GLOBAL MOBILITY SOLUTIONS

GLOBAL MOBILITY SOLUTIONS

CONTENTS HOW TO APPROACH MOBILITY 3 BUILDING EXPATRIATE PACKAGES 4 COST-OF-LIVING INDICES, ALLOWANCES AND REPORTS 5 QUALITY-OF-LIVING AND LOCATION PREMIUMS 6 HOUSING DATA 7 DAILY ALLOWANCES FOR SHORT-TERM ASSIGNMENTS 8 BUSINESS TRAVEL ALLOWANCES 9 OTHER GLOBAL PUBLICATIONS 10 GLOBAL MOBILITY SOFTWARE TOOLS 11 MOBILITY CONSULTING SERVICES 12 BENCHMARKING AND BEST PRACTICES 13 GLOBAL MOBILITY EVENTS 14-15 2

HOW TO APPROACH MOBILITY The face of employee mobility is changing. Economic challenges in the West are putting greater pressure on Asian markets. There is an increasing presence of foreign talent in Asia, including traditional expatriates and many on non-traditional packages. At the same time, Asian multinationals are globalizing rapidly, and forming their own mobility policies and practices which require solid data, information and insights. Businesses now must deal with increasingly complex issues, such as a new generation of professionals with different motivators, the need to find ways of reducing costs, and developing more flexible and aligned international mobility policies. In light of these challenges, your talent mobility strategy needs to: Support your corporate global business objectives and broader HR strategies Attract and retain the right global pool of talent Provide appropriate expatriate remuneration Maximize your international assignment investment It has become vital for companies to constantly re-evaluate and evolve their approach to global mobility. With insights from our worldwide surveys and expertise from across the globe, Mercer can help you with all of these needs. Mercer s robust mobility solutions can help you successfully manage globally mobile employees - from your talent mobility strategy to compensation, benefits, and all the way through to repatriation or localization. Mercer has developed a variety of information and web-based tools that can help you perform calculations, generate reports, gather reference information and generally support you in all aspects of managing your expatriate employees. Utilizing methods that are transparent, globally consistent and financially sound, Mercer s data and tools will enable you to design and implement consistent and equitable expatriate compensation packages. Furthermore, Mercer s expatriate consulting services and reliable, up-to-date benchmarking data can help you manage your human resources globally. It will also assist in guiding your remuneration policies to ensure your organization s competitiveness in the marketplace. Mercer is the unsurpassed leader in global mobility across six continents. Working with the world s leading organizations, Mercer has offices in 42 countries and territories and more than 25,000 clients worldwide making it the only provider of expatriate compensation data with a truly global footprint, with broader human capital and benefits consulting capabilities. Mercer provides the resources needed for our clients and our consultants to improve their strategic decision-making capabilities around the human capital assets of an organization and is the only consulting firm offering clients cross-functional international mobility expertise in fields such as HR strategy, talent management, international mobility policies, expatriate compensation, mobility organization and operational management processes, and international retirement. 3

GLOBAL MOBILITY INFORMATION BUILDING EXPATRIATE PACKAGES BALANCE SHEET The balance sheet approach, originally commercialized by Mercer, retains the expatriate in the home-country salary program and provides allowances and offsets to enable the expatriate to maintain a standard of living broadly similar to that enjoyed at home. Salary is analyzed in four main expenditure categories income taxes, housing, goods and services, and reserve (savings, investments, etc.). The goal of the balance sheet comparison is the establishment of compensation while on international assignment that preserves an individual s home-country purchasing power. Due to the often significant differences in tax rates, social security contributions, housing costs and general cost of living between countries, a simple exchange-rate conversion of gross salary would be meaningless. Therefore, under the balance sheet system, the individual s remuneration in the home location is adjusted for any cost-of-living, taxation, and housing cost differences in the host location. MULTINATIONAL HOME TO HOST COMPENSATION CALCULATOR QUALITY OF LIVING POLITICAL DIFFERENTIALS EXPATRIATION PRACTICES BENCHMARK ALLOWANCES GLOBAL FAIRNESS MOBILITY COST OF LIVING APPROACH LOCATION INDICES COUNTRY METRICS HARDSHIP MERCERPASSPORT EVALUATION ASSIGNMENT SURVEYS 4

GLOBAL MOBILITY INFORMATION COST-OF-LIVING INDICES, ALLOWANCES AND REPORTS To encourage mobility and to manage your international assignment costs, you need precise information to calculate fair and objective expatriate compensation packages. Based on more than 200 goods and services, our semi-annual surveys are conducted by professional researchers in over 400 locations. We research multiple brands at multiple outlets in each location, where your expatriates can buy goods and services of international quality. Expatriated employees will find the prices of goods and services in their host location to be different from and often higher than those in their home location. Mobility managers must be able to take into consideration continually changing cost-of-living and currency differences among diverse locations and integrate them into fair, workable, transparent, cost-efficient compensation packages. THE BENEFIT OF TWO APPROACHES To help you find the optimal solution, Mercer offers two distinct ways to compare costs: NATIONALITY-SPECIFIC APPROACH The Mercer ORC nationality-specific cost-of-living approach develops cost-of-living indices and differentials based on the unique spending patterns in a base home country. By using a different weighting for each market basket item based on the unique cultural aspects of each home country, it ensures that expatriates can maintain their home country expenditure patterns in their host locations. This approach compares prices in the home country from a local-national perspective to prices in the host city from an expatriate perspective. MULTINATIONAL APPROACH The Mercer multinational cost-of-living approach develops cost-of-living indices and differentials based on a blended international spending pattern. This methodology assumes a convergence of spending patterns among expatriates of companies employing a variety of expatriates with complex assignment patterns and from many different nationalities. With weighting of goods and services the same for all nationalities, this approach results in allowances based solely on a comparison of prices in the home and host location, while eliminating differences in allowances that may occur for assignees of different nationalities due to unique cultural preferences and nationalityspecific expenditure patterns. Mercer can help you decide which approach works best for both your company and your expatriates. With price information collected twice a year, Mercer s Cost of Living reports include: Location-to-location index comparison Home country spendable income Cost-of-living allowances by income level and family size HOME COUNTRY SPENDABLE INCOME Spendable Income represents the typical amount an employee spends on goods and services in his/her home country. Used in conjunction with our Cost of Living indices, they are the basis of appropriate cost-of-living allowances. Spendable income data are based on national consumer expenditure statistics for major countries. The data is broken down by income level and family size, from single employees to couples with four children. 35

GLOBAL MOBILITY INFORMATION QUALITY-OF-LIVING AND LOCATION PREMIUMS Factors such as climate, disease and sanitation standards, ease of communications, and physical remoteness can often affect the success of a foreign assignment. Moreover, the local political and social environment, political violence and repression, and crime may give rise to potentially uncomfortable, inconvenient or even dangerous situations. Mercer offers two approaches to objectively compensate mobile employees going to difficult assignment locations. The qualitative and quantitative methods involved in Mercer s products the Quality of Living Report and the Location Evaluation Report result in a recommended financial incentive that compensates them for adverse conditions in the host location. THE BENEFIT OF TWO APPROACHES Your company s decision to compensate expatriates for difficult conditions can be based on an assessment of generally accepted standards of living or on an assessment of differences in living conditions between two locations. LOCATION EVALUATION REPORTS (LER) These reports assess more than 130 locations worldwide on 14 categories that make up daily life for expatriates and their families. LERs recommend a premium for a given location compared to generally accepted high living standards. Analysts rate the living conditions in the location and calculate an overall score, which is then translated into a location-specific premium as a percentage of salary. The LER results in a single recommendation for all assignees in the host location, independent of the assignee s home location. QUALITY-OF-LIVING REPORTS (QOL) These reports also rate quality-of-living factors, but they provide a recommended allowance based on a comparison to a specific home location. The QOL calculator lets you compare the quality of living in two locations, determine a quality-of-living index between them and translate that index into a premium expressed as a percentage of salary. The QOL for a given host city varies, based on the assignee s home location. Customization of reports is also available upon request, as are reports for nonstandard locations. Mercer s global mobility specialists are available to advise you with further information on Location Evaluation Reports and Quality of Living Reports. 6 5

GLOBAL MOBILITY INFORMATION HOUSING DATA Housing decisions are emotional and costly. Determining how to compensate and provide for comfortable, safe accommodations for expatriates and their families can be a complicated process. EXPATRIATE ACCOMMODATION COST DATA Mercer s Host City Accommodation data helps you determine the housing allowance/budget for your employees when they are transferred abroad. Monthly rental housing costs are provided for each host location by: Type of housing unit (house/apartment, furnished/unfurnished and number of bedrooms) Price category of expatriate-preferred neighborhoods The data can also be supplied in customized formats. HOME COUNTRY HOUSING NORMS Mercer has developed Home Country Housing Norm data to enable companies to assess housing cost differentials between a home and a host location when sending employees on international assignments. Our research involves gathering and analyzing data based on the latest national statistics on family expenditure patterns in each of the countries covered. This data provides the normative amounts that employees typically spend on housing in their home country and can help you determine any employee contribution toward housing costs in the host country. Data is broken down by income level and family size. 7

GLOBAL MOBILITY INFORMATION DAILY ALLOWANCES FOR SHORT-TERM ASSIGNMENTS Short-term Assignments provide companies with an alternative to long-term assignments for the transfer of skills, know-how and resources. Changes in technology, travel and communication networks, and other issues, such as dual career and family concerns, often make Short-term Assignments more attractive. However Short-term Assignments present new challenges. Employees on short-term assignments are usually not accompanied by their family, therefore their living costs are different and they cannot be compensated in the same manner as for long-term assignments. On the other hand, short-term assignments last longer than business trips and require expenses of a wider nature, such as personal care products, laundry and entertainment. Mercer provides Short-term Assignment Allowance data that allows your company to grant a daily allowance in a fair and consistent manner. The data are available for each city covered by our worldwide Cost-of-Living reports, and are updated twice a year. The Short-term Assignment Allowance data is designed to provide your company with reliable information relating to daily living costs on Short-term Assignments. The Short-term Assignment Allowance includes the following categories with three prices reported (low, medium and high): Meals food at home and in restaurants Laundry and dry cleaning Personal care Entertainment cinema, sport club and newspaper Transportation Mercer s specialists are available for any advice on expatriate compensation and for any assistance you might need when using Mercer Short-term Assignment Allowances. 8

GLOBAL MOBILITY INFORMATION BUSINESS TRAVEL ALLOWANCE The Mercer Business Travel Allowance reports provide data to determine daily allowances for international business travelers in 334 destinations and four key regions: Africa-Middle East, Americas, Asia Pacific and Europe. The reports contain information on actual hotel and meal rates plus miscellaneous expenses at three budget levels: high, medium and low. The reports help: Determine daily per diem rates Provide reasonable expenditure caps Estimate budgets more accurately Control costs The reports provide cost data in the destination currency and the home currency or in any other currencies required. Reports can be purchased individually or through an annual subscription. Subscribers benefit from access to the data for all destinations and quarterly updates. 9

GLOBAL MOBILITY INFORMATION OTHER GLOBAL PUBLICATIONS WORLDWIDE BENEFIT & EMPLOYMENT GUIDELINES (WBEG) Keeping track of constant changes in laws and regulations in every country is time-consuming and expensive, but you can be confident using this topselling, trusted resource. WBEG contains the most comprehensive and reliable information on employment conditions, statutory employee benefits and typical employer benefit practices. With extensive analysis and narrative reports, WBEG offers unparalleled quality and is the ultimate reference for worldwide benefits and employment information. Offering in-depth benefit updates for 62 countries, WBEG is available in five easy-to-use volumes for the major economic regions of the world. To give you immediate access to benefits information wherever you have an internet connection, Mercer now offers the entire set of WBEG benefits reports in an online version. Your subscription gets you one year of access to WBEG-Online, where you can quickly access specific benefits information. PERSONAL TAX REPORTS The Mercer Personal Tax Reports are authoritative guides on income tax and social security requirements in 90 countries worldwide. The reports outline, in simple-toeasy terms, the country s tax system and the implications for both local and expatriate employees. These reports summarize individual income tax and social securty liabilities for tax and social charges. The reports include comprehensive tax tables that show the effective tax burden on a wide range of salaries for single persons, married couples and married couples with more than two children. GLOBAL MOBILITY HANDBOOK There is more to an effective international assignment than just moving an employee from one city to another. Mercer s new Global Mobility Handbook gives you the practical information you need to consider before, during and after deploying staff around the world. Available in two volumes, both reports provide insights into various aspects involved in expatriation, such as the human resources/administration function, preassignment preparation and moving, pay packages, budget, cost control and taxes, communication pointers, family issues, and repatriation. INTERNATIONAL CAR POLICIES International Car Policies is a valuable reference guide that can help you define new strategies and manage your company car policy in the most effective way, making it easy to: Highlight differences in car policy practices across key markets Identify cost-saving measures Compare your car policy with others in the market Based on responses from thousands of employers around the world, the Mercer International Car Policies guide provides information on typical company car policies and associated tax regulations. 10 108

GLOBAL MOBILITY TOOLS GLOBAL MOBILITY SOFTWARE TOOLS Technology is the cornerstone of an effective employee mobility program. Expatriates represent a large investment and a source of future leadership. Mercer is able to support businesses by providing a total assignment cost management tool and support service. Mercer offers an easy-to-use, online software tool, implemented by our specialists, which is designed to be simple and functional while providing clarity on all costs associated with performing expatriate compensation calculations. WEB-BASED DATA SOLUTIONS Mercer s web-based applications are designed to support you in all aspects of managing your expatriate employees worldwide. With instant access to data, reports and calculators, you will have the most sophisticated and easy-to-use global mobility database on the market. Online calculators let users customize data and expedite delivery of quality information to meet the needs of HR programs, administrators and employees. Mercer s global mobility calculators include: Cost-of-Living Index Hypothetical Tax Calculator Cost-of-Living Allowance Location Premiums Expatriate Accommodation Costs Short-Term Assignment Allowance Balance Sheet Calculator Spendable Income, Home Housing Norm and Reserve EXPATRIATE ADMINISTRATION SOFTWARE Mercer, in partnership with Equus Software, a leader in state-of-the-art technology solutions, provides AssignmentPro, an international assignment management software system that uses best-in-class technology to streamline expatriate administration. AssignmentPro provides end-to-end automation to effectively manage all aspects of international assignments. The system houses assignee-related information in a single easy-to-use format, eliminating the need to outsource expatriate administration. Some of AssignmentPro s key features include: Easy integration with many HRIS platforms allowing for complete automation of payroll and email systems as well as employee communications. The ability to manage and store documents, such as contracts, securely in a single database. Around-the-clock communication with assignees, suppliers and HR staff worldwide via web portals. The ability to manage business processes via an automated workflow system. Simple calculating and reporting of cost projections, expenses and compensation in multiple currencies. Online expense management allowing for automatic notifications of approved expense reports. MERCERPASSPORT The MercerPassport suite of web-based services is a valuable source of reference information that will help expatriates learn what it s really like to live in another country. Besides covering the fundamentals of foreign living, MercerPassport provides insights on costs and availability of essential goods and services in the host country. It also provides the whole family with a clear understanding of how to appreciate and adapt to life in a new location, as well as essential, practical guidance about moving abroad and acclimating to a new home. MercerPassport now also offers Start Guides outlining procedures and requirements for visiting or relocating to up-and-coming locations in Central Asia, the Middle East and Africa. 11

CONSULTING & BENCHMARKING MOBILITY CONSULTING SERVICES International assignments are part of a process to create change, improve understanding and develop the global presence that is needed in the present competitive business climate. Expatriation is synonymous with new business opportunities, expansion and growth. In order to manage expatriate assignments successfully in a highly competitive and cost-conscious business environment, Mercer consultants are able to support you with the services described below. MOBILITY POLICY CONSULTING Whether your company is creating its first global mobility policy or realigning its program to changing business needs, talent objectives or industry trends, Mercer can offer complete solutions to ensure your mobility practices are effective. First, Mercer clarifies the purpose of the expatriation program within your company and determines whether it is fulfilling that purpose. Then, Mercer identifies how you can achieve strategic objectives, specifically addressing the following areas: Defining different types of international assignments Relocation policies Housing Compensation approach Expatriation allowances and premiums Retirement and healthcare Language and cultural training Localization and repatriation Home leave Cost analysis Policy implementation and communication Dependent education RELATED CONSULTING SERVICES Mercer provides a wide range of capabilities relating to mobility, including talent strategy, global leadership development, labor market analysis and workforce planning, segmentation of the mobile workforce, mobility training and education, as well as technology and data-related support. Our mobility consulting and information solutions are provided as part of Mercer s Talent, Rewards and Communication consulting practice, which looks holistically at your organization s people strategies and objectives. Only Mercer can provide this in conjunction with mobility data and technology solutions. 12 9

CONSULTING & BENCHMARKING BENCHMARKING AND BEST PRACTICES GLOBAL MOBILITY POLICY BENCHMARKING Can you prove that your strategy for rewarding and managing expatriates is working? Are your policies competitive compared to what your competitors are doing? Can you document what you need to get support from other decision makers? Knowing how other multinational companies are handling their expatriate workforce around the world is crucial when designing and building your expatriate management strategies. It s important to validate your company s competitive position by understanding evolving trends and improving your market knowledge. By identifying possible improvements and cost savings, you will be able to introduce innovative ideas and make changes to the way your company manages its mobile workforce in alignment with overall business objectives. Mercer is able to help you with comprehensive benchmarking of your global mobility policy by providing detailed reports on key expatriate package elements, allowing you to analyze your existing global mobility policy and compare against best practices of global multinational companies representing all industry sectors. MERCER SELECT BENCHMARKING GROUP The Mercer Select Benchmarking Group (SBG) is an exclusive service offered by invitation only to companies with the largest and best-run expatriate assignment programs. The purpose of the SBG is to provide a comprehensive international assignment benchmarking resource to companies that recognize the importance of making data-driven decisions. Over the past seven years, Mercer s consulting team has focused on providing SBG members with the tools to compare their most critical assignment program elements with those of other multinationals. WORLDWIDE SURVEY OF INTERNATIONAL ASSIGNMENT POLICIES AND PRACTICES Aligning your company s policies and practices with the marketplace paves the way for successful international assignment programs for your organization. The valuable data in this publication, Mercer s most encompassing global mobility survey, will help you develop, modify and customize your expatriate packages. This is the largest survey participant base in the industry. Participants receive a free regional question-byquestion analysis report and executive summary. Custom reports are available by industry, by comparator group and by expatriate population size. BENEFITS PRACTICES FOR EXPATRIATES AND GLOBALLY MOBILE EMPLOYEES This survey, conducted approximately every two years, offers employers vital information on benefits practices among multinationals, focused on health, retirement and life/disability insurance. Providing these core benefits for globally mobile talent is difficult due to issues with social security, disruption of coverage, pre-existing conditions, funding, regulation and cost issues. Varying expectations from employees and sensitivity to local equity make these challenges even more complex. This survey addresses these challenges by highlighting the most prevalent approaches taken by multinationals and the trends in these practices over time. 137

GLOBAL MOBILITY EVENTS GLOBAL MOBILITY EVENTS EXPATRIATE MANAGEMENT TRAINING COURSES Mercer has been advising multinational companies on employee mobility issues for more than 30 years. Building on this knowledge and experience, we have specifically designed expatriate management training courses to assist HR professionals who have responsibilities in managing expatriates. Mercer offers courses that provide an overview of the key concepts of international assignment management, as well as further in-depth training and knowledgesharing of key trends and challenges in employee mobility. Various dates and locations are available throughout the year. LOCAL MOBILITY EVENTS Mercer holds global mobility roundtables in various locations throughout the year. These are designed to provide HR policy-makers and others who manage expatriates an opportunity to network with their peers and learn about the latest trends and practices. These roundtables vary in duration and cover mobility-related topics. Please contact your local country consultant for more details. GLOBAL MOBILITY WEBCASTS Join Mercer s global mobility specialists for a series of complimentary webcasts designed to help you optimize your company s global workforce while maintaining its competitive advantage. The webcasts will help you stay informed on topics and trends that directly affect expatriates and global mobility program management. For further information on upcoming webcasts and details of how to register, please visit www.imercer.com webcasts. 14

For further information, please contact your local Mercer office or visit our websites at: www.imercer.com/mobility www.mercer.com/managingexpats Argentina Australia Austria Belgium Brazil Canada Chile China Colombia Czech Republic Denmark Finland France Germany Hong Kong India Indonesia Ireland Italy Japan Malaysia Mexico Netherlands New Zealand Norway Peru Philippines Poland Portugal Saudi Arabia Singapore South Korea Spain Sweden Switzerland Taiwan Thailand Turkey United Arab Emirates United Kingdom United States Venezuela Mercer (Singapore) Pte Ltd 8 Marina View #09-08 Asia Square Tower 1 Singapore 018960 Tel: +65 6398 2593 Fax: +65 6534 9682 hrsolutions.ap@mercer.com www.mercer.com www.imercer.com Copyright 2012 Mercer LLC. All rights reserved. Insert code here 000-XX-0000-0000