Autumn 2005

Editorial

Anticipation, anticipation…

Alain Verstandig Managing Director, NET EXPAT The art of anticipating is probably one of the skills most in danger of disappearing in multinational corporations. And yet, the sooner an issue is tackled, the greater the chances of finding a solution and the less the effort required. So why is anticipation so little evident in a world dedicated to cost savings and optimization? Too many HR managers call on our Expat Coaching services only one or two weeks after transfer, with the intention of giving their expats time to settle into the host country. This means we already have to start coaching by ‘adjusting’ the expats’ first impressions since arrival… Even worse, some expats don’t even take their coaching seriously until they’ve had to face up to some crises of their own making. Another example is companies that only offer “repatriation coaching” to the partners of their expats. And yet the evidence shows that a partner who has had the opportunity to continue working while abroad will cope far better with the whole expatriation/repatriation process, and will find a job much more easily on his or her return! Anticipate… and your life will be a lot pleasanter!

Corporate Opinion

Mergers: getting the best of two International Assignment Policies

Peter Hawthorne, Director Global Assignments Corporate Compensation, GlaxoSmithKline, Brentford, UK. NET EXPAT: Peter, can you share with us your experience on what happens to international assignment policies during mergers? Peter Hawthorne: When GlaxoSmithKline was formed through the merger of Glaxo Wellcome and SmithKline Beecham in 2000, both legacy companies were frustrated about their own expat policy. So basically we all sat together, aiming to get the best of both policies, but also to look outside and fish for good ideas from the best practices in the field. Our challenge was money, as the message from the top was very clearly towards cost savings. As international mobility is expensive, the message was obviously to leverage the benefits of all this. I’m still impressed by the substantial involvement from our top management in the redesign of our Global Mobility Program. Our task was not easy, as the visions of the two legacy companies were quite different: for the first the quest was “best value for money”, with a slightly more US-centric approach while for the other, slightly more EU-centric, the challenge was on the selection of the right people and meeting their needs to improve performance. The good side of this is that we complemented each other nicely. The result was a nice holistic approach, with a clear focus on the needs of the expat and his/her family, a reduced administrative load, and a tweak on costs! All this of course properly integrated into a career plan. NE: You have taken the time to analyze the key success factors of modern international mobility. Can you share some findings with us? PH: We certainly have. We used to monitor simple but central things like the satisfaction level of the host organization and of our employees. Through the analysis of the results, we began to realize that the integration of the expat spouse/partner played a central role in the success of assignments, especially when facing the dual career issue. We backed up our analysis with academic researches, and we decided to do something. The option for GSK to employ the expat spouse/partner was not realistic and is not an option in most of the cases. We decided to work with NET EXPAT to deliver Spousal Assistance Programs, first at a national level in some countries, now extending the NET EXPAT offer to more and more locations, with positive results. n n n n n n We still face the issue of work permits for expat spouses/partners in some countries and, in this respect, GSK is greatly involved in the Permits Foundation (www.PermitsFoundation.com promoting open work permits for partners of expatriates). Of course, next to the support of NET EXPAT and the efforts of the Permits Foundation, the motivation of the expat spouse/partner is fundamental. But we have the feeling today of doing our part of the job. For non-working spouses/partners, GSK offers a ‘training allowance’, on which we are relatively flexible: this helps spouses/partners go to further education programs, language courses, and so on … in short all that can help them integrate into local communities and enjoy their expatriation. NE: Did you manage to keep your finances down with all these goodies? PH: The answer is yes! We first decided to use a more conservative living package to reduce cost-of-living allowances. We removed some unnecessary mobility premiums and reviewed a bit our housing policy to stick to realities. But the key savings come from the selection of whom we are sending abroad and for which position. We went down from 400 to 275 expats, with savings of around £20 million. We found that our population of young expats was quite easy to move, and very flexible. The problem was that they were more difficult to keep. Expatriation for them is a good way of enriching a CV and moving forward to the next employer. The more senior people, the one’s with “the skin in the game”, are motivated to grow but within the company and are therefore more loyal. So, basically, we ask first for results before we send our people abroad. Expats continue to see fantastic career opportunities abroad within GSK while, as an employer, we have reduced the cost and improved the satisfaction level. The right people in the right place, with the right package and the right support. I’d call it a successful merger of policies.

Testimonial

From Italy to Dubaï

Félicie de Gonfreville, Expat spouse from Saint Gobain, Dubaï, UAE NET EXPAT: How did you feel when, on your arrival in Dubaï, you had your first meeting with your NET EXPAT coach, Stéphanie Thomas? Félicie de Gonfreville: I wanted to find a job as quickly as possible after the year-and-a-half break in my career. I came from Italy where we had lived for three years. I had found work in Italy, but only after a long and arduous job search, and I didn’t want to go through that again. It had made great demands on my need for recognition and my self-assurance. NE: To what extent did the coaching help you? FdG: Because it is genuinely personalized, it allowed me to look at my situation afresh and to capitalize on my Italian experience. I was able to work on and elaborate my personal objectives, and think about the longer-term future, without the pressure of finding a new job. After nearly ten years working life, including an expatriation, I needed to structure things, to analyze all my strengths and weaknesses, to know which way I wanted to go, and to make the most of my Italian experience. The EXPADVISER test highlighted all my good and bad points, and I now also know that some qualities are more ‘expatriable’ than others. Over a number of meetings I was able to define my objectives and reconcile them with my family obligations. I very quickly opted for a freelance assignment as a consultant to the MENA group. NE: What, in your opinion, is the impact of an expatriate assignment in terms of both career and family? FdG: I made a real ‘balance sheet’ of my professional career, while at the same time taking that of my husband into account. I find it much easier to adapt to his career path on the principle that I, too, can develop my skills. Being an expatriate means growing in various ways, learning to show your competences in areas which you have never thought of before, and questioning your own assumptions. These challenges also apply to the family, which has to present a united front in standing up to them. They cannot be ignored. The expatriate partner can often lose self-confidence, either because he or she is no longer active professionally or because the right job just doesn’t seem to be there. This is bad both for the family and for the successful outcome of an expatriation and repatriation. So, just like language training, coaching should be systematic, both before and after the event.

Survey

The Dark Side of Short-Term Assignments

Michael Cadden, Managing Director, Living Abroad, LLC, Norwalk, USA According to a recent survey by SHRM/NFTC/GMAC, short-term assignments (STA) have taken over as the dominant form of new international assignments. This appears to be a direct result of cost-saving efforts by global firms. In fact, in the same survey 44 percent said they used STAs to save money, a sevenfold increase in ten years. Short-term assignees are often sent without their families, hence saving on housing and schools. However, in addition to the obvious stress on families, there is increasing evidence that the cost of additional, unbudgeted trips home are buried in other budgets and these frequent trips often include leaving work early on Friday and returning late-Monday. For highly paid managers, these travel days can add up quickly to substantial amounts of money through lost productivity. Also, as short-term assignments have a tendency to be extended with little forethought, consider how the cost for relatively expensive hotels or temporary housing can rapidly inflate if a six-month assignment extends to 12 or 18 months! There is new, hard evidence that additional money is saved on short-term assignments by reducing support services such as cross-cultural training, language training and destination services. It seems intuitive that these assignees who are expected to “hit the ground running” would be getting more adjustment–type services, not less. But this does not seem to be the case. Does, as it seems, this put further stresses on the assignees? Nearly 60% of long-term assignees, when asked, would gladly go on another such assignment. That number falls to below 40% in the case of short-termers. So why are these such a disgruntled bunch? This questions the assumption that short-termers fit the bill for developing global managers. The answer is not yet clear, but early evidence is beginning to point against it. If managed tactically and properly by Human Resources, short-term assignments can be a valuable tool for global companies. But, as discussed here, these assignments are subject to numerous areas of abuse and could have unintended consequences that mitigate the original assumptions of cost savings. Companies, especially HR people, need to remain vigilant and to educate line managers about the downside of short-term assignments – the Dark Side.

Expert Opinion

Balancing motivation and cost

Isabel Rodriguez, Senior IHR Consultant, ITX, Geneva, Switzerland Today, international mobility is a rite required by many multinational companies. Whether this is the result of a desire to expose those with high potential to different environments, or due to the company’s sector of activity, expatriation has become one of the keys to success for the companies and staff concerned. The difficult economic situation of recent years has caused companies to rationalize the costs incurred by international mobility, while at the same time offering attractive compensation and benefits to their staff. This search for a balance between employee motivation and the cost to the company covers several topics n n n n n n 1. Attractiveness of benefits: it is not always possible to keep the expatriate within his/her national system of social security: this may be because there is no social security agreement with the host country, because the maximum time abroad has been reached, or because social security in the country of origin does not cover expatriates. Additionally, managing a Third Country National (TCN) requires the implementation of tools that are independent of a national system that fails to benefit the TCN and which, when the time comes, will not ensure him/her a reasonable retirement. 2. Career opportunities and development, abroad and after repatriation: it is important that the expatriate is convinced of the mutual benefit of the years spent far from his/her usual environment and possibly his/her family. What a loss of human and financial investment for the company if the expatriate leaves the company shortly upon repatriation! 3. Optimization of costs (research on the best price for insurance products, advance analysis of specific financial and social aspects of life in the host country). A poor analysis of social and fiscal legislation can lead to additional costs that make expatriation extremely expensive. It is also worth looking for medical coverage that is comprehensive enough to spare both the expatriate and his/her family and the company any unnecessary worries. 4. Choice of payment system: most companies choose the “home-based approach” which has the advantage of being readily understood by the staff member and by HR, and which keeps a link with the country of origin. However this approach is poorly adapted to the needs of TCNs. Another approach is to use the local system, with the inconvenience that a continuity of retirement benefits is sometimes difficult to guarantee. A third approach is to manage expatriates from a “hub”, creating an “international club” that allows all to benefit from the same policy, regardless of nationality or host country. Finding a fair balance between company costs and benefits requires enormous amounts of data and know how... ITX 35, route des Jeunes, PO Box 1510 1211 Geneva 26, Switzerland Tel: +41 22 309 32 00 irodriguez@itx-ge.com

Asia Pacific

Compensation Trends in China

Elaine Ng Managing Principal, HR Business Solutions (Asia) Limited, Hong Kong, PRC As more jobs are created by massive foreign direct investments, the number of expatriates working in China continues to grow. Relocation Trends Increasingly, relocation to China is leaning towards a permanent form. This means that expatriates move to China on an indefinite basis with no repatriation guarantee (see Figure A). The major reason for this trend is the permanent transfer of jobs to China. Other reasons include relocation of APAC or sub-regional headquarters to China. In fact, 80% of respondents in this same survey expected more relocation of foreign nationals to China within the next 12 months. Unlike past years, where senior management has been the main target for relocation, relocation nowadays includes also middle managers and professionals. Compensation Trends Compensating expatriates in China is one of the biggest challenges facing employers. While expatriates from corporate headquarters may still be compensated on home-country balance sheet policy, the trend is to move away from this. As more expatriates are needed, many companies find that using the home-country balance sheet approach creates significant equity problems, when expatriates from high-paying and low-paying countries are working together in a common host location. Furthermore, as more expatriates are needed in China, companies are under tremendous pressure to cut costs to make expatriate assignments less expensive. As a result, employers have used alternative models of compensating expatriates working in China, especially for Asian expatriates who form the bulk of non-locals in the expatriate pool. Future Development Today, the so-called “full” expatriate compensation package is reserved mainly for those coming from corporate headquarters. Such a package is a rarity for Asian expatriates; especially those from Hong Kong and Taiwan working in China (see Figure B). As China continues to develop and catch up rapidly with Western standards, both economically and socially, the “full” expatriate compensation package will gradually be eroded. However, for now, so long as demand for foreign nationals remains high, a local ‘PRC’ package cannot do. *Source of Data HRBS Relocating Foreign Nationals to China Survey, July 2005. HR Business Solutions (Asia) Limited Tel: (852) 2524 2008 Email: elaineng@hrbsasia.com Website: www.hrbsasia.com