More companies are choosing to send employees on short-term assignments, but the main reason isn't to cut costs.

7 September 2006

AMSTERDAM - More companies are choosing to send employees on short-term assignments, but the main reason isn't to cut costs.

New research shows that multinational companies are increasingly using short-term assignments - of 3 to 12 months - over longer-term assignments. However, the main driver behind this trend is to help to complete projects rather than to cut costs according to 80.4 percent of participating companies. Transferring knowledge is considered another important reason for the short-term assignment approach.

The 2006 Survey of Short-term International Assignment Policies, conducted by ORC Worldwide, TheMIGroup, and Worldwide ERC, reports that while short-term assignments offer advantages, including a potential solution in situations where dual-career issues inhibit an employee from accepting a full expatriate assignment,  a key difficulty described by 45.2 percent of participants is controlling assignment length.

Challenges
 
"When a short-term assignment extends beyond the predetermined duration, it inevitably leads to other challenges," says Geoffrey Latta of ORC Worldwide, "such as ensuring tax compliance with host-location laws and complying with immigration regulations."
 
Out of the more than 530 North American, European, and Asian-based multinationals taking part in the survey, a majority of 60 percent named China, India, Korea, and Vietnam as some of the popular destinations for such short-term posts.

Incentive payments drop

Since 2003, there has been a 7.8 percentage point increase in the number of companies not offering incentives for short-term assignments. At present, more than 57.3 percent of the participants do not pay incentives. This figure is highest for Asian-based organisations at 69 percent, and lowest for those based in Europe and the Middle East with 52.4 percent.

In addition, 53.2 percent do not pay a hardship premium in locations where a long-term assignee would receive one. Again, Asian-based firms are less likely to pay such a premium in comparison to other multinationals.

[Copyright Expatica 2006]