Strategies for international assignments in HR

Mercer’s International Assignments Survey 2010, which collects data from over 220 multinational firms across all industries, found that presently, organisations globally have more structured international assignment programmes that put emphasis on shortened assignments, hiring locally and eliminating non-essential benefits in an effort to manage costs more effectively.

Cost cutting measures

Despite the economic downturn, international assignments overall have increased by 4 per cent over the last two years. To help control costs, companies are focusing on short-term assignments and, as a result, these have been increasing more quickly than the traditional long-term assignments. According to Mercer’s findings, 50 per cent of companies reported a rise in short-term assignments. According to the report  this year’s survey presents overall practices among 200+ global organisations across diverse industries addressing issues ranging from assignment pattern, profile to compensation approach, treatment of allowances, as well as provides insights into market trends on approaches that companies are undertaking to address financial pressure while keeping in mind the attraction and retention objective. Moreover, companies are trimming costs by hiring expatriates locally instead of paying for expensive moves from the home location.

International challenges

More than ever before, companies are torn between cost containment and addressing pressing business needs. According to Mercer’s research, approximately the same proportion of companies identify costs (60 per cent) and the difficulty of finding suitable candidates (58 per cent) as the main obstacles for international assignments. Concerns differ slightly according to region. In the Americas, the biggest deterrent is cost, whilst in Europe and Asia it is the lack of suitable candidates.

Moreover, while business expansion is still a chief reason for sending employees on international assignments, other factors like knowledge and business performance are becoming more important. More than two-thirds (68 per cent) of companies report that the key driver for sending employees on assignments is lack of available local expertise, while 59 per cent say it is improving the performance of an operation and 56 per cent say it is due to launching a new business.

Mobility policies

Given the financial and administrative costs associated with international assignments, most organisations are reviewing their global expatriate policies. Nearly 9  out of 10 organisations worldwide have been revising or are planning to revise their expatriate policy which includes benefits and allowances in order to save expenditure. Among all regions, benefits (housing, education and home leave) along with expatriate allowances and premiums (cost-of-living allowance and mobility/quality-of-living premiums) are the leading elements of mobility policies under review.  In addition, organisations are introducing ‘light’ contracts, applying stringent governance procedures, creating a link between assignment and talent management, simplifying processes and ensuring effective communication amongst expatriates and the organisation.

Other key findings:

*Compensation approach: Overall, companies report few changes in their compensation approach. Some are implementing a host country local approach to save costs, but finding candidates to move can be difficult with such a policy. Furthermore, with the increase of destinations in low-paying countries, the host approach cannot be applied consistently.

*Housing: Companies in North America typically provide a housing allowance with a required employee contribution and provide assistance toward employees’ housing in the home country. In other regions, companies provide free housing but employees must pay housing costs in the home country. In line with other cost-containment measures, companies are paying attention to the maximum budget for housing benefits and possible double payments of utilities under the cost-of-living and housing allowance.

*Security measures: More than one-third of companies have international assignees located in high-risk regions of the world and there is an increased awareness of risk among companies sending their employees to these areas. Nearly two-thirds of companies have a formal evacuation plan in case a situation becomes critical in high-risk locations.

*Commuter assignments: Commuter assignments are becoming more popular in Europe and North America, with an increase from 28 per cent to 45 per cent in the former and from 30 per cent to 35 per cent in the latter. Due to the distance travelled in Latin American companies, commuter assignments are not a common practice with them.

*Home leave: Nearly all companies provide home leave to their international assignees, either in the form of travel fare to the home location or a budget.