The number of employees on international assignments has doubled over the last three years as part of the continuing trends towards globalisation, according to a survey conducted by Mercer.
Mercer’s 2008/2009 Benefits Survey for Expatriates and Globally Mobile Employees is the largest of its kind and covers 243 multinational companies world-wide, including over 94,000 expatriates (compared to 50,000 in 2005/2006).
Mercer conducts the survey every three years to provide an overview of expatriate policies in large multinational firms.
According to its report, 47 percent of companies surveyed said they had increased the deployment of traditional expatriates (employees on 1-5 year assignments) and 38 percent reported an increase in ‘global nomads’ (employees that continuously move from country to country on multiple assignments).
“The growth has been driven by companies’ desire to be globally competitive. To successfully launch new ventures abroad and gain advantage over competitors, companies generally bring in their own experts from other locations to lead projects on a short term basis, rather than rely on local talent,” said Robert Lockley, principal in Mercer’s international business.
“Increasingly these are corporate global nomads, seasoned professionals who move from project to project within the same multinational company. They bring solid experience in transferring knowledge, and a consistent approach.”
Mr Lockley continued: “Multinationals highlight that international assignments are part of their global leadership development programmes. Gaining experience in various geographies is becoming an essential step on the career ladder of international firms.”
The majority of companies surveyed (86 percent) consider benefit provision for expatriate employees a medium or high business priority.
However, 26 percent admit to having no overarching policy for providing expatriate benefits.
According to Mr Lockley: “Establishing an international policy is essential to stay competitive, maintain geographical consistency and control costs. Even against a backdrop of economic uncertainty there is still competition for the best talent. Companies that are lax in this area will lose out.”
When asked to rate the success factors for their expatriate benefits scheme, survey participants ranked supporting the company’s business and HR strategies the highest (63 percent).
Being valued by employees and remaining cost effective were also deemed important factors (both 59 percent).
However, the survey found that nearly two thirds of companies (64 percent) have no specific procedures in place to measure the success of their expatriate benefit programmes.
“Creating and maintaining benefit plans for expatriates is an expensive and complicated endeavour. By failing to assess the value of these programmes to the company or the employees themselves, many organisations miss the opportunity to improve their benefit offering and sharpen their competitive edge,” said Mr Lockley.
The majority of companies surveyed keep their expatriates in host or home country retirement schemes. However, 32 percent of companies offer international plans – an increase from 23 percent in 2005.
Close to three-quarters (73 percent) of companies with an international plan restrict eligibility to certain expatriates who cannot be kept in the home or host plan.
“More expatriates are going on multiple assignments across several geographies. Over time it becomes difficult for companies to justify the link to the office in the expatriates’ original home location when they have not worked there for many years. Also, swapping an employee from host scheme to host scheme is often an unattractive option,” said Mr Lockley.
“In other cases expatriates move to locations where retaining them in the home country pension scheme creates compliance and regulatory problems.”
He continued; ”In these circumstances, setting up an international scheme is often the most attractive option for multinational companies that want to provide pension benefits to their globally mobile employees.”
The majority of respondents provide medical benefits for their expatriates, whether via international plans or via home- or host-country plans.
However, more than 80 percent do not consider local social security provision when providing these benefits.
Mr Lockley said: “Multinational companies can achieve considerable cost savings by tailoring their medical plans to integrate with local social security provision. Although the data suggests few have yet to implement such plans, we see a growing number of clients actively exploring this approach.”
The majority of respondents cover their expatriates for death benefits (86 percent) and long term disability benefits are provided by more than three quarters of participating companies (78 percent).
North American companies are more likely to offer benefits at a cost to the employee, typically by way of deductibles or co-payments.