Round Table:
How can internationalization with new devices cheaper?

Speakers:
Laurence-DIDAY AVRAM, Managing Partner, Head of Human Capital, ERNST & YOUNG
Eugenia FORNIERI, Director Mobility International Group, DANONE
David-Pigeon PAYET, Head of International Mobility, L’OREAL
Brigitte Poincloux, Vice President Compensation and Benefits, ALSTOM

The economic crisis is the guest of all the debates this year 2009. As such, international mobility, considered costly, puts businesses in a dilemma. The prospects for developing markets are now defined on a global scale. How then pursue international growth in a context of tight budgets?

The three companies are present a good illustration of this phenomenon. They have several things in common:
- A high proportion of their activity abroad (over 50% of turnover and staff in all three cases).
- Hundreds of expatriates around the world, with diverse profiles (young potential managers, directors …) and transverse (mobility between countries).
- A little activity affected by the crisis: it results in reduced growth and a commitment to rigorous cost management.
These companies have good experience in the management of international mobility and have already implemented policies. However, all are in a logic of cost reduction and equity between employees of the group. What are the trends?
Ø The end of political uniformly generous, with a tendency to differentiation packages by country, type of mission, level of experience.
Ø A limitation or even elimination of expatriation premiums, except in countries particularly difficult.
Ø A salary set mostly on a “Local Plus” in neighboring countries (Western Europe).
Ø A limitation of expenses related to housing and travel: the nature and amount of expenditures are closely monitored. Increasingly, employees are required to cover a portion (sometimes all) of these expenditures. There is sometimes the allocation of a maximum aggregate amount that the expatriate is free to allocate as it sees fit (housing, travel, education …). This point has been mentioned in other roundtables by other companies.
Ø A marked development of commuting: it is not officially made a trend but a fact.
Ø Maintaining the level of social protection.
Ø A willingness to develop to term skills in emerging countries (the number of expatriates is not decreasing at the moment but thinking is brought).
Companies are trying to improve their information systems to have a clear view of the costs of mobility. This is confirmed by the views of Ernst & Young as a board. It is still possible to make progress in rigor: monitoring changes in tax and social rules of the countries (in order to update and optimize packages), impact on business taxation (the charges they are deductible under corporation tax). The commuting must be studied carefully because it is particularly complex area of taxation. The apparent savings compared to a removal of the family need to be considered on a case by case basis.

These exchanges have confirmed the trends of recent surveys. Including ORC study presented May 27 at the 2009 American Chamber of Commerce (AmCham). European companies, anxious to reduce the costs of mobility, focusing their efforts on the following (in order of importance):

- Reducing non-essential travel.

- The location of expatriates (status local whenever possible).

- Optimization of differential cost of living.

- The differentiation according to the type of missions.

- The decline in housing benefits.

How about these developments?

The golden age of expatriation where very generous allowing mobile employees to learn seems gone! The rigor is an act of managed and is consistent attention. But several questions arise:

Ø Be careful not to focus on short-term to long term. Reflecting on the decline in costs is difficult because of issues relating to strategic development. These are not costs, but investments must be able to measure the return. Go far in the process? Be careful not to cross the line: it is not good (for the success of missions) to employees from too unhappy with their lot … with the risk of no longer a candidate to start in fine. Of course, it is possible to develop the skills of employees in foreign countries. But it takes time, this has a cost, and this has consequences on the mode of control exercised abroad, the coordination of projects and the establishment of a culture group …

Ø The trivialization of mobility within the career redraw the distribution and organization of work in the world. Abuses have been reported in the past: a generous lead to form a caste of privileged expatriates impossible to reintegrate. In contrast, consider mobility as “normal,” denying the difficulties that may be associated with this condition may lead to the opposite effect. Market competition is now global, including the labor market. Trivialize mobility reinforces this competition (between employees … and between organizations) and it is doubtful that this reinforces the commitment of employees towards their company. Retaining talent also has a cost …

The problem is complex. One thing is certain: the cost reduction should not be an end in itself but must be linked to issues globaux.C is a thinking and not just technical.