Companies still sending expats abroad despite economic downturn
The survey--Flash Survey: Cost Savings Initiatives 2009 (ORC Worldwide) ranked as number one in the Expatica HR 2008/2009 Top 5 Industry Survey Awards, scoring highly as a hot topic and a topic of value to HR professionals presented in an easy to read and digest form.
Here are some of the main findings from the survey.
ORC conducted a a flash survey on cost-savings initiatives in May and June of 2009 to investigate what creative strategies companies are using to be more cost-effective during the downturn. Nearly 200 multinationals responded.
Regionally, the majority of respondents came from the Americas (55.8%), followed by Europe (38.1%), and Asia Pacific (6.1%). The average number of expatriates among participants is 245, the median, 43. Participants represent every major industry, most notably the banking, financial, and insurance sector (12.7%).
The most telling revelation of the survey is that the majority of companies still feel the need to send expatriates abroad.
As many as 52 percent of companies surveyed made changes to expatriate policies due to the financial crisis. Companies are indeed reevaluating their policies. Most companies reported making changes to their policies on compensation and incentives, localisation, housing, COLAs, and home leave. Specific examples of compensation changes included: Delaying or reducing merit increases,freezing salaries,revamping compensation plans and deferring bonuses.
Changes to incentive plans included decreasing or eliminating percentages. Companies making changes to localization for the most part were increasing the number of localizations as well as more strictly adhering to the policy. A few participants indicated they were changing the localisation threshold from 5 to 3 years. Amendments to housing policies included reducing or reviewing allowances, aligning budgets to current market conditions, and implementing caps.
The majority of companies citing changes to cost-of-living allowances specifically mentioned moving from expatriate indexes to EPI or cost-effective indexes. Those citing home leave changes are for the most part, switching travel to economy class instead of business class for trips home.
The top five actions that companies are taking to reduce costs
- 73 percent are reducing nonessential travel.
- 59 percent are reviewing the need for each assignment.
- 52 percent are tightening control of policy exceptions.
- 46 percent are implementing cost projections.
- 36 percent are implementing tools to increase cost awareness.
The top five cost-cutting measures appear to affect internal practices and not expatriate packages. Clearly,
companies are looking to maintain the integrity of the global mobility program – but not at the expense of
the expatriate. As everyone knows an expatriate assignment is costly. Once the correct candidate is
selected, companies must ensure that each assignment is successful. To do so, they must invest in the
assignee and family to keep them productive and happy while in the host location. It is no wonder that
actions companies could take that would directly affect expatriates are not currently being considered.
Of the 36 percent of companies that reported reducing IAs, the average decrease in expatriate population size is 20 percent. Regionally, 42 percent of participating companies in Asia Pacific, 39 percent of companies in the Americas, and 31 percent of European companies are all decreasing their expatriate staff. Consistent with the regional analysis, participants from Singapore are more often reducing their expatriate population while Canadian companies have only minimally done so.