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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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Expats Moving Overseas – Ten Tips to Transition to a New Culture – Part 1

Posted on October 14, 2009 by | 4 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.


The complexities of moving to a new culture are immense.  Typically, expatriate training programs include a cross-cultural component.  However, I believe there are some areas which may be overlooked as the expatriate and possible family members prepare to move overseas.

With that in mind, I’d like to offer ten areas to focus on when transitioning to a new culture.  This list is by no means exhaustive.  Rather, it’s intended to help with the design of transition assistance programs.  The first five areas are listed below, and the remaining five will be out in my next post, so keep a lookout for it!

1. Language – Conversation Topics
It goes without saying that when moving to a different country, it’s necessary for both the expatriate, and their family, to learn the local language. Routine activities would otherwise become overwhelming. (Note: Even when moving to another country that speaks the same language as at home, it can still feel like learning a new language.)

Beyond the basic language skills, though, there should be training on conversation topics that might be considered taboo, or that are a normal part of the culture.   Not knowing these topics could lead to the expatriate and their family feeling left out.   For example, history may be a topic to tread lightly on in Australia, whereas a fascinating topic for someone in Europe. Other topics to examine are politics, art, and food, as some examples.

2. Food – What You’ll Find and What You’ll Eat
It’s essential to understand two aspects of food – what you will find, and what you will not. Most of us have our “comfort foods”.   Thinking of several different cultures, comfort foods could be dishes such as Thanksgiving turkey, fish-and-chips, spaghetti Bolognese, tacos, Vegemite, or kimchi.  If you’re moving someplace where your favorite foods aren’t available, outside of an expensive import, the inability to find them during a challenging period could be disappointing for an expatriate.   Especially if they are spending a traditional holiday away from friends and family, being able to find typical holiday foods can make the difference between a bout of depression and creating a new tradition.

Conversely, there will be new foods to try.   In many countries you’ll find that intestines, brains, and kidneys are staple foods.   It’s also possible that an expatriate will be invited to someone’s home and suddenly be in the delicate position of eating strange foods to avoid insulting their host.  Therefore, it’s critical to prepare for expatriates to both sample new foods, and to help them figure out where they can find comfort foods, if available.

3. Meeting New Friends, and Coping With Missing the Old Ones
One of the toughest parts of any expatriate assignment is making new friends, and starting a new social network.   While doing so, it’s easy to become disappointed at how different everyone is, and to miss the closeness of former friends.   This can lead to what I call “the social media trap”, where every free moment is spent using Facebook, Skype, etc. to stay in close contact with everyone back home.   However, this strategy will make it impossible for the expatriate to succeed at making new local friends.

If expats aren’t prepared for this difficult task, they can easily isolate themselves, and then become lonely and disillusioned with their overseas experience.

4. Getting Familiar with a New City
There are several components that go into familiarity with a new city.

  • Location – Where is the town center? Where is the office in relation to home?
  • Transportation – Is there a subway and bus system, are their taxis? If not, what alternatives exist?
  • Safety – What areas of the city might be dangerous at night, or even during the daytime?
  • Essentials – Being able to locate the nearest supermarket, laundry, and shoe-repair shops. Also, medical doctor and dentist referrals can be very helpful as someone gets to know a new city.

5. Formality at the Office
One of the most difficult subtleties between languages and cultures is the nature of addressing peers and managers.   Depending where in the world an expatriate will be working, challenges could range from knowing when to use first versus last names, to understanding when to use formal versus informal verb conjugation.  In some countries this could be about handshakes versus bowing or other customs.  These challenges are often further complicated when addressing a female superior, where the challenge becomes figuring out whether to use the equivalent of “Ms” or “Mrs”.

It’s essential that these subtle behaviors and forms of address be understood for an expat to be accepted at the workplace. If they do not, they may become embarrassed in front of fellow employees and potential clients.

Summary
This list is just a start.  In my next post, I will share five more tips with you.   In the meantime, let me know what you think by leaving a comment!

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

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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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Avoiding Burnout in Global Field Service Travel

Posted on September 29, 2009 by | 4 comments

IMG_1602cropAuthor:
Alan Freeman – LOF International HR Solutions

The following question, recently posted to an online discussion group, caught my eye:

“Our international technical services business is booming.  Our Field Service Techs are getting burnt out spending 2-3 months away from home. How can I incentivize them to keep traveling? They already receive an attractive daily bonus for each day in travel.  Also, some of the new clients are in areas that are not very desirable.”

My dear old grandpa used to tell me, “Son, if you run your horses too hard and too long, especially over rocky ground, they’re going to fall in exhaustion or go lame.  No amount of extra oats will make any difference.”

So what’s the problem?

 

Notable drop-offs in productivity, poor morale, health problems and, ultimately, resignations (at least in normal economic times) go hand-in-glove with heavy travel-related burnout – especially international travel to “not very desirable areas”.  If high crime rates, existence of serious infectious diseases, lack of sanitation, political unrest or even outright violence are characteristic of those destinations, then the prospect of employees being harmed, kidnapped or killed becomes a significant concern as well.

An indirect, negative impact on morale and productivity also can stem from marital or family problems attributable to employees’ extended absence from their spouses, partners and families.  Heavy travel on the part of one parent puts additional stress on the stay-at-home partner to look after the children, elderly parents, pets, household maintenance, financial management, etc.  In our experience, Field Service employees often maintained their homes and vehicles themselves so the spouse had to hire outside providers to look after these issues while the employee was traveling.

Throwing money at employees won’t make them or their families less susceptible to burnout, but it could contribute to a company reputation for “slave driving” and failing to understand the human side of the travel sacrifice. This is not a desirable outcome for the company or the employee.

What might be useful?

 

A firm could consider providing extended paid leave, “R&R”, between trips. Take a lesson from oil & gas, engineering & construction and defense contracting firms and utilize the “rotational assignment” approach.  Simply put, for every x weeks or months the employee works on travel, he/she is eligible for y weeks or months off on paid leave at home or in a “nice” location at company expense.  For example, one of our clients provides services at a mining site in a developing country.  Their employees work 7 days a week for 3 months at a camp site and then are sent home for a month off with full pay.

I once worked on a project where, after the employee worked 1 month (single status) at a remote Middle Eastern camp site, the company would pay for the employee and family to rendezvous in a Western European city, all expenses paid up to a set maximum, for a week.  Expensive? Yes, certainly.  Did it “refresh the horses”, improve morale and productivity and build positive morale and attitude toward the company?  Absolutely!

Sometimes, depending upon the facts and circumstances, it’s possible to provide some form of relaxation in-country (health club memberships, a bit of time off to sight-see, company-paid recreation, etc.) during travel.  This is another way to give them a needed rest.

Another possibility would be to hire additional Field Service staff so more employees share the travel burden and thereby make it possible for each to spend a bit less time in the field.  Yes, in today’s economic environment of extreme cost control, adding to labor cost is not a popular idea in the CFO’s office.  But then, what about the cost of assignment refusal, turnover, reduced productivity, lost opportunity while employees miss work due to illness or injury, and inability to recruit high caliber talent, etc.?

We also must ask how challenging, especially dangerous, are the “not very desirable” areas?  Iraq? Afghanistan? Somalia?  A jungle infested with disease-bearing mosquitoes?  Make sure you provide appropriate pre-travel medical exams and immunizations, and adopt some of the safety and security practices companies used for longer-term international assignees in hardship and danger locations.  This includes local safety and security plans, well thought out and established emergency evacuation plans and ensuring that death and disability insurance benefits are not voided by “war risk waiver” clauses in the insurance contracts.  This latter issue can easily be addressed through contact riders but, if not addressed proactively, can lead to extensive financial pain for the employer, especially given laws pertaining to the “duty of reasonable care”.  Woe unto those companies that have not established the mechanisms to track their employees’ whereabouts and deal effectively and quickly with emergencies.  Check out Mariana’s posting for some tips on extreme hardship assignments.

Our friends at International SOS Assistance are about to publish a research paper on employers’ legal “duty of care” that our readers should find of interest.

Something the person who raised the question didn’t mention – but we will – are global requirements for work permits, visas and tax compliance.  Often, even those on relatively brief field support trips to other countries are deemed by local governments to be performing “productive work” in those countries.  This can, and often does, require a work permit.  A company is well advised to consult with appropriate immigration counsel to ensure that its employees have the proper clearance to carry out their duties in each country.  This is not about the amount of time the employee might spend working in country; it is all about what he/she will be doing while in country.

As to taxes, members of management have often heard about the so-called “183 day rule” and simplistically believe that so long as the employee works in a given country for less than 183 days, he/she will not be liable for local income or social insurance taxes in the assignment country.  This is not necessarily the case and depends upon a number of key factors.  We recommend reading our contributing editor Claudia Howe’s excellent commentary on this issue.

So, at the end of the day, how do we respond to the question of “How do we incentivize our staff to keep traveling”?  We’d say, give your horses rest, treat them with dignity, recognize that their families bear a burden too, and provide them with fresh oats.

Otherwise, my dear old grandfather just might come back to haunt you!

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Posted in Expatriate Taxation, Expatriates, Immigration

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Medical Tourism: Saving Money on Global Benefits, Part 3

Posted on September 25, 2009 by | 4 comments

George Bashaw

Author:
George Bashaw – Atlas Global Benefits

Medical tourism is a hot topic, but can it save money for your company?  And if the answer is yes, should you adapt your health plan to incent certain employees to go overseas for medical procedures because it is less expensive?  This is a complex issue and requires that you do your due diligence before deciding anything.  This blog on medical tourism is part 3 in a series to help companies save money on international benefits.

Medical Tourism
If you are unaware, medical tourism is exactly what it sounds like, people traveling abroad for medical procedures.  According to McKinsey and Company, the industry is expected to reach over $100 million by 2012.  With medical cost skyrocketing in developed countries like the US, people are traveling to places like India, Singapore, and Thailand for savings up to 90% on certain procedures. For example, a heart bypass in the US can cost around $150,000 compared to $15,000 in India, which includes air fare and a brief vacation. Therefore, self insured corporations with and without global operations are taking notice and beginning to investigate.

Multinational Companies
If you already have a multinational employee base with a true global benefits plan, medical tourism is a viable option for your employees covered under the existing plan.  Typically, under these plans your employees can seek medical attention from the provider network.  However, it is also typical to find the domicile country of your company to be excluded from these plans.

If you have a true global benefits plan, ask your broker or your carrier about the possibility of medical tourism within this population.

Self-Insured Plans
Perhaps the greatest potential savings can be realized by self-insured plans in developed countries like the US where medical cost are high.  Unfortunately, I am unaware of a clear solution you can implement.  However, large medical carriers like CIGNA will help you explore the opportunity.

I recommend performing a utilization study going back 3-5 years to determine the occurrences of planned medical procedures which are good candidates for large savings like heart bypass, hip replacement, or knee replacement.  Armed with this data, you can compare those costs with alternatives in other counties.  Then, create an incentive plan that may appeal to a segment of your employees.

Sounds great for the wallet but India for Heart Surgery?
The thought of traveling thousands of miles to a distant country, where you may be unfamiliar with the culture and customs, and sometimes even the language, may sound like a big step, and it is.  However, you may find the quality of care equal or better than you are receiving now.  I live in Tulsa, OK and going to Cleveland Clinic sounds appealing if faced with a medical procedure.  Did you know that the Cleveland Clinic has a joint venture with the UAE and a clinic in Dubai?  Did you know that the Harvard Medical School has a joint venture with Wockhardt in India?

In Summary
There are many additional aspects to explore with medical tourism: cost, quality of care, cultural, legal, liability, and more.  Unfortunately, it would take a novel to address them all and I cannot in a blog piece.  However, if you are serious about saving money the potential is there.  Just be sure you do your due diligence.  Please leave a comment to let me know your thoughts or experience with this topic.

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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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Guidelines on Dangerous Assignments – When Your Employee is Risking His Life for the Company

Posted on September 8, 2009 by | 3 comments

mariblack3Author:
Mariana Villa da Costa – Littler  Mendelson

It is a big and dangerous world we live in today.  There are many “hotspots” around the world where the personal safety and security of staff can be in jeopardy unless the proper precautions are taken.  Expatriate employees assigned to high-risk locations are especially vulnerable.  Companies need to become familiar with the actual in-country conditions, work with security experts to do a risk assessment, and evaluate and update their assignment policies to minimize the risk to assignees and company alike.

What’s Dangerous?
Assignments may be considered dangerous in locations that have some of the following characteristics:

  • Countries where war, civil insurrection, or terrorism exists and presents physical harm or imminent danger to the health or well-being of an employee.
  • Widespread, uncontrolled violence or disease.
  • Lack of infrastructure (limited availability of basic goods and medications, for example).
  • Lack of family support services, such as schools, health care, etc.
  • Extreme physical conditions (sub-freezing temperatures, remote locations, etc.).

Companies often have a difficult time attracting and retaining people for these assignments, as the assignment is likely to be very stressful on the employee and family.  A proactive approach helps to address the problem.

Steps to Manage Extreme Hardship Assignments
There are several measures that can be taken by employers to address the unique challenges of extreme hardship assignments.  Here is a checklist to follow:

  1. Should the assignment include family members, or is an unaccompanied status required?
  2. Expatriate package should be reviewed to consider extra allowances and other benefits, as appropriate.  Some examples are:
    • Hardship Pay – Usually 10% to 25% of base salary, to compensate employees for extreme living conditions.
    • Danger Pay – Typically 15% to 25% of base salary, in addition to all other compensation.
    • Travel Benefits – Extra trips, or allowance to make trips for R&R (rest and relaxation) on a periodic basis, in a safe and secure location.
    • Assignment Letter – Update to include details on all extra benefits and explain the conditions the employee will find in the location.
  3. Safety and Personal Security precautions should be followed and training and information provided to each assignee (and family members), including:
    • Security Briefing and Training – Ensure every assignee is informed about the security risks in-country, knows how to address them, knows where to go in an emergency and whom to call (in the company, and perhaps outside security consultants as well).
    • Bodyguards (if required).
    • Secure Housing – Limitations on where assignees can live, to eliminate situations that are particularly risky.  Apartment complexes, gated communities or compounds many be appropriate.  Armed guards and security systems are typical.
    • Legal Representation Abroad
    • Kidnap/Emergency Response
    • Emergency Evacuation Procedures – Each assignee must understand the company’s procedure for evacuation, how it affects family members, etc., in the event of natural or man-made disaster, war or other catastrophe.
  4. Health issues are another important consideration.  Are there adequate medical facilities available in-country?  If not, what sort of arrangements can be made?  You also need to consider contagious diseases, insect-borne illnesses, HIV and other sexually-transmitted diseases, extreme pollution, blood supply, treatments for chronic illness, availability of prescription drugs, and applicability of health insurance.  There are health experts that specialize in assisting companies and families in health assessments, medical evacuations and similar challenges.Don’t forget the basics, such as up-to-date vaccinations!
  5. Other insurance (beyond health insurance) is often required.  Typical examples:
    • Life and Disability Insurance – Make sure coverage is valid in the assignment country.
    • Kidnap and ransom insurance
    • Burglary and other household effects insurance
    • War risk insurance – Often needed in countries designated as war zones.
  6. Cross-Cultural Training should be provided to ensure a relatively smooth transition for the employee, and a realistic preview of what daily living is like.  Companies often view such training as “too soft,” but experience shows that it is extremely helpful to prepare assignees well for many contingencies.
  7. Crisis Management Protocols should be defined in each organization.  Some suggestions:
    • Define a protocol for assigning “critical” status to disaster or crisis situations. It is important that companies have informed local sources to ensure that their assessment of the situation is valid and current.
    • Formalize and communicate country or regional contact points and phone numbers.
    • Set up a procedure for the employee in the event of an emergency.
    • Ensure that employee emergency contact numbers, as well as home and office phone numbers, are on record with the home office and the country contact person.
    • Conduct emergency evacuation briefings or updates upon assignment and at periodic points during assignments, particularly in areas of potential risk or conflict.
    • Plan for financial and travel contingencies.

Other Resources
There are many other resources to assist employers in managing extreme hardship assignments.  Start with the US Department of State Travel Warnings.  The UK Border Agency provides a listing of current conditions in many countries, as does the US Central Intelligence Agency World Factbook.  Forbes Magazine publishes a list of the World’s Most Dangerous Countries, which offers some useful information.  Check with security consultants and health care experts as well.

Summary
Managing assignments to dangerous places is a challenge for employers and stressful for employees.  Careful planning, sound policies, advance preparation and of course, a sense of adventure, are all steps to mitigating the risks and ensuring a successful assignment for your company.

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Mariana Villa da Costa

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Littler Mendelson

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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.

More About Warren

Warren Heaps

Warren on LinkedIn

Developing Markets Compensation and Benefits Group in LinkedIn

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Birches Group

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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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