In a just-released follow-up to its 2008 Flash Survey: Cost Savings Initiatives survey, ORC Worldwide, a global human resources (HR) consulting and management firm, reported that employers are engaged in ongoing plans to reduce costs in the international arena.
“In the continuing uncertain economic situation, HR managers struggle to deploy the right talent for the right assignment at the right cost – without adversely affecting the success of the assignment goals by cutting back on essential programs,” said Geoffrey Latta, executive vice president for ORC Worldwide’s international compensation practice area. “Many employers are in the process of reevaluating their expatriate programs with an eye toward taking strategic action.”
Respondents reported the following top areas of policy change: compensation and incentives (cited by 34.3 percent), localization (32.4 percent), housing (28.4 percent), cost-of-living allowances (26.5 percent) and home leave (22.5 percent).
To meet their budgetary goals, HR managers are taking steps such as reducing nonessential international travel, reviewing the need for each assignment before authorization and deployment, tightening control of policy exceptions, projecting costs, and others. “However, the changes appear to acknowledge the need to keep expatriates and family members satisfied with the overall package,” Latta added. “This trend is evident in the high percentages of respondents who, for example, are not restricting pre-assignment visits (and orientation programs) to expatriates only or eliminating incentive premiums.”
What industry has been hit the hardest by the recession? Not surprisingly, manufacturing has taken the heaviest blow. An analysis of participants revealed that the heavy machinery and vehicle manufacturing industry reported the highest percentage of companies decreasing their expatriate population. At the other extreme, the least affected industry is life sciences. The banking, finance, and insurance industries led in expatriate staff reductions.
“This year continues to be difficult for all business enterprises, particularly those with global operations, whose mobility programs are essential to the company’s long-term strategic objectives,” said Latta. “As always in times of economic downturns, HR managers balance the need to implement cost-efficient programs without jeopardizing their ability to mobilize – and motivate – skilled resources wherever needed.”