Short-term Assignments, Permanent Transfers, Localization, and Business Trips
Cost-effective compensation alternatives for international assignments lasting less than one year or intended as permanent transfers or done under local terms and conditions
The length of an international assignment can dramatically affect daily expenditures while abroad. For assignments of less than 12 months, the traditional approach of using an expatriate index and a balance sheet is not usually appropriate. Families usually remain in the home country, and expatriates will spend less on groceries and transportation but more on restaurant meals and travel home. On very long-term assignments, making the assignment a permanent transfer or adopting a local pay package can be significantly less expensive than using an expatriate pay approach. ORC gears its data solutions to reflect different spending patterns associated with various lengths of global business assignments.
Assignments for Three to Twelve Months
ORC’s Short-term Assignment Allowances address the unique differences of short-term assignments. They can be modified for each assignment according to length of the stay, the number of expatriates in the location, and any requirements specific to your company’s pay philosophy.
For benchmarks of how other companies handle short-term assignments, consider ordering ORC's Global Survey of Short-term International Assignment Policies.
Localization and Permanent Transfers
For expatriates whose assignments will become permanent, localized, or compensated on local terms and conditions, ORC can provide local job pricings and perform analyses of how a salary can be adjusted for the new home location (called net-to-net or net-to-gross comparisons). Under this methodology, the employee’s net pay in the original location is adjusted for any cost-of-living difference in the new location, then grossed up for local and state taxes and housing costs. In addition, a local relevancy study will compare this information to the existing salary structure of the new location.
To see how other companies are handling such long-term assignments, considering ordering ORC's Worldwide Survey on Localization Policies and Practices.
For assignments of a few months or less, it most often makes sense to treat them as business travel. ORC’s Business Travel Allowances Report can help you determine daily foreign living costs for business travel or short-term assignees. This Excel application, which is updated quarterly, provides data on the costs of hotels and meals (breakfast, lunch, dinner), and miscellaneous expenses for more than 300 cities around the world.