Case Study: ORC London
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In spite of the uncertainties of the economic and political climates, organisations continue to send significant numbers of employees on overseas assignments, to increasingly far-flung destinations. Typically, their role is to head up new operations, or fill skills gaps in existing divisions, and, as such, expats have become key players in the corporate bid for a share of the global market. In dispatching key personnel to exotic, remote or potentially dangerous locations, employers often find they have to make concessions on what constitutes the expats benefits package. Neil Krisko, country manager UK for global recruitment firm Antal, says: "There are some unusual benefits being provided by organisations that send staff overseas, and these vary enormously [depending on] the country involved, the length of assignment and the seniority of the employee." Countries with extremes of weather may warrant some practical benefits. Expats in Russia, for example, have been granted additional clothing allowances, because their traditional British wardrobe is wholly unsuitable for the freezing weather conditions. Likewise, expats headed for South American rainforest areas have been provided with safari-style clothing. There is even such a thing as a snow clearing allowance. Nino Di Vito, partner in human capital at Ernst & Young says: "In countries like Sweden or Canada, where snow is an all year round issue, expats have been given an allowance to pay someone to keep their roofs free of snow." Other company extras are discretionary, such as the cost of relocating a favourite pet cat or dog overseas. While unusual, it is not unheard of. Some organisations have even been known to cover the cost of relocating their employees’ horses overseas. "Typically this would be someone on assignment for two or three years, and absolutely crucial to that assignment, and to the company, says Di Vito. A decade or so ago, the economy was booming and employers were quite happy to authorise generous allowances and benefits packages for expat assignments. On realising the extent of these excesses, however, they promptly embarked on a series of cost-cutting measures, dramatically reducing the benefits policies. Then came September 11, followed by an economic downturn and a global downsizing of organisations. "When the economy began to recover two years later, these companies were caught on the hop; needing to get people overseas again, but desperately short of talent. So with top talent thin on the ground, and overseas assignments often business-critical moves where only one person is up to the job, expats are in a strong position to negotiate additional benefits and allowances," explains Di Vito. These include such things as billiard table allowances, where the organisations pays to ship a billiard table overseas, and in the case of some US firms, language lessons for American expats in the UK. A more dubious allowance made by one company that was subject to scrutiny by the tax authorities was a condom allowance. However, there was an innocent explanation: the expats who had received the allowance were engineers working in the Far East who were using the condoms to protect some of their valuable drilling equipment. Most of the benefits and allowances that fall outside of what would be considered standard options are more obviously of a practical nature. Olivier Meier, a consultant on expat issues at Mercer HR, says: "Where expats and their families have relocated to non-English speaking countries, companies may cover the cost of communication systems, such as access to email and the internet. Some pay for subscriptions to global news channels such as CNN so that they can stay in touch with what is happening back home." Expats in remote locations may also benefit from other extras. "China is undergoing huge development at the moment and a lot of expats are travelling there. But some parts of the country are so remote that employers will pay extra for regular shopping trips into the main cities, such as Shanghai," says Meier. Generous expatriate packages are often paid for hardship postings to places such as Saudi Arabia, where key employees can make sizeable demands, especially if they have a family. Charles Cotton, policy adviser at the Chartered Institute of Personnel and Development (CIPD), explains: "In some Middle Eastern countries women are restricted in terms of what they can and cannot do, while in other countries, it can be difficult to buy the basic things you need to settle in. Employers [therefore] have to provide additional financial incentives." A more serious financial consideration for employers is the possibility of kidnappings or hijackings. These can have a potentially enormous impact on the business, not to mention the victims and their families. It can cause massive business interruption, and, if bad publicity surrounds the event, put the company’s reputation at stake. Not surprisingly, an increasing number of firms are turning to experts for advice on how to manage this risk and are purchasing kidnap and ransom insurance. David West, senior consultant, international practice at Aon Consulting, says: "This provides the company with the financial support they need if the worst happens and they have to negotiate with kidnappers. It certainly isn’t an unusual request, particularly in the Middle East, and parts of South America." This type of cover can be written for both organisations and individuals. In addition to reimbursing financial losses, it also provides the services of response consultants to advise during the negotiation process. The largest claim Aon has handled is US$2 million, although the highest ransom ever recorded was US$65 million. "For employers, these are all additional costs to the overseas assignment package. With greater access to global consultancy services, they may well be asking whether they really need to have people established abroad, and looking at different ways of global working," says the CIPD’s Cotton.
Case study: ORC London
During her time as an expat manager Siobhan Cummins, managing director of compensation services firm ORC London, part of global HR management specialist ORC Worldwide, witnessed a number of unusual situations involving expats and their families. One of the most unusual ones involved an expatriate who was relocated to central Africa. He initially travelled out with his wife, but when living in a difficult location took its toll on their marriage, the couple separated and eventually divorced. "In due course, the expat met a local woman; they struck up a relationship, and she moved in with him. She then asked if her sister could join them, which he happily agreed to. There he was with two very attractive African women, and life was good – until the time came for him to go home," says Cummins. Under the terms of his expat benefit package, only one spouse or partner could be repatriated, so having provided a home and comforts to the two ladies, battle ensued over who he should take home. "Eventually we interceded and, as a result, neither of the prospective wives travelled with him. The moral of the story, I suppose, is that expats shouldn’t be greedy," explains Cummins.
The best places to be an expat
The quality of living in expat destinations generally has some bearing on how much an organisation is prepared to pay employees in additional allowances. A quality of life survey by Mercer Human Resource Consulting ranks Calgary as the world’s top city in terms of health and sanitation, followed by Honolulu, Helsinki and Ottawa. Cities are ranked against New York as the base city, which has a rating of 100, and scores are based on the quality and availability of hospital and medical supplies, and levels of air pollution and infectious diseases. The efficiency of waste removal and sewage systems, water portability, and harmful animals and insects are also taken into account. The analysis forms part of a worldwide quality of life survey, covering 215 cities, to help governments and major organisations decide where to place employees on international assignments. Slagin Parakatil, a senior researcher at Mercer, says: "The top cities for health and sanitation have a combination of excellent hospital services and medical supplies, and low levels of air pollution and infectious disease. Most of the low-scoring cities are in developing countries which have insufficient resources and infrastructure for good sanitation." Not surprisingly, Iraq’s capital Baghdad is now the world’s least attractive city for expatriates – its score dropped from 30.5 last year to 14.5 due to ongoing concerns over security and the city’s precarious infrastructure. Other poor-scoring locations for overall quality of life include Bangui in the Central African Republic, and Brazzaville and Pointe Noire in Congo. "The threat of terrorism in the Middle East and the political and economic turmoil in some of the African countries has increased the disparity between cities at the top and the bottom end of the rankings," explains Parakatil.