• Some 44% of multinational companies increased the number of international assignments from subsidiary to subsidiary in the past two years.
• The percentage of female expatriates has increased significantly in the past five years, to 13% from 8% globally, and to 15% from 11% among North American companies.
• Short-term assignments are widely used, but only 56% of companies have a policy governing such assignments.
• 60% of companies provide cross-cultural training, but the critical process of integration once in the host country is typically left to the employee.

Multinational companies are significantly increasing the number of international assignments, but the effectiveness of their expatriate policies varies, according to a new survey by Mercer Human Resource Consulting, the global leader for HR and related financial advice. Some 44% of multinational companies report an increase in the number of international assignments to and from locations other than the headquarters over the past two years, according to Mercer´s 2005/2006 International Assignments Survey. The survey provides the latest practices and policy developments in employee mobility management among approximately 200 multinational firms worldwide, and across a variety of industries.

Much of the increase in the number of international assignments is due to the widespread use of short-term placements which have become more prevalent over the past few years. "Short-term assignments are popular because they are generally more cost-effective than long-term assignments and they allow companies to transfer skill sets quickly and easily," said Yvonne Sonsino, a principal with Mercer in London. "However, for short-term assignments to be successful, companies need to develop well-defined policies to manage costs and limit risks.

According to survey findings, while the vast majority of multinational companies (84%) place employees on short-term assignments, only about half (56%) have a formal policy for this type of assignment.

"When employees on short-term assignment arrive at their new international posting, management and colleagues in the host country often find it difficult to invest the time to help them understand local business conditions and culture. There needs to be careful management of the process to make sure both sides get the best out of what can still be a significant corporate investment and a significant personal commitment from the employee involved," explained Ms. Sonsino.

Female Expatriates 

Mercer notes that the number of female expatriates has increased significantly, to 13% of such assignments in the most recent global survey, up from 8% five years ago. North America and Asia/Pacific lead this trend. Female expatriates now comprise 15% of North American companies´ expatriate population, up from 11% five years ago. Females now account for 14% of the expatriate assignments of companies based in Asia/Pacific, compared with 9% five years ago.

The most dramatic change in the percentage of female expatriates has occurred among companies based in Latin America. Five years ago, only 1% of their expatriate employees were female, but today the figure is 11%. Companies in Europe now lag other regions, with females accounting for 10% of their expatriates in the most recent survey, compared to 7% five years ago.

"Clients are telling us that diversity is among the big trends in HR management and gender diversity is part of this trend," said Ms. Sonsino. "In many regions of the world, women are more and more eager to develop professional careers and their competencies are becoming more and more recognized. In expatriate programs management, the increased presence of expatriate women may strengthen the need for well-defined spouse support policies."

Expatriate Allowances and Incentives

Mobility premiums - cash incentives to compensate individuals for the inconveniences of being transferred - continue to play an important role in encouraging employees to go on assignment. Only 22% of companies report they do not provide mobility premiums as an incentive for international assignments. However, far more companies provide these premiums systematically for long-term assignments (73%) than for short-term assignments (31%).

"Financial incentives can help encourage employees and their families to move. Unsurprisingly, it´s more challenging to get employees to accept long-term assignments than short ones, especially to difficult locations," explained Ms. Sonsino. "Also, short-term assignments are more likely to be perceived as an integral part of an employee´s career development."

According to the survey, more than half of the participating companies grant the same mobility premium when transferring employees from one country to another within the same region (intra-regional) as for a transfer from one region of the globe to another (inter-regional). 

Hardship premiums continue to be a necessary component of expatriate packages, particularly for long-term assignments, and close to three-quarters of the companies surveyed compensate employees for differences in living standards between the home and the host location.

Support Before and During an International Assignment

The Mercer study shows that many multinational companies provide programs that help expatriates and their families adjust to a new host location. Some 72% of the survey participants provide language tuition and 60% provide cross-cultural training.

Gareth Williams, a worldwide partner in Mercer´s Chicago office, said, "One of the main reasons that assignments fail is because expatriates and their families cannot successfully adjust to their new environment. Companies are recognizing the importance of providing support in advance of employee moves. Investment in language and cultural training, for example, can dramatically improve the chance that the international assignment will be a successful one."

According to survey findings, 60% of participating companies (and more than 75% of North American and European companies) provide practical support for international assignments. This may include assistance with moving arrangements, visas, visits to the host country, consultation with a tax advisor, and interim accommodations.

However, employees and their families are often on their own when it comes to integrating into the host community once they arrive at their new posting. Less than one-third of companies surveyed indicated that they facilitate introduction to other expatriates in the host location, for example.

"Although companies realize the importance of integrating employees and their families into the local community, lack of time and cost constraints often force them to concentrate their efforts on more practical, day-to-day employee support," explained Mr. Williams.

Repatriation and Post-assignment Support

Expatriates are often key employees of an organization, and proper repatriation or end of assignment process is a crucial part of employee mobility management. According to survey findings, repatriation terms are included in the international assignment policy for 60% of the companies.

As part of the measures taken to facilitate reintegration of expatriates back to their home country, about one-third (34%) require that employees take home leave and visit the home office before they finish their assignment, and slightly more than one-quarter (27%) regularly update employees on home country developments.

Localization: When an expatriate is transitioned to the status of a local employee

One of the more sensitive human resource management issues arises when an employer decides to convert an employee from an expatriate package to local employment status in the host location. This situation generally occurs when a long-term expatriate assignment takes on the characteristics of a permanent assignment, and it can be sensitive because an employee may receive less compensation overall than they received as an expatriate employee. Only about half the companies surveyed have a formal policy for this localization process, with the remaining companies handling the situation on a case by case basis.

Other findings

Other Mercer survey findings related to trends in international assignment programs include:

• Globally, 42% of companies provide expatriates with free housing, but for North American companies, the figure is just 22%.
• Some 50% of companies include spouse support in their international assignments policy; 11% do not have a policy but are developing one, and 12% handle spouse issues on a case-by-case basis.
• The overwhelming majority of companies surveyed (95%) grant home leave. About three-quarters cover travel costs to the home location, 14% provide a budget or flat amount that the employee can use for travel to any location, and 7% provide a budget or flat amount for travel to the home country only.
• While the majority of companies surveyed believe they have a general understanding of the cost of their international assignments, only a few are in a position to measure the specific expense, resulting value, and, ultimately, return on investment from such postings.

Notes

Short-term assignments usually last up to one year. Long-term assignments usually last from one to five years.

Mercer also produces Cost of Living and Quality of Living survey reports covering about 250 cities worldwide. For more information, visit www.imercer.com or call 800 333 3070.

Mercer´s 2005/2006 International Assignments Survey costs $1,080. More information is available at www.imercer.com or by calling 800 333 3070.

Mercer Human Resource Consulting is the global leader for HR and related financial advice, products, and services, with more than 15,000 employees serving clients in over 190 cities and 41 countries and territories worldwide. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago, Pacific, and London stock exchanges