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Companies are decreasing the time employees spend on overseas assignments, but that may not be the most effective way to cut costs, says KPMG.
Sarah Johnson, CFO.com | US
August 28, 2006
As global companies increasingly get a better handle on how much their international assignment programs truly cost, they're looking for ways to cut back, according to Achim Mossmann of KPMG.
Some are decreasing the amount of time employees spend away from their main office. KPMG's Global Assignment Policies and Practices Survey reports a 54 percent jump in the number of companies using short-term assignments compared to last year. But that doesn't necessarily save money; shorter stays can use up the same amount of time and dollars or more to plan the logistics and effectiveness of each trip, according to KPMG.
Many companies are only now realizing how many employees are participating in their assignment programs and the actual cost of each assignment, says Mossmann, national director of global mobility advisory services in the international executive services practice of KPMG. That leaves businesses having to balance the amount of time and money invested in each assignment with the value that an employee brings back from his or her experience.
"If the only reason a company uses short-term assignments is to avoid the cost of a long-term assignment, that is probably going to backfire," says Mossmann. The weight of the decision on how long to send an employee to another office should depend on how much time each specific assignment needs to meet its goals, Mossmann adds. If the goal is to expose a young employee to more international experience, then a year may be more appropriate than a few months.
Whatever the length, international assignments are on the rise. Forty-seven respondents to a GMAC Global Relocation Services survey last year reported an increase in the number of expatriate participants, and predicted those numbers would rise.
Of course, companies are also looking to decrease the costs of such assignments. But it may not be a priority: Only 14 percent of KPMG's survey respondents said their primary goal for their expatriate program is to control the costs and achieve ROI. "Companies don't really have the tools or understand the tools to manage the costs and manage the program well," says Mossmann, although they are moving in that direction.
The KPMG survey reveals that 38 percent of the respondents believe their relocation assignments are too generous, and 48 percent think their programs take too much time and effort to administer. "Companies don't necessarily spend enough time on the initial planning of an assignment," Mossmann says. "At the beginning of an assignment, they should have repatriation in mind and know what will happen with the employee when he or she returns from overseas. We often talk about the cost of an international assignment, but we don't really look at the value on the side of repatriation."
At Siemens, Mossmann's previous employer, finance executives frequently went on international assignments to meet long-term goals, mainly to make sure a subsidiary office was following the practices, philosophies, policies and procedures that were mandated from the German headquarters, Mossmann says.
"It is difficult to put a number on the cross-cultural experience that an employee brings back from an assignment, and the value that the employee brings back when he or she is able to communicate with people from headquarters or subsidiary organization," Mossmann says.