- Is the average global employee male or female?
- One of the most pressing issues for global HR managers is:
- A new, hot destination for expatriates is:
b) Effective selection of expatriates
c) Cost containment.
Answer: a, b and c.
(Any, and all of the above.)
c) United States
Answer: It's c-the United States.
Surprised? You may have had an easy time answering questions 1 and 2, but admit it, number 3 was a surprise. While it might not be listed in the Department of Commerce's "Big Emerging Markets," ask many international HR executives and they'll tell you there's an influx of foreign nationals into the United States.
As companies rush to globalize, they're bringing more and more people into the United States. Indeed, large numbers of middle managers, especially, are coming to the United States for developmental assignments, technical transfers, to head up project teams and to absorb the corporate culture. In particular, HR individuals often are here because companies want them to be able to return to their subsidiary divisions or joint ventures and use their new skills to operate independently. And, finally, some companies are bringing over inpatriates as a way to eventually employ fewer U.S. expatriates.
"We've seen increasing numbers. Companies are realizing they need to tap high-potential people from all over the world to develop their operations, so they bring them in for a couple of years to really understand the business from the U.S. vantage point," says Noel Kreicker, president of Northbrook, Illinois-based International Orientation Resources. She can attest to the increasing numbers of incoming global employees. For the past two years, Kreicker's firm has been doing as many cross-cultural programs for people coming here from other countries as for people going out.
Lincolnshire, Illinois-based Hewitt Associates surveyed their largest clients (18 multinational companies in the Fortune 100)-almost 70% indicated they expect the number of foreign nationals coming to the United States to increase. That's a slightly larger percent than those who believe the U.S. expatriate population will increase during the next 10 years.
And guess what? These inpatriates are facing the same array of thorny issues as most other expatriates when approaching their assignments: immigration and legal issues, compensation and benefits questions, family concerns and culture shock.
"What!" you say. "How can American culture-which is well-known all around the world-be an enigma to foreigners? Why would incoming expatriates have trouble with our housing and our schooling?" Incredulous, you might ask, "Does someone actually receive a mobility premium for relocating to the United States?"
Well, the fact is, whether you're going to India or Indianapolis, Russia or Racine, Wisconsin, outbound and incoming global employees confront similar issues.
Settle legal issues first.
Once an individual is selected for an assignment here, one of HR's top legal priorities is to address immigration issues and visas. When a candidate is selected to come to the United States, dealing with the U.S. government and the Department of Labor begins to take on a life of its own.
"In the United States today, we need to recognize that there's an anti-immigrant sentiment that's making it more difficult for firms to hire foreign nationals," says Ethan Bensinger, managing director of the Chicago office of New York City-based Fragomen, Del Rey & Bernsen P.C.
Companies generally use two types of work visas in the United States. One is the H1, commonly used when recruiting students from U.S. campuses, especially at the Ph.D. and master's degree levels. Congress imposed a cap of 65,000 visas per year, which is quickly being met.
Another classification is the L1 intracompany visa that allows managers and executives to enter the United States for up to seven years if they meet specific requirements. L1 managers and executives can easily switch from their non-immigrant status to that of a permanent resident by filing a "Priority Worker Petition" with the Immigration and Naturalization Service. Bensinger explains that even though the assignment is initially intended to have a two- to three-year duration, often there's a driving factor toward acquiring permanent residency status because of the accompanying spouse's need to secure employment-which can only happen if he or she is a resident. Another factor might be the family's need for residency status so they can qualify for the lower college tuition costs if there are children in that age group.
Another problem is that if an individual is using the H1, new U.S. Department of Labor regulations have become more rigorous. The regulations dictate posting job opportunities at the locations where the individuals are scheduled to work. There also are more stringent immigration rules about the person's level of education and experience. And, there are several new bills on immigration reform pending in Congress that are sure to have a direct impact on the hiring practices of multinational organizations.
Then, there's the waiting period required before you receive a green card (the common terminology for acquiring permanent residency status)-which in recent years has become more manageable. Prior to 1990, there were long delays of up to two or three years from the time an individual decided to stay here permanently. Bensinger forsees a time when that could recur if the quota of green cards to multinational workers is lowered. But, the significant impact is to the dual-career couple. The spouse of a multinational transferee can't work legally in the United States until the family has a green card or the spouse independently qualifies for a working visa.
"The accompanying spouse doesn't qualify for work authorization under the L1 intracompany transfer visa. If the spouse isn't a university-degreed individual, he or she can't normally qualify for the H1. So we have an accompanying spouse sitting home twiddling his or her thumbs until the time comes to obtain permanent residency status," he says.
But since 1990, according to Bensinger, because of the large number of quota slots available for L1 managers and executives, these individuals have been able to obtain permanent residency within a period of six to 12 months, and so it hasn't been too onerous for spouses. This is especially the case because it takes time to settle in. And before you know it, you have your green card in hand.
This could all change. Those new bills on immigration reform pending in Congress ultimately will influence multinational organizations and their ability to domestically hire or relocate well-trained, motivated multinational individuals.
Offer competitive compensation.
Just as complex as legal issues is determining the right compensation and benefits formula for inpats. Human resources professionals handle compensation issues in a variety of ways because the reason for using inpats varies. "Many companies are using inpatriates so they can use fewer U.S. expatriates," says Joe LaSorte, international total compensation consultant with Hewitt Associates. "Instead of transferring technology by sending someone from Pittsburgh to Paris, they're bringing someone from Paris here because it can often be less expensive," he says.
According to LaSorte, people who are here on two- to five-year assignments generally are paid in reference to their home countries. "However, there are costs associated with bringing people here. You need to ship their belongings, possibly pay for their children's education expenses, pay for their tax preparation, pay for return trips home." It's still relatively cheaper, however, because the cost of living in the United States is generally lower, so you don't need to give them a cost-of-living allowance.
In rare cases, the home-country salary may be more than the U.S. one, and then the issue is similar to what HR practitioners face when they send out American expatriates who usually receive higher salaries than their colleagues. LaSorte had a client who wanted to transfer a senior executive from Argentina to Miami. The executive was making approximately 30% more than his American peers. Was a pay cut going to entice him to come to the United States? Unlikely.
Says LaSorte, "The other action (short of a pay cut) would be to raise everyone else's pay, which of course isn't going to work because then you've got everyone else bumped up to the top of the range. That's not a good situation."
The key is framing the compensation for the assignment in terms of a temporary transfer. And, communication with all employees is the best solution. When organizations send a lot of people back and forth, they generally will have a formalized policy about pay and other components of the package. If people are familiar with that before a move happens, they know what to expect.
Another nettlesome issue is benefits, especially health care. When you bring someone to the States from a country that has a national health service, you open up myriad scenarios. For some inpats, their national health system will continue to pay for medical expenses (although it's a very cumbersome process); for many others, their systems won't pay. You can put them on U.S. plans, but that could be problematic. For instance, if anyone in the family has had prior medical incidents, you might have a problem with pre-existing conditions, which could severely limit medical coverage.
LaSorte says approximately half the companies that have inbound employees put them into the U.S. medical plan. Others choose to leave them on their home-country plans with some provisions. For example, it's one thing if they need open-heart surgery or major medical treatment-employees may choose to go back home. But they'll need some coverage in the United States as well. Otherwise, what would they do for a sprained ankle or when their children have a cold? It's far too cumbersome to deal with an insurer in another country 6,000 miles away for every situation.
There also are issues about pension benefits and social security. The United States has with many countries totalization agreements that facilitate keeping the employees in the sending country's social security system and continuing to make contributions for them while they're here, so they don't need to pay FICA tax. Next, this brings up the issue of putting foreign nationals into U.S. pension plans-which have a lot of restrictions.
"There's always a solution," says LaSorte, "But you need to think about these issues [the implications of the compensation package, medical benefits, retirement contributions] before you make the moves."
Treat international employees the same.
Clearly, there's a trend emerging to treat people transferred across borders the same, at least conceptually. In other words, multinational companies are beginning to believe their people are going to have to cross country lines since they're global. More and more managers responsible for globalizing their firms don't think Americans should be treated differently from Europeans who relocate to the United States or Asians who move to Latin America. The trend is to talk about people as internationally transferred employees.
Some organizations are beginning to develop global-transfer policies by which everyone is covered under the policy, regardless of location of origin. SC Johnson Wax is one of those companies. "As part of our move toward globalization, we have developed a uniform foreign-service policy for two- to three-year assignments. International assignments help remove barriers and bring people in the company closer together," says Geri Connelly, foreign service programs associate for worldwide human resources. "The policy facilitates international moves by not imposing financial hardships on the person moving. At the same time it treats people consistently and equitably. Even if we're not all speaking the same linguistic language, we're speaking the same business language."
The Racine, Wisconsin-based manufacturer of household cleaning, personal care and insect-control products has 12,000 employees worldwide and 100 expatriates and inpatriates. Currently there are 15 inpats working at corporate headquarters. They come to Racine either to receive training that will give them a broader base of experience than what's available at their smaller subsidiaries, or to fill an open position. Inpatriates aren't new to SC Johnson Wax. The company has been bringing employees into the United States for at least 10 years.
Its package is a fairly standard one in terms of compensation and benefits. The company ties people to their home-country compensation, practices tax equalization and covers the cost-of-living differences between home and host countries. It provides housing assistance, pays for children's education and offers a relocation allowance, which is a payment at the beginning and end of the assignment to recognize-and compensate for-the inconvenience of having to relocate. In addition, the company also offers cross-cultural training to all family members. Its commitment to developing a uniform transfer policy is a strategic move that enables it to globalize and transfer people around the world. One reason it keeps people on home-country compensation and benefits schemes is simply because social programs and national-health plans are among the most complicated issues to deal with in relation to the assignment.
Chrysler Corp., based in Highland Park, Michigan, does just the opposite of SC Johnson Wax. Chrysler compensates inpats on a U.S. salary basis. The giant car maker brings in about 15 to 20 people at any one time (and that number has been as high as 45), mostly from its subsidiary in Mexico. These individuals do technical liaison work or come on developmental assignments.
"We take a kind of simplistic point of view that if we give them a U.S. salary, they'll be getting the equivalent of their U.S. counterpart. Then there's no need for cost-of-living allowances or special compensation arrangements," says Raymond Wilhelm, manager of expatriate administration and services for international personnel. Which isn't to say that the company doesn't treat them as special. "Because of the numbers, we used to kind of hold their hands throughout the entire process." In fact, until recently the company had apartments set up for its inpats.
The inpat policy is quite similar to the expatriate one, with a few modifications. The company provides a foreign-service premium, housing subsidy, cross-cultural counseling and language training. "You have to understand the total compensation package that they had while they were working overseas to be sure what you're doing makes sense for them," he says. For instance, if you bring someone in from Frankfurt, there's a 13th month paid to workers that has to be taken into consideration. By clarifying the compensation history and expectations of the inpat early on, HR can avoid misunderstandings that may affect performance later on.
What About the Family?
Finding the right compensation and benefits package is essential for getting the inpats to make the move. But keeping them happy requires helping their families.
With about 200 inpatriates and expatriates as his responsibility, Wilhelm sees family issues as being crucial. He's not alone. "The family needs are paramount in a successful relocation because of the cultural differences and the specialized needs of families coming into this country," says Samuel L. Pearson, international relocation coordinator for Indianapolis-based Eli Lilly and Company, producer of human health and agricultural products. "We learned a few years ago how important it is to place a lot of focus on the family's needs. It's kind of like a domino effect. If the children aren't happy, the spouse isn't going to be happy, the employee isn't going to be happy, and the company isn't going to be happy-it can all tumble down on you."
The company calls their inpats International Service Employees (ISE). They number about 20 people a year and are scientists and financial and marketing people-highly specialized individuals. Pearson is called in after the candidate has been told about the position, and his job is to make sure that not only the employee is receptive toward the idea, but the family is as well. As soon as the candidate is identified, Pearson makes a phone call to the individual and starts the process. He puts them in touch with other ISEs who've created an informal mentoring program. They continue a constant communication process from the beginning (which includes a three-hour orientation to discuss the package, taxes, work permits and other necessities) until the family is settled.
If the needs of the family are predominant, the number one issue with families usually is schooling. The company pays for private schools if that's what the parents choose and brings the couple over to the United States a month or two in advance of the physical move to house-hunt and investigate schools.
Last year, partially as a result of Eli Lilly's commitment to making the lives of their inpats easier, and partly to help attract foreign talent to Indianapolis, Eli Lilly helped to found the International School of Indiana. The school is the brainchild of an international task force in Indianapolis which met to figure out how to attract more foreign investment, how to create more global thinking and how to help position the city for the year 2000.
The school opened with 38 students (pre-K through grade 3) in September of 1994. It has a French-American track and a Spanish-American track. Now in its second year of operation, the school has 81 students.
"With the help of other multinational companies, we expect to expand the school to a complete elementary school," says Pearson. It's one step to meet the needs of the company's inpat families.
Chrysler found one need to be language training. Prior to Wilhelm's arrival six years ago, no one had thought of giving inpats English lessons. The company started by giving English lessons to everyone in the family. "We assumed that they all spoke English, which they don't, and even when they know technical English, it's very different. We also discovered that we assumed they knew American culture. That was also not true."
And, don't fool yourself, adjusting to the United States and its culture isn't easy. People need help with what we consider the little things-like finding a house and getting a driver's license, setting up bank accounts, locating where to buy a car and learning how to bargain for one. In other words, people need help with the hundreds of details involved in relocating and setting up life in a foreign country. They may be highly regarded managers, but they'll likely have trouble getting a credit card here. They may have expertise that's in demand, but if they fit a certain profile, immigration officials may give them a hard time when they enter or leave our country.
"In my experience, when someone comes to the United States, many [Americans] don't realize that the States is a foreign destination for [that person]," says Jack Keogh, originally from Ireland, and currently the managing director of client services for Mayflower International Inc. "Companies that send people to difficult places (such as Saudi Arabia) know they're difficult and tend to think about it a lot. But they don't see why somebody coming to the U.S. from Ireland or Germany or Japan should have a problem. In their estimation, this is the land of milk and honey. So, they don't understand the difficulties."
But, Americans are different-and living here in the States is a very different experience for those not from here. We want everything done yesterday. We're bombarded at dinner with telemarketers offering limited-time offers. We have a sense of urgency and intensity unlike many other cultures and it can be intimidating. We're incredibly scheduled; even children carry organizers with calendars booked by the hour for soccer practice, piano lessons and tutoring.
Americans are superficially friendly-breezily inviting people to "get together some time for dinner" or to "drop over"-unconcerned if it'll actually happen or not. And, we're transactional, able to do business while engaging in amiable conversation and social interaction with strangers. All of these traits can be confusing to non-Americans.
"And there are so many choices, here. It's overwhelming," recalls Keogh. "If you go to a deli and ask for a corned beef sandwich, they'll ask if you want lettuce and tomato; mustard or mayonnaise; rye, white or wheat bread. You go to buy shoes and there's 50 pairs in size 10-blue, black, brown. You want to order your phone service and then you need to decide which telephone company to use and then which plan is the best.
"The number of decisions you have to make on a daily basis is incredible. I think people from other countries do have a very strong feeling that this is a foreign country and, consequently, they're looking at life in America as a challenge."
As Americans, we may find this perception difficult to believe until we step back and think about it from a less ethnocentric, and more universal perspective. The fact that our lifestyle requires adjustments, that our customs may be strange to others, that our medical, educational and legal systems are formidable, is important for everyone to understand, but particularly HR managers who have the responsibility for international assignees. In the rush to globalize, companies are facing firsthand the issues their expatriates have been confronting for years. HR can be at the front lines, helping to pave the way for a successful overseas assignment, even when overseas means here in the United States.
Personnel Journal, November 1995, Vol. 74, No. 11, pp. 40-49.