Effective Strategies in Expatriate Cost Management
Brian Friedman
14 July 2009
What makes assignees expensive ?
• Allowances 35%
• Property costs 35%
• Relocation Costs 15 %
• Professional services 10 %
• In-house costs <5%
Policy Review
• Who is an expat
• Selection / Governance procedures
• Traditional Policy
• Local Plus
• Expat Lite
• Flexpat policy
Allowances
• Benchmark allowances
• COLA
• Zero based allowances
• Gainshare allowances
• Flexpat
Property - the elephant in the room
• Review housing allowances• Location, location, location• Don’t show property over budget• Gainshare with assignees• Hotels, serviced accommodation, rentals• Bulk deals• Fees – v – commission• Incentivise DSPs• Shared Accommodation• Deductibles
Removals / Shipping
• Plan in advance – not last minute
• Shared Loads
• Back Loads
• Volume limits
• Incentivise assignee
• Incentivise service provider
Banking and Currency
• Review banking arrangements
• Understand charges and commissions
• Consider a specialist FX dealer
• Consider caps and collars
• Hedge liabilities
• Review assignee remittance costs
Schooling
• Use of education consultants / guides
• State v Private / Day v Boarding
• Home v Host
• Bulk discounts
• Gainshare with assignee / vendor
• Deductibles
Tax / Social Security
• Compliance – No 1 priority
• Risk Management
• Quarterly Review of savings
• Gainshare
• Review Tax Equalisation policy
• In-house – v- Outsource
Travel Policy
• Class of travel / Choice of airline
• Frequency
• Family members
• Destination
• Gainshare
• Flexpat
Immigration
• Compliance / Risk Management • In-house v outsource
• Get your service provider to train you
• Choice of service provider
Pension / Insurances
• International Pensions
• Healthcare / Medical
• General Insurance
• Emergency home leave
Vendor Partnerships• Partnerships – create the win-win
• Service Level Agreements / Gainshare
• Keeping the relationship fresh
• Over-runs and out of scopes
• Centralised v Local billing
• When to RFP / RFI and Transition management
In-house v Outsourcing
• What to outsource (and when and where)
• Use of contractors and home workers
• Never outsource responsibility
• Use experts to train in-house staff
• Loan staff
Non essential services
• Is anything non-essential
• Review what is absolutely necessary
• “Nice to haves” v “must haves”
• Is the pain worth the gain ?
Technology
• Use technology to reduce cost
• Use technology to enhance service
• Use technology to manage process
• Use technology to connect assignees
Volunteers
• Trailing Spouses
• Buddy Programmes
• Intercultural training
Ten easy ways to save money
• Focus on the ROI of the assignment
• Establish a definition of success
Don’t tell the assignee he is the only candidate !!!!!
Have a policy……. And stick to it
Focus on the family not just the assignee
Don’t separate costs into multiple budgets
Avoid Allowance Overload
• Try a Flexpat approach
Always have deductibles
Localise, localise, localise
Talk to your service providers
Gainshare with the assignees
The best companies make assignments a pre-condition for reaching board level
Read the Mckinsey study
Expatriate and Vendor Cost Management
14 July 2009
