Global Mobility Trends

Liz Lane, Associate Director, Frazer Jones Reward

The Reward & Global Mobility team at Frazer Jones has recently appointed Jon Jepp. Jon has worked in global mobility at organisations that include PwC and RBS and has been an assignee himself, working in the US for several months. Jon provides us with an insight into his experiences and recent trends he has indentified in global mobility.

Following the economic downturn, many organisations have significantly reviewed their global mobility policies. These policies have been re-written and implemented and a common theme has been cost reduction, specifically in the area of allowances. In several organisations we are aware of, housing allowances are now based on the mid-quartile rather than the upper quartile figures, cost of living is now based on the cost-effective index rather than standard. Some organisations have even introduced negative cost of living allowances for assignments to countries considered cheaper to live in, for example China and India; changes that are proving to be controversial with those on assignment.

Some organisations have removed some allowances altogether in a bid to make the assignment process more cost effective. Repatriation allowances, if one exists, are much less generous than they were before the recession hit and generally, expatriates are no longer financially better off when on assignment.

A further trend is that most companies now have 'local plus' policies which essentially puts an individual on a local contract in the new country, where they pay local taxes and get a local salary, but may also get some quasi expatriate benefits such as housing support and schooling. This is a cost reduction measure which is proving effective.

Assignment types are changing too. Flexible assignment types, including frequent flyer and commuter style arrangements, are gaining in popularity. Although short-term assignments are gaining ground, owing to their potential to provide flexibility and reduce costs (especially if they are unaccompanied), long-term assignments are still recognised as providing stability of leadership and the opportunity to increase strategic capability.

In terms of destinations, the key financial hubs still remain the most popular locations for assignees, for example Hong Kong, Singapore and New York and there has also been a rise in the numbers going to locations such as India and China. This presents new challenges for organisations, as failed assignments in China and India are common due to significant cultural differences. Relocation companies are becoming more instrumental in preparing assignees for their assignments by providing cultural and language training.

In the downturn, many companies were repatriating their assignees, to reduce costs during a period of uncertainty. Interestingly however, during the last big downturn, the most successful global companies that came through that period relatively unscathed were the ones that kept their expatriates on assignment...clearly showing that expatriates are important for global growth!