Long Live the 

Expat Package 

(for now)

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When a manager is posted on an overseas assignment, it is often considered a promotion and his base income can increase by a certain defined amount. However, the expatriate can dramatically increase his net take-home pay because much of his personal expenses are funded by the employer. For this reason, it is the “expat package” that is considered most interesting in the discussion of expatriate compensation. 


The Good Old Days 

Forty years ago, expatriate postings in so-called third-world countries were considered disruptive and often dangerous to manager’s careers -- and even their lives. It was a tremendous sacrifice for anyone to take such a risk on behalf of their employer and such dedication was rewarded handsomely. 

From the employer’s side, the supply of multinational-experienced managers in developing countries was almost nonexistent a few decades ago. And of the few who did exist, it was impossible to monitor their work because of the rudimentary communications technology that was available at the time. 

Global organizations found they had no option but to relocate their own managers. So, British companies had British expatriates, American companies had American expatriates and so on. 

Given the lack of options and the difficulty to induce quality people to become expatriates, international organizations were forced to provide regal benefits to their overseas managers. 

Over time, a standard “expat package” was developed that included most or all of the following benefits:

 

The "Expat Package"

• Hardship bonus (often between 10% - 30% of base income)

• Executive housing for the family (including utility costs)

• Automobile including fuel and maintenance (often with a driver)

• International private schooling for children

• Round-trip airfare to the home country for the entire family (at least once per year)

• Executive relocation for the entire family (before and after the posting)

• Sale or safeguarding of original family home

• Tax equalization with the home country

• Financial planning advice

• Executive healthcare coverage for family

For the expatriate, these benefits can result in a substantial boost in net compensation and overall quality of life. 

For employers, however, the “expat package” can add between US$150K and US$200K per year to the overall cost of the manager – in addition to cash compensation, bonuses and regular benefits. That is an especially large sum to sustain in many small emerging markets such as those of Southeast Asia.  The expatriate benefits package by itself can be equivalent to the entire labour cost of 30 or 40 rank-and-file employees. 


Still Hardship Postings?

Over the years, many emerging countries have progressed and are not the hell-holes they once were. Most major cities in Asia have affluent districts where most expatriates live that are as comfortable and luxurious as anything in their home countries. Another positive change is that fast-track managers today recognize overseas experience as valuable, or even critical, to their long-term career success. 

For these reasons, expatriate managers don’t need to be as heavily enticed nowadays as in the past to consider overseas postings in fast-growth emerging countries. 

At the same time, multinational employers have a lot more options for who runs their far-flung operations then they used to. Most progressive emerging countries have been able to develop a generation of younger managers and more than a few are capable of working at the most demanding international standards. While the base income levels of these local managers is quickly converging with those of expatriates, locals do not require the expensive “expat package” so they are less costly overall. 


The “Expat-Light” Package 

The combination of quality managers becoming more open to working overseas and more options for employers has resulted in a gradual clawing back of expatriate benefits by many international organizations. 

Many companies have reduced or removed hardship bonuses except in outright war zones. Others have reduced allowances for housing and international schooling such that they cover only a portion of the entire cost. The expatriate is expected to pay the difference himself or to find cheaper alternatives. 

Mid-sized and small companies seem to have been the most enthusiastic at reducing expatriate benefits. Some industries such as the contact center providers seem to be on track to eliminate them almost completely. 

The change has also not escaped various large development agencies (such as the Asian Development Bank) and many prominent international schools. All are well noted to have reduced expatriate employee benefits over the past few years.


Not So Fast

But the process is far from complete and many of the largest global organizations continue to provide full expatriate benefits with no sign of any looming policy change. Companies with long established international-track management programs such as the large global banks and industrial companies are obvious examples. In the public sector, embassies also seem keen to continue their policies for full expatriate support. 

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Executive Search &  Management Consulting:

Chalre Associates provides its Executive Search and Recruiting services throughout the emerging countries of the Asia Pacific region with specific focus on Philippines, Singapore, Malaysia, Indonesia, Vietnam, Cambodia, Laos.  We are proactive and well known in our sectors of focus.  Regional Managers use us to help bridge the gap between local environments and the world-class requirements of multinational corporations.   

 

C o n t a c t   U s

 

  +632 892 6703       +63 908 880 4178      leaders@chalre.com

 

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Asia CEO Forum

 

Asia CEO Forum presented by PLDT ALPHA Enterprise is the largest regular business event in Philippines and considered one of the most important in the Southeast Asia region. The forum serves as a hub for the spreading of ideas that help executive managers overseeing enterprises across the Asia Pacific region. 
  
Attendees are both expatriate and Asian management personnel overseeing multinational and regional organizations.  Held in Philippines, presenters are leaders in their industries and engaged in momentous pursuits of significance to the entire region.  

 

Asia CEO Forum is operated as a CSR (Corporate Social Responsibility) activity of Chalre Associates, one of Southeast Asia's most prominent senior management executive search firms, to promote Philippines as a premier business destination in the Asia region.  

 

Click Here to go to Asia CEO Forum now!

 

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Asia CEO Awards

 

Asia CEO Awards presented by American Express represents the grandest alliance of local and international business people ever created to promote Philippines on the world stage. As one of the largest events of its kind in the Asia Pacific region, it is considered a must-attend occasion for business leaders active in Southeast Asia. 

The star-studded Board of Judges of Asia CEO Awards give away 10 awards to many of the most accomplished leadership teams and individuals currently operating in Philippines and the region. The awards recognize extraordinary leaders who have demonstrated outstanding achievement for their organizations and contributions to others. 

As one of the fastest growing nations on the planet, the world's business leaders have their eyes on Philippines like never before. The annual gala was established as a natural outgrowth of Asia CEO Forum, the largest regular networking event for the business community in Philippines. 

 

Click Here to go to Asia CEO Awards now!

 

 

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SPECIAL DOWNLOADS:

 

Media organizations throughout the world call upon the Principals of Chalre Associates for thought leadership.  Below are some examples of published material written by our consultants or international journalists who refer to them.  For a complete list of published work, Click Here.  

 

 

Getting Ready For The Deluge: Outsourcing in Philippines

by Chalre Associates senior staff

 

Download [PDF file, 62KB]

 

The Economist Intelligence Unit of the Economist magazine asked Chalre Associates' Chairman, Richard Mills, to write a chapter about the Philippine outsourcing sector in its annual Business Guide Book.  The material provides a Executive Briefing on the progress and major issues facing this industry that is certainly one of most significant growth stories in the world.  more

 

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Asia Pacific Mining Conference 2007 - Report

by Chalre Associates senior staff

 

Download [PDF file, 28KB]

 

The 7th Asia Pacific Mining Conference put on by the Asean Federation of Mining Associations was perhaps the largest such event in the region.  Richard Mills, Chairman of Chalre Associates gave this report on what was said by the prominent mining people who presented. more

 

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The State of BPO in Philippines: Dan Reyes Speaks

by Chalre Associates senior staff

 

Download [PDF file, 31KB]
 

Richard Mills, Chairman of Chalre Associates, interviewed Dan Reyes of Sitel for ComputerWorld (US) recently to get his views on the state of the BPO industry in Philippines. Dan presented US readers with compelling information to support his view that Philippines is currently seen as the "Number 1" option by global companies sending BPO work to offshore destinations. 
 
Dan Reyes is easily one of most experienced Business Process Outsourcing (BPO) managers in the Asia Pacific region and the world. He is head of the extremely successful Philippine operations of Sitel, the world's largest call center organization. Among other things, he is a founder and former president of the Business Processing Association of the Philippines.    more