We wrote a piece recently entitled 10 things you should consider for your domestic relocation policy and we think it only fair to extend something similar to those of you dealing with, or just starting out, with international assignment policy.
There are 100 ways to carve a pumpkin and you don't have to do all of this - there are just a few pointers to get you thinking about how you could structure your policy and what you might include.
1. Policy review
Love it or loathe it, your relocation policy is an evolving beast. At least it should be. When was the last time you reviewed your policy?
I have worked with some companies that review their relocation policy every year and I have worked with others that haven't reviewed their policy at all. An annual review is probably a bit over the top, but you should keep your ear to the ground to keep abreast of any economic, political or social developments in countries you work in.
Your relocation policy has to hit the right note, both for the company and the beneficiary of the relocation support. Offer too little in the way of support and the best candidates will shy away, especially if your competitors are offering a more generous package. Offer too much support and the business could find itself paying over the odds. Ultimately, you have to find the balance that is right for your business, taking into account company culture, recruitment and employee transfer needs at the time, the employee's (and any accompanying family's) specific requirements and the situation in the destination location.
Aim to review your policy every two to three years but take into account market, economic, social and political changes that may require you to review sooner.
2. Eligibility and selection
The recruitment and selection procedures and considerations for expatriates will be different to those of domestic employees. Whilst domestic relocation can present its own challenges, moving overseas presents a completely different set of challenges that not everybody is able to easily adapt to. Getting expatriate selection wrong can be a costly business so it is important you take time to get it right for your organisation.
Many organisations blend the business need to relocate internationally with a career development programme, so they will be looking for particular skills and characteristics to select the right person for the assignment, including:
- Adaptability and empathy to new culture
- Flexibility
- Professional expertise
- Previous international work experience
- Tolerance and open-mindedness
- Family situation
- Language ability
- Attitude and motivation
This is a pretty useful standard list to use for all international assignment selection and once you have established what your criteria for each area should be you will be in a good position to provide an international assignment that is both successful for the organisation and fulfilling for the employee.
3. Definition of accompanying family
It is reasonable to expect that an assignee may wish his or her family to accompany them, especially for a long-term assignment. It is usual for the employee's spouse or partner and dependent children under a specified age (23-25 is common) to be included in the policy, providing they are accompanying the employee. If they are not accompanying the employee they would generally not be entitled to support of any nature, though you may wish to consider what support the business may offer in the event that the family member accompany the employee at a later date.
You will need to ensure that clear definitions are in place to prevent unnecessary extended family or others from taking unfair advantage of the organisation's generosity. I have seen scenarios where grandparents and live-in carers have accompanied assignees, though this has been due to specific, valid and reasonable grounds. Generally, this is something you should avoid unless necessary on compassionate grounds.
4. Preparation
Briefing - This is your opportunity to provide the potential assignee with as much information they need, covering all areas of the assignment. The employee's spouse, if any, should also participate in the briefing. Don't overlook the importance of this briefing.
Immigration - Don't let your employee handle their own immigration application. Immigration can take a long time and if it is not done correctly can unnecessarily delay the start of an assignment or cause complications further down the line. Work with a professional immigration company who will be able to give you advice along the way and make the necessary visa and work permit applications.
You may also want to consider whether the spouse wishes to find employment in the host country and if a work permit will be needed. Some companies we have worked with all also support this application or at least offer guidance to what is required to legally work.
Medical - Some countries will require a medical check as part of the immigration process. This is something that can be advised by your immigration specialist.
Driving licence - If the company is providing a company car, make it clear who is responsible for obtaining the driving licence and how or if this will be reimbursed.
Pre-assignment visit - You could look at this in two ways - to either acquaint the assignee with the new area before they take up residence there, or to give the assignee an opportunity to visit the area to see if they could actually live and work there. Where possible, you should try and incorporate this visit with a business trip to keep costs down. Of course, if there is a partner, they should go along, too.
Cultural awareness and language training - Stepping into a new culture can be challenging, especially if you don't speak the lingo, so offer this support to all family members. Even a move between the US and the UK can prove difficult - we speak (almost) the same language but the cultural differences are enormous. Providing this support before the assignment start will be of huge benefit to the employee and can reduce the possibility of a failed assignment.
5. Relocation services
Home country housing - What support are you going to offer the employee if they retain a property back home? Will you help them let it out? Will you support them if they leave it empty? What about if the sell it?
Moving and storage - What volume limits do you want to set? Organisations usually set a cap at a 40 ft container. You might want to offer less for an unaccompanied assignee or if they take a furnished property. Do you want to allow a little air freight in addition to sea freight so that essentials can be transported quickly?
Also, think about what the company doesn't want to pay for, e.g. pet transfers, cars, boats, wince collections, items with an excessively high insurance value, to name a few.
Relocation allowance - It is common to pay an allowance to cover any miscellaneous and unforeseen expenses associated with the relocation that are not specifically eligible for reimbursement or payment under the relocation policy. For example, cleaning the home property, excess baggage costs, cancellation penalties.
Temporary accommodation - Short-term accommodation before the employee leaves the home country, and/or before they source rental accommodation in the host country. Do you want to offer both? Consider how long they should spend in temporary accommodation, bearing in mind serviced accommodation is of a high standard and includes cleaning - don't let your employee get too comfortable otherwise they will want to stay there! 60 days split between home and host is common.
6. Compensation
Base salary - You can adopt either the home-based approach (balance sheet), host-based approach, or the global market approach.
The most popular is the home-based approach as it protects the assignee from cost differences between their home and host countries.
The host-base approach can be beneficial for cost savings because the host payroll delivers the salary, but integration with the host pay mechanism can make it difficult to move or repatriate assignees.
The global market approach puts all assignees on the equivalent compensation scale, regardless of their home country. This approach is much more inclusive.
Our recommendation is that you consult a financial specialist in this area as it is complex and each approach has different financial implications.
Bonus and equity based awards - Decide whether you want to include the employee in any home or host bonus scheme. At the end of the day, make it fair.
Hardship premium - There may be some circumstances where the organisation is operating in a location where the assignee may suffer some hardship based on factors such as: housing, climate, disease, sanitation pollution, medical facilities, education facilities, infrastructure, physical remoteness, crime, political and social environment, communications, cultural and recreational facilities, availability of goods and services, etc.
If your assignee is based in a location where hardship is suffered, how are you going to compensate for this? You may wish to pay an allowance, offer "rest and relaxation" trips, or a combination of both.
7. Benefits
Host country housing - Consider how this will be sourced. Must the employee do it themselves or will a relocation specialist be engaged?
Are you going to put any rental caps in place? A good relocation provider should be able to suggest suitable allowances for a 1-bed, 2-bed, 3-bed, etc. for both furnished and unfurnished. Don't forget any legal costs for lease checking, or translation services if the tenancy agreement is not in your language.
Whether the company or the employee is the named tenant on the lease depends on a number of factors but if you are taking a company let in the company's name, it is prudent to draw up an indemnity agreement between the employee and the company. This should prevent any unnecessary financial and reputational exposure to the company.
Utilities and taxes - Is the company paying or is the employee paying? If the employee is paying, take into account any difference between home and host utility charges and maybe compensate accordingly.
Some countries will levy municipal taxes. Again, the employee should not be out of pocket for such expenses.
Domestic and security staff - Depending on where they are coming from, some employees may with to employ the services of domestic staff. Usually, this is not covered, but if you have a particularly senior employee who is spending very little time at home you may wish to provide some cleaning and laundry support.
In terms of security staff, this is very much dependent on the host location. If the company considers a location as high risk, it should strongly consider the provision of security staff.
Company car - As well as establishing the eligibility criteria, you will need to consider whether the company wishes to provide a car or a cash allowance in lieu. In high risk locations, you may also want to consider hiring a chauffeur.
Spousal support - Quite often this is overlooked by many organisation however research has shown that the reason why a relocation fails is often because the spouse is unhappy. The spouse will typically have to leave their job and circle of friends to accompany their partner; the partner is at work and the kids are in school so the spouse has no support or social networks. Specialist spousal support can be tailored to include support such as finding a new job, creating a CV, preparing for an interview, right down to introducing them to local clubs and memberships including expat clubs. Organisations provide either a capped financial amount or a time-restricted use of a service.
Children and education - It is a given that if children of school age (you need to define this - will you consider nursery / kindergarten and university students?) are accompanying the assignee the company will provide some sort of assistance. In an ideal world you should aim to maintain curriculum continuity and the level of education that the children would enjoy in the home country. If the children do not speak the local language then you may have to look at an international school and these costs can be high.
Don't forget to include incidentals such as books, travel expenses, canteen expenses, uniform, and make it clear whether or not the company will pay for this.
8. Travel and leave
Travel policy - Will your assignee's travel within the confines of your relocation policy be subject to the company's standard travel policy or will it differ? Do you need to offer any enhancements to the standard travel policy?
Home leave - Some organisations believe it is important to allow the assignee (and family) additional time off to keep in touch with extended family and friends in the home location. Do you link this to a business trip or not? You could either provide a fixed allowance or reimburse the cost of air travel and airport transfers.
Consider how many trips you might want to permit.
Annual leave and public holidays - Are you going to base this on host or home country habits? Or are you going to create something completely different for assignees? It would perhaps make sense to align this with the home country so that the assignee isn't left alone in the office on Bank Holiday Monday...
9. Insurance
Medical insurance - Your organisation may already provide the benefit of medical cover but if not you should make a programme available to your assignee. Whether the company or the assignee pays for this is ultimately the company's choice but it would be unwise to allow them to undertake an assignment without cover in place.
Social security - If any home benefits (such as child benefit) are lost as a result of the transfer, you may wish to maintain the same level of benefits in the host location. This could be done by either enrolling in host location schemes or by means of a cash allowance.
Private insurance - It is usual for private insurance (e.g. car, house, personal liability, life) to be borne by the assignee. However, you may wish to support the assignee in sourcing appropriate and reputable providers in the host location.
10. End of assignment
Unless you have a fixed maximum term for all assignments, they could go on for ever. I dealt with a gentleman in London who had been there on assignment for seven years. Not only does this become costly to the company, it sets a precedent for more of the same.
Assignments shouldn't need to last for seven years. If, for whatever reason, the employee wishes to remain in the host location or the host location wishes them to remain there, they should be localised.
Do put some thought into this as assignments are costly and the organisation should not be paying out unnecessarily.
Celsium are experts in international relocation - permanent and assignments. If you would like any assistance in any area of relocation policy, please feel free to email Stuart or Shelley for more information.
Image by Ginny