Tag Archives: international hr

HR and Reward Challenges in Developing Markets – Beyond BRIC

Posted on January 20, 2010 by | 5 comments

 

Author:
Warren Heaps – Birches Group LLC

We are all hopeful that 2010 will be a better year for business than 2009. When that hoped for upturn finally takes hold, where will your company find growth?  If your company is like many others, the answer to that question points to developing markets in Africa, Asia and Latin America, where growth rates are higher and opportunities are great.

Growth is Robust
Post-recovery estimates from the IMF for 2010 indicate worldwide GDP growth of 5.7% is expected, while GDP growth in developing countries is expected to climb 9.5%.

Regional comparisons are even more dramatic:

  • Sub-Saharan Africa – 9.6%
  • Latin America & Caribbean – 10.5%
  • Middle East – 14.9%
  • Central and Eastern Europe – 1.4%
  • Euro Zone – 3.6%

As you can see from these figures, growth in the developing world is expected to be almost three times greater, on average, than in the Euro Zone.  Investors have already discovered this; according to Bloomberg Business Week, the top ten performing stock market indices since December 31, 1999 are all developing markets, ranging from 901% gain in Ukraine, to just 318% in Brazil. With potential like this, it’s not surprising that more and more companies are focusing on new markets in these regions.

HR Challenges
The landscape for operating in developing countries is different from what many companies may be accustomed to in Western Europe, the US and elsewhere in the developed world.  For HR, the most prominent challenges are in two areas – talent and reward.

The Talent Challenge
Developing country markets are smaller than big developed country markets.  Fewer employers participate in the market, and not all sectors are represented, but those that do are all vying for the same people – the best talent.  Highly educated professionals are often in short supply, especially those with advanced degrees which are often obtained in the US or Europe.  While professionals may have training and education in a particular occupation, it is very common for these individuals to switch occupations for advancement opportunities.  They become generalists rather than specialists, and switch between sectors often as well.

Leading Employers Play a Key Role
Certain employers are found in a lot of developing countries, and help to define the labor market.  These employers include companies from the banking; consumer products; oil, gas and mining; and telecom and technology sectors.  Many of these companies are global multi-nationals which have been operating in developing countries for many years, and have a lot of experience with the conditions.  The other major players are international public sector organizations.  This group includes employers such as embassies, development banks, multi-lateral agencies such as the UN, and leading international NGOs.

Know Your Competition for Talent
Many private sector companies are surprised when we suggest they consider the international public sector as part of the group of leading employers with which they compete for talent.  After all, what do oil companies or banks have to do with embassies or the World Bank?  The answer is a lot!

International public sector employers are involved in a lot of the same activities as private sector companies.  For example, an MBA graduate being recruited by a consumer goods company for a brand manager role is the ideal profile for an embassy public information officer.  The engineers that the oil sector seeks can be deployed as project managers for infrastructure development funded by the World Bank, or an NGO such as the Global Water Project.  In addition, of course, there are occupations that are common to all employers, in areas such as administration, finance, human resources, IT, etc.  The lesson is to expand your focus in developing countries to include not only companies outside your sector, but some of the relevant international public sector institutions as well.

How Can I Be Competitive?
The second significant challenge for companies in developing markets is figuring out the reward structure.  Compensation schemes are different in each country, but there are some common themes across developing countries which differ from more developed countries.  For example, the span of salary ranges is often much wider than the typical 50% to 67% often found in developed countries.  The differential from one grade to the next can vary dramatically depending on the levels — often the jump from manager to executive can be 35% or more.

Base Salary is Just the Beginning
It is quite common to provide cash allowances, such as 13th and 14th month, as well as transportation allowances or housing allowances in many countries.  In addition, in-kind benefits such as beverages or meals, transportation (commuter buses) and subsidized loans are found in many markets.  The value of allowances and in-kind benefits can be substantial, ranging up to 30% or more in some countries.

Good Market References Are Important
One way to ensure a competitive position in the market is to establish your position with reference to the leaders, using a high-quality compensation survey.  The survey should include values for base salary, cash allowances, in-kind benefits and short-term incentives.  In addition, you’ll need to be aware of the social benefits and other statutory pay practices, how pensions and insurance are provided, and how the income tax scheme influences how compensation is structured.

In Summary
Developing markets are exciting, diverse and challenging.  Human resources professionals need to become aware of the unique market dynamics in smaller developing countries, including the role of leading employers and the complexities of how rewards are provided.

Note:  Birches Group conducts total compensation surveys in 147 developing markets.  Visit our website for more information.

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Warren Heaps

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Developing Markets Compensation and Benefits Group on LinkedIn

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Posted in Africa, Compensation, Developing Markets, Global HR Expertise, International Expertise, Talent Management

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Five Facts About International Schooling

Posted on January 12, 2010 by | 4 comments

 

Author:
Liz Perelstein – School Choice International

Most companies sending employees overseas offer some kind of cross-cultural training.  But we rarely think of cross- cultural training for school children, even though education can be a make or break issue for many families considering an overseas assignment.

As you can see from the facts below, even expats who send their children to international schools encounter cultural differences that may be significant, and may clash with family customs.  Schools – local and even international – are a microcosm of the culture they inhabit.  Without understanding the host country’s educational system children can be disadvantaged in the admissions arena, in academic performance and in the ease of transition.

Consider these facts:

1) Did you know that 8th graders in Belgium, Korea and Japan do not use calculators in math classes?

Curriculum differences like these make it hard for children trained on calculators to adapt to local mathematics instruction in these countries.

2) Did you know that German parents give their children a Schultuete, or a cone filled with treats on the day they start first grade?

Children unfamiliar with local customs can feel awkward or embarrassed, affecting the transition to their new school.

3) Did you know that in Brazil children either go to school in the morning OR in the afternoon?

Spouses may find it difficult to work in countries with a school schedule alien to them.

4) Did you know that Saudi Arabia is enforcing a law that requires expat children to attend a school of their own nationality?

Many families choose a curriculum other than their national curriculum, often to preserve curriculum continuity with former or future schooling.

5) Did you know that admissions for 4-to-10 year olds for New York City independent schools requires an entrance examination that is ONLY administered in New York City?

Admissions opportunities may be limited for children if parents are unaware of requirements.

To learn more about educational customs in different parts of the world, visit our School Choice International blog or our Fact of the Week Collection.

More About Liz:

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Posted in Cross Cultural Insights, Expatriates, General, Global Mobility Services, International Expertise, Relocation, Repatriation

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Base Salary – Not So Basic!

Posted on January 6, 2010 by | 9 comments

Author:
Chuck Csizmar – CMC Compensation Group

Ever find yourself confused when asked to provide an international employee’s annual rate of pay?   Compared to the US, you will find scant uniformity between countries as to when and how monies are paid to employees, and this diversity can lead to confusion, misreporting of data and the potential for internal equity squabbles.  It is especially a concern when a US Manager attempts to hire a foreign local national without being certain of country-specific pay practices.

To a US employer, the term “annual base wage” or “annual salary” is simply the cumulative amount of payroll dollars (regular paychecks) dispensed over a twelve month cycle.  However, in many parts of the international community, it’s a bit more complicated.

Numerous countries consider statutorily required or common practice holiday (vacation) pay and Christmas (December) payments as part of what they term “basic salary” – which they report as a monthly calculation.  So what is the annual salary?

Defining Your Terms

In the US, annual salary is a common reporting term, an identifier to the company and the employee of the value paid to each position. To quote an annual salary is common practice.

The trick when considering global practices is to remember the distinction between the two annual terms:

  • Base pay – the amount of non-incentive wages or salary paid out over a twelve month period for work performed
  • Basic pay – the amount of non-incentive wages or salary paid out over a twelve month period for work performed, but including additional payments (usually in monthly increments) not directly related to the work effort

Some US companies prefer not to deal with the issue, relying instead on the US model of quoting an annual salary – then dividing by the total number of monthly payments due in order to calculate the monthly gross paycheck.

A client of mine once insisted on offering a candidate 75,000 euro, but no more for a key position.  When informed that in Belgium an extra month (13th) is common, and in fact mandated in many collective agreements, the response was “fine, as long as the total base pay isn’t higher than 75,000 euro.”

That candidate did not accept the position.

Here are a few representative examples to illustrate the diversity of practices across the globe.

  • Singapore:  While a 13th month payment (Annual Wage Supplement) is not mandated, it is common practice.  Executives typically receive 1 to 2 months pay as an additional bonus.
  • Mexico:  Companies are mandated to give employees a Christmas bonus equal to 15 days pay.  Common practice is to grant 30 days.
  • Peru:  Employees are entitled to a 13th and 14th month bonus; the 1st extra month is paid in July and the 2nd in December
  • Italy:  In December, employees are paid a Christmas bonus equal to a month’s salary.  In many contracts a 14th month’s salary is included and is paid in June.

The extra payments are not rewarding work performance, but typically provide extra monies for either vacation time or Christmas.  These practices are not commonly followed in the US.

What to do

To avoid confusion when dealing with local national employees it is helpful to talk in terms of monthly pay, the term commonly used by the employees.  No matter how many monthly payments are made, for whatever reason, simply multiply the payments to reach the annual figure.  To your international employee that is considered an annual pay entitlement, though not an annual salary as practiced in the US.

When reading compensation surveys make sure to check the definitions used; oftentimes the survey will report both an annual salary and a “guaranteed annual cash” – the latter inclusive of holiday bonuses and extra month’s pay.

Avoid setting a US-style annual salary and then dividing by the number of required payments to derive a monthly pay.  Instead, determine what you will pay on a monthly basis and multiply those payments by country-specific statutory requirements and common practice to derive (build-up) the annual salary.  It’s a bit more confusing for US companies, but it will be more meaningful for your international employees and likely save you employee relations issues down the road.

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Posted in Compensation, International Employment Law, International Expertise

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Ten Tax Tips for Twelve-Thirtyone: Year-End HR and Payroll Actions for Global Mobility

Posted on December 9, 2009 by | 4 comments

Author:
Claudia Howe – Global Mobility Tax, LLP

Wow!  Where did the year go?  Now that it’s almost over, HR and payroll professionals are working hard to finish out the year.  In the world of expatriate compensation and taxation, here is a reminder list of 10 things to do before December 31 (for our international readers, I realize this will be a bit US-centric, but hopefully useful nevertheless):

Tip #1: Pay all taxes due for jurisdictions that do not have a 12/31 year-end
Some countries have different year-ends, for example:  Australia = June 30,  Hong Kong = March 31,  New Zealand = March 31,  UK = April 5,  South Africa = February 28.

If taxes are not paid throughout the year or by 12/31 (especially in the first year of assignment), the employee or the company (for tax equalized assignees) may lose out on claiming important foreign tax credits on the US tax return and could have a nasty surprise at April 15.  This is due to the fact that the US only allows tax credits on the US return against taxes paid or accrued during the tax year.

For example:  Suppose you have an expat from the US in the UK since June 2009 and have not quite been able to get regular monthly UK tax payments set up.  If  UK taxes have not been remitted to Her Majesty’s Revenue and Customs (aka UK tax authorities) before 12/31, they cannot be claimed as a credit on the US return, causing temporary (and potentially permanent) double taxation!

Tip #2:  Pay all US taxes due through payroll
Perhaps you are aware of a very large January bonus that was not withheld at the top marginal rate and on which a US tax payment  should be made to avoid the underpayment penalty.   What are the options to make the payment?

  • Option 1:  send a check in the mail to the IRS with an estimated tax payment voucher (1040-ES – Q4, due January 15).
  • Option 2:  make the payment through payroll before 12/31.

Best choice?  Option 2.  When making payment through withholding, the IRS will treat it as evenly paid throughout the year and this will minimize/eliminate estimated tax penalties that could otherwise apply.

Tip #3: Update your tax accruals
Year-end budgeting is in progress.  If there are liabilities out there – be it US or foreign tax liabilities that will come due, it is important to accrue for them so that the financials are correct and also to avoid surprises later on.

Tip #4: Review relocation Gross-ups
For folks that were relocated during the tax year but are not tax equalized, a relocation gross-up should be processed if the company promised to pick up the taxes on the taxable items such as temporary lodging, temporary transportation, etc.  Many major relocation companies will do this for you, or will at least give you the amounts to be grossed-up.  Tax professionals can also be useful here especially if you are relocating an executive with the expectation of no tax detriment:  your 25% supplemental rate would likely not cover that tax bill and you could end up with a disgruntled exec at tax time in April.

If you process gross-ups at year-end, don’t forget to send a courtesy email to the employee informing him/her why the last paystub or the W-2 looks so much higher all of the sudden.  And be sure to process the payments of withholding through payroll (see Tip #2, Option 2 above!).

Tip #5: Review expatriate compensation details for W-2 inclusion
The tricky part of expatriate compensation is that it is usually not delivered all from one location;  many items such as housing, children’s education, local tax payments, etc.  are paid from the host location and are not channeled back to US payroll for inclusion in the W-2 (which, of course is required by law:  all compensation no matter where or how paid must be reported to the IRS on the W-2).

It is especially at year-end that I am reminded that our colleagues in payroll are indeed the unsung heroes of corporate America:  they are expected to deliver correct payroll on-time with 100% accuracy all the time – talk about stress! And no-one stops by to say:  “Thanks, Andrea, for getting my W-2 right – I know it must have been a challenge”!

Tip #6: Review withholding on US bonus, commission and equity compensation payouts
For US expatriates on assignment in a foreign location, remaining on US payroll, usually federal (and sometimes state) withholding will be turned off.  In lieu of the actual withholding, a hypothetical tax withholding for tax equalized folks is implemented or a fixed withholding amount for the foreign jurisdiction is taken out of the pay.  Since oftentimes these are fixed dollar amounts per paycheck, the withholding on bonuses or commissions are easily overlooked. Better late than never – now is a good time to review and ascertain that the correct amount of withholding has been taken out of these type of payments to ensure that the employee does not owe the company or the governments any underwitheld amounts.

If actual federal/state taxes are withheld from executive or high-income taxpayer’s bonus and commission payments, and if the person is tax equalized, you will want to ensure that taxes were withheld at the highest marginal rates, not the 25% supplemental rate.

Tip #7: Finalize your Authorization List
Make sure to finalize the list of employees that are eligible for tax services and let your tax service provider know before 12/31.  Delays beyond that date could delay the kick-off for the tax season.  Then your employees could be left wondering if their taxes will be taken care of – or not?

Tip #8: Sign your Engagement Letters

Your tax firm may not be able to provide services until they get that signed engagement letter back from the company.  So better check with the person who signs the letter to make sure it get out and not hung up in legal or procurement.  Again, delays could cause problems for your employees.

Tip #9: Solicit the completed 2009 travel calendars from all assignees
This can be coordinated with the tax firm you are using; the travel calendar is one of the most important items in the tax preparation process.  Most will supply you with an automated calendar at the beginning of the year to make this process easy, but of course, your assignees have to use the tool!  Tax firms spend almost half of the tax preparation time on reporting compensation in the correct format and sourced to the correct jurisdiction.  The travel calendar is a key item needed for this exercise as well as to determine tax residency status, qualification for tax exclucsions, etc.  The earlier the tax professionals can get their hands on it, the better!

Tip #10: Don’t forget to enjoy the holidays!
We all tend to get very stressed at year-end – it is a hectic time, after all!  But sometimes we do have to remind ourselves that we need to take a deep breath, sit back, and relax…and enjoy the Season!

Happy Holidays!

More about Claudia:

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Posted in Expatriate Payroll, Expatriate Taxation, Expatriates

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Five Secrets to Reduce Benefit Cost, Part 1

Posted on December 3, 2009 by | 1 comment

Author:
George Bashaw – Atlas Global Benefits

There are only a few ways to negotiate with an insurance carrier on fully insured plans.  For most carriers, claims history is the most important factor in determining pricing.  Therefore, you better know your claims if you wish to negotiate with its leverage.   Over the next few months, I am going to share five simple ideas to help you save money on your benefits.  Out of the five, I hope you find at least one of them useful.

Here’s the first one:  Know Your Claims!

Fully Insured and Self Insured
Insurance plans are fully insured or self insured. Most large companies have both. Typically, large multinational companies have self insured medical plans and fully insured non-medical plans.  Medium and smaller companies tend to have a majority of fully insured plans.  Therefore, it is likely that your company has at least a few fully insured plans.  Only fully insured plans will be discussed in this blog.

What’s Inside a Premium?
Premium can be broken down in two parts, claims and retention.  When an insurance company prices a new premium, they estimate future claims by looking at your claims history.  Estimated Claims + Retention = Premium.  Retention is approximately 20%-25% of the premium cost and consists of the following:  premium tax, overhead/administration, margin/profit, and commission/fees.

A Happy Insurance Carrier
Insurance carriers want claims to be around 75%-80% of premium.  If claims are over 80%, the carrier starts to lose money; if they are below 75%, they start raking in the profits. 

Claims Analysis:

Do a thorough analysis of your claims.  If your claims history is running less than 75%-80%, demand a decrease in premium.  If you do not get it, there is some reason why the carrier does not want to insure your risk.  For example, a carrier may not want to cover offshore drillers, so they jack up the price to reduce that demographic in their pool.

If you claims are over 80% you are getting a good deal. However, there are some carriers that may want your group and will offer you a better deal, even if you are running over 90% claims.

Please tell me your thoughts and share your experiences.  Know your claims!

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Posted in Expatriates, Insurance, International Benefits, Uncategorized

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Expat Selection: It’s Not Just Skills

Posted on December 2, 2009 by | 4 comments

Author:
Bruce Alan Johnson and R. William Ayres – Bruce Alan Johnson Associates (Pty) Ltd

Bruce Alan Johnson

Bruce Alan Johnson

Bill Ayres

[Editor’s Note:  We are happy to welcome Bruce Alan Johnson and Bill Ayres as Guest Authors.  Bruce and Bill have extensive experience working with companies to help understand how business is conducted in different cultures.  They are the co-authors of the book Carry a Chicken in Your Lap: Or Whatever It Takes to Globalize Your Business]

A large American corporation sent a senior executive to reside in an African country known for its wide religious tolerance, as the general manager of the company’s regional operations.  Managerially speaking, the man was qualified. But he brought with him a zealous sense of religious superiority that manifested itself as rigid intolerance.

In his first week on the job, he screamed at Muslims who were in a corner observing one of the five prayer times of the day, and then at Sikhs whose heads were traditionally wrapped.  By the next week, more than a hundred employees had walked off the job.  Some of them brought in government authorities to the site.  In the meeting that followed, the executive said that he would accept crosses as jewelry and pins, but no other expression of religious identity!  Even though the officials tried to explain the supreme importance of religious diversity in their country, the response was an arrogant assertion of “rights” that the executive claimed he had.

Of course he had no such rights, and a week later the government informed the American corporate headquarters that this executive would have to be removed at once, or all government contracts with that company would be canceled and official hearings would be held for the aggrieved workers.  He was recalled, another casualty of the mistakes companies make in sending the wrong people overseas.

Cultural Fit is Important in Expat Selection
Every time we talk to an audience about sending people overseas, we start with one fundamental point: not everybody can do this. Not everybody will be successful in Copenhagen just because he or she did well in Cleveland or Calgary. Furthermore, no magic, single thing guarantees success. The world is a complex place. It would be surprising if we didn’t need complex abilities to deal with it.

But what if you’re coming the other direction—sending people to the United States?  Over the years it has become quite plain that the most costly mistake made by companies sending people to the US has been the blind belief that there are dollar signs instead of “S’s” in the name United $tate$.  The second error lies in believing that a country as stunningly diverse as America is in fact an homogenous market.  America is not just 50 states—it spans 11 time zones, from the westernmost tip of Alaska to eastern tip of Maine.  And its people are so diverse in culture and outlook that domestic companies usually take great care to make sure that the right Americans are matched to the appropriate areas of the country for sales and marketing.  A person who sells successfully in Mississippi will almost certainly be rejected by the more harried residents of New York.

Recently a Middle Eastern company of considerable wealth sent a two-member team to New York City to head their American office.  Not only had neither member of the team ever been to America—both made vehement anti-Semitic remarks almost every day.  Needles to say, they were strongly resented by most New Yorkers, and failed completely.  They were recalled at considerable expense, the company’s reputation in the States tattered.

HR Should Take the Lead!
When it comes to finding the right people—and avoiding the wrong ones—human resources needs to play a critical role.  The reason is simple. Understanding the keys to choosing the people most qualified for overseas assignments is something that most line managers aren’t well equipped to do. Managers’ primary purpose is to get the job done.  Often, this does involve deciding who’s going to do what.  But in the international arena, those decisions are not based on how well you know the technical field or the business goals. They’re based on what you know about your people.

This is where HR can and should play a key role. Arnold Kanarick, who headed HR at The Limited and Bear Stearns, pointed out, “HR isn’t about being a do-gooder. It’s about how do you get the best and brightest people and raise the value of the firm.” Good HR offices are staffed with trained professionals who know how to evaluate aspects of a company’s people to assist tremendously in choosing the right people to send overseas.

To do that requires recognizing a fundamental reality: the world is a very complex place that does not lend itself to packaged solutions.  The primary challenge is finding people who can deal with differences—but what kinds of differences vary widely, depending on where your organization wants to go and what it wants to do.  There are no simple tests or easy systems for scanning personnel files.

So what should you be looking for?  Here’s a profile of what a potentially successful overseas assignee should look like.  Key characteristics include:

  • Matching demographic characteristics (gender, race, religion) to the place they’re being sent.  Different cultures react differently to different sorts of people.
  • Open-mindedness toward difference.  Can the people you’re sending work well with others who are different?
  • Language facility.  People who have no facility whatsoever for learning foreign languages—or, worse still, who actively resist even a modest attempt—should not be sent overseas.
  • Language assumptions.  Anyone who thinks the world speaks English (or their native language), or that the world ought to speak English, should stay at home.
  • Acceptance of the world as you find it.  Anyone infected with the desire to change other parts of the world to be more like their home will definitely do a poor job of representing your business.
  • Tolerance of different ways of doing business.  Just because you didn’t think of it doesn’t mean it’s wrong.
  • Time-change tolerance.  The more difficult it is for people to adjust to jet lag, the effects of travel, and time-zone differences, the less they probably ought to do it.
  • Cultural-time Flexibility.  People who understand that different cultures think differently about time, and who can adapt themselves to those cultural differences, will do much better overseas than those who don’t.

So how do you find employees who fit this profile?  There are two keys here: know what you’re sending them into, and know your people.  Choosing people to send overseas can’t be done with a one-size-fits-all checklist.  But a good HR department that does know the firm’s employees, and that does its homework, can make a tremendous contribution in helping companies get the right people in the right places overseas.

More About the Authors

Bruce Alan Johnson Associates

Carry a Chicken in Your Lap: Or Whatever It Takes to Globalize Your Business

Bruce on LinkedIn

Bill on LinkedIn

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

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Creating A Global Benefits Strategy

Posted on November 25, 2009 by | 3 comments

Author:
David Bryan – Norfolk Mobility Benefits

Editor’s Note: We are pleased to welcome David Bryan as a Guest Author.  David has extensive experience in international employee benefits, and is currently a Marketing Consultant for Norfolk Mobility Benefits in Naperville, IL.

Change is constant, particularly in the realm of international employee benefits. There is a social time bomb ticking — the number of employees paying into various social security systems around the world is diminishing while the number of recipients is increasing. To defuse this situation, many governments are reducing benefits while raising taxes, thereby shifting the burden to the employer.

Today’s multinational employer is evolving into the transnational of tomorrow as corporations do away with defined headquarters and instead move to regional centers of operations. To meet these and other changes, benefits professionals are implementing global benefits strategies (GBS).  Yet, in recent surveys in which I have participated, nearly 78% of multinational firms have no formal international employee benefits strategy!

Designing Your Strategy
There appears to be more centralization of core corporate functions in light of the global economy.  While authority for certain functions may be retained on a local or regional level, strategy setting is still at HQ.  In the end, as long as the global corporate benefit strategy is being deployed, certain aspects, for example the selection of vendors/contracts, can be left to the local operations.

A Global Benefits Strategy will provide for some of the following benefits:

  • A blueprint of your company’s decisions describing what employee benefit strategies should be deployed for the enterprise.  It is a living, breathing document that needs to be adaptable to change.
  • Agreed-upon policies to create universal understanding and, hopefully, support from the local subsidiaries.
  • A framework for future benefits changes and enhancements.
  • A written strategy which allows employees to see how certain benefits decisions were made, and is very helpful when new stakeholders are brought into the process.
  • Strategies to manage costs; global benefit costs are substantial.
  • An organization-wide reference when trying to understand or drive employee benefits decisions and planning.

Key Elements of a Global Benefits Strategy
Global benefits strategies can take many forms, and range in length and depth, but most successful strategies will include many of the following elements:

  • Global Benefits Committee – This team should consist of representatives from HR, legal, treasury/finance, risk management and, when possible, various global business units. Initially, the committee should meet frequently and agree upon a system of review and evaluation for the work as it progresses. Remember: the more senior the committee representation, the stronger the strategy’s influence on upper management.
  • Statement of Objectives – The team should develop a written, agreed-upon statement or set of statements that defines the overall objectives of the GBS. Some statements try to benchmark by using outside data from consultants (e.g., having benefits at or above the 50th percentile). While data may be readily available in some countries, it may not be in others. Benchmarking can be a useful measurement tool, but benefits professionals need to be aware of the need to obtain consistent criteria across countries.
  • Policy Guidelines – Policy guidelines provide specifics about the various benefits and levels of benefits that support and are tied to the GBS statements. For example, life, accident, disability, medical, retirement and savings plans are outlined with target levels of coverage; and integration with social plans is detailed. Keep in mind, though, that too much detail can lead to guidelines that cannot be applied globally. With medical plans, for example, specific co-insurance percentages may not apply when a supplemental medical plan in a particular country is based on a schedule of fees.
  • Implementation and Review – After agreeing on its strategies and supporting guidelines, the GBS committee must put certain processes in place to activate the plan. Typically, an announcement from a senior-level executive to key, local employees helps gain attention and buy-in. Local buy-in should be targeted to management, HR and, in many countries, should include the Works Councils or unions. This step is critical to successful implementation of any global benefits strategy.

Reaping the Rewards
After the announcement of the new global benefits strategy, a benefits audit is often conducted to educate the central benefits staff about what plans are in place.  For a new company, implementing a GBS is easier than for a well-established firm that must harmonize many plans to create a unified and consistent global benefits strategy. The benefits professional’s role is essential at this stage. Many consultants and insurers offer software packages to assist in this process, although many corporations devise their own audit form to meet their specific needs.

Set procedures need to be in place to implement, review and enhance local plans. Usually, one individual has a certain dollar amount of approval authority to exercise any latitude permitted by HQ (for new and/or enhanced benefits). The more senior the individual, the more authority. Local benefit needs — and wants — must be measured against predetermined criteria. This authority can be with corporate, local or both, as set forth in the GBS.

Along with these approval procedures, established communication chains must be followed. In cases of mergers, acquisitions and divestitures, reliable benefits data (pension reserve, for example) must be readily available. Pre-established lines of communication will help in this type of scenario.

In most instances, resources are scarce, resulting in a decentralized approach.  In spite of this, there have been more than a few “ideal” GBS roll-outs.  An announcement, then an audit, followed by site visits from benefits staff to bring the local plans into compliance with the new philosophy is a typical, effective approach.

Taking the First Step
While global benefits strategies can be similar, each company must tailor one to fit within its industry and corporate HR philosophy. The first step in this process is creating a shared vision for a GBS that is flexible, simple, legal and tax compliant. Further, it should integrate governmental social plans with new or existing supplemental plans provided by the company.

A multinational enterprise must look after its global employee benefit plans.  We all are under the budget microscope.  However, a well-articulated global benefits strategy will enable HR to manage benefits resources globally and ensure a compliant and competitive benefits approach in every country.

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Posted in Benefits, Global HR Expertise, Insurance, International Benefits

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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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Posted in General, Global HR Expertise, International Expertise, Professional Development

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Expats Moving Overseas – Ten Tips to Transition to a New Culture – Part 2

Posted on November 3, 2009 by | 3 comments

Heather MarkelAuthor:
Heather Markel – Culture Transition Coaching

Editor’s Note: We are especially pleased to welcome a new Guest Author, Heather Markel, who has shared with us her ten tips for a successful expatriate cultural transition.

A few weeks ago, I shared five tips for helping expats transition to a new culture. This post is a continuation of the previous one, rounding out the ten areas to focus on when transitioning to a new culture for an expatriate assignment.

#6 – Starting All Over
One of the toughest transitions for an expat is adjusting to a new office environment from “square one”. The expat may have held a senior level job in their previous location, and the new job can feel like a demotion. For the accompanying spouse, starting all over can be literal – if they’ve left behind a job or fruitful career, they may have to start a new career, or, in some cases, due to legal restrictions, not be allowed to work at all.

In both cases, it’s imperative that some attention be given to setting expectations. For the expat, this is about an initial period where they observe the office environment, rather than try to exert their own style or behavior on everyone else.  For the spouse, expectations should be set around what types of work are permitted. There should also be some support to help spouses with the job or career-search, or on finding something to replace the job they previously held.

#7 – Access to Activities
Transitioning to a new culture isn’t just about the office. Whether single, or with a family, expats need to find fulfilling activities to help them adjust to a new culture. If the expat has moved with their family, then group activities will be important to the success of their overall experience.

Of course, available transportation may impact which activities are accessible, so providing assistance with ideas, or resources, is ideal.

#8 – Changes in the Family
For expats who have traveled with a spouse, it is more than likely the spouse has given up a job or career to follow along. If the non-working spouse isn’t happy, it can have a very negative impact on the overall experience. If the non-working spouse used to be a provider, and is now tasked with looking after the home, or the children, the role change will inevitably impact the family as well. It’s important to have an awareness of the changes, set expectations, and have a set of tools with which to navigate the resentments and challenges that are likely to develop.

#9 – Clothes:  What Not to Wear
In many cases, this may be more impactful on women, than on men, but it’s important that a migrating employee understand if there are any cultural dress patterns. First, it’s less likely they will feel like they “stick out like a sore thumb” if they adapt to some of the typical dress codes. Second, there may be instances where the lack of this knowledge could land them in trouble – for example, in cities where women are expected to cover themselves from head-to-toe.

On a more subtle level, Americans tend toward either matching suits, or more casual garments in the office. When going out in the evening, it may be inappropriate to wear jeans. In France, women in the workplace sometimes wear what I’ll call “mismatched suits” – they look impeccably-dressed, even though their skirt does not have a matching jacket. Oddly, it’s not quite business casual; it’s simply a style difference. Going out in the evening, jeans are often acceptable if paired with a nice top.

Another thing I often find humorous is that in France, people always stare at shoes. So, while you might get away with wearing an old, worn-out pair of shoes or sneakers in some countries, you’ll become quickly insecure if you try the same in Paris.

Again, these are very subtle examples, but these small gaps can make all the difference when someone is trying to feel like they fit in to a new culture.

#10 – Eye Contact and Tone of Voice
Two behavioral areas between cultures that deserve attention are eye contact, and tone of voice.

One huge area where eye contact comes into play is on public transportation. For example, in Paris, it seems mandatory to stare at fellow passengers and it can be very uncomfortable the first few times you look up to find someone staring at you, meet their gaze, and find they do not look away. In Tokyo, it’s exactly the opposite experience. Passengers typically avoid all eye contact by pretending to sleep – it’s another jarring experience to see an entire car full of people with their eyes closed.

Finally, the tone of voice with which you speak can often reveal that you are a foreigner. As an American, I know we tend to speak fairly loudly in social situations, especially when dining or drinking. However, other countries lean towards quieter conversations. So keep this in mind and adapt your conversations accordingly.

In Summary
I hope you find these tips, and the ones from my previous article, to be helpful in understanding the challenges that expatriates and their families often face upon arrival in a new country. If you are an HR professional responsible for assisting expatriates with their transitions, be sure to keep these tips in mind.

I am always interested in hearing more tips or experiences. Please share yours as a comment to this post, or contact me directly by email.

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Posted in Cross Cultural Insights, Expatriates, Global Mobility Services, Professional Development, Relocation

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