Three of the biggest trends in global expatriate management are the rise of 'global nomads' and third-country nationals, more carefully-thought-through mobility policies and a growing link between international mobility and talent management. Indeed, the best organisations are finding that the more they integrate their mobility and talent management strategies, the less vexing some of the traditional problems of expatriate management – retention, localisation, repatriation and so on – become. Mobility experts from four leading international companies – AstraZeneca, Tetra Pak, Volkswagen and DHL – shared their own experiences of adapting their organisations' mobility policies to a more global world at Mercer's 15th Expatriate Management Forum in Prague earlier this year.
In a world where emerging countries are becoming increasingly important markets, one of the challenges all these companies are facing is providing expatriate packages that are both appropriate for the local market and consistent with the global policy. The challenge is compounded by the growth in 'third country nationals' – assignees of a different nationality from both the destination and sending country.
Helen Walton, director of global mobility at AstraZeneca, tries to reconcile the global and local by means of a Total Reward strategy, which allows her to emphasise different elements of the package according to different economic and cultural requirements. However, she says, people still tend to consider just one element of their reward – base salary – rather than looking at the totality, when comparing their package with that of other assignees.
She explains: "We take a home-based approach to reward In some regions, such as Latin America, reward is delivered as 'today' money, with high base salaries, particularly at senior levels, rather than pension schemes and other longer-term benefits. In more established markets, particularly those in the West, there is a broader range of benefits, and base pay will typically be lower. I don't think people yet fully understand the concept of Total Reward and it behoves HR and mobility specialists, therefore, to continue to educate everyone about the need to take account of the whole package in order to see its real value."
Deanna Rasmussen, head of global mobility in the supply chain business of DHL, experiences similar frustrations. Despite a global reward strategy and policy, "regional differences come up in discussions every year, particularly in Latin America, where inflation is high." The solution, she believes, is to handle some of the discrepancies at local level.
Marcellus Puig, head of global assignments – Americas and Africa region – and of global mobility policy at Volkswagen, says that the combination of fast-moving global nomads and inflation in developing economies leads to spiralling pay. What's more, he adds, the rising population of global nomads begs the crucial question: "Where is home now?"
Tetra Pak has sought to resolve the problem by establishing a 'global employment company' called Tetra Pak Global Resources, and most employees who go on assignment, whether to Germany or Botswana, has a contract from that company. Their ' base salary is a blend of the company's top seven markets, and the base salary structure and target incentive is the same for everyone, although the incentive does vary depending on the level and location. They also receive an offshore pension. "That gives us a common basis for the expats, and the philosophy behind it is that they will always know what they will be earning," says Adrian Moule, director of the global mobility centre of expertise at Tetra Pak. "But we then give them location allowances, cost of living adjustments and so on, on top."
Policies have evolved over the past two years, partly as a result of the recent global economic and financial crisis. Companies have made them clearer, they allocate costs differently and they are ensuring that policies are fit for purpose in an increasingly global world.
Rasmussen, for instance, has developed a global repatriation policy for the supply chain business at DHL – "because that was what the business needed." Puig at VW has found himself in the unusual position of rejecting a suggestion by the board that the mobility packages should be more generous. "They are good as they are," he says, adding that yearly benchmarking exercises in every market are essential in order to ensure you are competitive. And Moule at Tetra Pak has introduced a new short-term assignment policy and a repatriation policy. "We found people weren't being treated equitably, and I'm a great believer in equity," he says. "Whether you've been to Botswana or Germany, when you come back home you should be treated the same as everyone else."
Perhaps one of the most significant changes has been the introduction by AstraZeneca of a 'global opportunities policy', aimed particularly at global emerging talent.
Walton explains: "We maintained our home-based balance sheet approach, but we have no incentive allowances and we don't give allowances on the basis of 'hardship' or 'location'. The Baby Boomer/Generation X view of hardship is very different from that of Generation Y and Millennials: they go to places like Shanghai or South Africa because they see them as interesting developmental moves."
What's more, she continues: "Among this group of people, if one person doesn't want to take the role we will make it available to someone else. Among the more traditional senior executive expats, the thinking has tended to be that only one particular person could possibly do the job – and it's that that leads to 'discussions' about allowances and how much you are prepared to spend."
Localisation is an issue that still exercises many companies, and opinion seems to be polarised as to whether to phase out existing packages or to make abrupt switches. Phasing out can be prohibitively complex in terms of administration. Tetra Pak rejected that approach in favour of rolling one year of benefits into a lump sum and paying assignees half of it in the first month of localisation and the second half of it a year later.
The pension issue complicates localisation further still. Most companies take people out of the international pension plan (IPP) when they localise them – which creates understandable tension, although some provide an 'end-of-service' benefit that might, arguably, compensate for the loss in pension. As far as possible, AstraZeneca tries to keep assignees on their home pension plans, using an IPP only for its globally mobile group where there is no alternative.
But the more assignees fall into the global nomad category, the less of an issue localisation becomes. What's more, argues Walton, the more companies use international assignments to develop their global talent, the less they need to either localise or repatriate assignees, because assignments are part of a well-structured development plan. Indeed, the problems inherent in repatriation and localisation could be resolved through more tightly managed mobility policies, she believes, explaining: "Assignments should be for a fixed period of time to do a specific job, and when you lose sight of that you run into trouble."
There has been much talk of segmentation over the past two years, but segmentation is only effective, claims Walton, when combined with strong talent management.
"As our organisation has got better at identifying and managing talent, and focused more on budgets, we have had a more educated conversation about who to offer assignments to, and who not, and the appropriate packages for them. The global opportunities package that we introduced about a year ago was aimed primarily at finance and operations, who had graduate programmes, but it has also been taken up by our commercial organisation for their emerging talent. They are having those conversations now that one or two years ago they wouldn't have been having. So while we made the policy available, the pull has actually come from the organisation."
However, continues Walton, the mobility team's challenge is to ensure that the organisation uses the policies consistently and appropriately – and that sometimes involves encouraging the business to adopt more generous packages than it think it needs to. "It's about striking the balance between cost and talent management needs," she says.
Moule too stresses the need to balance the value to the business of the individual and the value to the individual of the assignment. "We have lots of assignees who are valuable to the business but are getting no personal development out of it. They are basically doing the same job, but just rotating around different countries. We really want to give the best packages to those people who are high value and developing at the same time."
The convergence of talent management and mobility policies allows mobility experts to be much more effective strategic business partners to the organisation, points out Puig. "Volkswagen recruited its first director of talent management about a year ago and I am now starting to work with the HR VPs in our different business streams and getting much more involved in those talent conversations. Unless you can do that you are purely transactional. Indeed, the more you understand what is happening in the business as a whole, the more effectively you can tailor your policies."
Given the increasingly strategic role mobility experts are playing in the ever more complex global talent management arena, it's not surprising that these leading companies believe that the level of expertise required militates against outsourcing. The trend instead is to concentrate mobility expertise in centres of expertise – and, in VW's case, for example, to establish regional hubs. And as markets expand further and the number of third-party nationals continues to rise, flexibility and agility in global talent management will become increasingly important bywords.