Barry Rodin, ECA’s Chief Economist, shares some headline results from ECA’s recent survey undertaken to help companies see how their international relocation benefits provision compares.
Successful international relocation of employees and their dependants requires the co-ordination of a number of related activities and procedures. For long-term international assignments relocation normally consists of the following three integrated stages: 1) preparation, including country briefings, language training, look-see visits and assistance with closing utilities contracts etc; 2) travelling to the host country, plus shipping of personal goods etc, and 3) orientation and adaptation to the new environment. For many employers effective support at the repatriation or onward transfer stage is also a key objective, especially if international mobility is part of a strategic talent management programme or it is required in order to retain staff with international experience to help develop the organisation’s international operations.
How effectively the initial relocation and settling-in stage of any type of international move is managed, be it long-term, short-term or permanent, will very likely influence its eventual success or failure. In recent years global economic uncertainty has seen companies looking for ways to make expatriate packages more cost-efficient. In terms of the relocation element the more commonly applied modifications have been to reduce the class of air travel, exercise limits on shipping and storage of personal goods and increase control in the use of service providers. However, it is apparent from responses to ECA’s International Relocation Benefits Survey that relocation support is still considered an investment worth making, largely because of the potential impact it can have on the likelihood of assignees accepting the assignment, subsequent assignment performance and the well-being of accompanying dependants. Below are some of the survey findings:
Economy class is now the most common form of travel for all levels of seniority for flights lasting no more than three hours. Three quarters of companies allow senior managers to use business class for flights of over 8 hours and 40% do so for middle management. Business and first class travel is most prevalent among international assignees employed within the travel industry and is also more likely among finance, logistics and retail companies. One way in which employers can make savings is through buying air-tickets directly from airlines or travel agents. It enables them to exercise greater control and economies of scale as well as tax savings in specified jurisdictions. 80% of survey participants said they used this approach.
ECA’s 2012 Managing Mobility Survey reported that giving employees the opportunity to visit the location can be very useful in allaying any family anxieties about living in a different country as well as ease the process of adapting to a new culture and lifestyle. 72% of companies in our Relocation Benefits Survey provide look-see visits, usually lasting five to seven days. Of these, more than 80% also pay for the spouse/partner to accompany the potential assignee on the visit. Among organisations managing a number of different (six or more) assignee nationalities, look-see visits are more likely to be paid for, confirming a greater need for such visits when managing assignments to and from many locations, often with significantly different cultures and living conditions.
88% of companies provide temporary accommodation at the beginning of the assignment while 55% provide it at the end. The typical maximum number of days for which this is provided is 31 although in some cases 90 days was cited. Temporary accommodation is most commonly delivered as a benefit-in-kind although reimbursing assignee costs is another popular delivery method.
Shipping and storage
The cost of shipping furniture to and from the assignment location is almost universally covered by employers. 40% pay for home country storage and airfreight and over 50% cover the cost of excess baggage. 48% and 24% respectively include large domestic appliances and pets. More than 80% will cover the cost of insurance of shipping goods from door-to-door, but less than a quarter cover insurance of personal goods whilst on assignment. Imposing limits on the volume of shipping, storage and airfreight according to family size, accommodation type and assignment length has significantly increased over the past decade (over 80% of companies surveyed do this today compared with 52% in 2000), reflecting greater pressure to control costs. Another cost saving measure is to stipulate that payment is made directly by the employer to the shipping agent/service provider. This approach, used by 60% of companies covering the cost of shipping/storage, enables them to take advantage of economy of scale by using designated service providers: over 40% of companies stipulate the use of designated vendors on a global basis with an additional 20% specifying them on a regional basis.
Over 40% of companies surveyed provide relocation leave – usually three to five days – at the beginning of the assignment. However, a large minority of these employers stipulate that relocation leave is at the discretion of management. Almost the same percentage offer relocation leave at the end of the assignment. Nearly half of companies providing relocation leave report that they limit the time after arrival and repatriation in which the assignee can use this leave.
A settling-in allowance is paid by 70% of companies at the beginning of the assignment to cover miscellaneous expenses associated with the move (e.g. kitchen utensils, bedding packs etc.) Of these a third pay the allowance at the end as well. On average the amount paid is equivalent to one month’s base pay, but half of companies do stipulate a maximum ceiling. Seniority, family size and local conditions, including type of accommodation are factors which will prompt three-quarters of companies surveyed to vary the allowance. Where a settling-in allowance is not paid 60% do reimburse specific miscellaneous expenses incurred at the start of the assignment such as utility connections small household appliances, driving licences and soft furnishings.
A variety of housing related assistance is provided both at the start and end of the assignment, including home-finding service in the host country (70% of the sample), assistance with terminating lease/rental agreements on repatriation (44%), and opening and closing utilities contracts.
Nearly all companies assist their expats in obtaining visas and work permits. Other immigration assistance includes: residence permits (74% of participants), compulsory vaccinations (60%), and passport applications (45%).
Orientation and briefing
Opening a bank account can be vital in ensuring employees are able to transfer sufficient funds, in the right currency, to cover initial essential costs and this is offered by 69%. Other support includes providing information on local schools (74%), language tuition (offered by 62% of companies of which 80% include the assignee’s partner and 43% include accompanying dependent children), and cultural awareness training (59% of which over half include the assignee’s partner but only a minority extend to children).
Little variation according to assignment type
When considering relocation support for short-term or career development assignments, or for permanent transfers, generally only a small minority of companies vary from their policy for long-term assignments. Where this does happen it is more common among organisations with relatively large, diverse and established international operations. Restricting or eliminating temporary accommodation or shipping of personal goods are the more common modifications made for short-term or training assignments but since these are more likely to be unaccompanied this is not surprising. Language and cultural awareness training may also be reduced or not offered at all.
Whatever the assignment type or business reason for the transfer international relocation often requires the collaboration of more than one function within the organisation and outside service providers. Coordinated and timely communication between all support services in both the home and host countries will enable relocation procedures to be monitored and developed to support the company’s evolving business needs.