Mapping Assignment Policies to Assignment Objectives ECA International
Agenda Types of assignment policies Historical Changing workforce demographics Drivers for assignments Mapping assignment policies to assignment objectives Summary 2
Types of policies Historically policies tended to be based on duration Short-term Long-term Permanent Local business unit Group level 3
Variety in types of international relocation 2.8% 4.3% 13.4% 14.0% Other (e.g. rotators) 8.6% 18.8% 9.7% 23.5% Permanent transfers Commuter assignments 56.4% 48.5% Short-term assignments Long-term assignments 2014 Forecast 2017 Source: ECA s Managing Variety in International Mobility Survey 2014 4
Increasing diversity of assignee populations Source: ECA s Managing Mobility Survey 2012 5
Remuneration methods Home equity Balance sheet Host local equity Higher of home/host Global equity Hybrid Local Nomad policies Int l salary bands Select Base Local plus Expatriate market rate Assignee host equity 6
Change in age group profile of international assignees Average proportion of assignee workforce 6% 21% 70% 52% 24% 27% Overall 2002 Overall 2014 25-35 years 36-50 years 50+ years Source: ECA s Managing Mobility Survey 2012 & ECA s Managing Variety in International Mobility Survey 2014 7
Changing workforce demographics Profile: Children grown up Property owners Retirement on the horizon Assignment motivation: Financial package Location Opportunity Profile: Single, no family issues Rent or living with parents Retirement not an immediate concern Baby Boomers 1946 to 1964 Generation Y 1980 to 2000 Generation X 1960s to 1980s Profile: School-age children Property owners Planning for retirement Assignment motivation: Career opportunity Educational opportunities for children Assignment motivation: Begin career outside home country Seek well paid opportunities Successive assignments 8
Demographic changes from 1970 to 2020 Source: http://populationpyramid.net/ 9
Progressive policy approaches An umbrella policy with a suite of tailored provisions beneath it to reflect assignment purpose and business assignment drivers. Assignee drivers such as requested alternatives (commuting instead of family relocation). Short-term Long-term Permanent Projects Graduate/development Commuter Rotator Leadership Skills transfer High potential Indefinite transfer Self-initiated transfer Global nomads 10
Business objectives for different assignment types What is the business reason for the assignment/transfer? What is the minimum timeframe needed to accomplish this objective? Can the objectives be modified to accommodate the needs of an employee if flexibility is required to meet the need? Is the assignment or transfer employee-initiated? What is the most likely next step for the employee at the end of the assignment/transfer? 11
Smarter policies to encourage mobility of talent Mobility strategy Long-term assignment Expat Lite Local Plus Low business value Mobility strategy Permanent transfer Local/Local Plus High developmental value Development High potential Self-initiated for a permanent move Local opportunity Strategic opportunity Senior level top performers Any employee Skills/ knowledge Low developmental value High business value Mobility strategy Long-term assignment Global Nomads Full Expat Local Plus Hybrid Mobility strategy Long or short-term assignment Expat Lite / Modified Expat Local Plus 12
Strategic opportunity can you pay a local salary? Junior manager (EUR) Senior manager (EUR) 60000 350000 50000 40000 Gross Net 300000 250000 Gross Net 200000 30000 150000 20000 100000 10000 50000 0 0 India China Netherlands Sweden UK Norway Germany USA Australia UAE Singapore Mexico Brazil India China Mexico Brazil UAE Singapore UK Netherlands Sweden USA Germany Norway Australia Local salaries source: Towers Watson Global Grades 2013 13
Local plus 350000 300000 250000 Senior Manager (EUR) Net Net with benefits 200000 150000 100000 50000 0 India China Netherlands Sweden United Kingdom Norway Germany United States of America Australia United Arab Emirates Singapore Mexico Brazil Local salaries source: Towers Watson Global Grades 2013 14
Expat vs. local - Brazil 250000 Net salaries in EUR 200000 150000 100000 50000 0 Junior manager Middle manager Senior manager UK local net Brazil local net UK expat in Brazil net Local salaries source: Towers Watson Global Grades 2013 15
Expat vs. local - UK 350000 Net salaries in EUR 300000 250000 200000 150000 100000 50000 0 Junior manager Middle manager Senior manager Brazil local net UK local net Brazilian expat in UK net UK expat market rate net Local salaries source: Towers Watson Global Grades 2013 16
Smarter policies to encourage mobility of talent Mobility strategy Long-term assignment High developmental value Mobility strategy Long-term assignment Expat Lite Local Plus Development Strategic opportunity Global Nomads Full Expat Low business value High potential Self-initiated for a permanent move Local opportunity Senior level top performers Any employee Skills/ knowledge High business value Local Plus Hybrid Mobility strategy Long or short-term assignment Expat Lite / Modified Expat Low developmental value Local Plus 17
Development / skills-based assignment: Expat lite India to UK 140000 Net salaries in EUR 120000 100000 80000 60000 40000 20000 0 Junior manager Middle manager Senior manager India local net Indian expat in UK net (full expat) Indian expat in UK net (expat lite) UK local net Local salaries source: Towers Watson Global Grades 2013 18
Smarter policies to encourage mobility of talent Mobility strategy Long-term assignment Expat Lite Local Plus Low business value Mobility strategy Permanent transfer Local/Local Plus High developmental value Development High potential Self-initiated for a permanent move Local opportunity Strategic opportunity Senior level top performers Any employee Skills/ knowledge Low developmental value High business value Mobility strategy Long-term assignment Global Nomads Full Expat Local Plus Hybrid Mobility strategy Long or short-term assignment Expat Lite / Modified Expat Local Plus 20
Local opportunity Local transfer (pure selfinitiated) Local transfer plus (part self-initiated, part company-initiated) Tax consultation Year of transfer only Year of transfer only Relocation flight Provided Provided Shipping Standard provision Additional assistance Language training None Provided Housing allowance None Company contribution for a defined period Education None Company contribution for a defined period Temporary accommodation Standard provision Additional assistance 21
Remuneration approach vs. assignment objective Local opportunity Development assignment & Skills / Knowledge assignment Strategic opportunity Junior manager Middle manager Senior manager 22
Summary One policy rarely fits all assignment objectives Changing assignee demographics and company needs lead to more complex policies Careful consideration can lead you to select the best fit remuneration approach Flexibility is key 23
Thank you Jacqueline O Rourke Head of Client Services and Account Management ECA International jacqueline.orourke@eca-international.com Questions? 24