Few Firms Measure Success of Benefits for Expats

By Kathy Gurchiek Nov 3, 2008
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The number of employees on international assignments has doubled since 2005, and providing benefits for those employees is high among the priorities of most of 243 multinational companies, according to Mercer’s 2008/2009 Benefits Survey for Expatriates and Globally Mobile Employees.

Eighty-six percent of companies surveyed say providing their employees with expat benefits is a medium or high business priority, but nearly two-thirds (64 percent) don’t have specific procedures in place for measuring the success of those benefit programs.

The majority of respondents were headquartered in North America (58 percent) and the European Union (31 percent); the rest were in Africa, Asia Pacific, Latin America and the Middle East and spread across other parts of Europe. Overall, multinational companies surveyed employ more than 94,000 globally mobile employees across all regions of the globe.

Typically, employers enroll employees in a home- or host-country benefits program. However, in case where a special international arrangement is provided, a benefits program for expatriates usually includes medical, retirement, disability and death coverage as well as coverage of business travel accidents and accidental death and dismemberment, according to the findings.

European companies typically provide a higher overall level of benefits than North American companies, but U.S. companies offer a wider array of benefits, sometimes at the employee’s cost through co-payments or deductibles, the report said.

Other benefits North American multinational companies provide include dental; vision; emergency assistance/evacuation; and dependent medical, critical illness and short-term disability benefits. European and other multinational firms provide emergency assistance/evacuation; and dependent medical and critical illness benefits.

It’s expensive and complicated to create and maintain benefit plans for expatriates, said Danny Mathieu, principal in Mercer’s international consulting business.

Failing to assess the value of those programs to the organization or its employees, though, can cause those organizations to miss an opportunity to improve their offerings and sharpen their competitive edge, he said in a press release.


The survey found “a noticeable shift” toward partial and complete outsourcing of some aspects of retirement benefits. Tax, relocation, payroll and health care are among aspects of benefits commonly outsourced.

“The outsourcing of benefit services for expats makes a lot of sense simply because the permutation of issues is growing exponentially,” observed Brad Boyson, SPHR, GPHR,a member of the Society for Human Resource Management’s (SHRM) global panel.

He noted, too, that “smaller companies are more likely to send expats abroad, and those companies may not have the internal resources to fully handle assignment management. “In some jurisdictions, outsourcing can save the company a considerable amount of money, especially on health care,” he told SHRM Online in an Oct. 29, 2008, e-mail interview.

Mercer’s survey found that almost 10 percent of expats have expressed directly to HR their unhappiness with their pension or medical programs while on assignment, a number that Boyson is surprised isn’t higher.

“Often HR is put in a no-win situation on these issues,” he said. “Different jurisdictions try and coordinate (politically) on the surface, but when you get down to actually bridging the finer details, all too often it’s simply not possible,” forcing the company to pay a compensating differential to make the employee ‘whole.’”

In addition, the systems and levels of medical service vary considerably around the world, he pointed out, “and the latter cannot be resolved simply by increasing an expat employee’s salary.”

Rise in Expat Numbers

Nearly half (47 percent) of companies surveyed had increased their deployment of traditional expats—those on one- to five-year assignments abroad. More than one-third (38 percent) have seen an increase in “transpats” or “global nomads.” These are employees who move continuously from country to country on multiple assignments for the same multinational company.

The rise in expat numbers is attributable largely to an increase in global leadership development and the launch of business ventures abroad, according to findings from Mercer’s survey, which was conducted the first six months of 2008.

Many international firms view experience in different geographies as an essential part of career growth, said Duncan Smithson, leader of Mercer’s international consulting business in the Midwest.

“The desire to be globally competitive has driven growth in expatriate assignments,” he said in a press release. Organizations continue to use experts from their other locations, rather than local talent, to lead projects on a short-term basis as they launch new overseas ventures.

These professionals “move from assignment to assignment in the same multinational company,” transferring their experience, knowledge and a consistent approach in the way they conduct business, he said.

Boyson thinks there’s a trend of people at all levels, not just business executives or knowledge workers, to be more willing and able to work abroad and managing and investing in their own career assignments.

Also, countries are making it easier for people to work abroad because of the demand for talent, he added. The biggest trend contributing to transpat numbers, though, is the ‘average’ worker being more open to managing his or her own career and working abroad without company sponsorship.

“Competent global citizens are not waiting for their employers to invest in their global assignments. Having global experience in the era of globalization is just too valuable to leave to your employer’s whims or discretion,” Boyson said.

The economics of globalization and the advent of instant communication and connectivity are helping to drive the growth of transpat numbers, he said.

“People are gravitating to work in regions where they can optimize their income potential and gain invaluable international work experience,” he said.

Also, “global media access makes being away from home significantly less emotionally distant than was the case in the past.” Today’s twenty-something employees, he observed, “have a whole different perspective on working abroad due to technology.”

Kathy Gurchiek is associate editor for HR News. She can be reached at kathy.gurchiek@shrm.org.

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