Tag Archives: expats

Holiday Gift Giving Around the World

Guest Author:
Dean Foster – DFA Intercultural Global Solutions

[Editor’s Note:  We are happy to welcome Dean Foster as a Guest Author.  Dean is a well-known expert on culture in business, is a frequent lecturer at various universities and conferences, and  is the author of many books on the topic of culture in business.  He is the Director of his own firm, DFA Intercultural Global Solutions.]

Gift giving can be a little tricky when giving gifts to
international colleagues. Cultural differences can make a terrific gift at home into a terrible no-no abroad. With the holiday season soon upon us, here are some important cross-cultural gift-giving considerations when sending gifts to your international friends and business associates.

Continue reading

Hey HR! Here’s What Employees and Families Really Need When Relocating Internationally

Guest Author:
Rachel Yates – Definingmoves.com

[Editor’s Note:  We are very excited to share with you the assignee’s spouse perspective on international relocation, from someone who has lived through five such moves.  Rachel Yates edits a website, Defining Moves, devoted to assisting relocating families around the world. ]

I read the post from May, 2011 by Warren Heaps about global mobility policies for the 21st century on this site, and found it to be fascinating, mainly because I am part of the changing demographics Warren described. On paper, we are the traditional relocating family; husband as assignee, spouse as the accompanying partner, and two dependent children. We have relocated through three continents over the last 10 years, and we have struggled. And we are most definitely not alone.

So what do relocating individuals and families really need from HR?

Continue reading

Ten Ways to Simplify Administration of Your International Assignment Program


Jennifer Stein – Global Tax Network

[Editor’s Note:  We are happy to welcome Jen Stein as a Guest Author.  Jen is the Managing Director of the Global Tax Network Chicago office.  She has more than 15 years of experience in expat and foreign national tax preparation and consulting, starting her career with Arthur Andersen, and then Ernst & Young, where she served for over 14 years.]

International assignment administration is complex. Sometimes it’s useful to take a step back and review basic components.  The list below, while not exhaustive, is a good starting point to help review your international assignment process and procedures.  Adopting one or all of these components may make your life easier when administering international assignments.

Continue reading

Is There a Crystal Ball for Talent Planning and Global Mobility?

Guest Author:
Nikki Goodstein – Cisco Systems

[Editor’s Note:  We are happy to welcome Nikki Goodstein as a Guest Author.  Nikki is a leader in Compensation & Benefits at Cisco Systems, Inc. and has a depth of experience designing and implementing global mobility programs. Before establishing the strategy and redesigning the program at Cisco, she led Global Mobility at The Coca-Cola Company. Nikki began her international HR career at Johnson & Johnson as part of their international compensation organization and has held HR roles in both the business as a generalist and in centers of excellence.]

Sorry, there is no talent planning “crystal ball,” but that does not mean you don’t need a plan!

Many companies with mature global mobility programs have evolved to measuring assignment success by leveraging available data across several key employment metrics:  performance over time, promotions/career opportunities, years with the company post repatriation, engagement scores reflecting manager performance, etc.  When consolidated into a dashboard, these metrics can help tell the story of success or challenges in your global mobility program.

Continue reading

Global Mobility Policies for the 21st Century

Author:
Warren Heaps – Birches Group LLC

It’s now almost the middle of 2011, so the 21st century is well underway.  The new realities of global business are upon us:

  • Companies are expanding from developed countries into new, high-growth markets in the developing world in record numbers.
  • Global talent is being snatched up across borders on a regular basis.
  • Companies are sending expats to new locations, and breaking new ground with each assignment.
  • Companies headquartered in developing markets like India, China, Brazil and South Africa, to name a few, are expanding along with multi-nationals from more established markets.
  • Demographic shifts will result in an increasing number of workers being sought from developing countries to replace the ageing workforce in North America and Europe.  In fact, McKinsey predicts that by the year 2040, the largest working-age population in the world will reside in Africa.

So what does this have to do with global mobility?  A lot!

Continue reading

Best Practices for Selecting International Assignees (Part 2)

Author:
Alan Freeman – LOF International HR Solutions

This is the second of two installments on the topic of assignee selection.

In our last posting, we began to list a number of proven best practices for selecting candidates for international assignments.  Here are several more:

Provide an overview of the your company’s applicable policies and processes. You and the candidate need to know early on if there are any “show-stopper” issues or you run the risk of wasting everyone’s time. Be sure, by the way, that your policy and administrative processes are well thought through and developed. You don’t want to be caught building an ad hoc “package” through negotiations. One-off deals frequently lead to lots of ongoing problems. Continue reading

Best Practices for Selecting International Assignees (Part 1)


Author:
Alan Freeman – LOF International HR Solutions

This is the first of two installments on the subject of assignee selection.

A recent question, “Please share ideas on best practices for hiring candidates for an immediate international assignment” triggers a few thoughts.

First and foremost, the organization must definitively establish that it is not possible to recruit local nationals in the location where the job is based. Hence sending a foreigner as an International Assignee is both necessary and can be sufficiently justified to obtain assignment country work and residency permits. If so, then…

Continue reading

Localizing Expatriates – Trap or Solution?


Author:
Warren Heaps – Birches Group LLC

Expats are expensive. With more and more focus on the cost of international assignments, companies are looking for ways to reduce expenses. The challenge is finding the most effective way to do it.

I believe one of the alternatives companies should consider is to simply reduce the number of expats! But this is easier said than done.

Localization is one approach which can be used to achieve this goal, but it’s hard to get it right.  Let’s look at some approaches and pitfalls when considering localization.

Localization Approaches
One of the most common approaches to localization is to convert the expat to local terms and conditions, and provide a phase-down of expat allowances and benefits.  For example, the expat would receive a salary according to the host country salary scale and participate in the host country benefits.  During a transition period (usually one to three years), the employee also would get some expat benefits.  This usually includes a transition allowance which provides the full net difference for a year, reducing in equal installments to zero after three years.  In addition, companies often provide continued schooling assistance for several years.

Some of the challenges with this approach are in the areas of benefits, taxes, immigration, schooling and housing.

  • Retirement Benefits – Companies face the issues of different levels of benefits, bridging of service, and shortfalls in both the home and host social security plans. Careful attention and analysis is required to resolve these issues.
  • Health Care – Many expats have coverage under global plans. When localization occurs they switch to local coverage. How does the local plan measure up? What about pre-existing conditions? College-age dependents at home? What if the local plan is not adequate when compared to the prior coverage? Some organizations allow continued coverage under the global plan in these cases.
  • Taxes – Many companies provide tax preparation assistance to newly localized staff (but not equalization). You should also be aware of trailing tax liabilities generated by incentive pay and equity compensation.  In some cases, equalization may be appropriate.
  • Immigration – Laws must be consulted to ensure expats can remain employed legally in the host country, and family members can stay in-country. This is one of the most critical issues to address, since mistakes can result in severe consequences.  In some cases, long-term expats can get permanent residence, which may also provide opportunities for spousal employment.
  • Schooling – Assimilation and adjustment of the family is a key to a successful localization. Schooling for the kids is often the biggest challenge, especially if the host country language is different from the home, or if local schools have lower standards or different curriculum options than the international schools. Many companies provide generous support for schooling during a transition period, aiming to prevent disruption in studies, especially for older students. Consulting with educational specialists, such as School Choice International, can be a very effective way to assist employees in making the best choices.
  • Housing –This is the other major element of the expat package that dramatically impacts the expat and family, and can be quite contentious.  Expat housing standards are often much more generous than local standards, and are located in the most desirable and expensive neighborhoods.  Localized expats may not be able to afford housing in the same locations.  Companies can provide limited assistance for a local move, as well as a shipment of goods from home. Assistance with buying a home is another benefit to consider.

Saving on Expat Costs
Localization generates savings for the company when the cost of local salary and benefits is less than the expat package. When calculating the savings, don’t forget to consider the cost of transition benefits (including any tax gross-ups). You may find the savings to be elusive for the first few years.

Useful Tools
One excellent tool to help employers calculate localization costs is the Permanent Transfer Calculator from Airinc. This tool calculates the net differences for all of the key package elements and illustrates the level of transition benefits needed. It is a very useful tool which enables companies to make informed decisions when localizing staff.

Other Considerations
The most common localization options are usually applied in host locations such as the US and Western Europe.  It is usually easier to localize staff in higher wage locations, and in developed countries.  Some companies localize staff in lower-wage locatio ns in the developing world, but these cases can be very challenging and demotivating for staff.  In addition, family assimilation can be much more difficult.

Companies sometimes localize staff only to re-expatriate them a few years later. This is generally a bad practice and causes a lot of confusion, especially for retirement benefits.  Instead, look at your career and succession planning and evaluate the chances of another expat assignment in the future. It may be more practical to consider reduced allowances instead of full localization in these situations.

Finally, always consult with your legal counsel when changing terms and conditions for expats. In many countries, laws limit the ability to reduce compensation.

Summary
Localization can be a useful technique to save money and reduce expat costs. Careful analysis and planning is required to make it work, and attention to family transitions is essential for success.

NFTC International HR Conference Report – Part II


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.

More About Warren

Warren Heaps

Warren on LinkedIn

Developing Markets Compensation and Benefits Group on LinkedIn

Email Warren

Third Culture Kids – Maintaining Stability in a Life Without Roots


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.

More About Megan