Expatriate Manuals Prevent Individual Deal Making
Even though manuals are valuable, they're not frequently used. Part of the reason for this, says Laura McMillan of Dallas-based KPMG Peat Marwick, is that many companies don't have standard policies. Effective expatriate manuals articulate policy clearly. In fact, companies may have individuals who try to circumvent the system that's in place in order to get better benefits. "You get into a lot of problems when you do everything on a one-time basis, she points out. "You'll have everyone trying to develop their own personal package." The manual reflects a strategic policy. This is the first step.
Another key problem, according to Kathryn Devos of Kenilworth, New Jersey-based Schering-Plough, is the mistake of thinking that international relocation is similar to domestic relocation. "Domestic relocation policy is real estate driven. International policy is people driven," she says.
Effective international relocation policy also must focus on cross-cultural issues and psychological factors that will affect the expatriate's success. It has to take into account a raft of other financial considerations such as educational expenses, travel expenses and compensation for alterations in the standard of living.
Start by determining the objectives. Obviously, you're not going to write down specific compensation packages, but the general guidelines of eligibility and level of employee can be included. It's important to define benefits because most of us are geared to benefits as they apply in the U.S. For example, pension and 401(k) plan participation may be affected by time spent in a foreign company. Vacation policies are different from one country to another.
Other items to address are: compensation packages, tax reimbursement policy, procedures regarding U.S. real estate—sales vs. rentals—through local management agencies.
A detailed, country-specific appendix can list some of the cultural and business
differences as well as the types of premiums for certain countries. For example, firms compensate expatriates going to the desert in Africa with hardship allowances while they may not do that for those going to Paris.
Define who the manual applies to. Will it be for U.S. employees only or for third-country nationals as well? How does it pertain to multinational employees coming to the U.S.? Does the policy apply to short-term assignees?
"A manual avoids people using leverage to cut their own deal, which would create problems with morale in the host locations," says Per A. Thorsrud of KPMG Peat Marwick. "It's very important."
Finally, include information about repatriation. General policies and guidelines are important so expatriates and potential expatriates know they are not forgotten when they're abroad. All too frequently, expatriates leave the company after they return to the U.S. Often, this is simply due to lack of planning and communication by management.
Personnel Journal, April 1994, Vol.73, No. 4, p. 56.