HRO Today July/August 2015 - 40

Relocation
commonplace in home country balance sheet based
assignments may be addressed as optional for local plus,
including intercultural and language training, spouse
employment assistance, tax return preparation, and
hardship allowance.
It is notable that tax equalization is not typically
an element of a local plus package, though it is a
foundation element of a home country balance sheet
based assignment. This leaves any increase in tax liability
as the assignee's responsibility. In many cases this is
manageable, but there may be cases, based on the
particulars of the home and host countries involved,
where the employee could be faced with a liability
greater than either home or host location peers.
When Local Plus Makes Sense
Since the local plus compensation approach has its
foundation in host location salaries, it does not relate
at all to maintaining any sense of parity with preassignment
purchasing power as the home country
balance sheet approach does. As a result, local based
assignment compensation works best when assignments
are in locations with similar pay levels and cost of living.
This is why local plus is popular in the Asia Pacific region,
where local plus assignments between Singapore and
Hong Kong-both high wage and with similar living
costs-are the norm. Even within this region, it is rare
to see a local plus approach for an assignment from one
of these high wage/cost locations into lower wage/cost
locations, including many cities in China.
Another growing trend is for developmental or entrylevel
assignments to utilize a local plus approach.
Employees in these circumstances may be more willing
to take an assignment with the lower cost host based
package since they may not have home location costs and
fewer attachments. This aligns with the trends seen with
the early-career millennial generation assignments.
The Challenges of Local Plus
Every assignment compensation approach has drawbacks.
For local plus these include:
* Disengagement from home country compensation and
payroll. While this is viewed as an advantage during
the assignment, it can be very difficult to reintegrate
an employee into the home country compensation
scheme when they haven't been a part of it for a
number of years. Communicating clear expectations
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HRO TODAY MAGAZINE
| JULY/AUGUST 2015
and having a process in place so that the employee has
a knowledgeable HR team to turn to for questions upon
their return is a good basic strategy.
* Exclusion from long-term benefit plans. While on local
payroll, employees on a local plus package may not
be able to participate in long-term benefits plans in
the home country, such as 401(k) savings plans. Some
employees are keenly aware of the loss they may incur
and will ask the company to compensate them for it.
* Contribution toward a have/have not culture. In
companies where the home country balance sheet
approach is traditional and used regularly, local plus
can cause perceived disparity within the assignee
population, if the non-financial benefits of the
assignment are not valued. Communicating the benefit
of the international opportunity to an employee's
future career development can help. European and
North American companies are prone to fit into this
category, which may explain why fewer companies in
these regions utilize local plus for temporary assignees.
The high cost of traditional packages is driving many
companies to consider alternatives, of which local plus
in particular is emerging as the most popular. Another
less frequent driver is the company's desire to show more
parity between local and expatriate populations as a
reflection of being a global organization. There are many
ways to structure a local plus package and many elements
that can be included or provided as optional based on
location characteristics or personal needs.
As global companies become more experienced in
moving their employees to meet complex business needs,
the approaches that they use are more nuanced and
support a wider range of mobility scenarios. Overall,
local plus can offer a more cost-effective and simpler
alternative to the traditional home country balance
sheet approach. Key factors to consider when making
the decision to employ local plus is to be certain that it
doesn't interfere with the assignment's objectives, that
it doesn't cost the company in less visible ways such as
compliance and administrative issues, and that it suits the
locations and the assignee population involved.
Lisa Johnson is global practice leader of Crown World Mobility.

HRO Today July/August 2015

Table of Contents for the Digital Edition of HRO Today July/August 2015

HRO Today July/August 2015 - 1
HRO Today July/August 2015 - 2
HRO Today July/August 2015 - 3
HRO Today July/August 2015 - 4
HRO Today July/August 2015 - 5
HRO Today July/August 2015 - 6
HRO Today July/August 2015 - 7
HRO Today July/August 2015 - 8
HRO Today July/August 2015 - 9
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HRO Today July/August 2015 - 11
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HRO Today July/August 2015 - 13
HRO Today July/August 2015 - 14
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HRO Today July/August 2015 - 18
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