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Weigh alternatives to long-term international expatriate assignments.
As Polycom Inc.’s product development team hustled to complete a new voice and video collaboration product last year, Daniel Sonsino wanted to round out the team’s mix of expertise. The vice president of talent management, learning and development sent three employees from China, India and Austin, Texas, to Israel for simultaneous monthlong assignments.
This alternative approach cost less than a single three-year international assignment.“We have used traditional expatriate assignments,” Sonsino says, “but we have moved away from using them lately and will probably use them even less in the future.”Polycom isn’t alone. Recent surveys by Brookfield Global Relocation Services, Atlas Van Lines and Weichert Relocation Resources Inc. indicate that the use of alternative forms of international expatriate assignments is increasing. For instance, 27 percent of the 361 corporate mobility professionals who participated in Atlas Van Lines’ 2012 survey expect international short-term assignments to increase.
Three-year expatriate assignments “are still going on and have their value, but I personally have found them to be of less value,” reports Gail Auerbach, senior vice president of human resources for Masonite, a global door manufacturer based in Tampa, Fla. “The cost and complexity of moving someone and their family abroad for three years has increased. More significantly, as quickly as the world changes today, traditional expatriate assignments are less effective in meeting the business needs.”
Yet commuter assignments, extended business travel, rotational assignments and other alternatives to long-term assignments offer risks as well as benefits. For example, they generally demand more-vigilant oversight by mobility and HR professionals to ensure compliance with relevant tax and immigration rules.
Allure of Alternatives
A variety of alternatives to traditional expatriate assignments exist. At one end of the spectrum is the use of a full-time local hire. Polycom, with headquarters in San Jose, Calif., sometimes elects to hire a full-time employee overseas rather than send a U.S. employee. “We gain immediate access to their cultural savvy and their personal networks and experience,” Sonsino explains.At the other end of the spectrum is what Scott Sullivan, executive vice president for Brookfield Global Relocation Services in Chicago, describes as the “truly flexible assignment.” This option requires HR professionals to think through and create an equitable, cost-effective international assignment program. Flexible assignments consist of required benefits, such as cost-of-living adjustment rates, paired with flexible optional benefits. The flexible benefits, such as frequency of return visits to the home country, are tailored to the needs of the position and the employee who fills it.Between these extremes exist numerous other assignment types, including commuter assignments, extended business travel and “local plus” approaches. The local plus approach speeds up the transition—via the scaling back of expatriate benefits—from international expatriate assignee to full-time status as a local employee of the company in the previous “host” location.In addition, improvements in virtual collaboration technology are helping employers address business needs without requiring employees to travel. Polycom uses videoconferences to support virtual teams of employees in different countries. Sonsino says, “They’re getting experience leading global teams; working with different cultures; and reading different cultural symbols, facial gestures and cultural nuances that you can’t get via the phone.”Use of all types of international expatriate assignments by U.S. companies decreased in late 2008 through early 2010, as organizations cut costs in response to the global financial crisis. Since then, mobility activity has rebounded. In 2009, 52 percent of the respondents to Atlas Van Lines’ annual survey reported that they planned to decrease relocation volume; by contrast, in the company’s 2012 survey, only 12 percent of respondents said they expect to reduce relocation activity.Laura Levenson, Weichert’s director of consulting services, says alternative assignments represent a large portion of the rebound. A 2012 Weichert survey of 180 HR and mobility professionals indicated that 61 percent of respondents either use alternative international expatriate assignments or are considering doing so.A 2012 Brookfield survey of 123 senior HR professionals found that:
35 percent of respondents’ companies have localization policies.
26 percent have international commuter policies.
25 percent have policies governing extended business travel.
The reason any company assigns an employee to a temporary position overseas boils down to a specific business need or an opportunity to develop employees’ skills and experience. Ed Hannibal, North America leader for Mercer’s mobility consulting practice, reports that alternative expatriate assignments enable HR professionals to provide high-potential employees with exposure to cultures and challenges at lower cost.Some HR professionals question the developmental effectiveness of traditional assignments. “At my former company,” Auerbach says, “I saw four individuals who we invested a lot of money in leave the company” after repatriation. “So what was the point?”Sonsino has seen expatriates suffer from weak developmental support and insufficient repatriation. “For some expatriates, it became a really disheartening experience because they felt forgotten or neglected and because they were so disconnected from their families and their cultures,” he notes. “I’ve seen it go wrong more often than I’ve seen it go right.”Meanwhile, factors including cost, the pace of business change and advancements in virtual work are driving the use of alternatives.Levenson warns that the administrative costs of alternative assignments add up quickly. “Someone has to constantly manage and monitor these assignments to ensure everybody using them remains tax-compliant and visa-compliant,” she says. Each assignment may cost less than a long-term one, “but the total cost to the organization may be more over time.”Hiroko Teshikawara, PHR, GPHR, is a member of Takeda Pharmaceutical Co.’s global mobility support team in Japan. “Ensuring an agile mobility program that enables assignment of talent when and where needed is critical as the companies operate in a borderless environment,” she explains. The consolidated group consists of 168 companies.
Managing the Complexity
There are at least four steps to managing alternative expatriate assignments effectively: Identify the rationale. The question, Sonsino asserts, is not “What type of expatriate assignment should we use?” but “Is any form of assignment right for the business and our people?” The answer should determine whether relocation is necessary; if it is, then determine the structure and length of the assignment.This question helps Sonsino and his team determine when, for example, a local hire makes more sense than a long-term assignment and when a short-term assignment offers a developmental opportunity or satisfies a business need more effectively than virtual collaboration.Alternative assignments do not fit every need. Some employees, for example, may not be suited for the relatively rapid acculturation that shorter-term international assignments require. Set clear expectations. Sundararajan Narayanan, vice president and global head of human resources for Virtusa, a global information technology consulting company based in Westborough, Mass., conducts discussions with employees about the implications of any expatriate assignment. Most of Virtusa’s assignments are roughly 18 months in duration. He starts by addressing any security concerns regarding the host location and then clearly lays out what experience, exposure and professional development the employee can expect to gain.Next, Narayanan explains exactly how compensation, benefits, tax procedures and immigration will work. “Regarding compensation and benefits, I speak with data points from Towers Watson, Mercer or any of the other larger firms,” he says. “However, the consultants will give you 40 pages of data points. As an HR person, you have to supplement that information with a qualitative understanding of the experience and all of the real-life issues they can expect.” This requires Narayanan to talk with other professionals, inside and outside the company, who have made similar transitions.Narayanan also maintains a network of tax and immigration advisors from whom he gleans compliance expertise as well as qualitative insights about working in specific locations. Managing expectations and clearly communicating the business rationale of an alternative assignment remain central “to avoiding perceptions of inequity among assignees,” Sullivan adds.Auerbach points out that expectations management should extend to the assignee’s home working unit or team. She evaluates the potential impact to the home office before making a final decision. Be vigilant about compliance. Because they are custom-tailored, alternative expatriate assignments lack some of the built-in compliance processes that long-term assignments feature.Rotational assignments may move employees from a country where tax and visa requirements are not triggered on any stay of less than three months into a country, such as China, where the employee may be immediately subject to taxation.Hence, alternative assignments require “holistic, integrated management,” Teshikawara acknowledges. “Striking the right balance between mitigating the risks and adhering to the company policy while being nimble is perhaps the most difficult challenge.”Hannibal identifies adherence to tax, immigration and related compensation rules and regulations as procedural challenges. “The tax bill is such a moving target,” he says. “It places more pressure on mobility practitioners. They are expected to act like internal management consultants and come up with the best solution for all parties.” Keep it simple. Because of administrative difficulties, tailored assignments at the “truly flexible” end of the spectrum currently represent only7 percent of all expatriate assignments, according to Brookfield’s 2012 survey.These difficulties explain why Auerbach strives to keep her assignments simple. For example, rather than “get complicated on pay” with a U.S.-based executive on a six-month alternative assignment in Austria, Auerbach included a monthly stipend for the executive to hire lawn care and other maintenance professionals to tend to his home in the United States during his overseas assignment. And rather than moving the expatriate’s belongings via intercompany shipping, Auerbach discovered that using UPS was less expensive and easier to manage.From a human resources perspective, managing alternative international assignments is complicated enough. Exploit any opportunity to simplify the components, Auerbach advises. The author is a business writer based in Austin, Texas, who covers human resource and finance issues. - See more at: https://des-edit.shrm.org/publications/hrmagazine/editorialcontent/2013/0313/pages/0313-alternative-expatriate-assignments.aspx#sthash.swqpV8h3.dpuf
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