Expatriate Policies Shifting Focus: Mercer

November 17, 2003 (PLANSPONSOR.com) - Acknowledging both the monetary and family costs of extended international assignments, employers appear to be shifting their policies, according to a new report.

In fact, 39% of multinational companies have increased their use of short-term placements, according to Mercer’s International Assignments Survey 2003 of 220 multinational employers.

“Long-term assignments are costly, can be complicated to arrange, and frequently create difficult family issues for the expatriate employee,” says Sherrie Webster Brown, a Chicago-based consultant in Mercer’s International practice. “Expatriate families can find it challenging to adjust to a new location and culture. Short-term assignments are more project-oriented and tend to provide greater flexibility.” Long-term assignments usually are from one to five years.

Regional Regimen

Another new trend is the use of regional transfers, assignments within the same geographic region. The survey findings show that 43% of companies report having incorporated some flexibility in their policies for regional transfers, and 39% have introduced specific regional transfer policies.

More than 7 in 10 (72%) employer respondents believe language training is essential, and three-quarters of those firms (75%) provide home leave at least once a year. For short-term assignments, 6 in 10 companies (60%) pay for at least three trips a year. More than half (58%) provide additional return trips for employees with children in the home country, while 30% pay for children to attend boarding school in the home country.

Nearly half of the survey participants (47%) provide expatriates with free housing, although only 19% of North America-based participating companies do. Still, most do provide for the difference in cost between home and host country housing, and just over one-third of all participants (34%) help employees to sell their house in the home country.

Furthermore, the vast majority (91%) of companies compensate expatriates for differences in the cost of living between the home and assignment locations. Regarding employees on short-term assignments, nearly two-thirds (62%) provide an allowance to cover daily expenses - an allowance that includes restaurant meals, public transport, phone calls, and laundry.

On the other hand, most permanently relocated employees are paid according to the local compensation structure, even when relocated to less-wealthy countries. Fifty-seven percent of companies indicated that they transition the base salary to the local level and more than 74% of them do so immediately and totally.

Less than one-half of the participants (45%) include spouse support in their international assignments policy, while one-fourth (24%) handle spouse issues on a case-by-case basis. Almost 4 in 10 companies (39%) consider career counseling an important part of spousal support.

"Hard" Shifts

Mobility and hardship premiums - which help to compensate individuals who are assigned to difficult locations - continue to play an important role in encouraging employees to go on assignment, according to the report. Most (78%) survey participants said that, at present, they do not intend to change mobility premium levels. However, more than one-fifth (21%) said they had already decreased mobility premiums to and from and North America in the past three years. Just 11% of participants (but 21% of US firms) expect hardship premiums to increase for assignments in the Middle East. Nearly a quarter (24%) expects a decrease for placements in , and 13% expect a decrease for assignments in Eastern Europe.

Mercer's International Assignments Survey 2003 costs $1,250. More information is available at www.imercer.com or by calling 1 800 333 3070.