Expatriates, third country nationals, employees on assignment, and so on – these are the people also known as the ‘management nomads’ of our days.
There have always been employees on assignments, first within departments, then within a region or the respective country. This has not been much of a problem, as they moved within one identical framework of working conditions and social security. The main problem was the change of residence and moving household goods.
As a company became international and even multinational, the employees had to move across national borders and started to cross oceans. At this point, it was not only the cultural shock but also living conditions and education that became important to the newly appointed transferee.
At first the positions were mainly country managers, representatives and controllers, who were to be assigned to the outgoing staff. In other words ‘home office people’ were entrusted with specific tasks.
Nowadays the main object is to transfer know-how and special skills. Or staff may be called in to help with the start-up of new national subsidiaries. Trouble-shooting and turnaround management are still the main tasks for assigned positions.
And no longer is the home office a single source for recruiting staff. All subsidiaries are taken into consideration. For this reason, we find today all kinds of people moving to other places from their home country. If we distinguished in earlier times between ‘expatriates’ and ‘third country nationals’, then the trend today is to use the term ‘transferred employees’.
And they are no longer selected by few specialists in the human resource departments. Now all companies have a list of all potential management skills and special know-how. And whoever wants to have a career opportunity is requested to have worked abroad for a certain period.
Today the distinction of categories of transferred employees is rather done by the duration of assignment:
l Up to two years:
Treat at home-based level
They remain in their previous local plan and conditions
with some additional fringe
l Two to five years:
Deal at either side – home or host
Usually the better conditions
l Over five years:
Some fringe benefits or
compensations are added
Out of this basic development, we can identify some major problems.
The variety of social security systems and company benefit plans is still overwhelming and there is no imminent harmonisation or even co-ordination in progress.
On the contrary, the financial problems of most states are a detrimental factor to any agreement on a common basis on social security. The differences in this field give space for compensation within the company plans and therefore even the harmonisation within a multinational company becomes cumbersome work for hard-liners!
The trend to handle the under two years at the original home level is unbroken. But in the field of the two years-plus we can see a trend for centralised handling and as an optimal solution the formation of so-called employment offices. These handle all transferred employees from one point and also work contracts are done centrally.
It is no longer the solution to offer a defined benefit pension for those who are knowledgeable and financially aware.
The trend is rather to have a defined contribution plan with some benchmarking for performance. And, of course, to have more than one risk profile for the selected investment vehicle, which should provide an excellent return on investment at retirement age.
There should also be the possibility to pay additional voluntary contributions, to channel any performance related compensation into such fund. In other words, tax optimisation is one of the new keywords.
And there are still other keywords emerging: ‘flexible retirement age’ and its brother ‘early retirement’ – and this at the full benefit level at no extra cost! Wishful thinking, perhaps, but visionary solutions from the bankassurance field are required.
But living abroad means also care for the family. In earlier times the spouse and children were just accompanying members. Then the question of risk protection was not such a problem.
But, nowadays, spouses have their own careers and their own benefits plans. How to handle the career interruption? How to protect the benefit levels reached and provide for an adequate retirement package?
And what about a job after returning home? Somebody else has taken up the former position and will not be moved so easily! On the road again?
The people who solve such problems are a rare species and there is a big need for them. Getting them on board means having a good chance to master the challenge of a fast growing number of highly mobile employees.
Domenica Huber is life/pension manager with Winterthur International in Zurich