Paragon Relocation’s immediate challenge was the implementation of a large scale, complex, global relocation program. There were numerous areas of consideration as Paragon was a single source solution to replace four separate global relocation service providers. Logistically, client users were spread over 82 different countries. Financially, services were billed in 22 different currencies. And due to the nature of the client’s business, visa and immigration challenges included remote locations with limited resources and an immediate need to have employees on-site. Relationships and issues with local and regional service providers such as DSP and household goods suppliers made streamlining a challenge. IT systems and HR processes had to be re-engineered to bring the team to a common platform.
Paragon became aware of customer dissatisfaction with the household goods movers in the South of France. The customer was extremely unhappy with the quality of the departure moving crew’s work and their timeliness. To manage this situation, Paragon’s challenge was to determine the source of dissatisfaction; ensure the household goods were safe and intact; address any issues with the mover so the situation would not happen again; and, most importantly, ensure the client and employee were satisfied with the final resolution. Additionally, Paragon focused on lessons learned from this situation and how to apply them across the company.
One of Paragon’s valued clients was being audited by the IRS and their relocation Buyer Value Option (BVO) homesale program was under scrutiny. For a corporation to be tax compliant with IRS Revenue Ruling 2005-76, Worldwide ERC® tax counsel recommends client organizations provide a guaranteed buyout at the end of the BVO process in order to operate in the most favorable way to protect the tax exempt status of their third-party relocation homesale program. Since the client previously did not include a buyout for their BVO program, this created a possible financial risk.
While a survey from the Worldwide ERC® notes family issues as the primary driver for failure of international assignments, a surprising number of respondents to Paragon’s survey do not view a lack of spouse/domestic partner career assistance as a deterrent to accepting international assignments. This finding suggests both the employee on assignment and company may be underestimating the financial, and more importantly, the emotional impact resulting from spouses/domestic partners putting their careers “on hold.” Legalities, as well as language barriers, skill set translation, etc. may impede the spouse/domestic partner’s ability to remain productive for the duration of the assignment.
A Fortune 1000 semiconductor supplier company with more than 22,000 employees worldwide in more than 50 locations. Products include power and signal management, logic, discrete, and custom devices for automotive, communications, computing, consumer, industrial, LED lighting, medical, military/aerospace and power applications. Paragon identified the need for expert-level review of client household goods invoices. For this client in particular, who used client-directed suppliers, the need was apparent through the number of household goods exceptions and questions on billing issues.
For a Fortune 500 global manufacturer of construction and mining equipment with more than 150,000 employees in 500 locations worldwide, Paragon became aware of a rising number of exceptions to policy. The rising exceptions resulted in increased overall relocation costs. Exception costs were in fact skyrocketing, having tripled in the previous three years despite the fact that relocation volume only increased slightly. To manage this mounting expense, the client asked Paragon to craft an exception management process that reduced overall exception requests and ultimately cut costs, all while maintaining the client’s desire to “take care of families in need” in an equitable manner.
Although International Mobility is more commonplace and expected to surpass the volume of traditional domestic move programs within the next 10 years, none of the companies surveyed have a tool in place to measure Return on Investment (ROI). In addition, a majority of organizations do not have a formal candidate assessment process, career path, and/or assimilation plan designed for assignees. According to a recent industry survey, 48% of repatriated U.S. assignees leave the company within two (2) years of return from assignment. With relocation costs estimated near three times the annual base salary per year on assignment, greater emphasize should be placed on the human capital. As with any other investment, ensuring proper candidate selection, coupled with a long-term development strategy is paramount.
When accepting an international assignment, one of the assignee’s considerations is the family’s ability to adjust to their new location as well as their own professional adaptability to a foreign culture. The value of cross-cultural awareness training assists the assignee in becoming sensitive to cultural differences. Expatriates and their families benefit greatly from this training by recognizing how culture influences perceptions, attitudes, communication, behavior, daily life and the practice of doing business.
In an effort for international relocating assignees to maintain family ties and stay current with home business contacts and associates, many companies offer the Home Leave Benefit. This benefit is provided to expatriates and their dependent family members on a yearly basis for the duration of the assignment. Some companies provide this benefit to give the assignee and family members an “extra break” from the assignment and do not require a trip to the departure location. However, of the companies surveyed, 67% stated that the philosophy for offering the benefit was for continued connectivity to home business contacts and home community with the majority allowing up to 10 days leave.
As the world’s seventh largest economy and the largest in Latin America, Brazil has rapidly become one of the busiest locations for expatriate assignments. Unfortunately, it is also a high tax location and foreign companies are discovering many unpredicted and significant costs to operate in this market. One of the most significant costs arises when Brazilian entities pay external invoices in foreign currency such as euro or dollar. The Brazilian authorities impose a range of taxes (IOR, IRRF) that can increase costs by up to 40%, which is often not budgeted. The tax is usually paid directly to the authorities and is not linked to the P&L item cost, so future forecasting is difficult.