Long Distance Relocation

The ability to effectively communicate with people from all over the world is key to a global manager’s success. An expatriate will have to interact with all types of people in the assignment location, i.e., employees, customers, shareholders, regulators, and vendors. Effective cross-cultural communication requires finding integrated solutions and compromises that allow decisions to be implemented by members of diverse cultures.

Cross-cultural training will provide expatriates with a starting point for the preparation of working overseas, addressing cross-cultural communication, and cross-cultural conflict resolution. For example, by knowing whether a society is individualistic or collective, an expatriate manager would benefit by knowing what to do in cases of decision making, offering incentives or even scheduling meetings.

Knowing the cultural dimensions of the society he or she is working in, the expatriate will have a point of reference when investigating what to expect with respect to all management practices.

Depending on assignees needs, there are a variety of cross-cultural training programs available. Prices typically start at $1,500 to $3,500 for one- to two-day programs, and increase as the duration and complexity of the services increase. These costs are miniscule, however, when compared to the overall cost of an expatriate assignment, and could save your organization from absorbing the financial burden of a failed assignment due to an assignee’s inability to adjust to his or her new location.

For more information, visit our resource library

As trends of short-term assignments have increased, a new category of worker has emerged, “stealth expatriates” (expats). This term is used to describe employees who work in another country outside of the country’s official international assignment program— often without the knowledge of Human Resources. These stealth expats originate from a number of different sources: employees or short-term assignees who have extended their planned overseas visit due to business reasons: foreign nationals who have been hired locally but on a semi-expatriate package; cross-border commuters whose job responsibilities have been extended; employees who are sent on assignment by business leaders who do not understand company procedures.

Flying under the radar, stealth expats inadvertently increase the risk of noncompliance for themselves and for their employer in the areas of tax, immigration and employment laws. Consulting companies in particular are caught in the dilemma of balancing contract deadlines to avoid penalties with lengthy work permit application requirements in the host country. It has become the job of Human Resources to educate the stakeholders on the options available to transfer assignees into the host country as quickly and efficiently as possible. This is often accomplished by taking advantage of special immigration legislation aimed at allowing people with special skills to work in host countries. Human Resources also are responsible for the corporate governance requirements of their companies to build processes that bring stealth expats into their companies’ processes and mitigate risk.

Companies that consult on global relocation are now developing sophisticated tools and processes to help organizations identify and track stealth expats and bring them back into company processes while not disrupting the stealth expats’ valuable contribution to their organizations’ international businesses.

For more information, visit our resource library

International Relocation: The Importance of Cross-Cultural Awareness

Companies operating in the global market are quickly discovering business success depends heavily on expatriate managers’ knowledge and familiarity with the cultures in which they do business. Culture clashes have a momentous influence on an expatriate’s assignment, and understanding the host country’s culture is a significant piece of the puzzle. Since expatriate failure is costly for companies, it is to a company’s benefit to provide cross-cultural training to employees working on overseas assignments.

Although generic programs exist, cross-cultural training is most effective when it’s tailored to the specific needs of the expatriate and the host country. Because learning about a new culture requires an understanding of one's own cultural biases and behavioral traits, companies that use customized, cross-cultural training typically receive better results.

Successful cross-cultural programs can include the following:

Host Country Information
Basic information about the assignee’s host country, including its history, common religions, political structure and recent events, so employees can understand citizens’ values and beliefs.

Behavior Adaptation
Although people have a hard time changing their cultural understanding, they can learn to alter their behavior to adapt to a new culture. In this phase of cross-cultural training, expatriates examine the way they currently handle a situation and what is required in the new culture.

Communication techniques
A manager going to live in a foreign country for the first time might not realize how communication styles differ around the world. For example, U.S. employees tend to use “low context” communication, which is direct and task-oriented. Many other cultures have “high context” communication, in which messages are more indirect, like in the Middle East.

For a full account of information regarding this service visit our resource library.

The five cultural dimensions (individualism vs. collectivism, power distance, uncertainty avoidance, masculinity vs. femininity, and time orientation) provides valuable insights into the cultural practices of different countries. This is the type of information that global relocation managers need in order to better understand cultural similarities and differences while on an international assignment. The ability to effectively communicate with people from all over the world is also key to a global manager's success. An expatriate will have to interact with all types of people in the assignment location, i.e. employees, customers, shareholders, regulators and vendors. Effective cross-cultural communication requires finding integrated solutions and compromises that allow decisions to be implemented by members of diverse cultures.

Cross-cultural training will provide relocating employees with a starting point for the preparation of working overseas or long distances, addressing cross-cultural communication and cross-cultural conflict resolution. For example, by knowing whether a society is individualistic or collective, an global manager would benefit by knowing what to do in cases of decision making, offering incentives or even scheduling meetings.

Knowing the cultural dimensions of the society he or she is working in, the expatriate will have a point of reference when investigating what to expect with respect to all management practices.

Depending on assignee needs, there are a variety of cross-cultural training programs available. Prices typically start at $1,500 to $3,500 for one to two day programs, and increase as the duration and complexity of the services increase. These costs are miniscule, however, when compared to the overall cost of a global relocation assignment, and could save your organization from absorbing the financial burden of a failed assignment due to the assignee's inability to adjust to his or her new location. Read more.

There are a variety of training techniques that prepare people for long distance foreign work assignments. They range from documentary programs that merely expose people to new culture through materials about the country's socio-political history, geography, economics, language and cultural institutions, to intense interpersonal experience training, in which individuals participate in role-playing exercises, simulated social settings and similar experiences in order to "feel" the difference in a new culture.

Although generic programs exist, cross-cultural training is most effective when it's tailored to the specific needs of the expatriate and the host country. Because learning about a new culture requires an understanding of one's own cultural biases and behavioral traits, companies that use customized, cross-cultural training typically receive better results. Successful cross-cultural programs can include the following:

• Host country information. Basic information about the assignee's host country, including its history, common religions, political structure and recent events, so employees can understand citizens' values and beliefs.
• Behavior adaptation. Although people have a hard time challenging their cultural understanding, they can learn to alter their behavior to adapt to a new culture. In this phase of cross-cultural training, expatriates examine the way that they currently handle a situation and what is required in the new culture.
• Local business etiquette. Even the most veteran and prolific employee can have difficulty without an understanding of business etiquette in other cultures. For example, the U.S. tendency to "get down to business" is regarded as rude in Japan, where business transactions often have a greater personal relationship component. An employee who appears impatient with Japanese traditions designed to establish friendship and trust will have little success in business negotiations.
• Communication techniques. A manager going to live in a foreign country for the first time might not realize how communication styles differ around the world. For example, U.S. employees tend to use "low context" communication, which is direct and task-oriented. Many other cultures have "high context" communication, in which messages are more indirect, like in the Middle East.

For more information about components that make cross-cultural programs successful, view our white paper, "Importance of Cross-Cultural Awareness."

Group moves occur for a variety of reasons and in most cases can be treated (relative to the IRS rules) exactly as other non-group moves. A group move, however, may not meet the IRS 50-mile test. In that case, consideration should be given to providing a short distance group move policy. The IRS 50-mile test generally requires that in order for certain costs associated with a relocation to be excludable from income, the distance between an employee's old residence and the new work location must be 50 miles greater than the distance between the employee's old residence and the old work location.

It is not uncommon for companies to change office locations, or have multiple facilities in the same geographic area, where the distance between an employee's old and new work location may or may not meet the IRS 50-mile test. For example, in larger cities, where a move may be from one side of a metropolitan area to the other, it is likely that the IRS test will not be met. These "short distance" office relocations, however, can significantly impact the commuting patterns of employees. It is highly unlikely that employees impacted by an office move, where their commute could be increase by up to 49 miles, will simply accept an "IRS explanation" as to why they are not entitled to relocation benefits. Employees will often make their feelings known and ask management to consider providing some or all of the relocation benefits provided in a standard regular or "long distance" employee transfer.

The relative distance that a short distance group move involves, necessitates a closer look at the specific features provided in a company's relocation policy to see if benefits should be offered for a short distance group move. Properly structured, short distance group move programs reduce absenteeism, attrition and administrative time, and are often far less costly than a normal relocation program.

For more information about short distance relocation packages, visit our relocation resource library and view our white paper.

In recent years there has been a significant shift from companies sending their employees on long-term assignments to short-term assignments. A long-term assignment is typically a one to three year assignment, although some may last five years or longer. Short-term assignments are typically 3 to 12 months.

 

So why the shift? 

 

The most obvious reason is an attempt to control cost. Most short-term assignment policies have less generous benefits attached to them and they are often single status, so the view is that the cost is less. This is not always the case though, as the cost is highly dependent on tax complexities caused by the home and host country tax rules, and the individual’s income and personal situations.

 

Other less obvious reasons are that employees are turning down the opportunity to take a long-term assignment. They are turning them down because of the following reasons:

 

• Concerns about security and terrorism
• Dual career family issues
• Career re-entry issues on completion of an assignment

Security and terrorism concerns are higher on individual’s agendas than they used to be.  Employees do not want to expose their families to such risks, real or perceived.

 

A much larger percentage of families now have dual careers, so when one member is offered a career development opportunity overseas, it means the other member has to give up their own promising career. For both personal and financial reasons the option to take the assignment is less attractive.

 

The age old problem of re-entry to the home office after a lengthy assignment is still alive and well. An assignee comes back after three years and is faced with unfamiliar faces, values and yes, politics from when he left. Unless there has been some very good career planning the assignee will often be slotted into a position that lacks challenge compared to his overseas role.

 

Short-term assignments can be a good alternative solution to long-term assignments to avoid some of these issues. A short-term assignment means the employee can either go on single status or the spouse can take a sabbatical without damaging their own career. A shorter time out of the home office is less likely to impact the employee’s career opportunities.

 

Many companies have realized this and have come to terms with the concept of shorter assignments. Deciding if they are indeed less expensive is a future topic for discussion.