Managing reward for international assignments

Author: Andrew Menhennet

Summary

• Before deciding on its approach to reward for international assignments, the employer should think about the types of assignments it will be using in the future. (See Types of assignment)
• The organisation may also find it useful to differentiate between assignments by duration as well as by their value to both the organisation and the individual in determining its policies. (See Value of assignments)
• The two most common overall approaches to reward for international assignments are home-based and host-based pay and benefits packages, but there are a number of possible variations to these approaches. (See Determining an overall approach)
• The use of incentives in expatriate packages has declined in recent years, but some organisations offer a "location" or "hardship" allowance designed to compensate for a different standard of living in the new location. (See Incentives and hardship allowances)
• A relocation package normally contains a number of core elements, including a pre-assignment trip, travel to the new location at the start of the assignment, shipment of goods and temporary accommodation while the assignee finds a longer-term solution. (See Relocation)
• On assignment, the typical expatriate package will include a number of core benefits and allowances, for example help with accommodation, school fees and home leave. (See On assignment: allowances and benefits)
• Health insurance is a particularly important benefit for the organisation to get right and is likely to be a primary concern for assignees. (See Healthcare)
• Regulation, taxation and practical issues surrounding pensions make this an area where organisations will need to research and plan their strategy and practice. (See Pensions)
• To ensure that taxation of an international assignee is handled correctly, it is highly likely that the employer will need to hire the services of a professional tax advisory firm. (See Tax)
• Support with the process and costs of immigration requirements is usually provided by the employer, although there may be some restrictions on the extent of support provided to the assignee's partner. (See Immigration support)
• Employers should not neglect planning for the assignee's return to the home location at the end of the assignment and should consider the financial support needed for repatriation. (See Repatriation)
• Benchmarking can help employers to check that assignment packages are both competitive and cost-effective, as international assignments are an area where costs can easily become difficult to control. (See Benchmarking the global mobility package)
• Organisations should consider the non-financial aspects of the overall employment package for international assignees alongside the pay and benefits offered. (See Total reward)

Overview

There are many different policy options for organisations considering how to structure a remuneration package for an overseas assignee. The objective must be to find the package that both is attractive to the employee and represents a fair deal for the employer. However, no two assignments are alike. The country from which the employee is being transferred at the start of the assignment (the "home" location), the country to which the employee is being assigned (the "host" location), the expected duration of the assignment and the employee's personal circumstances will all have an impact on what is attractive to the employee and represents good value to the employer. The chances are that an organisation will need to use more than one approach to achieve the best results across its international assignment population.