Compensation and Benefits for American Expatriates

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Compensation and Benefits for American Expatriates

• Sarah Brady
• Deanine Estes
• Shannon Johnson
• Kate Robertson

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Questions for our Expatriates and Experts

• Ms. Kate Robertson - Human Capital Advisory
  Services Division - Mercer
• Ms. Shannon Johnson Colgate Palmolive
• Ms. Deanine Estes - Proctor Gamble
• Ms. Sarah Brady - Chevron

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CAUTION

• What is an American expatriate?
• There is not one correct method to create a
  compensation package.
• There are more factors above and over what we
  have discussedwe choose the main issues.

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Failed Assignments

• Many expatriate assignments fail each year 30
• Family dissatisfaction
• Cultural issues
• Feeling of isolation from home company
• Financial dissatisfaction
• High costs associated with failures

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Overview

• Monetary Factors of Expatriate Compensation
• Non-monetary Factors
• Political Implications
• Current Events

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Monetary Factors Base Salary

• Base Salary
• Comparable to home country
• Serves as a reference point for establishing
  additional benefits
• Greatest point of flexibility
• Choose method
• Home country-based
• Host country-based
• Headquarter-based
• Base salary is the greatest point of
  flexibility. Companies set a maximum thats not a
  maximum, to be honest
• -David Kohtynski, Nike

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Monetary FactorsAssignment Premium

• Incentive persuade acceptance of international
  assignments
• Environmental or hardship premiums
• Mobility premiums

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Monetary FactorsTax Considerations

• Tax burden depends on location of assignment
• Solution Tax Equalization
• Simple and easily understood
• Benefits both employee and employer
• Employee will not receive the tax burden
• May be high cost to Employer

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Monetary FactorsPayroll

• Not placed on foreign locations payroll
• May accrue Social Security benefits
• Consider exchange rates and inflation

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Non-monetary FactorsFamily Considerations

• Assimilation programs
• Support programs
• Call centers
• Language programs
• Cultural awareness

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Non-monetary FactorsMedical Coverage

• 27 of expatriates are dissatisfied
• Employers provide full coverage
• 2 plans may be necessary
• Supplemental plans are necessary

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Non-Monetary FactorsHousing

• Housing and utilities allowance
• Goods and services allowance
• Cost of housing differences
• Expatriates discouraged from selling their
  American home
• American communities in foreign lands

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Non-monetary FactorsEducation

• Match American standards
• Tuition reimbursement

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Non-Monetary FactorsDays Off

• Travel Expenses
• Children
• Employees
• Rest and Recreation days

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Non-Monetary FactorsRepatriation

• Employees forfeit special compensation
• Re-assimilation problems
• Difficult to collaborate
• Resentment
• Solutions
• Re-assimilation courses offered
• Promotion offered
• Career development programs
• Capitalize on foreign experiences

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Political Implications Attack on September 11th

• Fear of domestic and international air travel
• Safety became top priority
• Travel restrictions to certain regions
• Extra approvals and precautionary measures
• After September 11th some companies curtailed
  travel and cautioned employees but there wasnt
  any huge exodus.
• -Wall Street Journal, 2002

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Political ImplicationsWar on Iraq

• Large impact on expatriates in Middle-Eastern
  region
• Fear for lives
• Opinionated with respect to business implications

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Current Economic Conditions

• Companies are decreasing number of expatriates
• Localization is a more cost efficient option

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Conclusion

• Many factors in sending expatriates abroad
• Every company compensates differently
• TOP PRIORITY MAKE THE EXPATRIATE HAPPY!!
• It is important to get an understanding of how
  your employees perceive the international human
  resources policy youve put in place and why you
  have relocated them. It is necessary to make sure
  they feel good about the programs that are
  underway to facilitate their international
  assignment. You want to know you are meeting
  their needs.
• - John Fadel, Deloitte Touche

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• QUESTIONS FOR YOU
• If you were an expatriate, what would you
  perceive as being the most important benefits?
  Why?
• Would you let the current social and political
  events affect your decision to go abroad? If
  not, what extra compensation would you deem
  necessary?
• Would you fear coming back to the U.S. after
  working abroad? What types of repatriation
  programs would you like to see implemented within
  your company?
• QUESTIONS FOR US?

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References

• Bibliography
• Anonymous. Worker safety is top priority.
  Business Insurance, Chicago, (Mar 24,
• 2003).
• Anonymous. Shell Oil, CIGNA winners of IFEBP
  awards. Employee Benefit Plan
• Review, Chicago,(Jan 1999).
• Balkin, Cardy, and Gomez-Megia. Managing Human
  Resources III edition
• Cairncross, Francis. Survey No Man is an
  Island. The Economist, 351. May 1999.
• Cummins, Chip. Expatriate Iraqis Say Oil Fields
  Should Be Opened --- U.S, -Backed
• Panels Embrace of Investment Isnt Surprise, But
  It Gives Hope to Firms. Wall Street Journal NY,
  (Mar 3, 2003)
• Feinstein, Selwyn. A Special News Report on
  People and Their Jobs in Offices, Fields
• and Factories. Wall Street Journal, (May 3,
  1998)
• Geber, Beverly. The Care and Breeding of Global
  Managers Training,29. July 1992.
• How U.S. Companies Are Responding --- Most Are
  Curtailing Travel and Cautioning
• Employees, But No Exodus Is Under Way. Wall
  Street Journal, NY, (Jun 3, 2002).
• Howe, Kenneth. Salary Negotiating Tips for
  Expat Assignments. The Wall
• Street Journal Interactive Edition. 2002.
• Hunt, John. Fewer Foreign Criticisms
  Companies, it seems, have been dealing with
• The complaints of disgruntled expatriates.
  Financial Times. London,