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Costs and satisfaction of international managers

An international group in the chemicals industry requested Intelfi to develop a policy for international relocations concentrating on harmonizing the charts for six brands with 550 international employees and to have an increased mastery of cost factors.

The goal of the assignment was to harmonize the policies, increase control and lower costs, while at the same time making it possible to maintain the previous provisions for the employees already working in third countries. Allowing for their progressive decrease was another element to be favored in this assignment undertaken at the request of the CEO and the director of corporate human resources.

A "change management" party was developed simultaneously with the taxation, human resources, accounting and financial aspects.

The main stages of the assignment were to :

▪ Analyze the discrepancies and common points in the charts for the six brands involved

▪ Evaluate the total, average and unit costs

▪ Analyze the coherence of the real degree of application of the charts

▪ Make comparisons according to the brand, country and level of responsibilities

▪ Present an instrument panel including the indicators of the convergence, budgetary and real   costs, and latency of the relocations already underway

▪ Develop a satisfaction survey and audit of the international employees' expectations   simultaneously with the announcement of the project to develop a corporate policy

▪ Conduct interviews with the executive committee to gather information by country, profession   and level of responsibility of the priorities affected by international relocation

▪ Meet and direct a working group comprised of operational and functional managers who have   already held various positions of high responsibility in different countries

▪ Propose tax rules (neutralization or optimization), principles of international compensation   packages and specific remuneration for relocations, valuing the different schemas in the   current framework and comparisons.

▪ Make a presentation to the Executive Committee. Design a road show directed by the   corporate HR Department aimed at the subsidiaries and corporate departments involved.

In relation to the market values referenced for this group, its countries and professions, the harmonization catalog for the brand charts generated savings of 11.5% in an equivalent full year. The services provided to international employees were on the whole maintained and an improved management of timetables was implemented.

For a company providing services to communities, the average duration of an assignment in a third country, 50 months, required adopting local status in line with the real involvement of managers in their country. In fact, in this company, 65% of the international employees had worked for a longer period in the third country than in their own.

A consistent status, and a reduction of costs of this part of the relocation policy was the objectives for this plan. Out of 315 international employees, 36 were eligible to participate in the localization program requested by the executive committee in response to the proposal made by the director of corporate human resources. The assignment was comprised of two phases:

> Technical Analysis :

▪ Evaluate the financial, tax and legal margins

▪ Define the conditions to start up the localization program

▪ Determine the transition and permanent costs

▪ The proposal and cost determination for the localization of 36 international employees.

▪ Have the Executive Committee validate the plan

> Implementation :

▪ Draft the lines of reasoning and support items for individual meetings

▪ The HR director starts negotiations

▪ Intelfi monitors the negotiations with a mandate to direct the talks

▪ Determine the figures for the intermediary proposals made during the course of the   negotiation

▪ Other individual incentives making it possible to reach a conclusion at this level of the proposal

▪ Draw up the individual agreement drafts and validate them

Entering into individual agreements with 27 employees, that is, 75% of the target, made it possible to immediately save 13.2% of relocation costs after one year, and 24.6% in two years when the transitory measures were no longer applicable.

The financial gains generated were redeployed to create rules for international relocations that were more selective, diminishing difficulties in reintegration upon employees' returns, making it possible to improve remuneration levels for international work as a substitute for relocation rewards.

An international engineering and consulting company had 15 senior managers in the world's capital cities. These experts all shared the same backgrounds, specifically, they had all graduated from three international engineering schools, and they had all necessarily been trained with a proprietary consulting methodology over the course of several years prior to assuming their national or regional positions.

With complete managerial and decision-making autonomy, in charge of developing their client portfolios, their international salaries and relocation incentives were much higher than those for reference markets.

The General Director is aware of the very high level of competition on an international level for these skills and does not foresee any steps to reduce costs in this sequence. The director is interested in knowing the qualitative and quantitative return for relocations costs and having a valuation of the best possible policies considered competitive in these markets.

The assignment consisted of three phases:

> Measure costs and advantages :

▪ Conduct interviews aimed at developing a questionnaire to determine the qualitative   satisfaction of managers

▪ Situation and evolution of relocation budgets for the four prior years

▪ Analyze coherence of applying the remuneration principles

▪ Develop a questionnaire, administer it, process and summarize it

▪ Draft a budgetary synopsis isolating the 25 main cost factors

> Market positioning :

▪ Difficulty: finding comparisons for sensitive positions that are very few in number

▪ Call for bids to firms specializing in remuneration studies

▪ Define a representative panel for comparison

▪ Analyze and weigh the results, obtain a mid-term positioning

> The key indicators and satisfaction scale :

Develop satisfaction indicators for the international managers by country, specialization, seniority, level of contribution to bottom line.

105 sensors were launched and integrated in a MIS establishing a monthly instrument panel that increased and became consolidated on an annual basis. This report was sent to the country managers and the holding company at the company headquarters.

A procedure to propose and approve new indicators was organized. It integrated these issues into the agendas of the company's quarterly meetings attended by all the country managers and constituted an instrument to measure and provide reliable and legitimate communication.

This study provided the basis for a reliable comparison in the mid and long term.
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