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A Perspective on Housing Norms for Global Assignees 04.26.2015 | Tim McCarney

In my day-to-day work with clients and other multinational companies, I’m often asked how to balance cost savings with the additional administrative burden created by enforcing certain program provisions based on a case-by-case analysis.

Let’s take the application of a housing norm as an example. A housing norm is a differential that is applied when a company provides an allowance for housing in the host country, but also deducts a specific amount deemed to be reasonable and customary expenses of living accommodations. It is assumed that a person has the expense of shelter no matter where they live; hence, the term “norm” is used to describe the deduction taken from the housing allowance.

By the same reasoning, the expenses of the home country housing typically disappear when a person goes on assignment, because he or she will either sell or rent out their home, or the company will assume coverage of mortgage and other home country costs.

But what if an employee is unable to sell or rent his or her home and/or the company doesn’t cover the costs of managing the home country property? When does it make sense to have a housing norm as part of a global assignment policy and when is it simply not worth the administrative effort to implement?

 

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Written by Tim McCarney

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