A practical path to care flex approaches, part 1

Olivier Meier, Mercer
Alain Verstandig, NetExpat
Des McKell, NetExpat

Organizations face the difficult task of paving the way to a future of work where employees can thrive and also deliver on business needs. An effective and relatable employee experience is formed when work connects with what matters to people. The pace of change has accelerated in the past three years. The shock of the pandemic and the evolution of technology have brought to the fore employee expectations and business trends that had been slowly emerging over the past few decades. Organizations increasingly realize that they have to provide employees with a new lifestyle contract — one that accommodates aspirations for greater flexibility and a better lifestyle for the entire family. Mobility issues are very much at the center of these aspirations, with the rise of employee-driven mobility (self-requested moves, cross-border remote workers) that supplements existing traditional forms of assignments.

A successful global mobility program needs to work well for both the assignees and the company. But implementing an infallible assignment policy that is both flexible and defined enough to serve as the foundation for any mobility scenario is a challenge, even for the most evolved global mobility programs. Recent data show that developing flexible international mobility policies continues to be a challenge for mobility teams.

Policies, package elements, or terms and conditions that apply to international assignees are constantly under review. Policy flexibility is in the top five policy elements that will be, are, or have been the most reviewed, according to a recent Mercer survey.

Reconciling compliance constraints, business requirements, and the aspirations of employees and management is leading organizations to explore more meaningful forms of flexibility — new “care flex” approaches.

The rise of flexibility

More companies have introduced flexibility into their policies recently — 57% in 2022, compared to 37% in 2019. In 2023, 62% of the participants in Mercer’s Worldwide International Assignments Policies and Practices survey said they are currently reviewing or plan to review the flexibility of their policies.

The main objective for introducing flexibility is to improve the assignee experience. Fifty-seven percent of companies consider it a very important benefit of increased flexibility.

According to our survey participants, the key challenges with introducing flexible packages are:

• The lack of technology infrastructure to support the flexible packages
• The risk of increasing costs
• The increased difficulty in tracking and reporting the options provided
• The lack of guidance from line management and HR

In another recent mobility policy survey, only 12% of companies regularly measure the impact of flexibility against set objectives. An additional 18% do some measurement on a random basis. The top expectations from the business revolve around combining business practicalities with the satisfaction of the workforce — the employees themselves, and also their families.

Different shades of flexibility

Flexibility in talent mobility comes in different forms. At the strategic level, flexibility can be about new work setups, tapping into new talent pools or reviewing career management. At the policy levels, different approaches have been introduced to offer better support to employees and/or facilitate mobility management.

Flexible policy approaches

Swapping benefits: swapping one benefit for another of a similar value.

Cashing out approach: allowing assignees to receive a benefit as cash instead of a benefit in kind. Assignees can fully replace benefits with the equivalent in cash or reduce the value of their benefits in kind and receive the difference in cash.

Lump-sum: one-time or recurrent cash amount intended to cover more than one component of the assignment-related package. It can be used as desired by employees but, over time, its purpose could become unclear.

Cafeteria model: allowing employees to select benefits from a pre-defined list. It can also refer to approaches allowing assignees to use awarded “points” to increase existing benefits or “purchase” new benefits from a predefined list.

Core flex benefits: core benefits (typically compliance-related) arise from the employer’s duty of care or internal guidelines that are neither negotiable nor flexible; flex benefits are non-core benefits.

These different approaches have pros and cons; for instance, cash-based and lump-sum practices are often perceived as easy to administrate and a quick way to meet employees’ expectations. However, in addition to being tax-inefficient in some countries, these approaches do not always improve the experience of assignees, and they present risks. Assignees tend to forget the purpose of the lump sums or simply do not connect them with specific purposes. The lump sums do not increase the feeling of being actively supported. Assignees might be tempted to trade some of their benefits and support for quick cash without realizing this could harm them over the long term. In hardship locations, restrictions need to be put in place to limit flexibility for duty-of-care reasons.

Changing mobility patterns: Employers have moved toward higher volume and utilization of permanent one-way moves, which can sound attractive to the relocation budget holder, with fewer traditional assignee benefits. However, for the employee and family, this often comes with greater levels of complexity and long-term financial commitments, requiring support to integrate quickly and, very often, maintain a dual family income. Over 70% of families that responded to a NetExpat survey cite maintaining the dual income as a critical component of their mobility decision and success.

This is leading companies to consider more structured forms of flexibility like core flex approaches designed to distinguish essential benefits from optional ones.

Ongoing dilemmas with core flex approaches

When setting up core flex approaches, companies face several challenges.

Flexibility versus duty of care: Duty of care is the first limit to flexibility. Organizations should not allow employees (or their managers) to make decisions that put them at risk or leave them with insufficient support. It is a question of compliance, but also employee well-being.

Inconsistent experiences: Beyond pure compliance, multiple options could lead to different employee experiences. If not correctly implemented, flexibility could undermine the consistency of the experience of mobile employees.

Total flexibility versus informed choice: Excessive choices could lead to errors and dissatisfaction if employees do not have the right input and support to make an informed decision (especially about the long-term implications of their choices). Too many choices can lead to decision paralysis, too!

Connecting flexibility with clear objectives: Flexibility is sometimes introduced to follow market trends or to adapt to new generations’ (alleged) expectations but without a real strategy and clearly defined business objectives.

Tough choices: Families can be forced (unintentionally) to choose between various flex benefit/support choices when, in fact, they need a little bit of everything!

Introducing care flex: a more meaningful form of package flexibility

The concept of core flex was initially driven by compliance considerations and the need to ensure a minimum level of support. The flexibility to decide on the type of benefits and level of support was often given mainly to line management.

Organizations are now increasingly refocusing their flexibility approaches on employee expectations. The objective is to increase satisfaction and retention as well as to provide a better experience to diverse groups of assignees with different needs. Are line managers and GM teams really the best placed to inform an employee what their family will need and value the most?

These new approaches require a new logic. If the core flex is driven purely by compliance considerations or viewed as a minimum level of support, it could lead to inconsistent experiences. A new logic named “care flex” would use the desired employee experience as a starting point to design the flexible approach. “Care” is no longer a minimum based on compliance; it sets the standard for a good experience. The “flex” part is then used to adapt the approach to the needs of the different groups.

The care flex approach is also about improving interactions with the assignees and having a broader view of the family’s needs.

In part 2 of this series, we explore implementing care flex approaches into mobility policy.