Managing an international program, specifically the spend related to the program, is likely to become increasingly complex in the immediate reality of global mobility.
With many assignments delayed due to the Coronavirus pandemic, as well as additional unanticipated costs such as extended temporary housing for current assignees, increased household goods costs, challenges identifying housing and schooling, etc., the landscape for global mobility over the next few months is uncharted territory.
However, within many industries, companies continue to have global mobility activity and are moving their employees to meet ongoing business needs. They are evaluating assignments based on the stage of the employee’s move or assignment and proceeding with caution, where freedom of movement is permitted. It is, therefore, unsurprising that global organizations are reviewing their mobility program spend to ensure they are in a strong position, especially amid concerns of a possible global recession.
International assignment spend is very complex, impacting everything from tax, to payroll reporting, to benefits/rewards, to productivity, to talent retention. On top of that, organizations are exposed to compliance risks if not managed properly. Average costs? They’re meaningless because there are so many variables to consider including the home/host country combination, length of assignment, tax treaties and whether the assignment is accompanied or not. Benefits typically expand or contract based on length of assignment, type of assignment (developmental, talent exchange, critical skills transfer, high potential) and often the location (hazardous, distance, emerging market).
A comprehensive program review is the best place to start when identifying cost savings. The biggest spend within long term expatriate assignments is tax, with typical taxes equal to 40% of the cost of the relocation. An effective tax planning strategy is vital to reduce this cost component.
Engage your relocation management provider or tax provider to review if there are any opportunities for cost reduction in the following areas:
For more information, check out our whitepaper on Reducing Your Spend on Workforce Mobility.