Long
Live the
Expat
Package (for
now)
When
managers are posted on overseas assignments, it is often considered a
promotion and they can expect to received an increase to their base income.
While this is exciting, it is usually only a few percentage
points in additional income. By far the most significant
financial opportunity for expatriate managers and their
families is the benefits they receive while being posted to the
overseas location. Much of their family's personal
expenses can be funded by employers. 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 to so-called third-world countries
were considered disruptive and often dangerous to managers’ 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 entire family
For expatriates, these benefits
usually 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 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 local
managers and many 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 most 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 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.
Hiring
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Asia
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Asia
CEO Forum presented by PLDT ALPHA Enterprise is the largest
regular business event in Philippines and considered one of the
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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
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Asia
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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.
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Asia
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Asia
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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
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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
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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
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
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
