Ensuring the Success of Your Global Mobility Program Amidst Rising Inflation
While inflation rates and overall costs remain high, global companies need to continually assess how this issue is impacting its employees working abroad.
Inflation.
It doesn’t compare to the public health concerns we’ve experienced the past few years, but its impact on everyone – from individuals to organizations, even governments – has been remarkably severe in recent months. While the latest reports show signs inflation may be easing, it’s still at levels not seen for more than four decades.
What’s Driving Inflation?
Rising inflation is caused by a myriad of factors – each of which could be their own article. Much of it though can be characterized as consumer demand vastly outweighing supply. Supply chain issues have been prevalent for years now, which has driven up prices for most goods and services. All the while, consumer spending also has remained high, supporting (and fueling) even higher prices.
How Inflation Looks Across the Globe
For those in the United States, it may seem like inflation is a domestic issue with all the talk about how it’s affecting things in our own backyard, but that is hardly the case when looking at other nations. According to the Pew Research Center, virtually every nation with an “advanced economy” is facing considerably higher inflation rates than they did before the pandemic. In fact, the pace at which inflation has risen in the United States is modest compared to some countries. As of Q1 2022, Israel’s inflation rate was 25x higher compared to where it stood in 2020. For reference, the inflation rate in the U.S. rose 4x in that same time frame.
This underscores a critical point for organizations with operations and staff across the globe – while inflation is on the rise everywhere, how much it’s rising varies widely from country to country.
How to Support International Transferees Amidst Heightened Inflation
While organizations deal with inflation-related issues at a macro level, they shouldn’t lose sight of how it’s impacting their staff on a micro level, particularly those on international assignment. Working abroad can be an invaluable experience for a team member, but that doesn’t mean it also isn’t without its stressors. Even in the best of times, being away from friends and family, while navigating new languages, geographies and cultures, can all be overwhelming.
Here are several considerations to keep in mind as you balance the needs of both your staff and those of your organization while the cost of living and doing business is dramatically on the rise.
Evaluate Your Relocation Packages for Foreign Assignments
As mentioned above, inflation affects both individuals and organizations. In a perfect world, employees’ pay could rise in accordance with inflation rates, but that isn’t always feasible. Still, it’s crucial that international transferees’ relocation packages reflect rising costs. Moving abroad is quite an undertaking for anyone. The stress of having an inadequate relocation package shouldn’t be added to their concerns. With how much inflation rates fluctuate on a month-to-month basis (and country-to-country, for that matter), it’s important that businesses routinely assess their relocation policy and benefits against current costs in both the departure and destination countries.
Consider Ramifications of Employees Wanting to Work Remotely Abroad
Traditionally, international assignments have been opportunities for individuals to work in another part of the world where their employer has a physical location. They’d go, work face to face with the team there, and get a broader perspective of the company’s work. With remote work capabilities, however, many individuals are looking to work remotely abroad, often where their employer has no established presence. In some cases, they’re seeking to relocate to a country with a lower cost of living, hoping to stretch their paycheck considerably farther than they could in the U.S.
Flexibility around remote work increasingly has become a common perk, but even if organizations allow staff to work remotely, they shouldn’t be given carte blanche as to where they do so. If an organization doesn’t already have a presence in a particular state or country, employees hoping to work remotely from there can pose significant tax and compliance issues for the company.
Continue Communicating, Emphasizing Value, Commitment and Trajectory
Another issue compounding organizations’ woes is a difficult hiring market. Retaining staff has been one of the bigger issues facing employers for the past year. With how much of an investment international assignments can be, it’s important that those working abroad are feeling connected to and valued by their employer. Feeling isolated and lonely is a common problem with international transferees. While there’s only so much an organization can do to help with homesickness on a personal level, reminding employees that their time abroad is not taken for granted is critical. They should have a clear understanding of how the assignment fits into their long-term trajectory with the organization. Knowing their value and future can make unsolicited offers from competitors less appealing.
There’s hope the recent signs of easing inflation will continue, but global financial experts still differ on whether inflation has peaked yet. While rates and overall costs remain high, global companies need to continually assess how this issue is impacting its employees working abroad. There are both financial and career incentives they can offer to ease some stressors that can come with taking on an international assignment amidst such high inflation.
If you need assistance with assessing your international relocation benefits amidst rising inflation, we can help. Hilldrup specializes in assisting organizations navigating the many nuances and costs associated with international relocation.
