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Effective Strategies in Expatriate Cost Management
Brian Friedman
14 July 2009
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What makes assignees expensive ?
• Allowances 35%
• Property costs 35%
• Relocation Costs 15 %
• Professional services 10 %
• In-house costs <5%
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Policy Review
• Who is an expat
• Selection / Governance procedures
• Traditional Policy
• Local Plus
• Expat Lite
• Flexpat policy
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Allowances
• Benchmark allowances
• COLA
• Zero based allowances
• Gainshare allowances
• Flexpat
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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
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Removals / Shipping
• Plan in advance – not last minute
• Shared Loads
• Back Loads
• Volume limits
• Incentivise assignee
• Incentivise service provider
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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
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Schooling
• Use of education consultants / guides
• State v Private / Day v Boarding
• Home v Host
• Bulk discounts
• Gainshare with assignee / vendor
• Deductibles
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Tax / Social Security
• Compliance – No 1 priority
• Risk Management
• Quarterly Review of savings
• Gainshare
• Review Tax Equalisation policy
• In-house – v- Outsource
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Travel Policy
• Class of travel / Choice of airline
• Frequency
• Family members
• Destination
• Gainshare
• Flexpat
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Immigration
• Compliance / Risk Management • In-house v outsource
• Get your service provider to train you
• Choice of service provider
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Pension / Insurances
• International Pensions
• Healthcare / Medical
• General Insurance
• Emergency home leave
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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
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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
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Non essential services
• Is anything non-essential
• Review what is absolutely necessary
• “Nice to haves” v “must haves”
• Is the pain worth the gain ?
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Technology
• Use technology to reduce cost
• Use technology to enhance service
• Use technology to manage process
• Use technology to connect assignees
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Volunteers
• Trailing Spouses
• Buddy Programmes
• Intercultural training
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Ten easy ways to save money
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• Focus on the ROI of the assignment
• Establish a definition of success
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Don’t tell the assignee he is the only candidate !!!!!
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Have a policy……. And stick to it
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Focus on the family not just the assignee
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Don’t separate costs into multiple budgets
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Avoid Allowance Overload
• Try a Flexpat approach
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Always have deductibles
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Localise, localise, localise
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Talk to your service providers
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Gainshare with the assignees
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The best companies make assignments a pre-condition for reaching board level
Read the Mckinsey study
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Expatriate and Vendor Cost Management
14 July 2009