Rewarding global mobility
- 7 Min Read
The RES Forum’s 2018 Annual Report into global mobility trends (which is based on research amongst the Forum’s 1600+ members from 780 multinational organisations in 40+ countries), dedicated one specific chapter to tracing the trends in reward package design within major multinationals. This article provides a short overview of the main findings of the chapter and offers some reward package design recommendations to help ensure SAFE (smart, agile, flawless and efficient) global mobility.
Understandably, reward approaches seek to augment the attractiveness of international assignments. Moreover, they seek to compensate assignees for some of the adverse effects of global relocations. However, since 2008, the financial climate has become harsher and organisations are looking to reduce relocation costs and to fine tune expatriate rewards. While earlier assessments of global mobility costs indicated that expatriates cost their organisations about three to four times more than their non-expatriated peers, more recent measures indicate that this expatriate premium has reduced to about two times.
Organisations are obviously now targeting a lean reward package design. ‘Lean’ in manufacturing is a systematic method for waste minimisation without reducing productivity. The ‘waste’ in global mobility reward is that assignees are compensated (much) more than is necessary to attract them to work abroad and to motivate them to exert the effort that is needed for their position and responsibilities. In addition, multinationals would want to find a way to motivate people and incentivise the right behaviours. They strive to be efficient in their reward package design which means they should also explore and exploit the full array of non-financial rewards. It is often the non-financial rewards such as career opportunities or an attractive psychological contract (including development and meaning in work) that generate a commitment to an organisation that makes people go above and beyond their contractually outlined duties. It is therefore important to understand the diverse target groups of globally mobile employees as well as to design tailored approaches that appeal to them. Most often, this is undertaken by global mobility departments distinguishing different forms of working abroad such as short term assignments (STAs), long term (LTAs) and local plus assignments (where assignees are paid according to local salary structure with some additional benefits). Other approaches to enhancing the efficiency of reward systems include keeping administration flexible and efficient.
In addition, contextual flexibility to react to situational changes such as currency fluctuations can be important to establish and service a global reward system designed to be fair and attractive.
Benchmarking and recommendations
The identified reward approaches in this chapter of the RES Forum’s Annual Report allow the reader to benchmark their own global mobility reward approaches with that of a comparison group of RES Forum member organisations. While this data can help to shape the reward thinking in multinationals, it is important to factor in further contextual, location and assignee population specific considerations outlined above. Multiple and highly pertinent learning points can be distilled from the data and the thoughts embedded in the chapter and the recommendations to improve the efficient package design in a multinational organisation include ten recommendations:
- Distinguish different assignment lengths so as to develop a suitable reward package. STAs and LTAs are associated with diverse reward components. It is common that multinationals distinguish between local and international contracts. Normally, local plus assignees have compensation packages that are a lot less generous than those of LTAs. In addition, companies may consider introducing region-wide international contracts for some staff.
- Distinguish between different assignment patterns. Cross-border commuters and professionals on extended business travel have different needs and a tailored reward package can be attractive to these global workers while saving resources. However, it seems that organisations have not always developed crucial support structures in response to idiosyncratic needs.
- Distinguish different assignment purposes. It has become abundantly clear that developmental assignments are treated less generously than strategic ones. Assignees are likely to be motivated by different (learning and career) factors and have mostly different demographic factors (age, career position).
- Distinguish between locations and business areas where the supply of mobile candidates is low. Monetary and non-financial reward in the form of business sponsors, coaches, mentors and career opportunities, may have to be increased in order to attract sufficient, well-qualified candidates.
- Distinguish powerful actors from less powerful candidates. High potentials and good performers have increased negotiation power. A real challenge for global mobility reward is therefore to be able to engage flexibly with outstanding performers who they really want to motivate to go on assignments and yet have an overall global mobility approach that is perceived to be fair and performance enhancing. One non-financial way would be to tailor the business support in the form of organisational sponsors, mentors, peer support and global mobility/leadership coaches.
- Distinguish between more and less attractive locations and hostile and safe destinations in order to tailor rewards and other package elements. Locations that are in war areas or that experience terrorist activities are clearly hardship regions and should have tailored benefits.
- Distinguish the performance of assignees. Thus, link some elements of reward to the overall assignment performance objectives and their achievements.
- Distinguish the developmental and career interests of candidates within the reward and wider HR system. Candidates with a high willingness to work abroad often do not need expensive rewards. In fact, they often see expatriation as a form of career enhancement and want to perform highly in order to gain marketable and valuable skills. If the organization creates the right talent and career structures they often remain in the organisation long term.
- Distinguish wider motivations to work abroad (including a sense of adventure, learning about specific countries, cross-cultural interests) in order to factor these in to the broader assignment offer. These wider motivations – in combination with location context – may trigger a form of reward choice/mobility cafeteria approach with respect to rest and recuperation or travel entitlements.
- Distinguish the family situation and other (caring) obligations of expatriation candidates in order to give them a suitable reward offer. Consider where assignees can reasonably be expected to contribute to assignment costs. For instance, evaluate a contribution to housing costs or children’s education investments.
It is clear that global mobility departments often incorporate many of these recommendations. Nevertheless, it might be advisable to periodically consider whether their approaches can be refined or updated. The RES Forum data clearly indicates that in many multinationals, not all of these recommendations are enacted. We argue that in order to create ‘efficient’ global mobility reward, organisations need to get the balance right between cost-savings and attractive, motivating compensation approaches. Indeed, it is some of the non-financial initiatives embedded in wider HR approaches (career and talent development systems, attractive psychological contracts, work content that allows learning and growth, leadership coaching and mentoring) that can be the key components of wider rewards for assignees. To get this particular balance right, it is of paramount importance to understand the diverse target groups of globally mobile employees, have a highly developed understanding of and cooperation with the organisation’s talent management teams, and trace performance implications of the array of tailored mobility approaches.
Michael Dickmann is Professor of International Human Resource Management at Cranfield University School of Management and, for the last five years, has written the Annual Report for the leading independent community for global mobility (GM) professionals, The RES Forum. This article is a short summary of some of the findings from the 2018 Annual Report entitled ‘Global Mobility of the Future: Smart, Agile, Flawless and Efficient.’ You can find more information on this specific subject as well as much more in the full Report on The RES Forum website here.