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Saving costs in a world of economic uncertainty

Jun 13, 2017
Lisa Johnson, Global Practice Leader, Crown World Mobility, explains how to reduce costs in global mobility



Cutting costs is a perennial topic in global mobility but with so much economic uncertainty in 2017, it is rapidly becoming the biggest talking point in the industry this summer. For those running global mobility programmes, however, the question is where to start.

There are always at least two ways to look at cost savings – one relates to focussing on policy and reducing or eliminating employee benefits within a provision; the other is from a strategic perspective and has to do with the company's overall approach to moving employees.

For any cost savings decisions, the question to ask first is: what is the company's attitude to mobility? Does it focus on the employee experience and do employees assume that they will need to move as part of a global organisation, or is it a rare event? Does the business move people to hardship locations? Does it have an employee population that is internationally experienced or new to mobility?

It will also be important to consider whether there are business needs being supported by mobility that are difficult to meet due to the unique skills required, challenging locations or the candidate pool available.

Here are a few tips to implement cost savings:

  • Reserve the traditional home country balance sheet long-term assignment policy for VIP or high-payback assignments and use a host location-based compensation approach for standard moves;
  • Require furnished housing to be the default approach where available and use HHG shipments only for exceptions or VIP moves;
  • Centralise assignment data gathering so that costs and exceptions can be tracked and analysed. Too often companies approach cost savings exercises without good data or an understanding of the ramifications of proposed changes. Unintended consequences or changes can turn expected savings into higher costs.

For many corporations, mobility programmes have already moved away from the cost-heavy long-term assignment approach in an age when assignees needed big incentives to work away from their home country.

These days millennials see working abroad and experiencing different cultures as a perk of the job and a natural part of their development; and they are quite happy to look after many of the details themselves.

Keeping employees tied to their home country compensation and benefits, for instance, is expensive and does not reflect career paths that are less about ‘out and back’ and more about following business needs, wherever they are.

Less expensive approaches to policy include:

  • Expat lite - a less robust version of the traditional policy;
  • Local plus – using host location compensation and benefits as a base and providing a few benefits where living as a local is unrealistic for a temporary assignee; 
  • Local-to-local - the transfer of an employee from one location to another with relocation support, but not on-going assignment benefits, similar to an international transfer; 
  • Localisation - often the transition to local status at the end of an assignment in lieu of repatriation or the transfer of an employee to a new location to live as a local, depending on who is defining the term; 
  • Core-flex – the most popular of flexible assignment policy approaches, core-flex offers a core set of policy support for all assignees, such as compliance related support (immigration, tax), basic relocation support and some benefits relevant to meeting corporate values (such as cross-cultural training) and then allows for flexible options based on employee needs or some other driver; 
  • Managed lump sum – while a pure lump of cash is rarely offered in international moves as it leaves too much room for error for the transferring employee, family and the company, a managed lump sum is increasingly popular for early career assignments. The relocation and compliance elements are managed by a relocation company while leaving the employee with a flexible assignment allowance (lump sum) to use as needed for other expenses.
One thing is clear, the world of global mobility is evolving, changing every year to reflect the world we live in and the budgetary restraints that go with modern business. It is unlikely that cost saving will be knocked off the agenda any time soon.

Lisa Johnson

Lisa is Global Practice Leader, Consulting Services, at Crown World Mobility, a global company which helps corporations manage global talent. She has more than 18 years of experience in the industry and has been widely published. Born in Japan, Lisa has also lived and worked in Spain and is now based in New York. 

 

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