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Are you interested in Compensation and Benefits in Africa?  If you are nearby to Johannesburg, you should plan to attend the Employer Roundtable sponsored by Birches Group, Emergence Growth and Aon Hewitt on February 7, 2013.

The event will be held at Aon Hewitt South Africa offices in Sandton.  You must register in order to attend.  Click here for more information and to reserve your seat.

I look forward to meeting you!

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Organizations operating in dozens of international locations have a lot of work to do to maintain separate salary scales in each country. Every once in a while a client suggests they are considering using just one scale for all their countries globally, or in a region. Then they ask me what I think. I tell them it’s a bad idea.

Now, those of you that know me realize this is a self-serving answer. My company is in the survey business, after all, and a single scale would require a lot less market data. But honestly, that is not the reason it’s a bad idea. There are so many reasons…here’s a few to think about.

1. Each country has a separate labor market, with different levels of talent affecting supply and demand. Labor regulations, social taxes, income taxes and of course, culture differ, too. The scale should be unique, too.
2. Just because countries are neighbors, doesn’t mean wage levels are similar. Consider the example of Nigeria and Ghana. These West African neighbors have distinctly different wage levels for the same jobs. And you needn’t go to West Africa to understand this — the same issue exists between the United States and Mexico, and many other country neighbors.
3. Countries (outside the Euro zone) have different currencies. What currency would you pick for your single scale? Let’s suppose you decide on US dollars. If you had a dollar-based scale this year, the local currency equivalent would have increased in Malawi by 47% in one day in May, and about 75% in South Sudan over the course of the year. But countries whose currencies revalued against the dollar would receive less in local currency. And these changes have no relation to the cost of labor, which is how employers establish proper wage levels.
4. What market data would you use for your single scale? If you use the highest paying market, you will increase costs in the other markets. If you choose a lower-paying country, the opposite happens. You can just take an average, right? Sure you can, and you get the worst of both situations!
5. Which pay mix is appropriate for your single scale? Most countries have statutory requirements such as 13th month and other cash payments. If you set your scale with just basic salary, you will have wide variations against the market when mandated allowances are considered. If you decide to include cash allowances, which ones do you use?
6. Just use a scale from headquarters, and convert to local currency. It’s easy and based on a single scale. But it’s still a bad idea, for a lot of the same reasons stated above. A few years ago, Chuck Csizmar wrote an article exploring this idea called “Can’t You Just Convert the Currency?” Check it out for further discussion.

These are just a few reasons to maintain separate scales in each and every county. It’s not so easy, and it takes a big effort, but it’s worth it. Any other solution will result in excess costs for employers and a lack of engagement from employees. So don’t do it!

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Working as an international HR professional is a challenge in so many ways. How can you best prepare for success in your role? Here are some tips which I refer to (with apologies to the late Dr. Steven Covey) as the “Seven Characteristics of Highly Effective International HR Professionals.”

Flexibility
Everyone knows HR is burdened with a lot of processes and guidelines. Companies strive for standardization across their entire enterprise. A good international HR pro understands that flexibility is a key to success. Every country is different and the standard approach that HQ designed might not work perfectly in every country. So be flexible about the application of global standards and processes.

Be Comfortable with Uncertainty
International HR staff are often faced with situations they have not encountered before and for which there is no precedent. You need to analyze the situation and create a solution, even if there are no clear cut answers. A real pro finds a solution that works for the client group, and satisfies corporate at the same time.  Uncertainty simply comes with the territory, so learn to deal with it.

Cultural Awareness and Sensitivity
Each nation of the world is different, and it doesn’t matter if they speak your language or share a border — each country is separate, distinct and unique. Learn how to embrace cultural differences and turn them into competitive business advantages. Listen to your people in-country before telling them what they should do. Learn what is happening in-country and how the history and culture influence how business is conducted. There are obvious things to avoid — such as holiday celebrations that are not part of the national culture. But it is the subtle things that are often overlooked.

For example, it is common in Kenya for managers to have company cars. However, many companies shy away from cars and extend that shyness to Kenya. Not a good idea. It’s a cultural thing – a status symbol, too. Think about it — no one sees a car allowance in your wallet but your neighbors see that company car in your driveway.

Performance management is another area to watch. Frank, direct feedback is not a part of many Asian cultures. Hierarchy and respect for seniority prevent frank exchanges, especially in front of others, which could be embarrassing to a senior manager. So take this into account when seeking, offering and interpreting feedback. Always check the cultural aspects that impact such discussions.

Try and learn a few words of the local language. It’s not that hard, and goes a long way towards establishing your credibility. It may be true that most international business people speak English but it doesn’t matter. You can practice your Spanish, French or Chinese and your hosts can practice their English.

Adaptability
You are working in areas which require adaptability to the situation on the ground. It’s often different from HQ. The roles of labor unions in Europe and Latin America, for example, create requirements that are very different from the US. If you start applying US-style labor relations in Europe you will embarrass yourself and your company. So learn the rules and adapt your style as needed.

In developing countries there may be limitations due to infrastructure. Go with the flow instead of comparing to other places where it may have been easier or more convenient to conduct business.  You will also encounter many aspects of compensation that are different.  Don’t assume they should be ignored just because you are not familiar with them — adapt your package to the local norms instead.

Be Agnostic – Good Answers Come From Many Sources
There are always many solutions to a problem. Depending on the country, the locally-recommended solution might be best. Don’t reject these ideas because they are unfamiliar or not from your usual global supplier. Perhaps the local solution is OK. Explore it, evaluate it, engage with your colleagues to fully understand and then decide.

Curiosity
It is not a coincidence that the NASA Mars Rover is called Curiosity. This trait is imperative for success in international business, and international HR is certainly part of that! Explore the differences you encounter, get to know your local colleagues and demonstrate genuine interest in learning new things. Ask questions – a lot of questions – so you can understand why things are the way they are in different countries.

Have some free time during a business trip? Explore the local sights. Shop in the local market (the one where the locals go – not the one for expats and tourists). Taste the local specialties and pick up some unique souvenirs. I traveled a lot when my daughter was young. I picked up a doll in a traditional dress in each country I visited. Now she has a great collection of dolls from all over the world, and a real appreciation of how big the world is.

Sharing and Listening
Over the years I have worked with people from many countries. One of the most striking things I’ve noticed is how easily people from around the globe are willing to share their ideas with others, and how many great ideas people have that I may not have encountered before.

So listen to your international colleagues and embrace their ideas. Share your experiences and ideas in return. Work on solutions collaboratively. You will benefit from their ideas and have a friend in every country!

Final Thoughts
Some of you are probably thinking that these characteristics apply beyond international HR to international business. You’re right! Share this post with others who work globally. I’m sure they will appreciate it!

Some of you are probably thinking that I omitted one of the most important characteristics that you’ve discovered. Share it in a comment – I’m a good listener!

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Eric Loff – Global Tax Network

The tax cost of an international assignment can be significant and companies struggle to find ways to manage these costs.  This article outlines two straightforward strategies for reducing the tax costs of your expatriate program.

Where do those excess taxes come from anyway?
Excess tax costs associated with an international assignment include the actual taxes paid by the employer on behalf of the employee which exceed the employee’s tax burden as calculated under the company’s tax equalization policy. But don’t worry. There are a variety of tax planning techniques that can reduce these excess tax costs. Two common ones are:

• Paying benefits-in-kind in lieu of cash payments
• Proper timing of the assignment

Read on to learn how these tax savings strategies work.

Benefits-in-Kind
In general, cash paid to an employee is taxable, regardless of why the cash is paid to the employee or how the employee spends the cash. In lieu of giving the employee cash, the employer could directly pay expenses for the employee. The direct payment of certain expenses by an employer is considered a benefit-in-kind; in many countries certain benefits-in-kind will not be fully taxable to the employee. Examples of common benefits-in-kind are housing, cars, and club dues.

In China and Hong Kong, for example, the direct payment of housing by an employer can receive beneficial tax treatment, i.e., less than the full payment is taxable to the employee. The company is typically the lessee and pays the rent directly to the landlord. Many landlords prefer this because the company is perceived as a more reliable tenant than an individual. This technique is relatively easy to implement, available in a number of other countries, and used by many companies. Before implementing employer-paid housing, you should consider the associated corporate liability.

The direct payment of car leases by an employer can also generate beneficial tax treatment in many countries, such as China, Indonesia and Spain. Providing company cars is also a prevalent benefit for local hires in many countries. Before implementing such an arrangement, you should consider if a car is necessary for the employee. Also compare the cost of leasing a car to the cost of purchasing a car. In many locations the price differential between leasing and buying is significant.

Club dues are another area where beneficial tax treatment may exist for direct payment by the employer, especially if the club is required for business purposes. Before paying for club dues, the company should determine if this is necessary for the employee. In fact, many companies are moving away from paying for club dues.

Timing of an Assignment
The start date and end date of an assignment may significantly impact the tax and administrative cost of the assignment. Although general rules do not exist, there are several factors associated with the assignment period that may impact the tax cost.

For example, in some countries tax treaties may provide benefits if the assignee is in the country less than 183 days in a tax year. For countries using a calendar year for the tax year, this means an assignment should start after July 1 and end before June 30.

In other cases, it may be possible to achieve tax savings if the assignment is less than a specified amount of time under a country’s domestic law.  Under U.S. law, it may be possible to provide certain benefits such as housing and per diems for assignments of no more than one year on a tax-free basis.  This time limit will vary by location, so it is important to understand the domestic tax rules in advance of sending assignees or business travelers.

On the other hand, be cautious about starting an assignment right before year end or ending an assignment shortly after the beginning of a new tax year. The administrative burden of filing an additional tax return may outweigh other benefits.

Finally, timing of the assignment can significantly impact the taxation of certain income such as bonuses or stock option exercises. The tax impact of these transactions should be considered as the assignment dates are finalized.

The information provided is for general guidance only, and should not be utilized in lieu of obtaining professional advice. Please see the following link for Circular 230 disclosure: http://www.gtn.com/circular-230-disclaimer.php

More About Eric
Eric Loff is the Managing Director for GTN Minneapolis, and focuses exclusively on providing Expatriate and Foreign National tax services to corporate and individual clients. He has more than 17 years of experience in the management of international assignment programs and the human resource, tax and payroll aspects of internationally mobile employees. Eric is a frequent speaker on global mobility topics and is the lead for the Minneapolis chapter of the Forum for Expatriate Management. Prior to joining GTN, Eric was an Executive Director with Ernst & Young.

He is a Certified Public Accountant and is a member of the American Institute of Certified Public Accountants and Minnesota Institute of Certified Public Accountants.

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About Global Tax Network
Global Tax Network provides international assignment tax compliance and consulting services for corporate global mobility programs, including program development, ongoing tax management, and special projects. The firm is recognized as a leader in consulting for emerging to mid-sized global mobility programs. GTN has six U.S. offices, with allied partners and resources in more than 100 countries to support assignee home and host tax requirements.  For more information please contact us.

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Calling all compensation professionals!  OK, some of you prefer the term “comp geek” but either way, I want to share a great resource.

Recently, I discovered a great new website called XLCalibre.  It’s hosted by a chap in the north of England, who prefers to keep his identity a secret for now. I can confirm, however, that the author is male, hence I shall continue to use the male gender for references to him.

If you spend any amount of time working on compensation for your company, then you use Excel. It’s such a powerful tool, yet there are so many features that most mortals just don’t ever hear about.  But don’t be like the old dog in the picture!  You can learn some new tricks!

XLCalibre is a site where beginners can get hints, and experienced old-timers can learn functions and techniques previously unknown or admired from afar (i.e., in other people’s spreadsheets).

To get you started, here’s are a few topics from XLCalibre which I know you will find helpful and interesting:

• All About Excel Date Functions
• Changing Text Case Using String Functions
• Left, Right and Middle (if you don’t know what it is, click)
• Dealing with Charts and Pictures

I hope you find this little tutorial useful for those times you need to get the spreadsheet working and you are so stuck with how to do it.  Leave a comment with your most challenging Excel problem and I will be sure to pass it along to the author of XLCalibre – I’m sure he can come up with a great solution!

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If you work in international HR, you know how important market data is for the management of your international operations.  Finding reliable data in all of your countries is undoubtedly a challenge.  Each country has different survey suppliers, different employers participating in the surveys, and variable levels of quality.  So naturally, when you find a survey you trust, the tendency is to stick with it.  But is one survey enough?  I don’t think so.

Two Surveys Provide A Balanced View of the Market
Typically, your “go-to” survey has several characteristics:

• It reflects the market in which you compete – the participants are the ones you are most often look for, usually from the same sector.  It’s the survey “everyone” is in.
• It’s the one that “corporate” designates (and pays for) – sometimes it’s not the best, but you have to follow headquarters instructions, and besides, it doesn’t hit your budget.
• It’s the survey you’re used to  – why bother exploring another option when you’ve finally mastered this one?
• The survey results are OK – you’ve never had a problem using the survey, except a few times when some of the data was a bit suspect, but overall, it’s fine.

These are some of the typical reasons why companies participate and rely on surveys year after year.  But these same reasons often stand in the way of exploring additional options.

They say two heads are better than one.  While I have yet to meet a two-headed individual, I have worked with a lot with surveys, and I can attest to the fact that two surveys are better than one!

There are many reasons for this — here’s just a few:

• Some key employers might be missing – by participating in another survey, you will get an alternative group of employers and therefore, a broader view of the market.  If your main survey is a sector-based one, try a general market survey to complement your sector data.
• Survey methodologies vary – and this means the results from another survey could be different.  Different could be good – it will challenge you to dig deeper and try to understand the differences.  Perhaps the alternative survey provides more details in certain areas, such as non-salary allowances and benefits in-kind, or uses a unique valuation for benefits.
• The results might actually be aligned – maybe the data from the two surveys matches closely.  That reinforces the conclusions you may have already reached and raises the confidence in both surveys as a result.
• The results might be totally different – thus allowing you to explore the full extent of the market options.  Is it the employer group that causes the difference, or the methodology?  How do know which survey is right?

The answers to these dilemmas, of course, vary according to your unique situation.  Which country?  Which sector?  How great are the differences? You have to explore to find the answer for your company.

So Look Beyond Your Old Reliable Survey
Challenge yourself to participate in at least two surveys.  Make sure that they focus on different aspects of the market and bring a unique perspective. Analyze the data carefully and apply your judgement to incorporate data from both perspectives.  Soon you will find you have a better understanding of the market.

If you need a second survey source for your international locations, be sure to check out Birches Group surveys.  We cover 148 developing markets, more than any other global provider, and together with Aon Hewitt, our marketing partner, we cover the world.

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When individuals relocate, they are bombarded with many changes at once. You may hear the phrase: So much to do, so little time. They may be tempted to skip part or all of the relocation process. Here we’ll discuss three questions related to orientation meetings.

• Why do we need to provide international assignees with orientation meetings?
• What should be covered during the orientation meetings with an international assignee?
• When should this information be provided to the international assignee?

Why do we need to provide international assignees with orientation meetings?
Once a candidate has agreed to accept the international assignment, many things that impact their daily lives change. This uncertainty causes concern for the employee and their family. Each step along the way to the new work location can create confusion and fear, keeping the employee from settling into the new work environment and quickly becoming a positive contributor in the new location. A thorough orientation process can help minimize the disruption associated with the move.

One of the keys to successfully communicating what is going to happen during an assignment is to provide the assignee with the information they need at a time when they will need it – just in time. The information also needs to be provided in a format that is easily understood and readily available for reference during the move.

To meet these goals, it usually means that the orientation process will consist of more than one meeting with more than one person during the relocation process. Care must be exercised as the employee can quickly become overloaded with information.

What should be covered during the orientation meetings with an international assignee?
Many areas of an assignee’s life will be impacted as the result of an international assignment. Several of these areas will require education of the transferee and their family, which is usually provided as a part of the assignment orientation process. Issues typically addressed include:

• Cultural issues
• Compensation changes
• Relocation benefits
• Tax and financial issues

For an assignee to be successful in their host location, they will need to understand the subtle cultural differences in the business climate. Cultural orientation meetings assist the assignee and their family in understanding the common practices in their new home location and help support them during the settling in process, as well as preparing the family for culture shock. Cultural orientation meetings may last from a few hours to several days.

During the compensation meeting the company will review the financial support they will be providing. The meeting will review differences in cost of living, how housing will be supported in the host location, and provisions for children’s education and other compensation related benefits. The meeting should also include a summary of how and when this support will be delivered. The assignee may have additional questions after the meeting for the program administrator.

In addition to reviewing the steps needed to move household goods, the relocation meeting may cover information regarding the host location housing and schooling options. Depending upon the assistance a company provides with home country housing issues, the management of rental of a principal residence may be covered.

Changes in the home country tax filings as well as the need to file in the assignment country may create financial concerns for the employee. Learning about and understanding the tax impact of an assignment or permanent move can be a time consuming process for the transferee. These and other tax issues should be reviewed with the employee in a comprehensive manner at a time when the employee can best use this information in their personal financial planning. To thoroughly review these issues, the assignee will usually meet with an outside tax service provider. The assignee will frequently need additional consulting assistance as they work through the tax compliance cycle for their home and host countries.

All of these meetings are a critical part of the assignment process and often the spouse is included in the meetings as well. The meetings help manage the assignee’s expectations and lay the foundation for a successful assignment.

When should this information be provided to the international assignee?
Information should be provided to the international assignee at a time when they need and can use the information. Typically, the tax orientation meeting is conducted after the individual has accepted the assignment. However, if an individual is moving permanently to another location, he/she may need to have the tax and financial meeting prior to acceptance so that they understand the terms of the package being offered.

Web based communication tools can assist the assignee through the details and issues related to their assignment. These tools reinforce company policies and are available to the employee at any time and any place that they have Internet access.

What challenges have you faced in providing orientation to international assignees, and what suggestions can you share with others based on your successes?  Please share in the comments below.

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About Global Tax Network

Global Tax Network provides international assignment tax compliance and consulting services for corporate global mobility programs, including program development, ongoing tax management, and special projects. The firm is recognized as a leader in consulting for emerging to mid-sized global mobility programs. GTN has six U.S. offices, with allied partners and resources in more than 100 countries to support assignee home and host tax requirements.  For more information please contact us.

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One of the most challenging situations that compensation professionals face is how to respond to unexpected or unusual external events such as maxi-devaluation, civil unrest, or natural disasters.

Flag of Malawi

On Monday May 7, the new government of Malawi agreed to the demands of the IMF and other donors, and floated the Kwacha, resulting in a 47% devaluation versus the US dollar. The new exchange rate, 246.26 Kwacha per US Dollar as of May 13, is fairly close to the parallel rate that has been in effect for the last several months, so in many ways, this move just makes official a rate that has been operational already in many parts of the economy.

Employees will now approach their employers asking how the company is going to protect their level of wages, especially to compensate for the expected price inflation that often occurs following a devaluation. Compensation and HR professionals should move cautiously with salary adjustments.

Here’s why.

Labor markets are impacted by economic conditions, but the fundamental principle that impacts salary levels is the cost of labor, not cost of living.  Supply and demand, not inflation or cost of living, determine the price of labor in the market.  See my prior posts on Inflation and Devaluation for a more detailed explanation.

That’s the theory, but how should an employer address the very real concerns that employees will raise following a maxi-devaluation?  

You need a policy.  Here are some policy suggestions to address devaluation:

1. Focus on Stability
   In the developing world, economic and political instability is common. Employees want employers to provide stability despite the inherent instability in the country. So you need a policy that outlines how your company will respond when certain external events occur.
2. Set a Threshold
   Define a threshold level of devaluation above which your policy takes effect.  This leaves no room for debating when the policy should be applied.
3. Define Actions
   The policy should describe the actions to be taken, the time frame for these actions, and how the ongoing situation will be monitored going forward.  For example, you might stipulate that an immediate adjustment of 15% to 20% of the devaluation be implemented, as an allowance which is separate from salary.  Once the situation in-country is more stable, decisions can be made about how much of the adjustment should be made permanent.  A period of four to six months is usually needed to sort things out.
4. Measure the Market, and then Measure it Again
   You should, of course, know your market position based on a high quality market survey.  Birches Group can help you here – we conduct surveys in over 140 developing market countries.  Are you on target, a bit high or a bit low?  If you have a high position, keep this in mind when deciding about any permanent changes.  Similarly, if you are in a low position, this could be a good time to fix it.  After an event like a maxi-devaluation, your survey data is going to rapidly be out-of-date.  Your provider should be able to advise on how employers in the country have reacted to the economic events and estimate a percentage that  reflects the prevailing practice.  Use this, together with your market position, to determine permanent adjustments and next steps.
5. Communicate
   This will ensure that expectations are reasonable and there are no misunderstandings about what the company will and will not do in response to a crisis situation.
6. Be Consistent
   Once you’ve established a policy, use it!  It is easier to apply a policy consistently than have to explain why exceptions are made for some and not for others.

If your company has staff in Malawi right now, what are you doing to provide stability to your local staff?  Please share your approach in the comments section.

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This is the second part of a five-part series, where we present checklists to help international HR professionals plan and manage long-term international assignments. There are five stages we identified for long-term assignment management:

Click to Enlarge

In part one of this series, we looked at candidate assessment, selection and approval. In this installment, we will examine Assignment Planning.

Assignment Planning includes the key steps you must follow after your candidate is selected for assignment and management has approved the move. Now you can delve into the specifics and develop a more detailed budget, along with strategic planning for tax savings and ensuring compliance with immigration requirements.   Here is a checklist for this stage:

Click to Enlarge

We’ll look at each of these steps more closely.

Gather Employee and Family Information
There is a lot of information that is needed to move forward with assignment planning, and sometimes it may not be in your HR system.  The biggest task is to gather complete family information, in order to provide inputs into the draft compensation calculation, and to those coordinating relocation, immigration and visas, and benefits.  You’ll need to make sure the assignee and family members have proper immunizations and valid passports.  If you have multiple policies, select the one that applies to the move, and gather the necessary data from your expatriate data provider on COLA and housing differentials, hardship pay, etc.  You’ll need to schedule a tax consultation, too, using the assignee and family information, plus additional details from the assignee which remain confidential between the assignee and the provider.

Draft Compensation Calculation
A draft compensation calculation (usually a balance sheet) is a key element, as it’s used to communicate the details of the assignment package to the assignee as well as for tax planning and budgeting purposes.  This is the time to assess any adjustments needed to benefits coverage and identify any shortfalls.  Your tax provider will need the comp calc to make the proper estimates for hypothetical tax and for tax planning.  Of course, the compensation calculation is the one piece of information the assignee really wants to review and understand, and probably negotiate, too.

Prepare for Relocation
Not only is the assignee taking a new position in a new country, the family is relocating, too.  It is a complex and hectic time.  Most companies enlist the help of a relocation firm to work closely with the assignee and the family to ensure a smooth transition.  In this step, the relocation firm might review policies, take stock of the household goods situation, and explain options for shipment and storage.  On the assignment side, this is also the time to explain housing options in the new location, and the budget.  Many companies provide medical exams, security briefings and cultural training.  Finally, a pre-assignment trip is often provided, to find housing, enroll children in school, and generally get a good orientation to the new location.  Don’t forget about pets!

Assignment Approval
The last step in this stage is Assignment Approval.  This means obtaining the final sign-off on budgets and cost projections, normally prepared by your tax provider.  Tax planning – a proactive approach to minimize tax costs of the assignment, should also be considered.  There are many techniques to reduce tax costs by making simple changes to contract language, payroll arrangements or social security coverage.  Sometimes changing the timing of an assignment by 30 days or less can result in huge first year tax savings.  In my personal experience, tax planning, if applied consistently for every assignment, will generate significant savings, far in excess of the costs you may incur from your provider, but it does require a disciplined approach and some flexibility from your company with regard to timing of assignments and allocation of costs.

What’s Next
In the next installment, we will take a look at international relocation.  In the meantime, please add your ideas and questions in the comments section below.

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If you are an international HR practitioner, then you have probably had to deal with long-term international assignments.  They can be complex, with many different people involved, both internal resources and external suppliers and vendors.

One of the best ways to ensure all the necessary steps are followed is to use checklists.  These are simple yet extremely useful devices that will help you stay on track with your international assignees.  A recommended approach is to develop a checklist for each of the common assignment stages or events that occur, including:

In this series, we will share checklists for each of the five stages of a long-term international assignment.  The steps highlighted probably won’t match the procedures in your company exactly, but the checklist will provide you with a handy reference which can be customized to your actual process. Let’s start with the first stage, Assessment, Selection and Approval.

In this stage, you’ve identified the need for an international assignee, and now you need to find the right candidate, and gain approval for the assignment.  Here is a checklist for this stage:

Let’s talk a look more closely at each one of these tasks.

Identify Candidates
This is one of the most crucial steps for an international assignment – finding the right person for the job.  You need to consider both the technical job requirements as well as any special skills such as languages which might be required.  Remember, assignments are expensive so you want to make sure your investment is sensible.  Therefore, always consult the outputs from your career and succession planning process to see if there are candidates in need of an assignment to further their agreed upon career plan.  Be sure you also take into account any location-specific limitations, such as lack of schools, security risks, and other situations which make normal family living difficult.  Be sure to involve line management and HR staff together in identifying the potential candidates.

Evaluation and Assessment
You will want to apply the standard assessments used to select people for any position in your company.  In addition, however, special consideration should be given to a candidate’s suitability for an assignment.  This includes an assessment of their personality and cultural awareness, to try and predict how successful they would be in the new environment.    How well does the candidate deal with uncertainty and change?  Are they comfortable operating in unfamiliar territory?  Is their operating style compatible with local culture?

What about their family?  It has been proven over and over that a family that is unhappy on assignment usually causes the assignment to fail or at least terminate prematurely.  So be sure the assessment covers the spouse and children, too.  You will probably want to assure some confidentiality of the results, with no details being shared other than a basic assessment by an external consultant of the likelihood of success and a “go/no-go” recommendation.

Final Candidate Selection
Now you are ready to meet with line management and together select the best candidate for the position.  Be sure to take into account all of the considerations, both the “hard” and “soft” ones.  Pay special attention to the potential impact on the candidate’s career plan.  While many organizations would look at costs as part of the decision, I would suggest choosing the right candidate first, and assessing the cost implications separately as part of the approval process that follows selection.  Too often, companies choose candidates based on cost as the primary consideration, which often results in sub-optimal results.

Assignment Approval
The best candidate has been identified based on a holistic assessment that considers technical knowledge, personality, cultural fit, career plan and family considerations.  The final step is to do a budget for the assignment.  The usual approach is to run a cost projection.  There are many ways to do this.  The most common approach is to work with your outside tax consultant; this generally requires a great deal of information as inputs, but yields a very complete picture of the total assignment costs.  Another alternative is to use a system which estimates costs based on normative data.  AIRINC has a product called ACE (Assignment Cost Estimator) which allows clients to estimate assignment costs quickly and with enough detail to make a decision about an assignment.  After all, you don’t need the entire, detailed budget until the assignment is finalized by both the company and the employee.

What’s Next?
In the next installment in this series, we will look at all aspects of assignment planning, from the employee and family perspective, as well as the company’s view.  In the meantime, please share your ideas, and any steps you follow in your company for selecting long-term international assignees.  Are there tools you use that you recommend? Or maybe some stories of difficult situations you wish you could have handled differently, from which we all can learn?

We look forward to your comments.

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