Relocations a balancing act

Controlling costs in long-term assignments about policy and program adjustments, best practices
By Linda Lachapelle
|Canadian HR Reporter|Last Updated: 09/24/2013

When it comes to relocation, employers face a continual struggle to balance talent management and corporate strategy objectives with costs.

This balancing act stems from ongoing concerns about the success of programs in retaining talent and capitalizing on expertise gained during assignments.

Although employers that send staff out of country continue to use alternative forms of assignments (such as short-term assignments, localization and commuting), long-term assignments remain the corporate choice for many situations, often because they are considered necessary for meeting goals in key locations and for leadership development.

More than three-quarters (77 per cent) of respondents to Cartus’ 2012 Policy and Practices Survey, part of the research series Trends in Global Relocation, said filling management and leadership roles is the key business driver for long-term assignments.

At the same time, long-term assignments are typically the most costly for companies — but they are still the assignment type most likely to be developed or modified, according to 51 per cent of the respondents.

Long-term assignments are being used extensively for moves into emerging markets — 66 per cent of organizations that increased mobility activity did so in order to expand into emerging markets, found the survey.

Controlling costs

Companies use a number of strategies to control or reduce the costs of overall mobility programs. These include adjusting assignment policy, improving the administrative program and adopting best practices in assignment management.

Policy adjustments

Core/flex programs: Many companies are adding flexibility to mobility programs, primarily to meet the needs of employees while controlling costs.

Core/flex programs typically include mandatory core benefits that align with all international assignment types as well as a choice of additional provisions that can be easily added or dropped to meet the assignee’s individual needs.

An increase in core/flex policies supports benefits choice by business units, employees or assignment types and ensures there are specific core provisions that reflect the employer’s philosophy regarding mobility and the equitable treatment of global employees.

From an administrative standpoint, a core/flex program needs to be carefully managed and understood so assignees truly receive the benefits they need.

Tiered programs: Employers have generally moved away from administering one policy for all employees. Tiering mobility benefits allows organizations to distinguish among the different needs of employee levels and target the budget to assignment priorities. However, companies should not implement so many different tiers that the program becomes difficult to administer.

“Right-sizing” policy elements: As companies adjust programs and policies to align more closely with business drivers and assignment objectives, some of the traditional core benefits may be reduced or eliminated to meet budget demands.

For example, companies may still employ a comprehensive package that supports senior executives, but scale back policy components for other tiers, such as lower level management or technical levels.

Program changes

Centralized versus decentralized program management: The increased focus on global mobility program structure reflects a growing awareness of competing organizational needs, including cost control, regional flexibility and compliance requirements. Among the options companies can choose to ensure a proper management strategy are a centralized global or headquarters approach, a decentralized regional solution or a country-specific scenario.

Tighter control on exceptions: A need for program flexibility is rising in assignment programs. This results in increased requests for policy exceptions from assignees to meet their individual needs.

This is especially applicable to moves into emerging markets — 41 per cent of respondents to the Cartus 2012 Policy and Practices survey are approving more exceptions for these assignments.

To keep tight control on the rapidly rising cost of these exceptions, companies need to determine exactly what level of exceptions they will tolerate. More rigorous policy adherence has been identified as a key best practice in Cartus’ recent research.

Best practices

There are a number of best practices companies have implemented to control costs, according to the survey, while maintaining the integrity of assignment management programs:

• Establish clear and concise program administrative procedures among all stakeholders involved in the mobility process.

• Set and manage expectations for all parties at the beginning of the assignment and match policy elements to the assignment’s goals. Ensure effective communication among the stakeholders inside and outside of the organization.

• Gain the approval and support of senior organizational leaders for the assignment program.

• Use cost projections to determine costs at the beginning of the assignment and monitor them regularly to assist in accurately capturing year-end expenses to establish, for example, expense accruals for an assignment term.

Long-term assignments are likely to continue to play an ongoing role in the mobility strategies of many organizations, whether due to their role in leadership development or the requirements demanded by longer term projects or complex markets.

Companies will need to continue to focus on how to make these assignment types both successful and manageable, through a careful balance of cost-containment strategies and policy/program oversight to ensure both organizational and assignees’ needs are met.

Linda Lachapelle is director of sales and business development at Cartus in Montreal. She can be reached at (450) 619-6056 or Linda.lachapelle@cartus.com. For more information, visit www.cartus.com.

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