Changing Expatriation Policies

A personal and professional opportunity

28/05/2013 Madrid

Políticas de expatriación

The financial crisis has had a direct impact on firms’ expatriation policies, which have speeded up in recent years. “Today expatriation is seen more than ever as vital for business to survive,” said Prof. IESE Sandalio Gómez during a Continuous Education session titled “Expatriation Policies in the Current Economic Context: The Company View,” held on the Madrid campus on May 27.

The meeting, organized by the IESE Alumni Association, discussed the main findings of the report prepared by IESE and Ernst & Young based on interviews with the heads of human resources in 30 Spanish companies with overseas operations. The report shows that 60 percent have had to modify their expatriation policies.

The expatriate profile has changed, according to Marta Álvarez-Novoa, a partner at Ernst & Young. Candidates who are willing to move to other countries are more highly qualified and organizations have to pay close attention to their careers and the flexibility with which they can exchange one for another.

Reduction of costs

She said companies are offering less compensation than before. “There is a trend towards cost cutting except when it comes to insurance and tax issues,” she said. “Before the crisis, the employees imposed their conditions, now it’s the other way round,” added Sandalio Gómez.

The fact is that, while a decade ago expatriates were improving their capacity to save, this is no longer the case. Now salaries only increase with promotion. Their salaries may stay the same, aside from incentives. "Part of the compensation for expatriates is linked to professional growth,” the professor said.

In spite of this, most employees view expatriation as a personal and professional opportunity. The report also shows that people’s partners have a greater say in whether an offer of expatriation is accepted or not. “The family is a decisive factor in whether or not it is successful,” he said.

Companies recognize that more and more employees are afraid to refuse expatriation for fear of losing their jobs. Some 83 percent of expatriates are still with the same company two years after leaving Spain. “Employees don’t dare to change their job as a result of the crisis,” said Álvarez-Novoa.

Feeling supported

Óscar Izquierdo of Ernst & Young emphasized that expatriates need to feel they and their families are supported and protected. He said that factors such as violence, quality of life and the differential in the cost of living have to be considered when designing compensation packages.

There is also better communication between companies and their expatriates and when it comes to repatriation to Spain companies usually plan six months in advance. At the same time, the report also indicates that a growing number of expatriates choose to move from one country to another. The report highlights the challenges ahead. On the one hand, companies have to devise a management team to control expatriates and, on the other, they need to learn how to manage the talent and development of these employees.