Employers assigning employees to work outside their countries continue to keep an eye on cost-cutting measures such as shorter assignments, according to the 2010 Global Assignment Policies and Practices Survey.
“The current economic environment is prompting organizations of all sizes to look abroad for growth, while increased competition is forcing companies to drive down costs in all areas of their businesses,” Achim Mossmann, a managing director in KPMG LLP’s International Executive Services practice, stated in a news release. KPMG is a global audit and tax consultancy.
One strategy is the use of short-term international assignments lasting three to 12 months, rather than long-term assignments of three to five years, Mossmann told SHRM Online.
While the use of three- to 12-month international assignments increased only 1 percent from 2009 to 2010, it is a practice Mossmann has seen increasing over time. The use of extended business trips—30 days to six months—is also increasing to a degree, he added.
Long-term assignments were more typical in the early 2000s, he said, but organizations are rethinking whether the associated costs, including relocating an entire family, make financial sense. There might be situations where short-term assignments have tax advantages, depending on the jurisdiction, he added.
“Companies have become more diligent in evaluating these situations and coming up with the right business solution,” he said.
And while a similar survey KPMG conducted in 2008 in the midst of the recession indicated that 28 percent of companies were recalling assignees from their international duties, the 2010 survey “implies a lot of organizations expect an increase in assignees over the next 18 months,” Mossmann said.
Localizing Assignees
Localizing assignees working abroad is another strategy that is increasing, according to the survey. This practice involves transitioning assignees to the employment status and benefits package of the host country and treating them like the nationals who work there.
In the past, a U.S.-based employee working an international assignment often retained his or her U.S. compensation level and received additional benefits from the employer, such as a housing allowance. Companies are cutting off such benefits.
“Organizations are much more diligent in localizing employees who have been overseas for a significant amount of time,” Mossmann said, and “really treating them like local employees.”
He noted Generation Y workers are looking for mobile assignments and “don’t need big packages as enticements” to take those assignments.
Mossmann sees localizing as a strategy that is becoming more mainstream: 81 percent of organizations are localizing some of their international assignees, the survey found.
Takeaways for HR
“It is important for HR professionals to understand the business drivers and the business reasons for international assignments,” Mossmann told SHRM Online, “and to be able to be flexible to assignment policies as well as HR policies.”
Organizations often think one long-term assignment policy is sufficient for its business needs, but that isn’t always the case. “There is [no] one-size-fits-all from an international assignment policy perspective,” he said.
Companies surveyed tend to be in the financial, manufacturing and high-technology industries. They tend to have 1,000 to 10,000 employees. Ten to 50 assignees is the most common scenario. About 61 percent of companies surveyed were headquartered in the U.S.
Among the findings from 500 HR executives with multinational organizations:
Supporting the organization’s business objectives and being adaptable to changing business requirements were the most important goals for international assignment programs (71 percent).
Most companies provide language training for the assignee, and 70 percent provide language training for the assignee’s children and spouse. The service was most often offered by companies headquartered in Europe and those with more than 50 foreign offices.
Two to three years is the standard length of an assignment for more than half of companies surveyed.
Most organizations plan for the assignee’s return within three to six months of the scheduled repatriation date.
A large majority of organizations—and especially those in manufacturing and those with more than 50 foreign offices—discourage assignees from purchasing a home in the country where they are assigned temporarily.
More organizations tend to provide temporary living assistance in the assignee’s host country during the 15 to 30 days after the assignee has arrived than in the period just before the assignee leaves his or her home country.
Except for companies in the energy industry, nearly all organizations provide storage in the assignee’s home country. Few companies pay substantial expenses related to the assignee selling his or her home-country residence.
Additionally, more than half of multinational organizations include opposite-gender unmarried partners in their definition of “family” and almost half include same-gender unmarried partners in their definition of family for the purpose of assignment-related benefits. However, the percentage using those definitions of family is highest in companies headquartered in Europe and the Asia Pacific region. The percentage is lowest for the manufacturing and energy industries.
Kathy Gurchiek is associate editor for HR News. She can be reached at kgurchiek@shrm.org.
Related Articles:
Study: Cultural Training Key Element for Global Assignments, SHRM Online Global HR Discipline, June 2009
Survey: Overseas Assignments Rise Despite Cutbacks, SHRM Online Global HR Discipline, September 2009
Expat Costs Spur Shorter Assignments, Outsourcing, SHRM Online Global HR Discipline, January 2008
Related Resource:
Managing International Assignments, SHRM Templates and Tools, September 2009