INTERNATIONAL MOBILITY STRATEGY & POLICY SEGMENTATION AT L OREAL MANAGING A HOST BASED COMPENSATION APPROACH EEPF, MARCH 2017
AGENDA 1 INTERNATIONAL MOBILITY STRATEGY 2 KEY FIGURES 3 POLICY SEGMENTATION 4 EXPATRIATE COMPENSATION 2
1 VISION & STRATEGY
NEW INTERNATIONAL MOBILITY VISION 2013 Group Universalisation strategy Selective international assignments Expertise Development of regional/local Performance talents Experts Future leaders 4
REASONS FOR AN INTL ASSIGNMENT Potential Performance Add value Motivation Expertise Culture, values, ethical principes Experts Young talents Hub Talents Experts Future leaders 5
2 L OREAL KEY FIGURES
INT L MOBILITY KEY FIGURES DECEMBER 2016 GENDER SPLIT
INT L MOBILITY KEY FIGURES DECEMBER 2016
3 POLICY SEGMENTATION
OLD SEGMENTATION Based on seniority (+/- 7 years of experience) World Pass > 7 years of experience Explorer Pass < 7 years of experience + Local Int l Specific request Short Term + Regional segmentation Hubs + intra-zone moves N.America Nordics Euro Asia 10
A NEW PHILOSOPHY Greater fairness between Expatriates / Local employees WHY? Align with level of responsibility and career progression Reinforce our Rewards Culture Provide competitive packages HOW? New policy segmentation Based on level of responsibility Closer link to Host market 11
NEW POLICY SEGMENTATION Group Executive Top Executive Senior Executive Manager 2 Manager 1 Team Leader Individual Contributor Professional GE TE SE M2 M1 TL IC P MOBILITY PASS 1 MOBILITY PASS 2 MOBILITY PASS 3 Job Mapping of future position in the Host Country Job Mapping determined by Rewards Manager 12
OLD vs NEW SEGMENTATION Based on seniority and region (+/- 7 years of experience) World Pass > 7 years of experience Region Hubs + intra-zone moves Explorer Pass < 7 years of experience + Local Int l Specific request NEW (Oct 2014) Based on position (Job Mapping Level in Host Country) Mobility Pass 1 Top Executives Mobility Pass 2 Middle Management Mobility Pass 3 Juniors + Local Int l Specific request Short Term Short Term 13
TYPES OF INTERNATIONAL MOVE LOCAL CONTRACT long term (> 9 mths) Long term short term (3-9 mths) INTERNATIONAL CONTRACT(Expatriates) long term (> 9 mths) employee decision L Oréal decision L Oréal decision employee decision LOCAL MOVE compensation SHORT TERM ASSIGNMENT POLICY compensation LONG TERM ASSIGNMENT POLICIES compensation LOCAL INTERNATIONAL POLICY (for personal compensation reasons only) relocation assistance (optional) social coverage social coverage social coverage assignment benefits assignment benefits optional assignment benefits 14
4 EXPATRIATE COMPENSATION
PACKAGE CALCULATION 2 APPROACHES BASE COUNTRY BASE COUNTRY APPROACH Net calculation HOST COUNTRY APPROACH Gross calculation 16
WHICH APPROACH FOR WHICH POLICY? BASE COUNTRY APPROACH Net calculation HOST COUNTRY APPROACH Gross calculation Short Term Local Int l Specific request Mobility Pass 1 Top executives Mobility Pass 3 Juniors Mobility Pass 2 / Better offer Middle Management 17
NEW POLICY : KEY CHANGES All compensation guaranteed & managed gross 1 Gross bonus target % set in line with Host Country practices Expat premiums isolated from base salary (e.g. hardship premium, French WPS compensation) Fixed for length of mission Paid gross once a year Same exchange rate protection for all policies 40% of gross base salary 100% of gross bonus 100% of gross premiums No change for Short Term and Local International 01 02 03 18
IN PRACTICE: MOBILITY PASS 1 BASE COUNTRY APPROACH BASE COUNTRY Net calculation GE TE SE M2 M1 TL IC P Gross reference salary Net salary COLA TOTAL NET SALARY Gross Guaranteed HOST Assignment COUNTRY Salary Social + income taxes Gross / net bonus target % Grossed-up Premiums Premiums 4 19
IN PRACTICE: MOBILITY PASS 3 HOST COUNTRY APPROACH Gross calculation GE TE SE M2 M1 TL IC P Gross HOST market COUNTRY salary NET SALARY Host bonus target % TOTAL NET CASH 20
IN PRACTICE: MOBILITY PASS 2 BASE COUNTRY BASE COUNTRY APPROACH Net calculation HOST COUNTRY APPROACH Gross calculation GE TE SE M2 M1 TL IC P Base Gross reference salary Net salary COLA Gross HOST market COUNTRY salary Grossed up TOTAL NET SALARY TOTAL NET SALARY Host bonus target % Host bonus target % Grossed up Premiums TOTAL NET CASH best offer retained 4 TOTAL NET CASH 21
TO SUM-UP Strong link to REWARDS FAIRNESS between Expats / Locals COMPENSATION guaranteed & managed gross Aligned with local rewards practices where possible 22
4 CONCLUSION
WHAT RESULTS 2 YRS LATER? Clear policy segmentation Rewards culture Easier management of expatriate compensation Complicated package construction process Increased dependency on host country Increasingly complex cases Competitive packages Need to simplify processes despite an oral corporate culture 24
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