much as possible about international assignments / global mobility and network with people already working in the field.  The best way to learn, get on someone’s radar, and find out who is hiring, is to hang out with them!

Thanks again to our reader for her question. We ask others to also provide suggestions and guidance via comments on this post.

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

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Impact of Assignments to Remote Locations on Children’s Education

Posted on September 14, 2009 by | 3 comments

Photo Liz Perelstein (2) Author:
Liz Perelstein – School Choice International

As businesses expand more and more into developing markets, companies are often facing new challenges in finding appropriate schools for the children of their international assignees.  In some locations, schools haven’t caught up with demand for international education; in others, there simply might not be any international schooling options at all.  Now more than ever, local schools are an option, but you need to be well-prepared for such an approach to work.

Schooling is a Top Priority
Assignees often state that having access to good quality schools for their children is the most important factor in deciding to accept an assignment.  Parents are more uneasy than ever about relocating with children when international schools are not available.  By gaining some understanding of the local educational system and curriculum differences in countries where you send employees, you will be in a better position to create policies that provide children with access to reasonable education.

Consider these facts:
Some local schools in India consider handwriting so important that teachers may not consider content if handwriting falls short of expectations.

  1. A study by the University of New Hampshire indicates in many European countries, parental involvement is not permitted.
  2. So-called “International Schools” may not be truly international.  Instead, they may be targeted towards local children to help them acquire language and other skills to promote attendance at US universities and/or may exist for children whose parents do not want them to attend local schools.
  3. In some countries, schools “stream” students into tracks as early as 12 years old, and this could affect the ability to gain admission to universities in other countries.  Admissions decisions based on an “entry examination” or prerequisites make this a clear challenge for those who do not have the language or curriculum background.
  4. Religious education is a fundamental part of national curriculum in many countries, such as Ireland.  This may meet an unenthusiastic response from families not accustomed to such arrangements, or those that practice a different religion.  And, even if considered acceptable, students may not have the religious background to fit in.
  5. Special education is handled in varied ways throughout the world, from mainstream educational options in the United States, to China, where few schools have an open-minded approach, and few teachers are taught to teach children with learning or other disabilities.

Language is the main obstacle that many companies are aware of when evaluating local school choices, but integrating families into a local educational system where goals, philosophies and methods are so dissimilar requires a different type of preparation on the part of the family, and a more flexible policy on the part of the company.

Tips for Success:
Here is a short checklist which is useful to help companies and assignees examine educational options for any overseas assignment, as well as for their eventual return home:

  • Before moving a family, allow them time and means to review curriculum of the school in the host country, and discuss it with teachers back home.  Evaluating where a child may be ahead or behind enables parents and schools to develop programs that assist in entry as well as re-entry.
  • Recommend that families bring along books, course outlines and any other aids to maintaining academic skills required at home so that kids can keep abreast of knowledge required for repatriation.
  • Find out the exit requirements for schools in the home country before leaving.  These, in particular, will determine curriculum to continue studying while abroad.   Can these be satisfied on assignment, and if so, what kind of policy do you need to support these additional costs?
  • Decide what kinds of supplemental or alternative education your company will allow to reduce hardship for children whose families are sent on assignment, particularly at key grade levels.  These may include tutoring, on-line courses, summer school, home schooling or boarding schools.
  • If schooling is totally incompatible, is it possible for the employee or the family to repatriate either a year earlier or later, as appropriate to facilitate the transition?
  • Provide opportunity for students to become proficient in reading and writing as well as speaking of the new language well before the move; in fact, as soon as the move is announced is best.
  • Engage a professional who understands discrepancies in curriculum as well as culture to recommend individualized support so that students can be prepared before returning home.
  • Repatriation is always difficult for children, since even international schools teach different curriculum, have different course sequences, and offer different languages and promote different viewpoints when teaching history.   Children who have attended local schools in remote areas may be more significantly unprepared to attend school back home or enroll in university in their home country.  Be sure to pay careful attention to home country requirements before assignments begin.

Conclusion:
School choices for expatriate children are always challenging, and even more so in locations where the traditional choices are limited or non-existent.  Families who have overcome these obstacles and successfully educated their children in local schools find the rewards to be significant.  Children truly learn new languages, cultures and curricular subjects and enjoy an unprecedented window into the customs of a different country.  As schools are a microcosm of the cultures they inhabit, children raised in local schools abroad can be our true ambassadors in the global world of the next generation.

Providing support in the form of tutoring, on-line learning and language instruction is a key consideration companies should consider when developing policies to support your employees in remote locations.  Inviting parents to reframe their definition of education as learning rather than schooling is the key to promoting the right attitude for a successful assignment.

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Should Global Mobility Services Be Centralized?

Posted on September 3, 2009 by | 17 comments

Author:
Warren Heaps – Birches Group LLC

As organizations continue to look for the best way to manage their globally mobile employees (expats), one of the most common issues to address is the best organizational structure to provide the necessary services and support to this group.   What is the optimal structure – centralized or decentralized – and how does an organization decide which approach is best for them?

Back to Basics
Expat management is a cross-functional discipline made up of several different areas of expertise, each highly technical in their own right, including relocation, compensation, tax, payroll and immigration.   To be effective, one must become familiar with all of these areas, and master at least a few of them.

In addition, customer service and vendor management are critical, especially given the preponderance of outsourcing to third-party providers.   Finally, all Global Mobility departments need a link back to the global talent management strategy in their company.

In my opinion, few companies, and few individuals in those companies, are really truly experts in all the aspects of Global Mobility.  Therefore, it makes a lot of sense to centralize mobility services, and invest in and develop the few staff that do have the capacity and experience to become experts.   Depending on the size of your assignee population, this could be at the corporate or HQ level, or in organizations with larger assignee groups, at the regional level.

The Regional Model
One of the most common structures used by many organizations today is the regional one, typically Americas, Europe-Middle East-Africa (EMEA), and Asia-Pacific.   Under this approach, a designated regional center coordinates all of the assignment management for the region.   The reality is that all organizations are at least partially outsourced, so much of the work is handled by third-party providers, and the role of the internal staff also includes the management of these outsourced processes.

A regional structure helps to ensure consistency across a broad range of countries, and develops deep knowledge of local practices, to provide the highest possible level of support to assignees.  In many cases, regional suppliers are engaged, based on their local market knowledge and performance in the region.

The Global Model
Some organizations choose to centralize services at headquarters.  This model ensures the highest level of consistency, since one group is responsible for all service delivery.   With smaller programs, this approach can work; as programs get larger, however, the regional model quickly emerges as a more practical solution.

Under a global model, there are often opportunities to ensure high levels of tax compliance and identify tax planning opportunities effectively.   These decisions require input from corporate tax and finance as well as human resources, and are best managed jointly at the headquarters level of the organization.

Another added advantage of the global model is the selection of outside providers, which would tend to be more global as well.   Realize, however, that few service providers can really provide services everywhere – they all rely on partner organizations to supplement their own resources.

The Decentralized Approach
There are some companies which continue to manage their mobile employees through a network of local offices, without any centralized support at the regional or global level.   This is a challenging way to operate for all but the very smallest programs, and may give rise to missed opportunities in areas such as vendor consolidation, tax planning and the general efficiency of the program.   Even under a decentralized approach, however, a standard international assignment policy should be developed and distributed, ensuring a minimum level of consistency.

Tools to Help Manage Your Program
Another factor to consider is the level of automation available to your organization.  Without a technology tool for assignment management that is accessible globally, decentralization is not realistic.  These days, there are hosted (SaaS) solutions which are affordable and very powerful, and integrate easily with your global ERP solution.   Whether you work with a specialized vendor, such as Atlas or MoveOne, or rely on your accounting or relocation firm, deploying a robust assignment management software solution goes a long way to simplifying your expat administration and helps eliminate redundant and inefficient processes.

Ask yourself a simple question – how many expats do you have in your company today?   If you cannot answer this question with confidence, you need a better tool to manage your program.

Don’t overlook short-term assignees, commuter assignments and short-term business travelers.   Each of these assignees require tax, relocation and immigration services, and if poorly managed, can result in unexpected costs. You should be able to capture all types of assignees in your assignment management system.

Moving Your Program Forward
Now that I’ve got you thinking about how your expat administration is being managed, take a careful look at your organization structure.  What kinds of changes might be beneficial?  Where are you biggest “sore spots”?

Post some comments about your specific challenges, and we can try to address them.

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Warren Heaps

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Posted in Expatriate Payroll, Expatriate Taxation, Global HR Expertise, Global Mobility Services, International Expertise, Relocation, Repatriation

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The Expatriate Agreement – Yes or No?

Posted on August 31, 2009 by | 7 comments

bio_400x400Author:
Chuck Csizmar – CMC Compensation Group

Recently I was asked by a US client to explain why I recommended that they create an international assignment letter for their expatriate employees.  After all, they only had a few employees overseas and previously had resisted the call to what they described as “playing the lawyer card”.  They felt that management could effectively deal with the circumstances of each individual expatriate situation as matters came up, and were reluctant to lose what they considered their prerogative – to set terms and conditions as they thought appropriate for each employee.

This is not the first time I have been asked that question, as it is not unusual for small companies or non-profit organizations to send an employee overseas with little more than a verbal agreement and a series of vague assurances.  These organizations wish to avoid bureaucracy and move quickly.  However, in most cases these casual and hurried arrangements have proved painful and expensive experiences for all concerned, largely because:

  • The shock employees and their families faced when they came to grips with actually living in a foreign country, vs. simply visiting.  The local realities of daily life, combined with cultural differences compared against “back home” became quite a wake-up call when they were no longer insulated by the transitory nature of a business trip.
  • The constancy of unforeseen and confusing localized situations arising (medical claims, driving licenses, bank accounts, schooling, language, etc.) proved such a frustrating distraction for the employee that they often lost focus on the job – the reason they were there in the first place.
  • Relationships with headquarters suffered as the employee asked for more and more consideration (increased payments) to redress what they considered coverage gaps in their terms & conditions.  The trust element was weakened as employees felt they were being short-changed by management.

Coming from an environment where every expatriate was given a detailed assignment letter “before” getting on the plane, I was at first taken aback by the client’s question – because the absence of mutually agreed terms and conditions is almost certain to eventually prove very expensive to companies trying to take a “short cut.”

Here are some reasons why providing an assignment letter is a good idea:

  • Protection:  Like any contract, confirming the terms & conditions of the assignment protect both parties from misunderstandings, misinterpretations and assumptions – before expenses are incurred.
  • Clarity:  Accepting an overseas assignment is a major step for any employee, as well as for their affected family members.  The more you are able to clarify exactly what the terms and conditions of the assignment are, the more likely you are to ensure a smooth assignment for all parties involved.
  • Cost control:  Defines those expenses that the company will pay for and conversely what they will not pay.  An agreement here will mitigate issues rising once the expatriate is on the ground in the host country.  Concerns raised once the assignee is relocated usually result in increased company costs, as negotiating leverage is lost and the company feels compelled to avoid alienating a very expensive investment.
  • Standardization:  Your international policy, whether written or only a matter of case law precedent, should strive to treat all expatriates in the same fashion.  Unique circumstances do occur but the basic principles should be repeated for every assignee.

So how bad can it be, playing it by ear and leaving terms & conditions to be developed over the duration of an employee’s international assignment?  Flexibility and quick thinking are positive management traits, are they not?

Unfortunately, when you court the inherent risks that accompany an undocumented assignment, you should be prepared for:

  • Increased costs that you have not planned for
  • Constant negotiations that attempt to improve the lot of the expatriate
  • Disgruntled employees and / or affected family members
  • Greater risk of failed assignment

Taking that short cut usually limits the financial and emotional protection the employee and their family are going to rely on, at the same time that the company has committed a substantial amount of money to place them in an overseas location.  That is not a good management practice.

When preparing an international assignment letter, what elements should be included?

  • Title, compensation and assignment duration – critical elements of status and reward in the host country
  • Housing and cost of living allowance considerations – should include the amounts involved (as applicable) and the frequency of review
  • Benefit coverage (medical, dental, life, vacation, holidays etc.) – how will home country benefit protections be handled in the host country
  • Relocation considerations – the back and forth policy coverage for the employee’s residence, to include movement of household goods overseas
  • Property management (as applicable) – what will happen to the home country residence?
  • Tax preparation – employee obligations in both countries.   Usually a statement of company liability for “additional” taxes is included.
  • Home leave – how often, and in what circumstances?
  • Schooling, language, cultural orientation (as applicable)
  • Repatriation – a balance is usually struck here between the employee’s strong concern and the company’s natural vagueness for what the future might bring
  • Connection to international assignment policy – refer to the policy as the source of company rules and procedures
  • Unique and individual circumstances (as applicable) – if it’s different from the norm, write it down!

The items listed above represent only a portion of the questions that your expatriate candidate will have, and the list is not all-inclusive.  So should your company consider taking a casual approach to sending an employee overseas, unsupported by a signed assignment letter, be aware of the risks involved.

Is there a scenario of an employee being asked to live overseas where circumstances would not require an international assignment letter?

I don’t think so.

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Posted in Expatriates, Global HR Expertise, International Expertise

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Global Salary Budgeting – Smart Approach or Misguided Shortcut?

Posted on August 23, 2009 by | 4 comments

heaps_warren1Author:
Warren Heaps – Birches Group LLC

It’s getting near to the time of year when companies start to draw up budgets for next year.  One of the most important numbers in the exercise is how much to budget for growth on the salary line.  Some organizations assume that making an assumption for salary growth globally based on the figures used in the headquarters country is a good solution.  After all, it’s easy to just take one number and apply it around the world.  Such an approach, however, is flawed.

Just as Chuck Csizmar explained in his recent post about comparing salaries across different countries by converting currencies, global salary budgeting needs to be done country-by-country, and taking a shortcut like the one described above is a recipe for disaster.   Here’s why.

Market Movement Varies by Country
The primary information used by HR and finance to determine salary budgets is market movement (this is a measure of how much salaries increase from one year to the next, usually from surveys) and internal economic assumptions (basically, how much can the company afford?).

Suppose your US-headquartered company decided to apply the US salary increase percentage to all of your markets overseas for a five-year period.  The graph below compares the average increases over the five-year period ending in 2008 for selected markets.

Average Pay Increases

As you can see, the average increase amounts vary a lot by market.  The difference compared to the US ranges from 7.1% (India) to almost 20% (Nigeria).  At the same time, the average in Europe is below that of the US. And that’s just comparing the averages for one year.  If you looked at the cumulative effects with compounding over the five-year period, the differences grow dramatically.

OK, I get it.  I need data for each market.   I’ll just use inflation.
Inflation data is fairly easy to get on a global basis.   You can usually find it for free on various websites, and your local finance folks will certainly have some figures for you to use as well.   They use inflation to budget price increases for your products and to anticipate the impact of price increases in raw materials and other costs of doing business for the upcoming year.   And of course, official inflation figures are produced by the government of each country in an unbiased and apolitical fashion, right?   But what does inflation, or cost-of-living, have to do with salaries?

Cost of Labor is What Matters!
Setting salaries is affected by many factors.  The absolute level of pay is certainly influenced by cost of living – countries with higher costs tend to have correspondingly higher salary levels.  But the main factor affecting salary increases – the one that drives the market movement each year – is an old rule from Economics 101. Three words.  Supply and Demand.   If you are recruiting for positions with hot skills, for example, and there is a shortage of these skills in the market, don’t you end up paying more for these recruits?  If there is high unemployment or an excess of qualified candidates, and positions are easy to fill, isn’t there considerably less pressure to raise salary levels?

Can I just use devaluation instead?
Short answer?  Nope.  Local employees are paid salaries set in local currency, and obtain their everyday good and services in the local market, in local currency.   Devaluation (or revaluation) defines the relationships between the currencies of different countries, usually with a reference to a “strong” currency such as US Dollars, Euros, Pounds Sterling or Yen.   Exchange rate changes do affect the price of goods, for example, especially imports or imported raw materials.   But these fluctuations do not fundamentally affect the cost of labor in a country.  Remember, also, exchange rates are sometimes controlled by governments to achieve other objectives.   Hardly a reliable measure of anything, really.

The Best Approach
To estimate your salary budget properly, you need to obtain data for market movement in each country, and analyze it in the context of your own organization’s situation (market position, health of the business, funds available for increases, etc.).   There are many sources for market data – everyone has their favorites (hopefully some of you are using Birches Group data).  And then you have to apply something no statistic or consultant can provide – your own judgment – to determine the right figure to use in your company.  Interpretation and analysis of the data and applying it to your company’s situation is the art of compensation rather than the science.


More About Warren

Warren Heaps

Warren on LinkedIn

Developing Markets Compensation and Benefits Group in LinkedIn

Email Warren

Birches Group

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Posted in Compensation, Global HR Expertise, International Expertise

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