Multinationals increasing use of international assignments

INTERNATIONAL REWARD

Multinationals increasing use of international assignments

The majority of multinational companies are maintaining or increasing their use of international assignments, according to a new survey by Mercer Human Resource Consulting.

As many as six in ten companies surveyed by Mercer are increasing their use of short-term international assignments, while a quarter are sending more employees on traditional assignments.   

However, while most respondents to the survey plan to increase or retain the number of globally mobile employees, a significant minority (38%) report a reduction in long-term assignments as they seek to "preserve operational flexibility in a rapidly changing global economy," said Mercer.  

"International assignments are valued by companies as they help equip employees with the leadership skills to launch new ventures and manage projects abroad. Employers tend to select their globally mobile employees carefully and provide them with above-average benefits," said Peter Blake, principal at Mercer. "Unsurprisingly, many companies do not view assignments requested by employees as providing the same level of return on investment." 

Policies and trends

• Almost all participants agreed that addressing benefit issues for globally mobile employees is a medium or top priority, though one in four does not have a benefits policy for these employees.
• 30% of companies have no formal governance procedures and one in ten has never reviewed their policies. 
• Almost a tenth of globally mobile employees have expressed dissatisfaction with their benefit package while on assignment.      

"Setting and managing benefit programmes for expatriates and third country nationals is an extremely complex undertaking. Keeping approaches fair and consistent globally is very challenging, particularly as the ‘ one size fits all’ approach no longer satisfies employees, said Peter Blake. "Differentiating benefits by region or level of employee, for example, is becoming increasingly necessary but can further complicate the process."

Pensions

• Defined benefit (DB) pension provision for globally mobile employees will continue to decline. One in ten organisations offering a DB plan aims to close it in favour of a DC scheme in the near future.  
• Two-thirds of companies with international pension plans now use defined contribution (DC) arrangements.   

Other benefits

• Reflecting practices in their home countries, North American companies typically provide a lower level of benefits than European organisations, though employees of American multinationals can access additional benefits if they pay for them. 
• While the majority of European multinationals provide international medical plans with no restrictions on the choice of provider and family coverage, employees of North American companies are expected to contribute towards the cost of treatment.  
• The most common level of death benefit among participants is 2.5 times salary in North American organisations, compared with three times salary in European and other multinationals. 
• The long-term disability benefit provided by most multinationals is 70% of salary.  
• Almost all companies provide emergency assistance, accidental death and dismemberment and business travel accident cover.  

Want to know more?

Title: Expatriate and Third-Country Nationals Benefits Survey 2005, Mercer Human Resource Consulting.

Sample size: Of the 232 multinational companies that participated in the survey, 93 have headquarters in North America and 63 in Europe. The companies surveyed had over 50,000 "globally mobile" employees in total. The report covers four core areas of benefit provision: retirement, death, disability and medical.   

Availability: Copies of Mercer’ s survey cost &#8364 900 and are available from client services, Geneva, tel: +41 22 869 3000 or www.mercerhr.com/expatsurvey

Mercer Human Resource Consulting is the "global leader for HR and related financial advice, products, and services". It has more than 15,000 employees serving clients in over 190 cities and 41 countries and territories worldwide. To find out more visit www.mercerhr.com

Posted 6 January 2006