By Christof Ternes, Mercer
Mercer's 2019 Flexible Mobility Policies Survey gauged how companies have introduced flexibility in their global mobility policies, identified the prevalent approaches, and assessed how successful they have been. New participants may complete the survey for discounted pricing on the report.
As defined by the dictionary, to be flexible is to be “capable of being bent, usually without breaking.” As it turns out, this definition is also applicable to many global mobility programs. That’s because companies have to constantly adapt, change, and “bend” their policies and expectations to suit the needs and requests of an increasingly diverse mobile workforce and perpetually cost-conscious management. How can they accomplish this without going too far, breaking their own rules, and rendering their carefully balanced policies into a useless pile of exceptions?
Changing with the times: the rise of more flexible global mobility solutions
If we think about international assignment policies, including the ones that are still being applied by many companies today, we must look at them through a historical context. After all, the concept of what’s meaningful in any international assignment policy is directly related to the values and standards of the time in which they were created – a time, when global mobility was synonymous with the relocation of Western male expatriates for a duration of 3 to 5 years supported by a very generous compensation package.
Despite the lingering presence of some of these older and more outdated talent mobility policies, there is now a much broader array of assignment types and package types available to today’s mobile employees than at any time in the past.
Indeed, many companies are providing much more flexible compensation packages, assignment types, and mobility policies to satisfy their expatriate employees’ demands. By increasing their flexibility to match the evolving expectations of their workforce, these companies are also able to offer more competitive and attractive compensation packages. The objectives are to:
- Respond to new business needs and evolving workforce expectations
- Manage exception and drive cost efficiency
- Integrate mobility as part of a holistic Diversity & Inclusion global benefits design approach
The trick to all this is implementing flexibility in a way that is both satisfactory to the employees and cost-efficient for the companies.
Levels of flexibility and the factors affecting them
When it comes to gauging how much flexibility you can realistically offer your employees, there are three major components to evaluate:
- Your existing talent pool. A larger talent pool means a larger array of individuals willing to take on your assignments, which is a good thing for the company as it provides more options and an opportunity to control costs. The same time, this increased flexibility for the company brought by a larger talent pool implies managing the different expectations of a diverse workforce.
- Your current work arrangements. Whether it’s rotational assignments, specialized commuter policies, or simply letting employees work from home (virtual assignments), companies are now offering a wider and more flexible variety of work arrangements for mobile employees than ever before. The question for the companies is too what extent these alternative arrangements are available and suitable to replace traditional long-term assignments.
- Your organizational policies and practices. In regards to flexibility in mobility, an organization’s policies and practices are often one of the first issues to spring to mind. What is the overall logic behind the relocation and compensation packages and to what extent can they accommodate a degree of flexibility?
If you can successfully respond to the disparate requests of varying groups of individuals within your company (as opposed to viewing your entire organization as one homogenous entity) then you’ll be able to manage expectations and drive cost efficiencies with greater results. At the same time, flexibility should not go too far and put companies in situation where they might not fulfill their duty of care towards their employees and treat them inconsistently.
Many organizations are turning to assignment segmentation to help enhance the flexibility of their offerings. That’s because segmenting assignment durations and objectives into different groupings is less complex than trying to create individually configured packages for everyone. Segmentation offers a greater degree of choice for management but these choices must remain within the boundaries of pre-defined categories – i.e. there is flexibility to choose between the category that will be used but not to change the content of the packages for each category. Segmentation must be based on objective criteria and not be subject to ad-hoc negotiation. Furthermore, it is an option for management and not for the assignees themselves. For these reasons segmentation can be complemented or replaced by different flexible models.
The following models and concepts associated with package flexibility might be a way to introduce flexibility in your mobility program or can be used to complement assignment segmentation:
- Cafeteria model: The cafeteria model consists of a predefined set of package choices to peruse, similar to how the meal offerings are premade and presented in a real-life cafeteria. Also like a real-life cafeteria, these options aren’t guaranteed to always satisfy every single person, but it is still a way for employers to provide more flexibility and choice between different types of expat packages.
- Core/flex: This approach can complement the cafeteria model. It consists of establishing a distinction between non-negotiable (core) policy items and negotiable (flexible) elements. The concept of the core/flex approach is to maintain a minimum internal standard (the core) while still allowing for some regional or local flexibility.
- Lump sums: Companies sometimes struggle to address all the issues associated with relocating an employee, such as family accommodations, housing issues, transportation complications, country-specific taxes and fees, and so on. Lump sums are often viewed as a simple solution. It consists of providing a lump sum to be utilized however the employee sees fit instead of benefits in kind. The added simplicity and flexibility can however sometimes be offset by the vagueness of its purpose: employees sometimes pocket the lump sum, forget its purpose and still complain or they don’t use it appropriately and make wrong choices. There also might be additional costs, as lump sums are generally taxable while benefits in kind can be tax free if they are categorized as a company cost.
How flexible are your organization’s expatriate packages and policies?
If you’re seriously considering increasing the flexibility of your expat packages and policies, you need to understand which side of the flexibility spectrum your organization currently falls on; after all, an essential part of understanding flexibility is being able to asses it through the lens of your company’s culture and employee value proposition.
As far as company positioning in regards to flexibility, here are the two opposite ends of the spectrum that any organization could be on:
- The company’s global mobility policies are highly structured with little or no flexibility available for the business (regarding cost) or assignee (regarding optimised benefit combinations).
- The policies offer limited alternatives for supporting assignments of different durations, to different locations, for different purposes or to support different personal assignee circumstances
- The company strives to give as much choice as possible to the business and assignees in how they determine individual assignment packages.
- The company accepts that these bespoke arrangements create additional administration and risk, but the commitment to flexibility is a core pillar of the company’s reward strategy and employee value proposition.
In practice most companies fall somewhere in between these two extremes, picking and choosing components of each as seen fit.
This all leads to two final questions:
- If you’re striving to offer greater flexibility in your expat offerings, where does your company currently fall in the middle of these two extremes?
- Where does your company have the potential to fall?