International employee relocation can bring business opportunities, but getting it right requires plenty of planning, especially during the COVID-19 pandemic. This article outlines key things to consider when you relocate employees overseas as part of an office relocation or expatriate placement and provides you with a handy checklist.
Why relocate employees overseas?
Businesses decide to move employees around the world for a range of reasons. They might be planning to set up a subsidiary in a new market, or they may need to move staff within their network to capitalise on existing skills, knowledge and relationships.
Relocation doesn’t come without its challenges, however – and a changing landscape due to the remote working trend is making the role of HR more pronounced. Read our full guide on returning to the office after the COVID-19 pandemic.
Support systems and perks, including great international employee benefits, can help motivate expats to take the plunge and maximise the chance of a successful placement.
Employers and HR departments may be tasked with moving staff from one location to another as part of short-term projects or permanent corporate relocation moves. Often, the choice is between hiring local employees or transferring talent – and there are plenty of reasons to choose the latter.
Successfully relocating staff overseas with employees who are satisfied with their benefits package are more likely to be loyal to their employers and engaged with their organisations. Six out of ten employees claim that a comprehensive employee benefits package is a key factor when they look and apply for a job.
The advantages of moving staff overseas include:
- Avoiding rehiring and training costs
- Knowing a worker is skilled and experienced
- Fostering continuity of service
- Using insider knowledge and relationships in a new location
Such transfers can help to foster international expansion, which can itself bring financial benefits. According to a survey of Software as a Service (SAAS) business owners, the average company will see revenue growth of 13% from such a move.
Moving staff can also promote knowledge sharing and, of course, fill essential roles.
These effects may be felt best when a team member is thoroughly supported by the business both socially and financially. One meta-analysis showed a strong positive relationship between work-domain support and expatriates’ sense of commitment. Since maternity care for expats can be expensive, supporting your staff with benefits such as maternity care insurance for expats could be a great idea.
What to consider before an employee relocation?
1/ Expatriate mental well-being
Well-being is more than just physical. Those on international placements are at a higher risk of mental health problems and expat mental health can be vulnerable to the effects of isolation.
Moving to a new country can be exciting and enriching, but such a significant life event can also take a toll on the mind. Ensuring your company has the architecture in place to support isolated staff members may be especially important since expats are at a high risk of internalising issues. Establishing work-life balance when you are working from home as an expat can have a massive impact on productivity, too.
To be sure your relocating staff is well prepared for their international assignments, it’s a good idea to arrange cross-cultural training or coaching for them before departure from their home country. Companies have found that this type of training is crucial for preparing the assignees to develop a comfort level with working and living in an unfamiliar place.
2/ Family, accommodation and practicalities
Your expats will need somewhere to live, and if they have children in tow, then school and college places are a must. Helping to connect your assignees with the information they need about international schools and the best expat neighbourhoods could help to simplify this process and reassure the wider family. Stay aware of school application deadlines, which may be inflexible.
You might also consider signposting them towards vaccinations for expat children in their destination country or a regional relocation agent.
3/ Administration and finances
Moving staff overseas can have tax implications which it can be beneficial to assess. Your expats might need to pay tax in both their home and placement country and you may also be liable to pay corporate tax in multiple nations.
The exact rules will depend on whether your international office is set up as a branch or subsidiary and where your offices are located – the European Union has a useful guide to tax rules for subsidiaries in Europe.
The cost of transferring an expat can be measured in time as well as money, so minimising employee downtime may also be a priority. Making sure your expats have all the equipment they need to get online as soon as they arrive could help to minimise disruption.
4/ The COVID-19 pandemic
The pandemic affects many aspects of business travel, so check the rules in your home and destination country for any restrictions or quarantine requirements.
Investing in quality group international health insurance could also bring reassurance to expats that their family’s health will be looked after.
When your employees are expats, however, there are even more factors to consider, such as the specific regulations in that part of the world and the wider pandemic situation. Just because your expats work in a region with few restrictions, doesn’t mean they’ll be happy with a minimalist approach.
Head of HR at William Russell
Cost of moving employees overseas
There is a lot of research out there about the average cost of a relocation package, and a package can range anywhere from $2,000 to $100,000. How much you want to spend on an employee relocation package is entirely up to you and your company. It is cheaper to relocate a new hire, at around 70,000 USD per relocation, according to data from Internations.org. Some more stats on potential costs of relocating an employee abroad:
- It costs on average $97,166 to relocate a current employee homeowner
- It costs on average $72,672 to relocate a new hire homeowner
- It costs on average $24,216 to relocate a current employee renter
- It costs on average $19,309 to relocate a new hire renter
Also make sure you have checked your governments’ recommendation on tax as an employer. In the UK, you have certain tax, National Insurance and reporting obligations if you contribute to an employee’s relocation costs as their employer.
Relocating employees overseas: A checklist
Preparing staff for an office move is a complex business, so your HR department might prepare with the following steps:
- Run assignee interviews – an adaptable employee will be sensitive to their new surroundings and more likely to fit their lifestyle with a new culture so the interview stage can be key.
- Set clear goals and values – set your assignee up for success with consistent targets.
- Offer pre-departure training – this may cover an introduction to corporate customs in their destination culture, any security specifics and need-to-know local laws.
- Allow time – encourage your assignee to join local support networks and to build new friendships.
- Communicate – ask about your employee’s domestic situation – if their spouse or family is finding it difficult to settle, this could affect the placement’s success.
- Offer a great international private healthcare package – because healthcare systems differ so much around the world, families need peace of mind they’ll be well looked after while they’re away. Some countries now make health insurance compulsory for expats.
What are the challenges of relocating employees overseas?
All great things come at a cost, and transferring expatriates is no exception. The cost of an expatriate employee can be higher than the cost of hiring at home due to relocation costs and the need for income supplements. This gap is more significant in certain markets. In so-called ‘hardship locations’ in the developing world, for instance, additional allowances are a common incentive.
Employee desires have also shifted in recent times. A 2021 study by Boston Consulting Group has found a decreased willingness to work abroad – 13% fewer respondents said the idea of becoming an expat appealed to them in 2020 compared to in 2014.
Demand has not slipped entirely – more than half of professionals were still willing to work abroad in 2020 – but this backdrop means support systems and benefit packages are likely to prove more important than ever. The study also showed COVID caseload correlated with the desirability of a destination country, and that international remote work now has a greater appeal.
Staff relocation isn’t without its risks – human resources consultancy Mercer says the biggest reason for an expat assignment failure is failure to adjust to a new culture and working practices – this is cited by 40% of expats whose assignments had failed.
How do you convince an employee to relocate?
Relocation package as the best way to motivate employees to relocate. They can include:
- Some or all moving expenses
- Long term job offer
- Temporary housing
- Finding a home
- Help to move their family
- Employee benefits
Benefits can be key to success for companies planning employee relocation. In the Employee Benefit Research Institute’s (EBRI) State of Employee Benefits Survey 2018, 73% of respondents said health insurance was an important factor in the decision to take a job.
Insurance benefits are more than just attractive perks, however – they also help employees to meet their essential needs. In the EBRI’s 2020 Workplace Wellness Survey, 70% of respondents felt employees need help from their employer to stay healthy and financially secure.
This article is by Damian Porter at William Russell. William Russell provide international employee benefits for groups of 3-9 employees, 10-39 employees and 40+ employees. Their range of health and protection plans are designed exclusively for expats and international businesses. Gain a competitive advantage with the right insurance benefits package for your employee relocation. For further information email [email protected] and mention this article on Cheryl Obal’s website.