Increased globalization continuously pushes organizations to expand further into emerging markets, to operate across borders more effectively, and to create better results in more cost-saving, flexible and innovative ways. This explains the spreading popularity of virtual working arrangements (e.g. telecommuters, virtual cross-cultural teams) as well as rapid transformations in HR strategies, such as moving talent pools from developed to emerging markets (read here), and ‘growing’ local leaders in new destinations (read here).
However, although these new approaches to global staffing are meant to substitute or decrease the need for costly traditional assignments, the deployment of employees from their home base to different foreign locations will still constitute an important and necessary part of global business. Simply, as the global business environment changes so does global mobility. Global mobility policies continuously evolve and become more flexible. A recent PwC International Assignment Services Network publication describes these changes in global mobility policies over time.
From ‘one-size only’ to ‘tiered’ policies approach
As identified by the PwC professionals, the first step towards increased flexibility in mobility policies can be characterized by the emergence of so-called ‘policy tiers’. The results of the PwC Survey of Expatriate Policies and Practices shows that in 1992 only 5% of companies had a “tiered” approach to policies, while by 2000 the number had increased to 50%, and reached 87% in 2011. Policy tiers allow companies to differentiate policy provisions by type of assignee and the criticality of the assignment to the business. For example, developmental assignments meant for younger and less experienced employees would have less costly benefit packages, as compared to executive assignments with critical business value. Hence, instead of applying the same benefits to the entire expatriate population, ‘tiering’ has pushed organizations to customize, resulting in both cost control and better alignment of policies with business/mobility objectives.
From merely differentiating to allowing a choice: ‘business choice’
The next step on the way to greater policy flexibility has come from so called ‘business choice’, which implies not only assigning expatriates to specific policy tiers, but also being flexible in relation to assignment costs within these tiers. This has enabled global mobility professionals to customize expatriation allowances according to the assignee needs. For example, the company can decide whether to provide assignees with additional home leave trips (e.g. in the case of assignees with families), or provide hardship premiums (e.g. in the case of tough assignment destinations).
From business choice to employee choice
Finally, to make employee deployments even more attractive and get the right talent to the right place, mobility policies also had to offer more flexibility for assignees. As reported in the PwC publication (2013), one of the latest twists in mobility policies is the introduction of assignee choice in relation to benefits – the so-called ‘menu’ of benefits. Under this approach employees can select their ‘favorite’ benefits (e.g. preference for family visit allowance to increased host housing allowance), which turns assignment benefit programs into a more meaningful and personally valuable concept. Practically, such ‘menu’ of benefits could work with a points system, where each assignee has a specific amount of points based on his/her policy tier (with the points reflecting cash value), which can be distributed among the list of available benefits. It is important to note that the ‘menu’ approach does not eliminate the company’s tiered design of mobility policies. It should be viewed as an added value, rather than a redesign of a company’s approach to global mobility.
Managerial considerations for creating global mobility policies with assignee choice
- Adding assignee choice to a global mobility policy is either cost saving or cost neutral
Program costs can be maintained by reducing the number of core benefits provided to everyone, and replacing them with a choice of benefits with capped cost. As more items will be moved to the choice menu, the menu becomes more robust, and the overall program costs may even decrease due to differences in chosen items by different employees.
- Enhancing assignee choice results in company benefits than reach beyond just cost saving
In essence, having the possibility to choose allows employees to obtain the benefits that matter most to them. Such an individualized and personalized approach will likely create more satisfaction, loyalty and decrease turnover. Simply put, employees are happier when they can choose what they want.
One of the most important factors is for expatriates to realize that that their standard of living might be more costly in the overseas assignment, gone are the days when living abroad meant living luxuriously. Many expats will find they are moving to a more expensive city than their home.