Effective Strategies in Expatriate Cost Management

Brian Friedman

14 July 2009

What makes assignees expensive ?

• Allowances 35%

• Property costs 35%

• Relocation Costs 15 %

• Professional services 10 %

• In-house costs <5%

Policy Review

• Who is an expat

• Selection / Governance procedures

• Traditional Policy

• Local Plus

• Expat Lite

• Flexpat policy

Allowances

• Benchmark allowances

• COLA

• Zero based allowances

• Gainshare allowances

• Flexpat

Property - the elephant in the room

• Review housing allowances• Location, location, location• Don’t show property over budget• Gainshare with assignees• Hotels, serviced accommodation, rentals• Bulk deals• Fees – v – commission• Incentivise DSPs• Shared Accommodation• Deductibles

Removals / Shipping

• Plan in advance – not last minute

• Shared Loads

• Back Loads

• Volume limits

• Incentivise assignee

• Incentivise service provider

Banking and Currency

• Review banking arrangements

• Understand charges and commissions

• Consider a specialist FX dealer

• Consider caps and collars

• Hedge liabilities

• Review assignee remittance costs

Schooling

• Use of education consultants / guides

• State v Private / Day v Boarding

• Home v Host

• Bulk discounts

• Gainshare with assignee / vendor

• Deductibles

Tax / Social Security

• Compliance – No 1 priority

• Risk Management

• Quarterly Review of savings

• Gainshare

• Review Tax Equalisation policy

• In-house – v- Outsource

Travel Policy

• Class of travel / Choice of airline

• Frequency

• Family members

• Destination

• Gainshare

• Flexpat

Immigration

• Compliance / Risk Management • In-house v outsource

• Get your service provider to train you

• Choice of service provider

Pension / Insurances

• International Pensions

• Healthcare / Medical

• General Insurance

• Emergency home leave

Vendor Partnerships• Partnerships – create the win-win

• Service Level Agreements / Gainshare

• Keeping the relationship fresh

• Over-runs and out of scopes

• Centralised v Local billing

• When to RFP / RFI and Transition management

In-house v Outsourcing

• What to outsource (and when and where)

• Use of contractors and home workers

• Never outsource responsibility

• Use experts to train in-house staff

• Loan staff

Non essential services

• Is anything non-essential

• Review what is absolutely necessary

• “Nice to haves” v “must haves”

• Is the pain worth the gain ?

Technology

• Use technology to reduce cost

• Use technology to enhance service

• Use technology to manage process

• Use technology to connect assignees

Volunteers

• Trailing Spouses

• Buddy Programmes

• Intercultural training

Ten easy ways to save money

• Focus on the ROI of the assignment

• Establish a definition of success

Don’t tell the assignee he is the only candidate !!!!!

Have a policy……. And stick to it

Focus on the family not just the assignee

Don’t separate costs into multiple budgets

Avoid Allowance Overload

• Try a Flexpat approach

Always have deductibles

Localise, localise, localise

Talk to your service providers

Gainshare with the assignees

The best companies make assignments a pre-condition for reaching board level

Read the Mckinsey study

Expatriate and Vendor Cost Management

14 July 2009