Benchmarking policy components can provide a snapshot of the industry at a certain moment. Deborah Ann Conlan reports on international policy components of 10 multinationals.

In these uncertain times, and perhaps because of them, there is a new opportunity for shifts in global mobility demographics and programmes. The development of regional policies and increased intra-regional, permanent, and short-term moves in place of traditional expatriate assignments are all responses to the issue of creating globally experienced employees while organisations act responsibly to fiscal challenges.

However, there is no doubt that globalisation will continue to be a critical economic engine for businesses. Organisations must develop globally experienced employees in order to take best advantage of expanded global markets. And benchmarking is an excellent method to evaluate the effectiveness of workforce mobility programmes, which support the development of global competencies.

To learn what these organisations were doing differently regarding their global mobility policies, the author conducted in-depth interviews with 10 of Employee Relocation Council's (ERC) corporate members. ERC is a US-based professional membership association concerned with workforce mobility around the globe.

The participants include Accenture, DuPont Company, General Motors Corporation, PepsiCo, Inc., Saint-Gobain Corporation, The Gap, Inc., McDonald's Corporation, Roche Palo Alto, and United Parcel Service. One company wished to remain anonymous.

Some of the participants have primarily in-house programmes while others outsource much of their relocation and benefit administration to supplier partners. The participants were primarily US-based organisations, but also included companies whose headquarters are outside of the United States.

Transfer volume

Of the 10 multinational companies interviewed, six had experienced stable transfer volume during the last 18 months or since September 11. Of the remainder, increases or decreases were related directly to the specific company's business strategy or increases and decreases in its stock prices.

Going forward, no company anticipated significant volume changes (after resolution of the current geopolitical uncertainty). Of course, potential market opportunities in locations such as China or business strategy directives can and will always impact volume.

Security policy

Understandably, tightened security policy and processes have been a major focus over the last 18 months. Relocation departments are working much more closely with their security divisions. Revised tracking and employee contact systems have been instituted by some of the participants. Security briefings and ongoing monitoring has increased significantly.

The continued threat and uncertainty throughout the world has created a new awareness and filter on whether employees of a specific nationality can or should be sent to particular locations.

As an example, one participant shared that their company tends to move intra-regionally in the Middle East because of security concerns for non-Middle Eastern employees in that region.

Alternatives to traditional assignments

Rather than revolutionary change, the global mobility arena is evolving as it matures. Several years ago companies were operating on "a globalisation at any cost" basis.

Today the basis is still globalisation, but with a stringent focus on the costs. Jack Welch was hailed as a visionary 12 years ago when he said the modern corporation must become multicultural and multipolar — a citizen not of one country, but of many.

However, companies today must balance business opportunity against economic challenges. There are new alternatives to the costly traditional full-assignment packages that covered employees for a period of three to five years.

Some of the alternatives reported by the study participants include permanent moves, short-term assignments, intra-regional moves, and increased business travel.

Policies have been created and expanded to address inter- and intra-regional mobility activity, permanent moves, and localisation. These policies better limit the amount of negotiation that companies now allow.

Policy review

International policies have been formally reviewed and benchmarked by three of the 10 participants during the last year. Two more companies are planning policy reviews for this year.

The allowances have been reduced and/or caps established in order to address cost efficiencies. For instance, resettlement allowances in one company are now USD 10,000 versus the previous USD 40,000.

Another company spoke about a comprehensive review of hardship locations and an anticipated reduction in premiums this year. Rather than takeaways, companies are establishing processes and limits so that negotiation and exceptions can be minimised.

While respondents indicated that there were no sweeping changes to their processes or benefits, they did report modifications to how they were communicated, seemingly indicating that processes, guidelines, and policies had been defined more clearly.

In ERC's 2000 International Survey, only 87 percent of the respondents even had a formal international policy. Corporations, to a great extent, now not only have an international policy, they have addressed intra-regional, permanent moves, and to a lesser degree, localisation protocols within their policies.

Communication with employees has been enhanced greatly by e-mail and intranets —eight of the 10 companies now have their policy online.

Policies centralised and decentralised

Strategy and policy are both centralised and decentralised in these companies. The organisations most often state that strategy and policy are centralised from headquarters and that there is one consistent international (inter-regional) policy that is administered regionally. Intra-regional moves, on the other hand, are subject to either regional policies or more flexible administration.

Within the benchmark group, policy administration is handled most often on a regional basis—dividing the world into three segments: Europe/Middle East/Africa (EMEA), the Americas, and Asia-Pacific.

Some companies have a fourth region based on their own demographics that may sub-divide one of the regions. For example, a company may administer North America and South America separately.

Some companies assign administration to the home region; other companies use a host region structure.

Expatriate population size

Expatriate populations (expatriates receiving full assignment benefits) ranged from fewer than 25 to 2,300.

In part, the range reflects the varying roles of the respondents—some respondents had responsibility for only portions of their company's expatriates; others held ultimate responsibility for worldwide expatriates and reported larger numbers.

For half of the respondents, 35 percent or fewer of their expatriate populations were US nationals on assignment. For these companies, the number of employees on assignments cominginto the United States and from one non-US location to another is higher than that of US employees on assignment outside of the United States.

Age of expatriates

Study participants reported that almost 70 percent of their international assignees are 41 to 45 years old.

On average, three-quarters of the assignees were married or accompanied by a domestic partner. Just under 60 percent had dependent children.

Respondents noted increases in the number of single and younger assignees, as well as increases in the number of female assignees.

Interestingly, most companies reported that the ratio of male to female assignees was about 80/20. This continues to point to an ever developing shift—industry statistics have shown anywhere from 13 percent to 18 percent of assignees are female.

Length of assignment

The average duration of an assignment was two to five years. One corporation mentioned trying to have the assignments run a five-year term in order to maximise the opportunity and the return on the company's investment.

That same corporation and many others have simultaneously been aggressively increasing the number of short-term assignments in place of traditional (long-term) in order to reduce costs.

Domestic and international mobility

All of the participants were involved in US domestic and international mobility to some degree.

This was a trend that ERC identified many years ago that time has borne out.

Relocation administrators and supplier partners need to be skilled in supporting global mobility activity.

Key locations for assignments

There were no surprises in terms of key locations. The United Kingdom and the United States were critical, as were Japan, Mexico, Singapore, Hong Kong, and Switzerland.

China is clearly identified as a critical location going forward.

Changes in the future

Consolidating and leveraging worldwide activity is a continuing theme. In terms of anticipated changes, 50 percent of the respondents spoke about exploring methods to centralise more of their global activity—for various reasons.

Increased volume provides access to lower supplier costs as well as a platform to introduce consistent policy utilisation across all regions.

One company spoke about the additional objective of reducing the number of external contact points for their assignees. Two of the 10 interviewed companies are currently in the RFP process.

Outsourcing

With the exception of strategy and policy, more component functions of international assignment management have been, or are being, reviewed for possible outsourcing.

Audit and payment of reimbursable expenses is being done internally in six of the 10 organisations. In the management of household goods, only two companies completely outsourced this function directly to their relocation management company (RMC).

The majority of participants had direct contracts with household goods providers. Of the eight remaining companies, one had its RMC also manage its direct contracts, and another company divided their household moves equally between its RMC and direct contract.

Measuring success

Formal assignment success measures, capturing assignment costs, repatriation refinements, and consistency in administration continue to challenge our industry.

Companies continue to explore success measures. Some industry experts feel that each assignment should have specific objectives that can be monitored, tracked, and evaluated as a way to measure assignment success.

However, capturing the total costs associated with assignments is problematic for employers. This is one reason why companies have difficulty with return-on-investment (ROI) analyses.

Some companies use pre-assignment estimates, accrual, and quarterly reconciliation processes in an effort to get closer to tracking and managing the total costs.

Repatriation

Repatriation continues to be primarily about the logistical move and return of the assignee and family. However, four of the participating companies interviewed for this benchmark study have introduced mentor programmes.

In the best case, there was a formal programme run by the company's human resource department. This process is initiated at expatriation and continues through the repatriation stage.

This study provides insight into corporations that have used their experiences in global assignment mobility to create better solutions for their employees, clearer processes for the administrators, and the right balance in terms of costs.

August 2003

Reprinted with the permission of the Employee Relocation Council from the July 2003 issue of MOBILITY magazine.

Deborah Ann Conlan, SCRP, is principal of SYNAXIS, Alexandria, VA. She can be reached at 703/823-3423 or e-mail daconlan@synaxis.to.