2013 EMEA EXPATRIATE MANAGEMENT CONFERENCE€¦ · Key success factors •Global Mobility Policy :...
Transcript of 2013 EMEA EXPATRIATE MANAGEMENT CONFERENCE€¦ · Key success factors •Global Mobility Policy :...
BUILDING PRACTICAL LOCALISATION POLICIES
12 APRIL 2013
Emmanuel RIVERE, Head of the Global
Mobility Practice for France, Mercer, France,
Paris
Sandrine MATHELIN, International Mobility
and Compensation Manager, Yves Rocher,
France, Paris
MERCER
Table of content
• Localization : definition
• Why a localization policy ?
• Targeted population
• Core principle
• Typical policy rules
– Contract
– Compensation
– Benefits
• Accompanying terms
• Key success factors for a localization policy
• Appendices
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Localization Definition
….
Expatriation
« Conventional » approach Localization
Compensation
Benefits
Legal
Localization +
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Localization policy Why a localization policy ?
• Facilitate the transfers within the group
– Reinforce the group’s international identity & culture
– Use international mobility as a tool for career
development
– Adapt to a globalized world
• Send employees abroad at lower costs than standard
expatriations
– i.e to subsidiaries that cannot bear standard expatriate
costs
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Localization policy Targeted population
• Transfers upon employee’s request
• End of expatriation
• Career management for :
– Juniors
– Locally hired foreigners
• Permanent transfers
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Typical policy rules Contract
Principle
Terminate the home country work contract
Risks / Challenges
Potential legal issues
Comments
- No remaining link with the home country entity
- Signature of a local contract (unlimited duration) in compliance with immigration
- No terms for reintegration
- According to the home country legal framework, estimate the risks in case of dispute with the employee
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Typical policy rules Compensation
Principle
Host local market salary
Risks / Challenges
Is there any challenge here ?
Comments
- Two markets (depending on the location) : - « Pure » local market
- Local market for locally hired foreigners
- The employee is fully responsible for his/her taxes (No tax equalization, protection, …)
- Local bonus plan
- Local benefits in kind (if any)
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Typical policy rules Compensation
Progressivité des salaires par marché
(salaire de base)
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
47 48 49 50 51 52 53 54 55 56 57 58 59 60
Mercer Position Class
Ind
ex (
Base 1
00)
Argentina China (Beijing) Czech Republic Mexico France
PC 47-48 Junior
Executive
PC 55
Expert / Specialist
PC 60
Senior executive or top executive
Market salary
progression
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Typical policy rules Compensation
WARNING
-Exhange rate
-Compensation structure
-Benefits
-Tax burden
-Local cost of living
Paradox :
-Juniors, who localize easily, despite of the salary levels
-Seniors : More difficult Beneftis
Total cash, marché général (brut, €)
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
180 000
47 48 49 50 51 52 53 54 55 56 57 58 59 60
€
Po
sit
ion
Cla
ss Argentine
Chine
Rep tchèque
Mexique
France
Total cash (€), All industries, median market
€
Position class (IPE)
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Typical policy rules Benefits : Health, disability, retirement, unemployment
Principle
Host local coverages
Risks / Challenges
Critical, for employees coming from high level to low level social scheme
countries
Comments
- Benefits are the most challenging part of the localization
- A preliminary study is fully required
- Immediate Risks (Health / Disability) vs Differed risks (Retirement)
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Typical policy rules Health & Disability coverages
• High disparity in the health& Disability coverages : Statutory coverage + Private
insurances
• Health and disability market levels can be divided into 3 groups :
Statutory health
coverage
Private health
coverages Examples
Group 1 Weak / insufficient Weak / insufficient Niger, Albania
Group 2 Weak / insufficient Good level / Mature Brazil, China
(High disparity)
Group 3 Good level / Mature Good level / Mature
France, Belgium,
Expats coverages
guarantees
Very big area – High disparity of the overall coverage (statutory coverage + private insurances) – Strongly dependent from the region (Asia, South America, etc…)
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Low expectations
Neutral expectations
High expectations
• The below matrix can help in assessing the expectations from the employees depending on the countries combination :
Typical policy rules Employees expectations : how to define the needs ?
Host country
Home country
Group 1 Group 2 Group 3
Group 1
Group 2
Group 3
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Typical policy rules Retirement
• Same approach than the health & disability coverages
– From a qualitative perspective, less diversity in terms of retirement coverage types :
- Defined contribution (DC)
- Defined benefits (DB)
– From a quantitative perspective, complexity is still there.
• Mercer divides the retirement coverages into 4 groups :
Description Examples
A Robust retirement coverage, leading to good retirement conditions on
a long term basis Denmark
B Good retirement coverages, but requiring some improvements Australia, Netherlands,
Sweden, Canada
C Good retirement coverage, but not reliable on a long term basis as is USA, Chili, Brazil, France,
Germany, Poland
D Retirement coverages requiring improvements, sometimes weak, and
not reliable on a long term basis as is
India, China, South
Korea, Japan
Source : Melbourne Mercer Global Pension Index
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• The below matrix can help in assessing the expectations from the employees depending on the countries combination :
Typical policy rules Retirement
Host country
Home country
Group A Group B Group C Group D
Group A
Group B
Group C
Group D
Low expectations
Neutral expectations
High expectations
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• According to the country of localization, the rights can be partially or totally
acquired. If the rights are acquired, it means that the localized employee will benefit
from the rights acquired in the home country.
• In case of acquired rights in the home country, the localization will have an impact
on the future only.
• If rights not acquired in the home country, the localization will have an impact on the
past as well.
Typical policy rules Retirement : acquired rights
Estimated
level of
retirement
Country A – Home country Country B – Host country
Estimate Comments Estimate Comments
Before
localization 60
Beyond the statutory retirement coverage,
the company has a supplementary
coverage. Rights are acquired.
60 The rights are acquired : the localization has no
impact
After
localization 30
Because of the localization, the rights
acquired in the home country will not be
accumulated
50
The host retirement coverage is mandatory. On
top of it, the host subsidiary has a very competitive
supplementary coverage.
TOTAL 30
The employee would have got a
pension of 90 if he had stayed in the
home country
110
Rights acquired in the home country + host
coverages = the employee benefits from a
higher pension than if he had stayed in the
home country.
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Benefits (Health, Disability, Retirement) Common approach in case of localization
• The biggest challenge in terms of localization comes from the Benefits
area : where does the employee come, where he is being localized
– Does the host coverage meet the home country standard ?
– Are the local subsidiary practices good enough ?
• Case by case study required, through the following methodology :
1 3 4 5 2
Home country
coverages analysis
Host country
coverages analysis
Recommendations
Adjustments Implementat
ion
• Some deeper analysis might be required, depending on the employee seniority (Top executive)
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Localization policy Suggested Accompanying Terms
Provided one shot / first year :
• One way flying ticket
• Moving
• Cross-cultural training
• Relocation
• Tax assistance
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Localization policy Conclusion
Typical localization package :
• Host market salary, no other premium nor incentive
• Benefits :
– Gap analysis to be performed…
– … On an individual basis if required
• Benefits in kind
– No BIKS
– Potentially, one-way accompanying benefits
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Localization policy Key success factors
• Global Mobility Policy : localization segment formalized
• Clear eligibility criterias
• Strong communication and training :
– HR community, DHRs
– Managers
– Host locations
• Strong internal sponsorship
– Group DHR
– Board
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• Expert in information systems, he has also directed the choice and then the implementation of the dedicated applications for expatriate management: Packages calculations, assignments / assignees administration, costs and exceptions tracking. (Direction of the request for proposal, implementation, roll out over several continents, training of the operational). He has also directed the conception of the Back office tool for the French hub. Then, he has strongly contributed to the optimization of the operational processes through the Lean – Six Sigma methodology.
• Before Société Générale, Emmanuel was member of the project team in charge of implementing PeopleSoft HRMS (HCM) on the EMEA area for Ernst & Young.
• He is fluent French, English and Spanish.
Curriculum Vitae Emmanuel RIVERE
• Emmanuel is Principal, based in Paris and team member of the EMEA Global Mobility Centre of Excellence to assist firms in global mobility consulting issues and challenges.
• He is the leader of the Mobility Consulting business for France.
• Before joining Mercer in March 2009, he has directed during 3 years, at the Corporate level, the International Mobility projects for Société Générale in Paris: design and implementation of the new compensation policies, transition and change management, roll out (France, USA, UK, Hong Kong).
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Sandrine Mathelin, Remuneration and International Mobility Group Manager Groupe Yves Rocher
Sandrine has been Group Remuneration and International
Mobility Manager since March 2011 for Yves Rocher
Group, a French family owned business with 7 major
brands dedicated to beauty and well-being.
Before joining Yves Rocher Group, Sandrine was
International Mobility Manager for Vallourec during 4 years.
Previously, she worked as Compensation and Benefits
and/or International Mobility manager in international
companies such as Technicolor, SHV Gas, McKinsey &
Company.