Reaping Mutual Respect in Global Assignments

All the cost control strategies discussed so far have generally focused on a particular line of thought - that of encouraging responsible spending on the part of the expatriate. Beyond purely controlling costs, however, putting them in control is actually far more beneficial in the long-run as well. Firstly, they are in the best position to decide what to do in the local context (being entrusted with that duty in the first place, anyway), and secondly, it builds their confidence that the company has implicit trust in them. And this is what we will be talking about next.

One of the most effective cost control methods is actually what many would call the human factor. This is an attitude whereby you treat your expat well and deal reasonably with them and any family they may have to bring over. Don't forget that while the company is breaking into new territory, so is the expat. They would love to help you, if only you help them out as well.

The most expensive price a company could pay in terms of expatriation costs would have to be the expat themselves bailing from the assignment. This, despite the many policies and contracts he may have agreed to in writing before being sent on his way.

Such a drastic measure is no joke, and does not happen overnight. Checking in with the expat and his feelings on the assignment or the general mood of the culture overseas is essential to keeping him anchored long enough for results to show. Once again, this requires effort on the part of the home company, or the department handling international mobility.

Even if they may not make such a move, dissatisfaction can still build up when the long-term needs of an expat are not being addressed adequately. Has the company clearly communicated their support via educating the expat on where they can turn to for help should issues crop up? Or is the attitude such that the company will only interfere when monetary matters are concerned? For expatriates with families, is everything being done to ensure that the family is being cared for enough so that the expat can concentrate happily on his new position? Of course, the expat and his family will surely appreciate their personal space, so once again, this becomes a delicate balancing act between being overly concerned to the point and having absolutely no concern at all.

Much of the balancing act can be successfully done if the company sounds the expat out with constant communication. The point of this is to show the expat that "we're in this together", and that you trust them with what they're doing - that's why you're offering support whenever possible. To know that someone is there for them in this strange new land is reassuring, and this reassurance will translate into confidence and a better quality of work.

So all in all, when you help your expat to build trust in you and your commitment to his success, you can be sure that he will put forth the necessary effort to make that success come true for you. What could be more cost-effective than that?

Responsible Allowance Budgeting

It is undeniable that an expat needs to live and function comfortably enough to do his very best to represent the company on the international front. However, some companies make the mistake of overdoing the allowances. They have allowances for everything, big and small. Not just the essentials, like food and transport - sometimes even toiletries may be included in the deal!

As such, one of the ways companies can look into for expat package cost control is in the area of allowances. Again, we are not talking about cutting it all away. We are talking about controlling the spending so that it doesn't start a fire that becomes insatiable.

Try to consolidate the allowances. If you have allocated allowances for everything under the sun, you can be sure that the expat will make full use of each and every one of them. The expat - that professional you've thoroughly screened and are trusting to represent the company overseas - you can be sure that he can do some mean budgeting. There's no need to budget for him, really. Consolidate all the allowances into as many logical groups as possible - in fact, one group if at all possible. This lump sum can be his daily or monthly allowance for miscellaneous livelihood expenses. Once that is done, he will be sure to sort the rest out himself.

The other thing that can be recommended is that of deductible expenses. This means, for everything your expat needs to claim under an expense or allowance, while the company will pay for most of it, perhaps up to a certain percentage, the rest will have to be picked up by the expat himself. Once again, this puts the expat in semi-control, and drives home the point that he, too, is responsible for spending wisely - even if it may not be entirely his money. This will be especially beneficial for both parties when it comes to big items, perhaps like furniture. It has been proven time and again that people are always more careful to choose the best of the best, when a bit of their fortune is involved!

Of course, some expenses, like those used for entertaining clients while discussing the signing of a certain deal may or may not fall under such a scheme. It is entirely up to the department managing the externalization project. The things is to be as clear and upfront about this to the expat as possible - before he sets off for his assignment.

And in time, little savings will snowball into big ones!

How to House an Expatriate

One of the biggest worries on the mind of an expat is how he will be housed during his assignment overseas.

And that's also one of the biggest worries on the mind of the company's international human resource manager as well.

Across the board (barring perhaps remuneration), housing expenses takes up the biggest chunk of funds in an expat's package. This is especially so if the expat is being sent to a developed city. Surely you couldn't ask him to stay in the countryside which is a 2 hour drive away from the office he's being assigned to. Well, you could, but is that really wise, all things considered?

Many companies leave the selection of housing to a local agent, perhaps considering that they will have more experience in the local real estate than either the company or even the expat on the way there. They are quite right in thinking so, but this is where one needs to be careful. Do you include the local real estate agent as a partner, or do you simply hire them as if you were hiring any outsourced labourer?

These questions need to be asked because when an agent is being hired to simply find a room for the expat, chances are that they will find a house or room that fills out the whole housing budget, or even exceeds it. They will attempt to convince the expat to take these highly-priced rentals. After all, that's the height of their budget, isn't it? And if possible, they may even push the expat to try to renegotiate with the company or expatriation management about the housing budget so they can get a better house with more amenities - just because they can. This is something that may happen when the agent is simply that - an agent. And they are concerned first and foremost about their bottom line - more so than the welfare of your purse strings or that of your expat's.

By offering to partner with the agent and offering them reasonable incentives to recommend housing that is within or below the budget, you would be telling them that you are interested in a long-term relationship, and they in turn may be happy to take that first step in line with your requirements.

Things may not always work out that way, of course, so many companies actually leave the house sourcing to the expat themselves. A budget is still involved, but reports show that most expats max out the housing budget all the time - again, just because they can. This is not a good attitude to cultivate, so some companies successful with their international mobility projects have utilised something rather radical - a system called profit-sharing.

This time, the incentive is offered to the expat. If they can manage to find satisfactory housing below the budget they have been granted, the company allows them to keep half of what remains. This provides a powerful push for the expat to find the best housing possible - at the lowest cost. The company benefits as the expat is no longer using up every last cent of his housing budget, but the expat benefits as well, seeing the fruits of his wise budgeting habits by being able to help himself to half of whatever remains.

Of course, there are many other methods a company can use to ensure the housing budget stays controlled. The point is to craft a system where both sides can benefit fully. Remember, controlling costs, not cutting them, is the key!

Looking into the Overall Package (A.K.A Localisation)

When sending expatriates overseas, companies usually offer them an Expat Pack, which defines all the benefits they will receive while on their overseas assignment, as well as some details about the scope of their work. Some of the things that may be covered are housing, transport, food, education, days of annual leave, sick leave concessions, public holidays, bonuses, working hours and other related things like that.

Sometimes, having no yardstick to go by, some managers base their expat packs on what the home country grants their executives. As such, it may result in an imbalance of benefits between the expat and the locals, especially when sending an expat to a country with a lower standard of living. This may create a bubble around the expat, starkly setting him apart from the other employees, in effect alienating him from building a rapport with the team that will be supporting him in his assignment.

The opposite is also true. When a company sends an expat to a country with a higher standard of living based on a local package, other problems may arise that often harm rather than help the expat and the local team collectively.

There is no doubt about it. The HR team needs to look closely at the situation of the country that the expat is being sent to in order to best adjust the expat package for the outgoing professional. That is one aspect that localisation covers. Remember to localise, not for the home country, but for the target country, bearing in mind the needs and dues of the expatriate.

The other aspect of localising involves offering the expat a package based entirely on the local context. That means things like housing, travel, and food will be handled entirely by the expat as if he were a local. Needless to say, the remuneration for his work will have to be higher if this is the case, but some expats enjoy the freedom of not having to keep receipts for everything they do, and will relish taking up a package like this - if the price is right, of course. To that end, the HR department needs to find the best way to balance cost control and the expat's welfare.

Also, localising the expat will involve getting him to acclimatise to the local work culture. If he was used to starting work at, say, 9am when at the home company, but local culture dictates a starting time of 8am, then he may have to adjust accordingly, instead of insisting "that's how it works at home", as it will draw him no closer to his local support team. Instead, he may find himself making a few enemies! Going along with the local culture will increase productivity for sure (if one dives in with the right attitude), and this figures in the overall picture of international mobility cost control.

One thing to note is that it may be wise not to start an expat - especially a green expat - off with a localised package right away. Communicate the company's line clearly to the expat, ensure that he agrees and ensure that there is something black and white to document that agreement. Then slowly ease the expat into his local role. Always be communicative with the expat, because if you end up shocking him, you'll probably end up shocking your bottom line in the country where he is in as well.

Expatriation Programme Costs - Cut or Control?

Many companies involved in global mobility recognise and agree with the necessity of sending expatriates on assignments, knowing full well that these ones are at the forefront of this movement and have adequate experience to make things work.

However, many companies also recognise and agree that the global economy is currently wading in deep waters. They are grimly aware that full recovery is possibly a very long way off.

In light of this, it becomes pertinent for the brass to execute a very tricky corporate balancing act while walking on the tightrope of a declining international economy. Talk about a class act!

So on the one hand, you want to save and possibly reduce costs. On the other hand, you don't want to reduce your company's international presence via your expatriates. What's left to do? After all, survey shows that full expat programs can sometimes easily into six-digit figures annually. You may be surprised to know that the not-so-secretive secret many international human resource managers will recommend is not cost reduction, but cost control.

What is the difference, then? Put simply, cost reduction means you'll be telling your expatriates right off the bat that you're cutting their funding. Whether that comes out of their salary, allowance, or other bonuses, you can probably foresee that there is a low chance of this ever ending well. This is especially since the expat is your face to the other side of the world, and you are unable to monitor their dealings with the clients as closely as you could with a local employee. Dissatisfaction - however tiny - is the last thing you want them to exude when facing potential clients!

The other option of cost control is slightly different. Instead of slashing every single zero you can see on the expat pack, you'll be applying a few principles and giving a few incentives to your expats. The purpose? To motivate them to trim spendings done on the company's account while not holding back any of the incentives that they rightfully deserve.

Cost control helps the expat see and reap the benefits of responsible spending - something many often forget when they are spending Other People's Money. By putting them in semi-control, they feel closer to the company they represent and can thus fulfill their tasks with a higher morale than if you had just simply cut everything into half. It also makes it clear to the expat that their service is valued by the company, that their opinion matters, and that the expat and the company are in this together - for the long-run.

So in nutshell, control; don't cut!