Companies are failing to comprehensively measure costs and return of investment (ROI) for staff sent on international assignments, according to a report issued by international benefits consultancy Mercer.

Mercer's International Assignments Survey 2008 shows that a majority of companies are unable to accurately calculate their ROI, with 71 percent describing the measurement of financial benefits with international assignments as a challenge. The primary reasons are a lack of appropriate measurement tools, decentralised data and time constraints.
 
Estimation of cost

 “Expatriate assignments cost between 1.5 and 4 times what a local employee would cost. They represent a major investment, particularly those that include family. Measurement is vital,” says Matthew Hunt of Mercer.
 
 “Companies are looking for ways to reduce costs by hiring local staff instead, by reducing or eliminating benefits and allowances, or by looking for alternative ways to address pressing business needs. Some companies are replacing long-term assignments with short-term ones. However, this may be counter-productive, and companies are acting without sufficient information on the effectiveness of current policies,” says Hunt.
 
From the 200 multinational firms surveyed, only 28 percent indicate that all costs are compiled in a central database and approximately, 60 percent felt that they could obtain a fair estimation of the costs. The elements most commonly taken into account when projecting the costs of international assignments are expatriate package costs (salary, premiums, allowances and benefits) and relocation support costs (pre-assignment trip, language training, moving, relocation agency, and tax assistance).
 
Administration costs linked to the management of expatriate compensation are also considered by 77 percent of the companies. Some costs incurred but less typically taken into account include the possible departure of the assignee during or after the assignment (considered by 37 percent), the break-up or discontinuity of functioning teams in the home country (considered by 13 percent) and the cost of mentoring programmes, which are only considered by 4 percent of responding companies
 
Measuring ROI

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