How much does each global assignment cost? It’s a simple question – and a hugely important one as companies try to justify their global mobility strategy. But most discussions examine either the compensation packages and how they are distributed, or the cost of the services used to actually relocate the individual.
These are major factors of course. But there is another point to consider and it seems that this is often overlooked: the cost of downtime.
How much productivity do expats lose?
In a major study on the time spent preparing for and managing a relocation, Altair found that a typical employee spent over 39 days engaged in non-core-business activities. So if he or she was not relocating, this would have been time spent adding value to the business.
There is, of course, a bigger argument: relocation has strategic value and this is a necessary cost – but it remains a startling figure, especially when the multiplied by the salary costs of the highest earners.
What activities cause the most downtime?
The Altair report makes a distinction between high-impact and low-impact tasks undertaken by the relocating employee. High-impact tasks make up 24 of the 39 days lost and are defined as tasks that take more than three working days to complete. These activities are:
- Finding somewhere to live
The process of house-finding, including any ‘reconnaissance’ trips was a high-impact task
- Domestic admin
The tasks of obtaining a driver’s licence, setting up utilities and local bank accounts.
- Immigration red tape
Securing work visas and any other official documentation
Discussions and negotiations over salary and compensation packages, along with research into tax and pensions provision
- Household goods
Arranging the packing, transportation and unpacking of household goods, including any customs clearance issues
Are experienced expat assignees more productive?
As you would expect, regular relocators are more used to the process than first-time movers. As a result, they tend to spend less time on admin-related tasks such as immigration: they’ve done it before and they know how it works.
However, this is balanced by the fact that more experienced movers often have larger families and larger salaries, thus complicating processes that are somewhat simpler for first-time movers – who are often relocating without a family and with more standard compensation packages.
Altair notes that multiple movers only spend on average one day less on ‘unproductive’ tasks.
What is the real cost of expat failure?
The cost of a move has to be balanced against its success. If someone is sent to open up a new overseas subsidiary and it quickly starts to add to the company’s global bottom line, all is forgiven. What’s a few days’ loss of focus when the job done is ultimately successful?
But when things go wrong, it is the global mobility department who is asked for the answers. Adding up the cost of an assignment is complex (but here is a great example of how it can be done) but it needs to include the hidden figures of productivity loss.
It is only when we are able to present a true idea of the total cost that we can talk about the total value that global mobility adds.
Balance productivity loss against traditional cost metrics, such as compensation packages and allowances. Find out more by reading: “Relocation allowance: what's included and what is it for?“