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International HR Policy Basics

April 1, 1997
Related Topics: Expatriate Management, Policies and Procedures, Featured Article
It has finally happened. Your company is venturing out. It opens operations in Belgium in six months, and you’re responsible for drafting the international HR policy that will carry the first team of expatriates overseas and back again. You know that to achieve and retain a competitive edge in a world market this policy needs to support your company’s global business strategy. You know that it shouldn’t be too restrictive or too vague, and that it should reflect local customs of the host country. And because you know all of this, you’re feeling a little nervous.

But there’s no need to worry. When you break down policy development into it’s basic components, it’s less overwhelming. Let’s take it step by step. First we’ll identify the objectives of a global HR policy.

State policy objectives.
Regardless of the corporate business strategy unique to each company that will drive the specifics of an IHR policy, there are certain objectives that any effective IHR policy should aim to accomplish. The policy should attract and motivate employees to accept international assignments. It should provide competitive pay plans to ensure the assignee can maintain his or her accustomed lifestyle. It should promote career succession planning and include guidelines on repatriation and additional overseas assignments. It should facilitate relocation between home and host locations. And finally, it should be cost-effective, understandable and easy to administer.

To meet these objectives, you must have internal or external systems or programs functioning to handle the following six areas.

  1. Candidate identification, assessment and selection.
    In addition to the required technical and business skills, key traits to consider include: cultural sensitivity, interpersonal skills and flexibility.
  2. Cost projections.
    As the average cost of sending an expat family on an overseas assignment is between three and five times the employee’s pre-departure salary, quantifying total costs for a global assignment is essential in the budgeting process.
  3. Assignment letters.
    Document and formally communicate the assignee’s specific job requirements and associated pay in an assignment letter.
  4. Compensation, benefits and tax programs.
    Identify the compensation, benefits and tax approach that meets company objectives. Some common approaches to pay include: home balance sheet, destination-based, net-to-net, flexible and lump sum. Tax equalization, tax protection or laissez-faire policies also may be incorporated.
  5. Relocation assistance.
    Assist the assignee with disposition or management of home and automobiles, shipment and storage of household goods, visas/work permits and pre-assignment visits.
  6. Family support.
    Provide cultural orientation, language training, spousal support, education assistance, home leave and emergency provisions.

Include key elements.
When developing an international human resources policy, the following points are usually addressed:

  1. Purpose and other general information
  2. Relocation preparation
  3. Relocation to host location
  4. Allowances to maintain standard of living
  5. Leaves
  6. Education allowance for dependent children
  7. Benefit coverage
  8. Tax policy
  9. Repatriation (or succession plan)
  10. Termination agreement.

This is by no means an exhaustive list of items to include. It should be considered the minimum guideline, however, when developing a table of contents.

Administer the policy.
Administration of an IHR policy can be an important determinant of its ultimate success. The proper channels and workflow should be clearly delineated and well communicated. You need to decide which tasks and activities will be administered internally and which will be outsourced. An assessment of the knowledge, skills and cost required to perform

critical functions should be gauged for both internal resources as well as outside service providers. Many multinationals currently outsource certain functions—including relocation, culture/language training, payroll, government reporting, income tax and immigration.

Technology can also facilitate policy administration and should be utilized to help reduce costs, improve efficiencies and improve service quality. In the short term, technology can improve operational efficiency by automating certain manual processes or providing an improved platform for transactions.

Regardless of which feasible solutions you choose, solving specific goals of the company’s globalization strategy will be critical. Top priority always must be given to continuing excellence in client service to the international assignees. The ultimate value of a well-designed IHR policy and program is that it allows employees to stay focused on their business priorities and continue contributing to the financial success of the organization.

To retain the value of the human resources function in the ever-changing global business climate, you need to take proactive measures to ensure the growth of your company in this ever-shrinking "small world." It will be the company (regardless of size) that will leverage both knowledge and advanced technology and will take advantage of the overwhelming global business opportunities that await now and in the 21st Century.

Global Workforce, April 1997, Vol. 2, No. 2, pp. 29-30.

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