Experts share different perspectives on assignments’ success. Benefits and compensation, tax and relocation services: assets for a mobility strategy that controls costs and creates value.
Mobile employees are key to companies’ international growth, either by acting as spearhead in setting up operations in new countries, or by helping transfer skills and innovation. They present opportunities and challenges that set them apart from locally hired staff.
What are the main challenges for HR managers?
Pasquale Gorrasi, Director International Lines at Generali Employee Benefits:
“To start with, they are on average more expensive than local employees. HR managers need to carefully balance the need to support growth with the need to rein in costs taking into account a variety of aspects: countries involved, employee status and assignment objectives among the others.
Another key aspect is attracting and retaining global talents. Employers need to ensure mobile employees are not in a position of disadvantage and that they are properly protected, along with their families, during the assignment abroad and in the transition after that. Insurance benefits are key to employees who need to rebuild a support network, in terms of access to healthcare, pension rights and so on, when they move or relocate.”
How to get started?
Mario Ceron, Global Human Resources Director / Global Hr Services, Rewards & Mobility AdvisoR - KPMG España:
“I recommend the companies I work with should start with a strategic reflection: before launching the execution it is important to gather intelligence on a variety of aspects and to translate this into action.
Key aspects to consider: the specific international growth objectives and type of growth chosen (organic or not); the countries involved; the compensation markets you want to compare yourself with and availability of compensation benchmarks, and other factors. HR Managers should conduct this exercise involving the company’s leadership early in the process to obtain business and organisational direction. Consequently, and based on the corresponding analysis, they will be able to better assess and advise on the different compensation approaches and packages needed, what the compensation levels should be, etc. so that the right decisions are made on how to drive implementation, select tax planning strategies, manage the choice of suppliers, etc.”
What is the impact of tax considerations?
Nicolas de Limbourg, Partner, PwC Belgium: “It is important to carefully consider the specific conditions of your expatriate employees from a fiscal standpoint when defining the contract strategy. Elements that can be attractive when negotiating with local employees, such as variable pay or long term incentive plans, can be more difficult to apply in the context of a career on the international stage.
We need to take into account multiple scenarios and perspectives: the country of origin and of destination. Tax treaties established between countries offer advantages to avoid or mitigate the risk of double taxation, by establishing that an employee is entitled to pay taxes in the country of residence. However in the context of an international career, it is possible that an employee find herself filling more than one tax return in order to catch up with revenues due in a country left 3 or 4 years before, or even up to 20 years earlier when it comes to pension.
The role of the tax advisor is to help understand what works best for the company and the employee in the short and the long term, by taking into account the employee status, countries involved and how to translate sustainably benefits proposition across countries that may have different practices and standards.”
What helps prevent an assignment failure?
Isabelle Premont, Managing Director, Map Relocation: “We should not underestimate the role played by so called soft aspects, such as inter-cultural adaptation, access to support services and support for the accompanying family. Global statistics show that between 12-18% of assignments fail because of issues related to family adjustment and cultural adaptation in the new country. Companies often arrange pre-assignment meetings with the employees and their family to assess how ready they are to move abroad, and to anticipate and discuss support needed.
I’d like to point out that this exercise is also extremely useful at repatriation stage as a similar effort of adaptation is needed even when returning to your home country after a while. There is also increasing attention on benefits for the spouse/accompanying person such as retirement/disability pension, support for higher education or for entering the job market.”
Pasquale Gorrasi: “It should be evident that the success or failure of an assignment depends on a number of elements. HR managers have to consolidate in an integrated solutions several angles, ranging from transition challenges - including social, cultural and financial aspects - to benefits with a focus on employees but also on their dependents, and to fiscal and benefits and compensation strategies. We are increasingly called on to simplify this complexity. We hope you will find in this publication resources and tools that can help make it easier for companies and employees to conduct their business on a global scale.”