New Challenges Face Employers When Localizing Expatriates
July 30, 2007
New York — Employers continue to face challenges in localizing expatriates — that is, phasing out or removing expatriate assignment terms and conditions — even as the practice becomes more common. In the past two years, according to ORC Worldwide’s 2007 Survey on International Localization Policies & Practices for Expatriates, 48 percent of the participants have seen an increasing use of localization. For the coming two years, that number rises to 57 percent. “Although cost has traditionally been a driving factor in localization,” Geoffrey W. Latta, ORC executive vice president, reports, “two other reasons now lead the way — the expatriate’s own desire to remain abroad and the company’s need for the employee’s specific skills on a long-term basis.”
The key critical issues facing employers today when they want to localize an assignee are the following, in order of prevalence: retirement plans, consistency in developing local pay packages, management preference for individual negotiations, establishing an acceptable local salary in low-salary countries, and employee requests for continuance of coverage for international schools and health care.
“Although many companies still do not have any formal policy on localization,” according to Latta, “44 percent now do so, compared with a quarter of participants in 1998.” However, only 19.4 percent strictly follow the policy. “This finding reflects the wide variety of conditions under which localization occurs,” Latta adds. “What works in one country won’t work in another. What works when the employee wants to stay won’t work if the company is pressing the employee to remain. One size doesn’t fit all, but that makes the challenge of avoiding different deals that can’t be defended all the more difficult.”
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For more information on the 2007 Survey on International Localization Policies & Practices for Expatriates, contact Samantha Polovina.