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Cost Containment: Revising global mobility policies

by | Nov 8, 2021 15:28

Image: xpath global

Cost-cutting is critical for all businesses, regardless of their size. Large companies, however, must strike the right balance as they must be mindful of the costs of expat programs, while still providing packages that will attract and keep their talents.

Read below how 3 experts in the Global Mobility industry tackle the costs and how do they keep assignees happy.

What should a GM/HR have in mind when they need to plan an international assignment? What would be the main points the GM/HR should take into account when assessing the best type of assignment and the best potential candidates?

SANDRA CORONA:

I would say if everybody has heard the typical “location location location”. That’s basically the most important thing that everybody thinks about. Part of knowing about location, where you’re going, what are you trying to do, meaning that you have to know about laws. You have to know the labor laws, the local laws, you have to know Visa accessibility. 

With housing, is how you determine the location, the driving distance, the facility, the schooling, everything. Accessibility is what determines location. That’s why the number one place is location.

But then comes for example labor laws. In labor laws, you have to know how many local employees or local people you have to employ, how many you can employ foreign labor, and how many of your people you can bring to stay within the regulations because companies and countries can find you if you exceed or do not stay within those conditions.

And then what makes a good expat? I came to the conclusion that every single person is an ideal candidate. What we have to do as corporations, HR, and then us as global mobility to develop people is to start from day one. We did not exercise the practice of developing people because of what every single company does and still they tell you “Your personal development is yours to do”. 

Our role is to develop and give you the skills or develop your skills. But your personal development is yours, which is where we stay behind, which is why people are not ready for the post-pandemic process. 

I always say that everybody’s a potential expat, but now looking into it on a deeper level, we missed the part as global mobility partners to prepare the expats culturally, prepare them in inclusion, humanity, and grief. Because in grief you give yourself empathy and you give others empathy. In culture, you give yourself the ability to see things from different perspectives. You can create mind models to help the person see things from a different perspective not just – this is my culture, this is what I come from, and this is what I’m used to. 

“Us” and “them” – that creates distance, non-inclusivity, which is what we’ve all been talking about. That is a role as a global mobility partner. We are their coaches, we miss that part, we have to retrain ourselves so all of those certificates have to be worth something.

What would be the main points a client should take into account when developing a GM policy regionally or in a specific region/country?

MICHAEL TOMSETT:

We have some insight into policies for our clients. We certainly wouldn’t want to say that we’re a global mobility policy consulting organization and that’s actually not where we are. Packimpex is a local organization on the ground in the five countries that we’re currently active in. We do see the policy when it concerns the services that we can deliver and we do sometimes see a global policy and where we get involved is to advise on how to localize that global policy. I think that’s the first thing – we don’t have a total global oversight and that’s why I’m happy to be on a call with experts that do have more of a global perspective. 

The other thing that we do see is that the policy often matches the company’s culture, so there’s no one-size-fits-all. In the markets, we’ve seen a lot of traditional clients, but also high-tech kinds of businesses. What we really see is that the culture of the company reflects in the policy. What we like about working with tech companies is that their employees have a real self-service culture, so they want to do things by themselves. 

We’ve spent many years adapting our entire service delivery towards that kind of team player, hand-in-hand approach that really has to do with listening to the client and then delivering the service they need, rather than saying you know this is our service: you can take it or leave it. 

What should HR / Comp & Ben professionals consider when they have to keep the transferees happy and productive and keep the costs low? How do you juggle with this as it’s not easy to tick both boxes?

SANDRINE BARDOT:

There’s this tension between spending and trying to save money at the same time. I would say that the one thing which is really important is that, in the beginning, when the company was designing its international assignment policy, it had to really think of the different types of assignments it wanted to offer and what are the purposes of those different types of assignments.

Some of the aspects of the risks are associated sometimes with some countries or the hardship associated with some countries. On the contrary is the fact that it’s like a super wanted type of relocation that everybody wants to go to: the executives versus those that you send because they’re high potential and you want them to grow their skills.

You’re not going to approach those people the same way, you’re not going to approach the type of assignments the same. I think that not having that clearly defined and being kind of vague into saying “oh we just want to send somebody abroad because we think it’s right” it’s probably a big area where you can do some savings because you need to have a purpose. 

There are some places where we’re not spending enough and it’s actually costing a lot of money to the organization. I’ve been an expat myself. I relocated three times to Italy and to the UK before I moved to the UAE and I didn’t know it would be almost a permanent move. As much as my first expatriation was to roam, I didn’t have any support from a language perspective nor a cultural perspective and it made the integration much more difficult.

Not providing that might have deterred somebody else and might have made the move a failure. When it’s a failure, you need to repatriate the person and sometimes the person resigns. It’s a huge cost to the organization compared to the ongoing cost of keeping the person over there.

I think it’s important sometimes to see that some elements of the package are actually an investment to ensure the success of the expatriation and while others are more like a financial reward. I would focus on the ones that allow for better integration of the assignee into their new location. 

What should mobility practitioners take into account when devising an incentivizing scheme? Would you please share with us some good examples with great results? 

SANDRA CORONA:

I can consider 2 of the several companies that I’ve worked for to be focused on the employee. They both did the same thing and this was stocks. For many employees, stocks are subjected to headquarters: if you’re working in the headquarters you’re going to have access to stocks. When they become an expat, you immediately open the opportunity to buy or have access to those stocks. If you are let’s say a stock option plan has been like a benefit and that is based on headquarters stocks, the ones that everybody wants access to, then if you are part of a joint venture you create, as a company, stocks that fit into that joint venture that might not immediately give you profit in the first year, but as the joint venture grows the stock grows in value. So that is kind of exclusive.

Then there’s the salary increase. This is the part that I was fascinated with. The salary increases when you become an expat. You have the salary increase attached to the assignment, so that would be one salary increase in the year. Then, you have your home country salary increase attached, which is independent and it’s very normal. Then you have the headquarter salary increase, and then you have the one based on performance. So you can have in one single year four salary increases plus that employee level that would get you into better benefits, more money into your retirement fund and so on. These put people into that feeling of belonging: “we’re being part of something”. Lastly, which gives people the sense of inclusivity is treating everybody the same across the board regardless of passport. There’s a lot of countries that treat or give salary increases or a certain type of salary based on passport and the companies that I worked for let everybody know they have the same chances. I love that in a company because it creates that sense of belonging. It brings engagement, opportunity, growth, all of these wonderful things that you get from an employee. Those are three successful options that expats get.

SANDRINE BARDOT:

I personally think that there are other incentives that we can provide to people for international assignments and things that maybe most companies don’t really look into.

Everything that makes the life of that expat a little bit easier on the psychological level once they’re there. One of the challenges that I found in the mobility programs that I managed was this kind of performance management and the career revolution and especially upon return. Not having somebody to support the career of that person, to make sure that their performance is evaluated on the same criteria as everybody else, because sometimes the expectations are a bit different and either higher, or on the contrary.

I would say things that look into helping the person return to the home country or to move on to the next assignment. The other thing which in my opinion also can prevent people from coming back is the lack of support upon re-entering the home country. It is another cultural shock coming back to the home country. Typically, an expat has grown a lot on a personal, emotional level, not just the cultural and professional. When they come back to a purely local job in their home country, there is a whole aspect of their growth, which is completely neglected and not used in the new job and that’s very frustrating. 

What kind of services DSP providers should prepare or should have in place for cases like this and have you ever been in the situation where your services were used to help actually sell the assignment itself or the location itself?

MICHAEL TOMSETT:

I think it’s true to say that we’ve been in that situation a lot. At Packimpex we have found ourselves in front of groups of people who would be heading abroad on a group move so, even before the group moves abroad, we’ve been called in to motivate and encourage people to take away the fear by explaining the process.

I totally agreed with the services to help people build a social environment, but how to convince people to move? Either you provide them support or you provide them with cash. We see both. I did also agree with the investment into people, so we see it really as a strategic purchase to spend on some of these services because the cost of failure can be huge. Our relocation consultants and our specialists are working almost like an extension of the HR and the hiring manager or the mobility department need to convince that high potential employee or that executive to make the move. We’re called in for that.

What services do we offer? Well, of course orientation tours, that’s absolutely classic. We’ve found that when you are dealing with group moves (and that is something that does happen in Europe) you need to sit with the whole group and also have senior management on the company side to engage with us and support us and we do it together. What we’ve also done is when the assignees are going ahead with the move, we’ve put a life cycle in place as well. It’s like a helpline function.

One thing that we’ve done really successfully is newcomer support programs. It would be good to have like the repatriates support program as well for the ones coming back. We’ve seen it here in Europe where we get people together in groups of newcomers and we’ve run a program somewhere between cultural and social integration.

People go through that course and it helps them to build networks. Language lessons and spouse support can go in the same direction, you’re getting together with people on a regular basis, you build networks and it really helps with the emotional side. 

What would be the main changes companies made during this period regarding their GM policies? What was popular for the assignees in their benefits packages and what was not?

SANDRINE BARDOT:

If I look back to the pandemic, what I’ve seen is that a lot of organizations sent people home as soon as they started to realize that borders were closing. I personally know of a number of people who were global heads of international mobility who lost their job around the end of 2020. The companies at that point in time were saying: no more business travel, no more international assignments, so it’s not even that they were cutting some parts of whatever it was, they shut it down. I think that now they’re coming back to a different way of thinking.

There was a lot of skin-deep type of reaction because we’ve never been in such a situation before. I think that there is going to be more focus on the types of assignees and trying to have more people going on a shorter period of time, with fewer benefits, rather than sending people for three years immediately. A lot of organizations are going to try to work more on the basis of projects. This, in a way, also makes sense, because what we see in the world of work today is that companies are moving away from jobs that are really defined towards tasks and towards agile work, which means that the people are assigned to a specific project.

Expatriation that would have a non-traditional duration (six months or more) will be project-based. I think in those cases where organizations have a place where they’re sending a lot of people trying to contain costs by moving away from giving cash for the housing but providing accommodation. That might be a cost-saving opportunity for them as they can replace people. I think it’s not a redefinition of the package, but more of what we want to do with our global mobility approaches.

What would be the elements to consider an assignment as being failed and what is the trigger included in the GM policy that causes that failure, if there is one? 

SANDRA CORONA:

Coming from my background I’ve always worked on projects. This experience of being in a project is to let people know that when you hear about a project, it has already been three years in the making. All of those things [what’s going to happen, how are we going to train, provide, and communicate the benefits to the employees] come into account when you have a good program. That means that in the repatriation process when people know that they’re going to return, you as a good company should have been working on that package a year before.

Your responsibility as the manager and as the global mobility department head of that is to be specialized in that, understand what happens and what doesn’t work. If you are understanding of the population’s needs of the assignees: how many have children, how many are going single, how many are married etc, then you cannot set expectations, which I heard and it sounded so harsh. Setting expectations since day one is all of this planning that I just told you. By the time it hits my desk, it is because the people like the managers, the leaders, the directors, already work this out for me. So if I, as global mobility, fail to communicate, be honest, straightforward with the expat, and not understand their needs beyond the compensation side, you start to have expats with issues beyond finances that are not addressed and when the time of repatriation comes.

If you do not understand how to apply those in your corporation once they come back, then where are you going to place them? What are you going to do for them? How are you going to keep them motivated? Giving them the opportunity to control their future in the company is key. If you do not give your employees the flexibility to make their choices of where they want to go after this last assignment, keep in mind that it can make an assignment successful or break it.

Is there anything you noticed about changes/trends in international assignment packages?

MICHAEL TOMSETT:

Absolutely. I think it’s about flexibility and about how important it is to listen to people and to your clients these days. Flexibility has been coming for a while. I think we’ve always had to be flexible, especially global mobility dealing with global organizations and people. The two megatrends we’ve seen in the industry is the free shipping crisis. I think on a megatrend level really also connects to some of the things we discussed before – the trend towards shorter assignments, all of this is kind of playing together.

If you’re going to do a shorter assignment, you don’t necessarily want to be shipping household goods. We did a quotation a couple of weeks ago for a 30 cubic meter move from Qatar to Switzerland and the price was astronomical. We figured out for the customer that rental furniture would have been half the price for over a 2-3 year period. Let’s not forget about gen Z and the millennials. They’re used to doing things by themselves. 

With the whole self-help thing, company culture is really about listening to where the client actually needs help and adapting your service delivery to what their needs really are. The trend of flexibility is for sure the wave that we are riding at Packimpex. We’ve had to think very hard about it and we see that the landscape for relocation services or forum for DSP services is a lot around the traditional packages. Then, there’s a points-based package system coming up, where the assignee gets a certain number of points and they should choose from a service range.

If you want to watch the entire discussion, you may access it HERE.

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