The new Flexible in Mobility: Equality vs Equity & Consistency vs Flexibility

Non-discrimination laws and the equal pay discussion about the gender pay gap drive HR philosophies, which state that we should compensate our employees in a consistent manner, providing equal pay and benefits for similar work.

With the latest trend of focusing on employee experience “EX”, there is at the same time a push towards an increasing individualisation of benefits. Businesses are also asking for more flexibility to make an assignment more attractive for the employee or more cost-effective for the company.

This results in a tricky demand for Mobility to create flexibility while maintaining a consistent treatment of employees. The dilemma of creating a circle out of a square. Exceptions to policies are high in administrative effort often costly and have the potential to become the rule, when it can not be argued to other employees why an employee was granted an exception.

For Mobility, the problem is elevated because of the complexity of cross-border relocations. If you compare the interaction of HR with a local employee with the interaction of Mobility with an assignee, you can see a difference. Mobility needs greater observation and look at many factors of the individual situation of an employee much more, for example, family situation, home housing situation, financial situation, and the filing of taxes, or potentially even children's special schooling needs. None of these factors play a role for a local employee, but together with destination specifics it increases the number of factors that might justify an individualised treatment of assignees and their families. Let’s not forget that this is already done when accompanied assignees receive additional benefits than single assignees.

Equity and equality are the two strategies we can use in an effort to produce fairness and attractiveness, which in turn promote employee engagement. Equity is giving everyone what they need to be successful. Equality is treating everyone the same. Equality aims to promote fairness, but it can only work if everyone starts from the same place and needs the same help. It is obvious that in Mobility, not everybody starts from the same place let alone relocates to the same place, therefore making equity a viable strategy. It would imply to identify the individual needs of the assignee and applying consistent principles in providing the necessary benefits.

The issue is of course not new to Mobility, but due to the demands of the business for more flexibility and agility and EX demanding a higher customisation of benefits, new approaches are emerging to deal with the challenge.

Historically, companies only had a short and long-term policy assignment policy. The first attempt was to create more flexibility for the business as well as for the assignees while maintaining consistency. Policy segmentation was the answer and policy suites were created that split policies into more than just short and long term e.g. into developmental, graduate and strategic policies. More assignment policies created more choice in terms of cost and attractiveness of an assignment to the business.

More recent approaches to Mobility policies are being created, for example the Do it yourself, “DIY” or lump sum approach, where instead of certain benefits the assignee receives a lump sum, which allows him or her to spend it as they like. This approach has its limitations, especially when it comes to compliance related benefits (tax, immigration, duty of care). There is a duty of care risk if the home search is left to the discretion of the assignee, when e.g. cheaper accommodation in risk areas is chosen. Another big risk is the potential discontent when an assignee realises that a colleague made a better choice when spending their lump sum. Lastly, a business should not forget that there is a potentially higher cost to the business when benefits that could otherwise be provided tax free, are paid as a lump sum and becoming taxable. It can be a viable approach if these factors are considered carefully and I have seen situations where DIY or lump sums made a lot of sense.

A UK-based company was recruiting graduates for a rotational programme that would send them on three consecutive 6 months’ assignments around the world before being localized in the UK or another country. The company received hundreds of applications from all over the world, but due to their diversity drive only a minority of the selected candidates were from the UK. Therefore, it was not possible to keep all of them while being employed out of the UK in the UK social security system. An international pension plan to cover for the shortfall, was dismissed due to cost and complexity reasons. Finally, also based on the fact of the new hires being millennials it was decided to provide lump sums for the missing home social security cover. In addition, they were informed of the shortfall and private insurances were offered that they could buy at their discretion.

A failed approach I witnessed was the introduction of cafeteria systems in Mobility policies - leaving the choice of different benefits to the assignee. Due to different taxation and the difficult comparability of benefits (think more home leave instead of a shipping allowance) it was almost impossible to keep the costs between different assignments the same. In addition, assignees regretted their choice of benefits once realising the situation in the assigned country, leading to change requests, discontent and additional administrative effort.

A more feasible approach is called the Core - Flex approach, which identifies certain benefits within policies that can be adjusted such as, housing, financial incentivisation, relocation allowances, while the remaining benefits are provided in a consistent manner. This approach necessitates certain governance rules that consist of a set of criteria that allow for the modification of benefits and clear limitations. I refer to the associated risks as the “nose and noise” factors. The business should not provide benefits based on sympathy with a specific employee, nor should an employee be in a position where he or she cannot explain why they were or were not given a certain benefit, potentially creating what is often referred to as “noise”. Careful consideration is needed when planning which benefits to flex and in how to define a governance approach to make it a successful approach to provide more equity.

I am still waiting for a company that I could advise to develop a policy configurator, which would be like how we can buy cars these days. A person can go on the Web and specify what model, engine, colour, exterior and interior you want. To configure an assignment package, you would have the compliance related benefits defined as a standard (think of tires, breaks, seatbelts and airbags for cars). The non-compliance relevant assignee benefits can then be linked to solid criteria (family situation, destination country, value of the assignment to employee vs towards the company) with clear examples, a step by step definition of an assignment package would be possible. It would have an additional complexity that technology will solve soon, similar to when you purchase a car and the final price of your car is displayed. Arguments against it are the expected increased administrative effort of providing more individualised packages. A well-designed set of benefit levels with proper documentation and good partnerships with your providers, should limit the additional effort when providing benefits in a more equitable way.

In summary the key aspects to observe when considering to create more individualised benefits are:

• Compliance: Do not touch compliance related benefits
• Governance: Establish clear rules and limits around flexible benefits
• Change management: Adhere to change management aspects, e.g. involve stakeholders early in the development
• Communication: Make sure all relevant stakeholders in all your locations (assignees, business, HR and external providers) understand the system
• Capacity: Make sure that the resources and skillsets are available so that you can administrate a flex programme
• Culture: All decisions around cost, risk, attractiveness and complexity need to be aligned with your company culture

The benefits of a higher flexibility are obvious. Customised benefits offer a higher attractiveness to assignees, creating better EX and in turn a higher employee engagement. Besides the one-off effort to define the flexibility that suits your culture and objectives, you might have to deal in return with increased administration. The latter offering an opportunity to look at a way to make your Mobility function more efficient and agile.

Mobility is creating one of the most relevant employee experiences in the life-cycle (hire to retire) of an employee and the EX is being seen together with a purpose as the way to unlock employee engagement. With more individualised benefit packages as a way to apply an equity instead of an equality based strategy, the time might have come to consider the new Flexible in Mobility.