CapRelo Blog

Controlling Global Assignment Costs

Posted by Amy Mergler on Thu, Dec 06, 2018

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Finding a balance between employee support and cost management when overseeing global assignments is a challenge, but it can be done. Most importantly, it's imperative to properly plan for assignments and actively manage expenses.

No two global assignments are identical, so rather than creating a one-size-fits-all solution, you may opt to evaluate some custom-fit solutions that take the bigger picture into consideration to create opportunities to save. In addition, you may consider these measures to help manage and reduce global assignment costs.

Assignment Cost Control Measures

  • Establish goals and select the appropriate candidate for the assignment. To avoid the cost of a failed assignment, one of the most important steps is to properly plan your business goals and objectives to screen candidates and identify the best talent for the assignment. Candidates can be assessed not only on their job skills, but also on their ability to manage and adapt to a different culture and environment.
  • Review your assignment program regularly. There may be areas in your program where minor adjustments can be made to reduce costs without negatively impacting employees. For each possible adjustment, analyze how it will impact the relocation process and how it will affect your employee's productivity during the assignment.
  • Regulate cost-of-living allowances. There may be a significant difference between the costs of living in originating and host countries. Set allowances that are applicable to their respective locations, and recalculate cost-of-living subsidies regularly to reflect financial fluctuations in the host country's economy. Use a salary cap when calculating the COLA to further contain costs.
  • Reevaluate host country housing guidelines. To control housing expenses, employ more conservative standards to determine guidelines for host housing using the most current data available. Remember to review and adjust the guidelines regularly to account for local real estate value and currency fluctuations.
  • Lower house-hunting trip reimbursements. International airfare, transportation at the location, as well as lodging and food can be expensive. Reduce these costs by limiting the number of days allocated for these trips. Unless necessary for school enrollment, limit trips to the employee and spouse/partner only.
  • Reassess the costs of language training, cultural training services, home-finding and familiarization trips. Though these services are often crucial to an employee's successful assignment, you may be able to do some research and compare providers to determine if there are more cost-effective ways to provide them, such as providing web-based language training. Pay attention to service quality and client satisfaction to ensure you make both cost-effective and responsible decisions.

Managing Global Assignment Costs

Topics: global assignment costs, managing costs, global assignments, global mobility, global relocation

Understanding Global Assignment Costs

Posted by Amy Mergler on Fri, Nov 16, 2018

Plane flying above skyscrapers-cropped

Confidence in the economy is rising, and with it, the number of companies seeking to establish, strengthen or expand their positions globally is increasing. Often, this involves expatriating talent to fill key positions in other countries. Some companies will also provide global assignment opportunities to expand their employees' knowledge and skills.

Whether your company is well versed or new to managing global assignments, the
cost of them can be daunting. However, when appropriately planned for and managed, global assignments can positively impact a company’s global business goals.

Sending an employee and a family of three on a three-year global assignment could
cost in excess of USD $1 million. So, it’s not surprising that many global companies
believe traditional overseas assignments are cost-prohibitive. Some companies have
reduced, frozen or even eliminated their global assignment programs. However, to
remain competitive, companies still need to place the best talent at the appropriate
locations, and often that talent isn’t available without a global transfer. This is when
the proper management and oversight of relocation costs becomes imperative.

Understanding the Costs

If you’re planning global assignments, there are ways to scale back costs without
compromising operations or impacting employee productivity. Finding that balance
between employee support and cost management to successfully oversee global
assignments is a challenge, but it can be done. Below is a list of some of the expenses
businessman hand working with new modern computer-croppedassociated with a global assignment:

  • Candidate Assessment – Conducted by the company to determine if the employee is the right candidate for the global assignment.
  • Pre-Decision Assessment – Aligns the individual needs of the employee and the employee's family with the business goals of the assignment.
  • Immigration – Obtaining the appropriate documentation for the assignment. The reason for the assignment will dictate the appropriate visa type.
  • Tax Implications – Determining the tax implications of the assignment and responsibilities of both the company and the employee. 
  • Tax Assistance – Providing the employee with tax assistance, which could include consultation; preparation (for both home and host countries); filing (for both home and host countries); tax equalization.
  • Host Country Housing – Providing reasonable and customary rent and utility costs for the employee's housing in the host country according to regional guidelines based on family size and location.
  • Allowances – Ongoing payments made, separate from base salary, during the assignment: 
    • Cost-of-Living Allowance (COLA) – An allowance or differential paid to the employee for similar goods and services in the host location that they have int he home location based on family size and salary. Intended to cover costs to purchase host country goods and services over those from the home country.
    • Transportation – An allowance for a car for the duration of the assignment, the amount of which may vary by location and family size.
    • Hardship – An allowance paid in addition to salary and COLA for assignments in locations designated as a hardship for the employee based on factors that include potential violence, incidence of disease, medical care quality, geographic isolation and availability of goods and services.
  • Miscellaneous Expense Allowance – One-time payment made, separate from base salary, intended to cover expenses not expressly covered in the Letter of Understanding, like renter's insurance, obtaining a new driver's license, immunizations, taxis, etc.
  • Cultural/Language Training – Provided to the employee and the family to assist in understanding  the host country culture and language.
  • Home Finding and Destination Services – Locating housing in the host country, as well as registering with local authorities and setting up accounts.
  • Departure Services – Home sale, property management, lease termination, etc.
  • Global Household Goods – Transporting (via land, air and/or sea) or storing household goods and personal effects.
  • Temporary Living – Fully furnished housing at the destination location.
  • Repatriation – Return of the employee to the home country at assignment completion.

Managing Global Assignment Costs

Topics: global assignments, global mobility, managing costs, global assignment costs

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