By Steve Nurney
There is a well-known saying that advocates leaving things alone when they appear to be running well: "If it ain't broke, don't fix it!" In general, this is good advice – but not necessarily in the context of global mobility program management.
Your company has been sending employees to work outside their home country for years. But do you have a clearly stated global mobility strategy? Is your expatriate compensation policy documented clearly and communicated well? Do you know all the inputs and calculations that go into your compensation packages? Are you using the right peer companies to benchmark your mobility program's effectiveness? Does your expatriate program have a positive ROI over a meaningful time frame? In short, do you know for sure whether your global mobility program is not broken?
If you cannot answer "yes" to all of these questions with confidence, it is time to evaluate your global mobility program.
How to Begin
The most important consideration going into an audit is having a clear understanding of why your company moves employees abroad. Is it to broaden the experience for your best talent? To provide scarce managerial help until local managers can be trained? Is the nature of international assignments the same in all countries and for employees at all career levels? Is it appropriate to have one policy that applies to everyone? Or should you have tiered policies to allow for specific situations?
You should also consider your competitive environment. For instance, if you are in financial services, you do not want to compare your global mobility policy to those of energy companies, which often have features peculiar to their need to man remote extraction sites.
Some industries and some specific companies have cultures that truly foster mobility. So, if your employees know when they walk in the door that mobility will be expected, your policies may not need to be overly generous. In that case, you should not benchmark against companies whose approach to mobility gives expatriates a lot of customized, exceptional treatment.
You need to know who your competitors are and how they are handling expatriation. Do you want to benchmark against your industry, your region, or specific companies?
What to Audit
Once you know what to expect, you should analyze your company’s compensation packages and review their elements:
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How do you determine each allowance?
- What are the assumptions made – both implicit and explicit?
- What is the desired level of compensation resulting from those allowances? At the market? Above the market?
- Do the answers to these questions align with your desired competitive position and business needs?
It is important to conduct a simple yet thorough review of the actual package calculations to ensure that the data source is correct, and that you are using accurate employee and assignment demographics – from salary and family size to home and host locations. This is important both in automated environments (where payroll data is uploaded and processed via electronic files) and in those that rely on a high level of manual input (such as “homemade” Microsoft Excel files).
Then, you should review the actual processes used to determine and provide compensation information. Who provides that information? Internal employees? Are these services outsourced? Do they need to be? What role does each person have? Are they all following the same, correct procedures and using consistent, correct sources of information? At this point, it is important to verify that your global mobility policy is clearly documented, agreed to, and adhered to by everyone involved in administering it.
Examine the whole process from start to finish, making sure that what is supposed to be done is being done, that it is done in a timely way, and that it is done consistently and correctly.
Where to Look
Where are you likely to find opportunities for cost savings and program effectiveness?
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Your housing policy may be a good place to find cost savings. Reconsider assumptions made for housing costs in the assignment location. Setting reasonable expectations in employees’ minds before the assignment begins is important in curbing housing allowance expenditures and costly requests for exceptions. Assignments are temporary. Assignees should not expect to duplicate their home country housing standards in the assignment location.
- The Goods & Services differential (or, “Cost of Living Allowance”) is another area of focus. When reviewing the way the differential is determined, be sure that no benefits are duplicated. Some employers unknowingly provide separately some of same items that the differential includes. For example, many companies provide transportation assistance in the form of a company car or allowance. If so, the differential should exclude these elements to avoid duplicating benefits.
- Exchange rates and relative inflation in the home/host locations change over time – and recently these conditions have been quite volatile. In some cases, the level of allowances required can be lowered considerably because of those changes. Economic conditions may also turn the other way, and packages should be updated to ensure that you compensate your assignees fairly.
- Retention is an important yet underused indicator of a mobility program’s effectiveness. Consider the number of assignments that end prematurely, the achievement of assignment goals and objectives (to the extent that goals have been clearly established) and, upon repatriation, whether the employee can be effectively redeployed internally. If not, your company is losing the experience that your expatriates gain while on assignment. What measures do you have in place to ensure that returning expatriates will want to stay with the company when the assignment is over?
Sometimes Wheels Need Grease Before They Squeak
We began this analysis with the axiom, “If it ain’t broke, don’t fix it.” A related saying is, “The squeaky wheel gets the grease.” But flawed mobility programs often do not look “broke” nor do they squeak when you just keep running them the same way over years. Senior HR managers and other stakeholders in expatriation need to remember to periodically step back and determine whether your global mobility program is properly aligned with business goals – and meeting expatriates’ needs. Pay special attention when changing policies or practices, and when introducing new systems or people to the expatriation process.
Auditing and benchmarking help you to take a fresh look at your mobility policy, review mechanics, and make sure that no changes in your company or your business environment warrant an adjustment in policies or processes. Regular tune-ups of your mobility program can ensure that your overall talent management strategy yields results that benefit both your company and your expatriate workforce.