Are you looking to expand your business globally and send employees on expatriate assignments? It’s important to choose the right type of assignment for your global mobility program. In this blog, we’ll explore the best types of expatriate assignments and how they can benefit your global mobility program.
Global Mobility Assignments Explained
Finding the right person for an open position can be difficult. When you find that perfect fit, you’ll do what it takes to get them to their new location. However, relocating someone internationally can be a difficult task without proper guidance and support. Even if your global mobility program offers cost of living allowances, ships their household goods, or helps them find an amazing new home, expatriate assignments often go wrong over time.
Housing, cultural adjustment, family adjustment, and a new work environment can all lead to poor productivity. This is especially true if the assignment takes someone far away from their loved ones for an extended period of time. Therefore, it’s important that you understand the advantages and disadvantages of the most common types of expatriate assignments: long-term, short-term, and typical business travel.
Some global mobility programs choose to use just one type of assignment, or include multiple different options. This decision often depends on the employee and the position available. Either way, finding the best fit for both your company and your employee will ensure both are successful long term.
What is a long-term expatriate assignment?
There is no single definition of what constitutes a long-term expatriate assignment. However, a long-term expatriate assignment generally has a 12-month to 36-month duration. Some companies may define a long-term expatriate assignment as work that lasts a minimum of two years but not longer than five years. One of the most important things to note is that this type of assignment is not a permanent transfer; the employee intends to return to his or her home country after the long-term assignment is complete.
Common relocation benefits provided to the employee on long-term assignment may include: immigration support, tax assistance, pre-assignment trip, household goods shipment(s), allowance payments, final move trip, temporary housing, cultural training, language training, spousal assistance, medical insurance, housing support, tuition reimbursement, and more. It’s best practice for the level of support offered to the employee to be commensurate with their experience, tenure, salary, and family size. However, the company may take geographical factors into consideration. For example, if the public school system is insufficient in the host country, assignees may receive tuition support for private schools. Due to the multi-year arrangement, it’s common for employees to secure a personal rental lease and bring their own furniture and furnishings from their home country.
The benefits of expatriate work go both ways. You have the opportunity to dispatch your best talent to international partners and help them build and grow their international business. Additionally, your workers have the opportunity to expand their knowledge of different cultures and markets and enhance their careers with overseas experience.
The specifics of each long-term assignment vary greatly depending on industry and location. In the past, it was important to instill the culture of the parent company into the foreign entity and help drive revenue growth in the overseas location. Today this still exists, but the opposite is also true. Overseas workers are being deployed to the parent country or other countries to gain experience, transfer knowledge, and run specific project-based work. How companies handle expatriate assignments are changing as global travel is now just as common as traveling within your own country.
Companies know that employee dissatisfaction with long-term expatriate assignments is a problem. The most striking example of employee dissatisfaction is when workers move their entire family overseas. It’s common for many staff to encounter buyer’s remorse as stress and unfamiliarity with new surroundings begin to affect loved ones.
Costs are extremely high for expatriate assignments and many companies don’t properly vet the individual taking the assignment. They don’t test the person’s ability to thrive in a “foreign” location and adapt culturally. Additionally, many companies forego cultural and language training that is essential in providing a foundation for a successful transition. However, many companies choose not to or don’t know the importance of this investment.
Consequently, increases in employee dissatisfaction and high costs with long-term assignments has led many companies to reevaluate their long-term policies. Many companies have chosen another route: short-term assignments.
What is a short-term expatriate assignment?
This type of expatriate assignment can last between three months to a full year. Similar to long-term assignments, each company defines short-term assignments differently. Because the employee plans on returning home after such a short amount of time, there are additional benefits that must be considered. Many companies will not allow the family to accompany the employee on these short-term assignments but will provide alternative benefits. These may include trips home up to twice per year, furnished accommodations, per diems, travel allowances, and more. Relocation management companies such as WHR Global manage short-term expatriates and provide the structure and benefits available to this group of assignees.
Common relocation benefits provided to the employee on short-term assignment may include: immigration support, tax assistance, small shipment or excess baggage only, allowance payments, final move trip, temporary housing, medical insurance, housing support, and more. It’s best practice for the level of support offered to the employee to be commensurate with their experience, tenure, salary, and family size. However, due to the short nature of the assignment, the assignee’s family may stay in the host country which significantly reduces total costs. Due to the short duration, it’s common for employees to move into fully furnished temporary housing for the entire length of the assignment.
The problems of dissatisfaction and homesickness became apparent with long-term moves. Therefore, short-term overseas engagements were developed as an alternative to pulling up roots and moving families across the globe for extended periods. From your company’s perspective, a short duration generally costs less upfront since the employee’s family generally stays in the home country. It also gives you more flexibility when developing workforce mobility. Additionally, the consequences of individuals becoming “taxable” in the foreign location can be managed effectively, thus significantly decreasing the cost of the assignment.
The cons of short-term expatriate assignments revolve around demands to rotate a variety of personnel, which requires more planning and administrative time for everyone involved. There is a trade-off between a series of short-term assignments versus a single long-term assignment. What works for your company may not work well for others.
Unless utilized as a rotational development program, short term assignments may not be long enough to fulfill the business need. If the employee is opening a new location, launching a new product, or transferring organizational knowledge and skills, a long-term assignment may be needed to achieve all objectives.
What is an extended business traveler?
These types of expatriate assignments can really rack up frequent flier miles. Typically, these employees are not on a formal assignment. However, there are still tax and immigration considerations when sending someone on extended business travel.
Business traveling simply causes less disruption for everyone involved. Your workforce has much more control over how they perform duties and you don’t have to permanently allocate resources to a foreign location.
Extended business travel also allows you to draw from a larger talent pool of employees since some employees may outright decline a short or long-term assignment. Employees are naturally more likely to accept an extended business travel assignment due to the flexibility. Employees see their family more often, and extended business travel assignments may utilize a hybrid remote work setting when feasible.
Work visa requirements differ widely from country to country and can be impacted by the home and host locations involved. In some instances a worker may enter into the country on a work permit waiver, but in other countries it may be illegal to perform a single work duty without having the proper work visas in place.
Employees are also required to closely track their travel for tax and immigration purposes. Companies and employees may incur additional tax liabilities and unintended consequences if the employee overstays their welcome.
For more info, check out WHR Global’s EMEA Client Services Manager, Jenny Elsby, speaking at the EuRA International Relocation event in Dublin, Ireland. “Assignment Types & Changes” on April 28th, 2023.