Abstract
The prominence of foreign work assignments in our increasingly global workforce poses a labyrinth of challenges for employers and employees alike. Not only must employers lure often hesitant employees to accept overseas work posts, they must also navigate the complicated waters of global HR policies and programs. Applying the findings of Mobilising Talent: The Global Mobility Challenge Survey, jointly sponsored by BDO International, one of the leading accounting and consulting networks, and Ipsos, the author discusses the key incentives, other than increased salaries, that are value-adds to relocation packages. The author also shares a population demographic comparison of employees who are more and less willing to work abroad as well as the important HR policies and regulations that both employers and employees must keep in mind when tailoring international compensation and benefits packages.
Among the many challenges posed by today’s increasingly global workforce, overseas work assignments are growing in frequency and complexity for employers and employees alike. Historically, the main concern for employers has been the cost of moving employees abroad. It has often been stated that the cost of employing an international assignee is between two to five times the cost of a local hire. This is largely because employers have traditionally enticed employees to accept foreign work assignments with increased salaries. Additionally, new challenges arise for HR when someone accepts a foreign assignment, from reconciling tax and payroll issues to compensation incentives and assignment structuring, further driving the conversation about how best to tackle global workforces. One approach to reducing the overall cost and headache of managing an international employee base is to understand how employees think and feel. This may help alleviate some employers’ costs and concerns as well as encourage the right employees to make the move.
A key finding in Mobilising Talent: The Global Mobility Challenge Survey, conducted by Ipsos and jointly sponsored by BDO International, one of the leading accounting and consulting networks, shows that increased compensation is not the only incentive that can be used to convince employees to accept an international work assignment. Additionally, the survey reveals that there is great opportunity for employers to offer alternative incentives to help employees make the often difficult decision to accept a work post and live abroad. Furthermore, employees across the globe and among different population demographics have varying levels of openness toward working overseas, creating a spectrum of needs and desires for employers to address. While some employees may require more significant and extensive compensation packages to accept foreign work assignments, employers who want to send employees abroad are increasingly looking to provide non-compensation-based incentives that are also valued by employees. The incentives they offer may be different for a requested or developmental assignment compared to those for an operational assignment. HR’s policies and programs may also differ on a case-by-case basis and require special attention from both the employers and employees. However, regardless of the assignment type, employers should strongly consider the needs and desires of employees when tailoring compensation and benefits relocation packages.
Key Incentives Driving Employees Abroad
Apprehension about both their move abroad as well as potential move back home may be a serious factor driving someone’s decision to work abroad. Even when open to accepting foreign work assignments, employees value familiarity and security. The majority of those surveyed prefer to be relocated to English-speaking countries and the assurance that they will receive help relocating back to their original job and country once the international assignment has concluded. This raises the question of how to reconcile employer needs with employee wants. For example, in non-English-speaking countries, this could mean providing foreign language assistance.
Of desired relocation destinations, the United States ranks first, with 34% of those surveyed indicating they would want to move there the most, followed by the United Kingdom with 22%, Canada and Australia both with 20%. Being able to speak the local language, even if it is not English, is also important to employees. Of the employees surveyed, 42% say that they would be “much more likely to take the job” if their employer paid for language training.
Employers can offer other incentives to make employees more comfortable while abroad. For example, preassignment visits—trips to the country to see what it is like before accepting the position—paid for by employers are strongly valued by employees, with 43% of them saying such a trip would increase the likelihood of their accepting a foreign work assignment. Employees also want to have access to their family. Forty-three percent of surveyed employees indicate that having travel expenses back to their original country to visit family paid for by their employer would make them more open to working abroad. In addition, employees are eager to bring their spouse with them, and receiving immigration assistance to help their spouse find employment abroad is important.
The guarantee that employees could move back to their current role and country after 2 years with further relocation assistance is the number one incentive among employees surveyed, with 45% saying it would make them much more likely to accept a position overseas.
In challenging economic times, the number of those concerned about not having a position to return to when their foreign assignment is up rises. Conversely, in more buoyant economic times, many employees have less fear of losing their position or future post assignment. They are confident that, on returning to their home country, their enhanced skill set and experiences will make them a more valuable and desired employee. Some employees may even see a return to their old job as a distinct backward step, due to the professional and personal growth they underwent abroad. When economic times are difficult, job security becomes of far greater significance, and employees are more reluctant to leave their current, seemingly safe position.
Incentives such as paid language training, visits back home and employment assistance for spouses are all components that help provide the professional and personal support structure that employees considering an overseas work assignment need and desire. While surveyed employees have varying levels of hesitancy toward accepting a foreign work assignment, many agree on these alternative incentives. These non-compensation-based incentives that employers can offer may actually reduce the cost of international relocation to a company, increase the return on investment and make for a much happier and more productive employee. Knowing what drives employee behavior and decision making is the best way for employers to effectively determine what alternative incentives to include when structuring international relocation packages (see Table 1).
Top Five Incentives for Employees to Be More Likely to Take an International Assignment, Ranked.
Global and Industry Comparison
Not all employees are equally open to the idea of accepting an overseas work assignment. Across the globe and in different industry sectors, there are particular geographic locations and population demographics that consist of people more willing to move and work abroad, as well as those who are less inclined to do so.
The survey shows that, by region, employees from Latin America followed by the Middle East and Africa are the most likely to relocate overseas for work, with 34% and 32%, respectively, saying that they would consider a move. Those who say that they would be less likely to accept an international work assignment are found generally in Asia Pacific, Europe and North America, with only 24%, 21%, and 20%, respectively, saying that they would move.
According to the survey’s findings, particular segments of the population are also more open to accepting foreign work assignments. Senior executives and decision makers as well as people under the age of 35 are among those most willing to consider a move, with 30% and 28%, respectively, saying that they would likely relocate if offered a position abroad. Men, low-income earners and unmarried employees are slightly less open to accepting a foreign work assignment, but are still overall more open to the idea than others. Employers should strongly consider targeting these employees who indicate a relatively high willingness to work overseas when looking to fill foreign positions.
The eagerness that employees exhibit toward moving and working abroad also varies by industry. Employees in the telecommunications and information technology as well as the construction industry are relatively open to accepting a foreign work assignment, with 28% of both groups saying they would seriously consider it. On the other hand, only 25% of employees in the commercial and retail and 23% of those in the medical and education sectors indicate that they would consider an overseas assignment. Understanding who is more and less likely to accept a foreign work post may help employers develop better, more effective relocation strategies and incentives.
International HR Policies and Programs
When tailoring mobility programs to employees and assignment types, it is important that employers are apprised of not only the needs and desires of employees, but also of the various policies that may already be in place within an organization. Policies can accommodate any type of assignment, including long-term, short-term, indefinite, commuter and more, and can be tailored to offer the incentives required to make that particular assignment more convenient and successful. For example, a commuter assignee traveling between two EU countries may not be as concerned with a tax equalization policy as a US citizen taking a long-term assignment to an EU country. For this reason, policies can be regional or global in scope and reach.
One of the most difficult to fill is the indefinite or “one-way” assignments. Though the survey indicates that 45% of employees want the guarantee of being able to return to their current role, some foreign work assignments are meant to be permanent. These moves may appeal most to employees from Latin America, the Middle East and Africa as well as senior decision makers—all groups that are very open to working abroad. One-way moves can fall into three categories—critical moves, company initiated moves and voluntary moves.
Table 2 chart illustrates how different incentives are appropriate depending on the assignment type and purpose. There are “core” benefits that are necessary across the board for almost any international move. Then there are “flexible” benefits that are considered for additional support in certain scenarios. In the case of a critical move, most employers are willing to provide whatever package is needed to be competitive and entice the employee to accept it, aiming to anticipate their every need and desire. These “flexible” benefits, for example, may be offered to employees who the employer considers extremely valuable or who are less willing to move abroad, such as those in the medical and education sectors. For such employees, employers are often more flexible in their support, as opposed to someone who volunteers to move.
Three Types of Company Assignments and Their Corresponding Incentives Strategy.
Core Benefits
Immigration, VISA and work permit assistance, as needed
Tax preparation and consultation for the first year
Shipment of household goods
Flexible Supports
COLA and housing allowances
Relocation and education allowances
Preparation and consultation throughout the assignment, including equalization true-up
Beyond compensation, one of the most costly reimbursements relating to sending an employee abroad, if offered, is the tax cost. There is a myriad of taxes that can come into play, and if employees feel it is necessary to be kept whole (tax equalized) from a tax perspective, then employers will likely bear the additional costs. While this can be done in many different ways, it is usually done by collecting a hypothetical (stay-at-home) tax from the employees on their salary and bonuses at their “normal” tax rates and paying the host country tax on their behalf, while also grossing up each additional benefit or assignment-related compensation component using the top marginal home or host rate that will apply during the assignment. This can encompass income, social security, wealth taxes and possibly others, which could equate to duplicate taxes if the employees continue to be taxed in the home country while being taxed in the host country. In many instances, there are tax treaties and credits to alleviate duplicate taxation, but treaties do not exist in all home–host country combination scenarios. It is important to keep in mind that the incremental taxes can also continue far beyond the assignment period. In the case of deferred compensation, such as incentive or equity plans that may consist of grant, vest and distribution dates, there are all kinds of administrative and cost planning challenges.
Because countries tax deferred compensation and equity plans differently, there can be taxation mismatch and duplication if not acknowledged and addressed in advance. There may be taxation and true-ups needed long after employees return home if an item of deferred compensation vests while on assignment and is taxed in the host country years later upon distribution. It is essential for both employers and employees to understand the effect an overseas work assignment has on all components of employees’ lives, including both present and potentially unforeseen future factors.
Though understanding employees’ desires and concerns is a crucial part of employers’ strategic planning process, the success of implementing an international mobility program also depends on communication and consistency. There should be communication within the company as well as between employers and employees to decide what incentives should be included in international compensation and benefits relocation packages. Since the survey finds that incentives besides higher salaries can persuade employees to accept a foreign work post and that employees around the world and across different population demographics have varying levels of openness toward working abroad, these conversations are more important than ever before. While many areas of a company may need to come together to structure and carry out the most effective compensation and benefits packages in accordance with HR policies on a domestic and international level, the results will hopefully be a growing global workforce filled with more employees willing to accept foreign work assignments as well as more satisfied employers.
Footnotes
Author’s Note
Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.