International Assignments: Expatriates with Families Versus Empty Nesters
One of our team members recently reconnected with an old friend from her expatriate days in Hong Kong during the 1990s via Facebook. The friend is now on a subsequent expatriate assignment in Shanghai and, upon reconnecting through technology, they lamented about the differences from the 1990s to today and also about the experience as an ‘empty-nester’ versus a mother with school-aged children.
While in Hong Kong during the 1990s, the friendship blossomed because both women lived in the same 40-story apartment complex and their children attended pre-school and first grade at the Hong Kong International School. At that time, the social life of an expatriate in Hong Kong was rich, helped by the sheer proximity of so many people in the same situation – living in a culture that was unfamiliar, no extended family nearby, and a delightful degree of freedom afforded to mothers with live-in help. It was a recipe for developing deep friendships as expatriate wives and partners sought to make the transition as easy as possible for their spouse and their children.
Now joining her husband, a top executive running the China operations for a U.S. based computer hardware manufacturer, in Shanghai for another assignment, the friend is realizing a completely new and unique experience. Their two children are now college students and have remained in Texas. She now spends the majority of her time, “learning about the city, culture, etc., instead of concentrating on the kids’ schooling and other needs.” No longer tethered to an American school, she has found her circle of friends widening, meeting more people from other countries as opposed to the almost exclusive American-centered life in Hong Kong. And she noted that there are a lot of ‘empty nesters’ also on assignment. She refers to Shanghai the ‘New York City’ of China because of its large and varied population and, as a result, she has joined several expatriate groups, including the Shanghai Expatriate Association, Brits Abroad, and The American Women’s Club of Shanghai.
She and her husband live in a serviced furnished apartment, unlike Hong Kong, where they lived in a high rise with most of their personal belongings shipped over from the U.S., recreating as closely as possible the home they left in California. The ability to leave without a moment’s notice has provided her with the opportunity to travel frequently, whether it is to accompany her husband, visit her children in the U.S., or explore locally on her own. For this assignment, they also made the decision to keep their home in Texas instead of putting it into a property management program, providing a home base for the entire family, resulting in a genuine sense of comfort knowing that there they will return home once this assignment is completed.
Another significant difference between expatriate live today and that of fifteen years ago is the prevalence of the internet and the various forms of e-communication. In addition to traditional means like email and online chat, expatriate families also rely on Skype and Facebook, even though the latter is blocked by the Chinese government. Leveraging technology she comments that, ‘Staying in touch has never been easier.”
When considering the benefits package for an expatriate couple with children not accompanying, we do recommend that companies allow more than one home leave trip per year, and include student visits at least twice a year. Also, we always recommend that both the assignee and their spouse/partner have complete medical examinations before their departure, which should be a mandatory requirement in any policy, but is critical in these instances to ensure that the assignee and their spouse/partner have their medical needs met in the foreign location. We also suggest that companies include a robust Emergency Leave benefit, as aging parents at home may require immediate response from the boomer expatriate on assignment.
Over the past few years we have witnessed a decrease in the number of families offered long-term international assignment, primarily due to a conscious effort for the company to reduce costs. When relocating a couple rather than a family unit tuition payments are non-existent, housing and COLA allowances are smaller, household goods may not be shipped, and travel is less expensive. While we have not seen factual date to support a corresponding increase in sending older couples as opposed to younger couples, it seems quite clear that the mature expatriate can enjoy and relish the experiences of living abroad. Boomers bring a unique viewpoint, and if offered the opportunity, companies should not be concerned that expatriate life is for the young, but rather for the “young at heart.”
Posted on 10/9/2009 in Global Mobility | Comments (0)
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International Frequent Traveler Assignments: What’s Going On?
Over the past twelve months third party relocation management companies have seen an increase in the use of frequent traveler assignments, also referred to as “rotator programs,” by clients with global business needs. Reasons for the recent increase include the need to manage shorter-term knowledge transfers, the difficulty in convincing employees to move more permanently to certain locations, and in some situations, general cost containment. Technology companies that need to set up complex systems or train customers often adopt this type of assignment as do major international consulting firms and companies in the energy field who require experienced personnel to travel and stay for limited periods in hardship locations. This segment of the employee population is very unique in their willingness to travel constantly for work, and many companies continue to experience ongoing challenges in hiring the appropriate candidates for these specific assignments. In fact, a Deloitte Tax LLP survey claimed the most significant challenge in managing a rotator program was attracting qualified candidates, with the second biggest challenge being “legal, tax, and regulatory compliance issues in home and host location.”
We caution clients that complying with tax and immigration standards and requirements around the world is critical to maintaining a viable program, one that remains invulnerable to hidden costs due to unpaid tax bills or employees stopped at borders because their visa and/or work permit paperwork is incomplete. We recommend designing a relocation policy tier to specifically address this type of assignment, inclusive of details on how the corporation will provide extra support towards compensation (such as housing, auto, per diem allowances; foreign service premiums and hardship pay), health and welfare benefits, tax obligations, immigration prerequisites, and travel policy while on assignment. Outsourcing some components, such as paying per diems or processing expense vouchers, acquiring short-stay accommodations, and the tracking of the time and expense of these assignments, is quickly becoming a ‘best practice’ in the industry as clients streamline internal human resource functions.
Regardless of how the program is structured, we always remind clients that a critical protocol is to ensure that frequent travelers are tracking days in-country, days traveling, and days at “home,” enabling tax partners to properly gauge tax liabilities, and to forewarn of any impending entry or exit issues. We suggest that tracking travel is actually a good practice for any employee who travels abroad because whether they are on a rotator, commuter, short-term or long-term assignment, they will need to recreate a travel history for the year when preparing tax returns. We also recommend that the traveler ask authorities to stamp their passports with entry/exit dates, even if not deemed necessary, to facilitate this process at the end of the year.
Have you witnessed an increase in rotational assignments within your global talent pool, of that of your clients? What has your experience been in tracking these assignments?
Posted on 09/9/2009 in Global Mobility | Comments (0)
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Expatriate Perspective: A Tale of Two Cultures, My Experience as a Trailing Spouse
One of MSI’s Strategic Services Directors had the opportunity to interview a recently returned expatriate regarding her experiences as a trailing spouse who had lived in two overtly different locations, Guadalajara, Mexico and Geneva, Switzerland. Not surprisingly, Lori related that there was much that was dissimilar between the two cultures; however, there were many instances she cited in which the overall consequences of being a foreigner in a foreign land seemed to cross all cultures.
When asked to describe a few examples of the differences, the first that came to mind about life in Mexico versus life in Switzerland was that the Mexicans are warm, welcoming, smiling people, whereas the Swiss are closed and cold. Lori said, “Mexico is unruly and loud, while in Switzerland there are rules for everything – it's illegal to cut the grass on Sundays or during lunch hour, homes' windows must have curtains, hedges have to be trimmed a certain amount by a certain time of year, lest the neighbors report you to the police.” She went on to relate that the Swiss are known to take a good idea and legislate it. For example, there is a law dictating that chimneys have to be swept annually. In contrast, Mexico's laws, as described by this American expatriate, seem like mere suggestions to follow. Lori later intimated, “… all one needs is a pocket-full of pesos to remedy any transgressions south of our border...”
After living on these expatriate assignments for some time, Lori began to feel that there were many notable similarities of expat life in Mexico and Switzerland. For example, other expatriate wives were the dependable source of information, comfort and friendship, no matter where she lived, no matter where they were from originally. She summarized this bond by saying, “I will always cherish my international assortment of friends from far-flung places.“
Lori said that the old adage, “A picture is worth a thousand words,” held true when trying to describe how to have your hair cut, colored and styled when language is a barrier. She also fondly recounts that meals the world over are slower, and include more conversation, and more time-consuming preparation, than in the U.S. “Eating tamales at the home of the woman who spent two days preparing them, or eating a multi-course French feast in the home of a wine maker, is not an experience that can or should be rushed.”
She missed some conveniences of American life, describing an incident when she was eight months pregnant, trying to pay utility bills in person in Guadalajara. Lori joked, “…who knew that 'the check is in the mail' is a uniquely American phrase?”
Lori’s spirit of adventure carried her through these two disparate expatriate assignments. The challenge of learning new languages and acclimating to new customs helped her empathize with those going through, or about to enter into, these exciting experiences. As many trailing spouses have admitted, the opportunities afforded them because of their husband’s assignment abroad helped them grow and thrive beyond what they may have experienced had they stayed home. While there are myriad differences in world cultures, as Lori can attest, there are still many similarities when one is the stranger in a strange land.
Posted on 08/14/2009 in Global Mobility | Comments (1)
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What are Localization, Local, and Local-Plus Assignment Packages?
As organizations continue to expand their global presence, there is still a need to export corporate culture as part of a knowledge transfer to offices based far from corporate headquarters. The traditional long-term expatriate assignment of one to five years is still one of the most prevalent compensation methods to entice employees to move abroad. The expatriate receives above-base compensation elements and tax equalization assistance that ensures the employee remains on a relatively equal financial plane had they not moved and worked abroad. However, expatriate assignments are admittedly expensive for corporations to support, which has resulted in the creation of several different assignment types that bring the expatriate more in line with local employees.
Localization Packages are provided to employees who are moved abroad with some extra benefits, such as a household goods shipment, housing allowance, school tuition allowance, or tax preparation for the year of the relocation, that is decreased over time until the employee is on the same compensation and benefits level as a local hire. We have seen this type of relocation as an effective way to bring locals “home.” These individuals may be non-Americans who have studied or worked in the U.S. and are interested in returning to their home country, but have become accustomed to the lifestyle they enjoyed in the U.S. The Localization Package can help the employee with re-entry and re-acclimation, though, of course, this option is not exclusive to returnees, and is applicable to a variety of globally mobile employees. An important element of a Localization Package is that the employee intends to live permanently in the host location. They will be transferred to the host country payroll immediately upon the termination of any additional benefits, and social security and retirement shift to the host location as well.
A Local Assignment Package is more often offered to a non-native to live in the host location. In instances where the employee is the driving force behind the relocation, many companies will provide only a local package; whereas if the employer is initiating the move, the package may include additional incentives. We have witnessed an increase in this type of mobility package in regions where there is a considerably large expatriate population already present, as in Hong Kong, mainland China and Singapore, resulting in a more competitive hiring environment where a traditional expatriate package may not be necessary. In these countries, the expatriate population is largely comprised of younger people and the jobs are more technical in nature. This method is also more easily applied to non-Americans who are not subject to taxation in both the home and host country, or to Americans with incomes not significantly affected by their global tax liabilities. Employees under a Local Assignment Package may also remain in their home country social security system and other long-term plans during their time abroad, and by definition, an employee on a Local Assignment Package intends to return to their home country.
While the definition of Local and Local-Plus Assignment packages is fairly fluid, the distinguishing feature of a Local-Plus Assignment Package is that the company provides more above-base compensation benefits, such as a subsidy towards housing, school tuition, tax assistance and/or preparation, or some other negotiated element, that places the employee in a similar, but not equivalent, level with local employees. These employees also remain on their home country social security program, and do not intent to move permanently to the host location. The Local-Plus concept has become more popular as a way for companies to bridge the gap between a full expatriate assignment and a true local package that may not be attractive enough to entice the very best candidates for the position.
Even in today’s economic climate, companies continue to have organizational needs that require global mobility. As companies continue to expand their global presence we will see continued evolution of assignment types in terms of both traditional expatriate assignments and business travelers.
Posted on 07/15/2009 in Global Mobility | Comments (0)
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Host Country Tips for Promoting a Successful Global Assimilation
Whether large or small, companies in today’s economic climate must ensure that their global mobility program is as effective as possible, regardless of financial resources. Even as organizations reduce their overall volume and change the profile of some global assignments, the average cost of an assignment is still well over US$1,000,000. As such, it’s critical for companies to protect this investment, a process that begins with a successful assimilation into the host country.
In larger organizations, successful assimilation is supported by the company’s relocation program, through the inclusion of benefits including language assistance, cross-cultural training and settling-in services. In smaller organizations, the assimilation process is sometimes more challenging. With fewer financial resources and often no structured policies, host country managers are left to their own accord to work with employees and help them with their assimilation.
In working with your employees, regardless of your relocation program elements, here are a few suggestions which will help your global assignees as they assimilate into the new environment.
If your company has other expatriates in the area, set up a “mentor” program whereby one of the current expat families provides assistance to the new family. If there are no expats, then ask for locals to offer their assistance. Mentoring programs don’t just benefit the employee but also his/her spouse/partner and any accompanying children. We recommend initiating the mentoring as soon as the employee agrees to the assignment because answering questions upfront can help set expectations appropriately. When the assignee arrives in country, make sure that the families meet in person, and that follow up continues throughout the first few months of the assignment. You may even want to create a ‘tip sheet’ or ‘critical list’ for mentors to serve as a guide as you launch the program. Of course any mentoring should be complimented by regular follow-up by host country human resources as well.
Host country human resources can also conduct both general and assignee specific research on the area and present an information package with details about shopping (groceries and other sundries), medical care (general practitioners, dentists, etc who work with the expatriate community), how to open a local bank account, how to register with the consulate, how to use public transportation, and information about joining general expatriate associations and clubs. We recommend that the local human resource manager invest time in visiting expatriate schools and garner the basic information so that they can provide that information to their incoming assignee/family. We also suggest that they take a tour with a local agent to view potential expatriate housing, familiarizing themselves with the typical areas, styles and available inventories.
Organizations can also sponsor periodic lunches for expatriate spouses/partners to create a sense of unity amongst the group. The lunches are often modeled after ‘newcomer’ events and include basic networking and general introductions. If available, a human resource leader may also want to moderate discussions around challenges faced etc. providing a forum for those who are further along in their assignment to share their experiences.
While it’s always optimal to provide these services through a relocation management company, it’s not always practical, but it always important. Successful assimilation is a critical key to the overall assignment and the return on the investment for your organization.
Posted on 06/2/2009 in Global Mobility | Comments (0)
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No Room for Failure…Successful Global Assignments
In a recent post we introduced the topic of ensuring a return on investment from global assignments and how we can influence that return during pre-assessment and assignment preparation phase of the relocation. That is one-half of the equation. Repatriation is the second-half. A staggering 48% of all returning expatriates leave their company within 2 years of repatriation. And, the majority of those individuals are leaving to work for the competition. Companies are making an investment of over $1.25M in an assignees two- to three-year global assignment, but what are they doing to ensure that they remain with the company? Honestly, some are not doing anything at all.
Most companies focus the majority of their investment pre-assignment and on-assignment through housing allowances, education stipends, cost of living adjustments etc. Few organizations focus on repatriation and the ongoing work with the assignee that needs to occur around career path and their eventual return to the home country. Repatriation brings significant emotional concerns for the assignee and his/her family including adjusting to an ‘old’ workplace, the change in culture, the lack of ability to practice their learned global skills, and a return to normalcy. Global assignees have been treated to something special, and now it’s gone and often they do not or cannot reclaim that energy or feeling within their existing company.
What can we do to keep these people at our organizations and productive and happy? Ensure that the assignee has a plan from the pre-assignment through repatriation and include a decisive career path, which is committed too by both parties prior to initial assignment acceptance. And, offer professional repatriation services. Amazingly, with repatriation services, the 48% attrition rate noted above, drops to under 20%.
Global assignments aren’t just about the COLA and the housing allowance. With an investment this large, it’s critical to look at the emotional elements and ensure that your global assignees are set up for success. It’s the one way to ensure that you and your company will get a return on the investment.
Posted on 03/27/2009 in Global Mobility | Comments (1)
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Last Call for H-1B Visa Petition Filing!
It is a cruel irony that April 1 is both April fool’s day and the filing deadline for H-1B visa petitions for skilled foreign workers with scientific, technical or engineering skills. If you are the relocation specialist in your HR department, or the recruiter challenged by a tight budget, or the line manager in need of foreign workers with the skill sets critical to develop the new software product that will save the company, you’re doing a lot of deep breathing these days. That’s because you and thousands of your peers are in the final stretch of the race to the H-1B visa filing deadline.
If you haven’t begun yet, you must start today working with your legal counsel to file the required petitions for the H-1B talent you have identified. On April 1 United States Citizenship and Immigration Services (USCIS) will begin accepting H1-B petitions for the fiscal year 2010 H1-B quota (which begins on October 1, 2009). Last year USCIS received petitions far in excess of the 65,000 cap (of which 6800 visas are reserved for nationals of Singapore and Chile) on the first day of filing. Even in the current economic slowdown leading immigration law firms expect a similar tsunami of filings with the same result – a random lottery-type final selection process.
If any of your H-1B candidates holds a Master’s Degree or PhD granted by a college or university in the US, you have a little more breathing room, but not much. There is an additional quota of 20,000 visas for candidates who meet these criteria. Expectation though is that the additional quota number will be exhausted in the first few days after the 4/1 deadline as was the case last year. USCIS holds a separate master’s cap lottery and those not selected are given a second chance by being entered in the regular H-1B lottery.
In addition to the new technical talent recruited by your company, you should review the status of any students currently employed and working under F-1 employment authorization, known as Optional Practical Training or “OPT”. These employees need H-1B visas to continue working after their OPT work permits expire. In 2008, the Department of Homeland Security (DHS) granted “cap-gap” relief to F-1 students whose employers file H-1B petitions on their behalf before April 1. Under the DHS provision, qualifying students selected in the lottery can continue their employment under legal status even if their OPT permit expires in the “gap” before they are awarded their H-1 B visa on October 1, 2009.
If your company has registered for and is in good standing with the federal government’s e-Verify Program, some of your student employees may be eligible for a 29 month employment authorization giving them as many as three chances to apply for the H-1B visa. This applies only to employees with degrees in science, technology, engineering or math – the critical “STEM” skills in such short supply among American students who are also citizens.
Also be aware that any TN employees (from Mexico or Canada) beginning the green card process may have to convert to an H-1B visa in the interim.
So the race is on and the stakes are high as American companies seek to secure the critical technical skills we need to survive in a global marketplace ever more competitive. Don’t be caught napping and be made an April fool by the H-1B visa deadline!
Posted on 03/2/2009 in Global Mobility | Comments (1)
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Global Assignments…How Can We Ensure ROI?
We're talking about the dreaded "R" word in the U.S. – Recession. We consistently hear and read about the staggering numbers of corporate lay-offs and spending cutbacks. All the while, we're being asked by our organizations to ensure the ROI of the human capital we have in place and those that we still need to move around the world to support globalization. With the average cost of a two- to three-year global assignment now well over $1.24M, how are we going to ensure that the Company yields a return on investment?
Two factors with significant impact to the ROI of a Global Assignment that come to mind immediately are Pre-Assessment and Preparation, and Repatriation and Re-assimilation. We're going to tackle Pre-assessment and Preparation.
With an average $1.25M plus investment, it's a wonder to me why companies and assignees themselves are reluctant to make the initial investment in preparing for the assignment. Aside from the initial assessment based on cultural compatibility, values etc., which is critical and often undervalued, there are definitive benefits to cultural training that are quantifiable and yet, still ignored.
According to ERC (Employee Relocation Council) the top 4 reasons for an 'unsuccessful' international assignment are: Spouse's/Family's Inability to adjust to cultural/physical environment, Expatriate's inability to adjust to cultural/physical environment, other family related problems and lack of skills necessary to conduct business in the host country culture. These are all issues addressed through one critical assignee service, global effectiveness training.
For less than 1% of the total assignment investment, companies can provide assignees and their family members with global effectiveness training, which provides them with the critical information on preparedness, initial expectations and continued assimilation. This training and education doubles the success rate for an international assignment, so why don't more companies provide the service, or for those who do, why don't they mandate that their assignees take advantage of it?
Posted on 02/12/2009 in Global Mobility | Comments (0)
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Relocating to China? You will need to know…what is a FA PIAO?
Every year a new influx of non-Chinese expatriates are relocating into
China. Each of these newcomers will at sometime along the way come
across a surprising term. The "fa piao"
(
)!
To the unsuspecting ear, this seems like a word that belongs inside an
exclamation dialogue box in a Chinese Batman comic book. However, far
from being an expletive for pain, fa piao simply means “official
receipt”.
The fa piao system is used by Chinese tax authorities to calculate and
collect business taxes. A fa piao is provided by businesses to
consumers for the amount of services or goods rendered much like a
receipt.
However, there are some big differences between a receipt and a fa piao:
- Fa piao are issued in denominations, like currency
- Fa piao also generally do not itemize what the purchase was for
- Some
stores that deal a lot with expatriates will issue a receipt, others
will only give a fa piao. Some will provide both, and a few will not
give either (avoid those places)!
- Fa piao sometimes
include scratch off panels concealing authentication passwords that can
be redeemed for prizes in a lottery format (the Chinese government has
been creative in pushing the use of the fa piao to reduce tax evasion)
These differences obviously present problems for expatriates who need to submit receipts for goods or services purchased.
The best practice is to always ask for your own fa piao. Expatriates
are encouraged, just like Chinese citizens, to ask for and collect fa
piao so that they can earn tax breaks at the end of the year. One of
the biggest tax breaks you can receive is on the rent you pay. A fa
piao can help you avoid paying Chinese taxes on residential lease. Your
landlord has a responsibility to give you fa piao. This can mean
considerably savings. Have your DSP or relocation company get involved
in requesting, obtaining and storing the fa piao for your residence.
The fa piao for your residence should be a required document and should
be stored along side the signed lease agreement.
While at times trying to obtain a fa piao may make you feel like
swearing, but just remember that this foreign detail serves a worthy
purpose. Instead of getting frustrated, get creative -- and revel in
the fact that you can speak a little Mandarin and actually know what a
fa piao is!
Posted on 12/15/2008 in Global Mobility | Comments (0)
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