The Incentive Trend Continues: Fewer, Smaller Incentives; More Hardship Premiums
March 14, 2007
New York — ORC Worldwide has released its flagship study, the 2006 Worldwide Survey of International Assignment Practices and Policies, based on expatriate pay practices followed by nearly 900 organizations for their 175,000 assignees. The majority of participating firms are headquartered in the Americas (48 percent), followed by Europe/Middle East/Africa (25 percent), Japan (21 percent), and Asia-Pacific (7 percent).
The survey found that expatriate assignments into the Middle East have steadily increased in recent years. Representing only 5 percent of all assignees in 2000, this percentage doubled to 10 percent six years later. “As expected, the large players are predominantly in the mining and oil industries,” according to Geoffrey Latta, executive vice president for ORC’s international compensation practice, “with 60 percent of expatriates assigned to that region working in those industries.”
How do employers motivate candidates to relocate to the Middle East and other difficult destinations? “Over the years, although the majority of organizations continue to use incentives to encourage employees to accept an international assignment – even to favorable host locations – there has been a steady trend to provide fewer and smaller premiums,” according to Latta. The industries most likely to grant an incentive are the utility and energy fields; the least likely are advertising, media, and publishing.
That trend has been accompanied by an increase in the use of hardship premiums for dangerous or difficult locations. In 1996, 64 percent of the survey participants used hardship premiums, compared with 67 percent in 2002, 71 percent in 2004, and 74 percent in 2006. When an organization has assignees from multiple nationalities working in the same location, nearly half use the same percentage of base pay to calculate the hardship premium; one third pay the same cash amount to all assignees, and one fifth pay different percentages based on the individual’s home country.
#
For more information on the 2006 Worldwide Survey of International Assignment Practices and Policies, contact Samantha Polovina.