Time moves forward and things continually change, so maintaining balance requires periodic adjustments to current factors and situations. Micro or macro adjustments may be required depending on circumstances. Does that sound like some common sense life advice that's accurate for the world today? Yep, but it is also central to the balance sheet approach to managing expatriate compensation during an international assignment.
Well known and well utilized, the balance sheet methodology has been and continues to be used by the vast majority of global mobility programs when sending expatriates abroad on assignment. Over the years, short-term assignments (STAs), extended business travelers (EBTs), localizations and permanent transfers have encroached on long-term assignment (LTA) territory, but LTAs are by no means extinct or endangered (except maybe due to COVID-19)! They continue on, although in this ever-changing environment, what drives a specific assignment and what will be provided in support of the expatriate and family in the host location has been "responsive" to business needs, employee needs, and economic and global factors.
We have seen incentive elements (like "Foreign Service Premiums," large miscellaneous allowances, excessive housing allowances) get snipped back or eliminated to adjust to the cost-conscious environment. Maybe at the risk of assignment failure, we have seen language and cultural training programs questioned, reduced or eliminated to get the cost down. On the other hand, we have seen an increase in spousal career support. We are seeing mobility programs addressing duty of care clearly and prominently. As the article below from Mondaq points out, policy should be constantly in dialogue with the reality of the need to balance both sides of the equation. That means that "the ideal compensation package is one that is considered fair and attractive enough by the expatriate, however, it must also be cost-effective for the organization."
Ultimately, global mobility policies and practices should be designed to create solutions that are relevant, cost effective and that help achieve a company's strategic goals, while protecting both the employee and the company from compliancy issues related to employment, compensation and benefits, immigration and tax. As companies address a greater variety of employee and corporate needs, they are called to develop a wider variety of alternative policies which provide greater flexibility to accomplish what the business hopes and needs. But even in this pandemic, scenarios still exist where an LTA is the right call and where the balance sheet approach continues to be a valuable and relied-upon tool for supporting assignments. Are there any specific adjustments (adds or subtractions) to the balance sheet that you are seeing trending?
Not quite a year ago, maybe in the "heart of the pandemic," we were contemplating COVID-19's impact on expatriate management. Companies were grappling with constantly changing infection rates, location restrictions and lockdowns, and duty of care quandaries. That post received so many hits because everyone was looking to discover what others were doing and seeking advice on how to handle situations with their expatriates on assignment all around the world. As we make our way forward trying to make progress and maintain balance in a disruptive world, global mobility teams will continue to be valued as key contributors!
Consequently, the Balance Sheet Calculation was and is subject to constant adjustments in order to align with a more and more cost-conscious environment. In the last few years, companies either completely eliminated or reduced those elements of remuneration that exceed the basic allowances (such as the previously very common "Foreign Service Premium") or greatly reduced individual elements such as housing allowances or additional benefits, e.g. spouse support. This does, however, neither reduce the overall complexity of the approach nor change the limits outlined above.