As we approach 2017, the days of a standard set of lucrative policy benefits, designed to persuade a senior level employee to uproot their family and taken on a foreign assignment, are slipping into history. By Lisa Johnson, Global Practice Leader, Consulting Services, Crown World Mobility.
But the big question for corporations and global mobility professionals is how best to replace them? These days many young professionals need less persuading to take on an international assignment – they see working and living abroad as a way to build their career. They are also far more comfortable planning much of it themselves and are adept at finding answers online. As a result, core-flex policies, which combine a company’s “must-have” policy elements with an optional approach for elements that allow for choice (typically by a manager or an employee) are growing in popularity.
Could this be the future? For many employees in the past the financial upside was an important motivating factor for an international move, with the expectation that they would be able to bank a substantial amount of their assignment benefits. Today, expectations and budgets are different. Nowadays, very few companies offer a straight-up flexible policy, such as a lump sum that employees manage independently. Partly, this seems to be due to the number of programme elements that are deemed essential or compliance-related, and the concern that employees will not know the best way to accomplish certain tasks.
When given the option to keep money rather than spend it, for instance, they may choose to keep money and find themselves at a disadvantage later. Examples of benefits that are likely to be undervalued upfront, but appreciated in hindsight, include: Cross-cultural and language training; Shipment of goods; Home housing disposition. In the past, companies often had policies that assumed all assignees’ and families’ needs were the same, regardless of location, assignment goals and family situation. This “one-size-fits-all” approach made planning and managing assignments simpler; it also made assignment support expensive and inflexible.
So, is Core-Flex the ultimate answer? Well, there are some caveats to consider. For a start it is not a given that introducing Core-Flex policies will save money, which is often one of the primary reasons for their introduction. In fact, if not implemented appropriately they could even prove more expensive. Secondly, it is a common misconception that core-flex simplifies policy administration. In reality, administration is typically more complex than for a strictly defined policy or suite of tiered policies. More choice means more complexity in development, roll out and ongoing management. Budgeting can also be more challenging, since it may be harder to anticipate which flex options will apply to various assignments.
For businesses considering a core-flex approach, here are the Pros and Cons:
Fewer requests for exceptions
Employee can manage move on their own terms
Employee can benefit from cash not spent
Employee typically receives more assistance than they would with a standard policy approach
Can be more costly to the employee who “runs out of money”
The employee carries more of the administrative burden
Company spends more than necessary if the employee can keep cash
Increased cost of flexible policy can make management of it complex