Mobility Cost Management: Make Policies Work
Mobility leaders are constantly challenged to minimize program costs, yet reducing benefits and cutting costs alone could impair a program’s efficacy.
As companies move employees across borders to enable global growth, talent mobility has become a key contributor to an organization’s overall success. At the same time, mobility leaders are challenged to constantly minimize program costs. The first article in this two-part series demonstrated how global mobility leaders can optimize costs by looking at their mobility program holistically; this article explores additional steps global mobility leaders can take to employ a more strategic approach to cost management.
Use Policy Segmentation
While most mobility leaders agree that one size does not fit all when it comes to policies, companies can benefit from reviewing and possibly rethinking their approach to policy segmentation. Mobility policy suites that are segmented by move type (permanent or temporary), time (long-term or short-term assignment), or level (employees’ jobs or salary levels), may not be maximizing their mobility return on investment.
Segmenting policies to better align with business needs is an increasingly common approach to ensure cost efficiencies. Most assignments and transfers have unique objectives and bring different value to the business. For example, an increasing number of junior employees are taking and initiating transfers to new locations to develop their leadership skills. Using a long-term international assignment policy for every assignment may mean companies are passing by an opportunity to save.
Segmentation allows companies to line up their mobility strategy with the needs of the business and can lead to assignments that are more cost effective. Strategic assignments considered critical to the business can have a more supportive policy recognizing the value of the assignment to the company. At the same time, employees whose careers stand to benefit from taking a transfer or assignment can be offered packages that cost less and provide less company assistance with the understanding that the experience will benefit them in other ways.
Mobility leaders need to consider several factors before deciding that policy segmentation is right for them, including:
- Understanding how mobility enables their companies’ overall business objectives.
- Determining how assignments fit into their company’s overall talent management program.
- Knowing what types of assignments exist today and if there are gaps to fill.
- Deciding how they want their policies to stack up against their industry or peer group.
- Identifying what stakeholders need to be involved in any proposed changes.
In addition, it is important to engage with Talent Management to ensure the mobility program is integrated into the greater career management process. This way employees seeking assignments to develop their careers will have the greatest chance of success. This will help identify and realize potential career benefits.
Policies should adhere to global regulations while remaining responsive to local nuances. Depending on the size of the program and volume of global activity across countries, it may make sense to develop local or regional policy addendums which can allow the program to take advantage of country-specific practices. For example, a global policy doesn’t need address having a car and driver if there are only a few countries where this would be advisable; local country practices may also have alternative solutions which can be detailed in a policy addendum.
When global mobility leaders talk about localization they are typically referring to two types of scenarios. The first is hiring and transferring employees across borders with local terms and conditions. In this case, while the policy structure is designed for a global permanent transfer where employees move to host country payroll and benefits, some companies may make policy concessions to help the employee and accompanying family settle in.
In the second scenario companies take assignees who are currently on assignment in the host country and transition them off their assignment benefits and move them to a local compensation structure. Companies often address this second type of localization on a case by case basis; however, establishing a process and policy to address this transition will create consistency and keep costs low by ensuring that as the assignment ends, assignees are either being repatriated or shifted to more cost effective local terms and conditions.
In addition to leveraging local polices, companies can consider incorporating talent development activities designed to enhance local talent pools. Companies are known to use this strategy because of outside economic pressure but in markets where local talent is available this is another strategic way to manage mobility costs.
While it is critical to manage compliance and risk issues, it is equally important to give flexibility to both employees and the company to maximize cost management opportunities. Policy segmentation offers the business flexibility and it’s a good way to respond to business needs while shoring up the integrity of the mobility program overall. In addition, a core/flex policy approach, where policies contain a certain set of required provisions with others that are optional, can offer further cost savings.
In some programs the business selects the optional provisions and managers control costs while still ensuring the core compliance elements are covered. Other companies allow their employees to choose their benefits. These programs typically have required services or benefits and then allow employees to elect certain benefits within a predefined framework. This approach ensures overall cost can be controlled while allowing employees to meet their personal needs.
Managing costs strategically can create more opportunity than cutting benefits or reducing allowance amounts. By looking across the mobility program global mobility leaders can identify ways to optimize and increase efficiency, while managing costs effectively without impacting the underlying value of the program.