Over a third of multinational corporations say international assignments are too costly, but less than half of those companies are striving to make their programmes more cost effective.

21 September 2006

AMSTERDAM - Over a third of multinational corporations say international assignments are too costly, but less than half of those companies are striving to make their programmes more cost effective.

A new survey by KPMG LLP, 2006 Global Assignment Policies and Practices, shows that approximately 38 percent of the multinational companies surveyed say overseas assignment programmes are "more generous than they need to be. However, 48 percent of companies feel administering to expatriate employees takes "too much time and effort." In contradiction, only 14 percent of companies surveyed say their expatriate employee programmes are designed to control costs and ensure an appropriate return on investment

Achim Mossmann, KPMG's national director of global mobility advisory services observes that "despite many companies saying they want to improve efficiencies and cut costs related to their international assignment programmes, some are actually moving in the opposite direction."

Mossmann suggest that companies can improve their ROI on overseas assignments only if they manage the entire expatriate employee process, a process which involves several steps including setting specific goals for the assignment, identifying appropriate candidates who can meet the goals, and ending the process by securing jobs for expatriate employees on their return.

Only 23 percent of companies report establishing assignment-specific career goals for every expatriate employee, which is a decrease from 2005 when 31 percent of companies reported establishing assignment-specific career goals for every expat employee, says Mossmann.

Plus, 38 percent of companies say international assignees leave the organisation on repatriation mostly because no appropriate job is on offer in the home country. This percentage is higher than the equivalent figure in 2005, when 29 percent of companies reporting repatriated employees leaving.

Another surprising finding is that 38 percent of companies surveyed believe they manage repatriation well, while in 2005, 49 percent reported successful handling of this process.

The survey also revealed that 54 percent of companies were using short-term assignments as a way to cut the costs of their international assignment programmes, as this type of programme reduced the time involved during the administration process.

According to Ben Garfunkel, of KPMG's international executive services practice, many companies still believe in the myth that short-term assignments are more cost-effective and easier to administer because they have fewer immigration and tax requirements. "But short-term assignments actually require more advanced planning and oversight to ensure tax and immigration compliance, making short-term assignments less cost efficient in the long-run," he says.

Other findings include differences in benefits offered. Asian-Pacific and European companies are twice as likely to offer benefits to the non-traditional dependents of expatriate employees as US companies. And nearly half of European companies will reduce benefits specifically designed for international-assignments, such as cost-of-living allowances, in countries with a lower cost-of-living than the home country.

[Copyright Expatica news]