20 ways to reduce the cost of your global mobility programme

To identify where savings can be made you first need to have a good understanding of your overall mobility programme costs. Cost estimates can help to control costs if they are used as part of the approval process for assignments. They can also be used to compare scenarios to identify the most cost-effective option. Comparing the actual costs of assignments with estimated costs can identify where costly exceptions to policy are being made.

Does your current set of policies address the mobility needs of the business going forward? Will your company need to adopt new types of assignment to mobilise talent and do you have policies that define them? Permanent transfers and virtual assignments, for example, may be cheaper than more traditional assignment types, although the latter may present compliance challenges that lead to unforeseen tax costs.

Do you use the same policy for all assignments of a certain length, regardless of their purpose? Costs can be saved by linking the generosity of benefits and allowances to the importance of the assignment to the company. Those considered critical for the success of the business should receive the most generous terms, whereas those initiated as part of a development programme or requested by employees for personal reasons, for example, do not require inducement and may be less generous.

While segmenting policies can lower costs, they can also confuse the business regarding how to match the right policy to the business value. Creating policy decision trees can help to ensure you choose the right employee for the right assignment with the right assignment package.

Is the way you calculate pay for mobile employees fit for purpose or flexible enough to save costs? Do you use the same compensation approach for all assignments? For example, while the local-plus approach to calculating pay does not guarantee cost savings in all scenarios, having it available as an option means you could use it for the cases when it does.

Individual exceptions made here and there can eventually accumulate into large costs – both monetary and administrative – for the company. Implementing a well-defined process for managing and authorising policy exceptions will reduce administration as well as direct costs, and tracking exceptions in assignment management software will help you identify areas of your policy that may need review.

Are you providing assignment-related benefits and allowances to employees who have been in the host country for five years or more? Avoid paying for long-term assignment benefits indefinitely by adopting a localisation policy.

In some countries, certain benefits attract lower tax if provided by the employer in-kind rather than through a cash allowance, but greater administration may be involved in delivering benefits this way. Look at your major host locations to see if the tax savings using this approach outweigh the administrative hassle and costs involved for your company.

Lump-sum and core-flex approaches may present a way to give assignees flexibility while reducing admin costs, but can bring a different set of challenges regarding duty of care, unexpected exceptions and tax compliance (which may increase the administrative burden you were trying to avoid). While these approaches have their advantages, make sure you’ve weighed up and addressed the potential challenges before going ahead with them.

If you have allowances defined as percentages of salary (mobility and location allowances being typical examples), consider setting a maximum salary on which these allowances are calculated, or a maximum allowance that will be paid. Cost of living allowances can also be limited by capping the amount of spendable income to which the cost of living allowance is applied.

These approaches tend to be more viable where a company has lots of senior-level employees going on assignment. If implementing benefits caps would be very challenging for your company, another approach to reducing benefits costs is to re-tier benefit provision (see point 10).

Do you provide the same level of housing support, for example, for all your assignees? Savings could be made by linking your provision to a lower or local allowance level for more junior employees, those on developmental assignments, or those on assignment in non-hardship locations. You could also consider moving all your existing allowances down one level in your provider’s housing table, or halving/removing mobility allowances for developmental assignments that aren’t business critical.

Do you pay your employees on short-term assignments the same per diem as you pay your business travellers? Daily rates for business travellers assume employees are staying in hotels with no access to catering facilities and may therefore be overcompensating short-term assignees living in apartments who can cook for themselves and eat more cheaply.

Do you use the same type of cost of living index for all your assignments? ECA publishes three different index types which vary in generosity depending on assumptions about the employee’s shopping habits. Costs can be saved by using cost-effective indices where appropriate, for example where the home and host locations are in the same region, for developmental rather than strategic assignments, or after the first year of an assignment when the assignee has adapted to local conditions.

While it can be challenging to explain to assignees why a reduction has been made to their salary, by not applying negative cost of living indices you are giving them more money than they need to maintain their standard of living, which can accumulate to large sums of money for companies with multiple employees in lower-cost locations. It also means assignees in relatively low-cost locations and those in relatively high-cost locations are not being treated equitably.

If you apply the cost of living index to a fixed proportion of net salary instead of using spendable tables then you may be indexing a larger portion of income than you need to protect purchasing power, particularly at higher income levels. Most companies who use spendable tables apply the cost of living index to total spendable, but further savings can be made by using index spendable, which is the (smaller) portion of income used to buy items covered by the index and excludes items like holidays, jewellery and other one-off purchases.

Currency fluctuations can generate lots of enquiries from assignees who feel they are losing out when the exchange rates move against them. The number of enquiries and time spent dealing with them can be reduced by having a dedicated exchange rate management policy in place.

Unnecessary costs can be incurred by falling foul of immigration, tax or reporting obligations. Have you suffered penalties before or are there areas where you know you may be falling short, for example international remote working or short-term business travel? Identify the largest areas of risk and consider investing in technology to help you track liabilities.

Tax can have a huge impact on the overall cost of assignments. Make sure that you maximise the many expatriate tax reliefs available in various countries, carefully structure contracts and allocate costs appropriately between home and host employers.

Our recent Global Mobility Now Survey found that two in five companies say diversity and inclusion are priorities but only one in four think they are successful in attracting a diverse range of mobile employees. The picture is slowly changing, but there is still some way to go; for example, less than a fifth of international assignees are female. By making international mobility within your organisation attractive and accessible to a more diverse group of employees, you can increase the pool of talent from which you’re selecting. Expanding your talent pool can indirectly reduce costs by reducing the need to incentivise reluctant candidates or make costly exceptions.

Is your GM team set up to deliver your programme in the most efficient and cost-effective way? Consider your operating model design and review the scope of work to be performed in-house, outsourced or moved to a specific department. Outsourcing can lead to greater service expertise and reduced HR admin, but it can also lead to slower response times. Your decisions may be affected by the extent to which you adopt technology (see point 20).

Even the smallest GM programmes can benefit from automating processes like salary calculations and cost estimates. Companies with larger mobile populations might want to consider assignment management systems that centralise and automate a wider range of processes and provide analytics to identify even more areas for improvement. Finally, virtual alternatives to on-the-ground services (such as home search/tours) adopted during lockdown may prove to be viable and cost-effective solutions in the long term.