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How ECA can help you to benchmark your expatriate packages

A common question we’re asked here at ECA is ‘what is the typical assignee package in country X?’ To answer this, we need to break the question and package down into two key components: salary and benefits – you must also bear in mind that in each market, location and sector the findings will be unique!

The first thing to consider is how your assignees’ net salaries compare to others in similar roles in the host country. It is best to look at net figures as the point of comparison because other expatriates will face different tax liabilities and social security deductions. ECA’s unique, personalised and interactive MySalary graphs (see Figure 1) in the MyExpatriate Market Pay reports will show you this information in an easy to understand and adaptive visual format that enables benchmarking against different industry groups with just a click. Your company’s job holders are highlighted as red diamonds, while other assignees in the country whose data has been submitted to the survey are marked with crosses, making it immediately clear where your salaries fit into the wider market.

It is important to benchmark a cross-section of jobs at a variety of seniorities to understand how your salary methodologies impact expatriates across the company hierarchy. Even when using a uniform salary methodology, you may find that junior staff salaries are positioned around the upper net salary quartile while senior staff fall below the lower quartile, or vice versa. It is also possible that a policy that delivers the desired outcomes in one country will not in another, which is why ECA advise benchmarking in each of your assignees’ host locations. Your company’s requirements will dictate where in the market you want to be positioned and regular benchmarking can ensure you continue to meet those objectives and remain competitive.

To accurately compare all the roles in your company with other organisations’ expatriates based in markets all over the world, big or small, it is essential to use a job evaluation system. For example, a country manager role in a small country sales office is not equal in size and scope to a country manager role in a large national operation at a multinational. ECA’s job evaluation system ensures that accurate comparisons are made according to job sector, nationality and other variables. Higher values in ECA’s points system reflect a greater relative worth of an assignee to their respective company.

 

Figure 1: Example MySalary graph. To show or hide industry groups click on the relevant item in the legend. To zoom in on a particular point use your mouse to draw a rectangle over the area. To reset the zoom level click the reset button that appears in the top right of the graph.

Net salaries are only half the story of expatriate compensation. Benefits can make up a significant portion of an expatriate package. Depending on the countries of operation, the cost impact of offering combined housing, utilities, schooling and transport benefits to your expatriates can be even higher than the salary for a senior manager, as we see in the United Kingdom and United States (Figure 2).

Figure 2: Proportion of net expatriate packages attributed to salaries and benefits (housing, education for one child, a car and utilities) in selected countries based on ECA average figures for senior manager (110 ECA Points).

As such, in order to understand the overall net costs of your expatriate’s package it is essential not only to compare net assignment salaries, but the benefit policies you provide as well. Keeping up-to-date with the general benefit policies applied by your international rivals will allow you to continually reflect on whether you are providing appropriate all-round packages. As with the salary component, it is also essential to benchmark the benefits provision, not just at a policy level, through surveys like ECA’s Benefits for International Assignments survey; but also on a country-specific and individual level using ECA’s MyExpatriate Pay reports.

Comparing the benefits provided to individuals on a case-by-case basis will allow for a more detailed insight into how your assignee packages compare to the market, it will also enable you to deal with questions regarding the package from stakeholders such as the management, line managers and the expatriate themselves. This is why ECA provides more than just an overview of all relevant benefit policies offered across the assignment destinations – we also offer detailed (and anonymous) breakdowns of the benefits provided for each individual that a response is submitted for (see Figure 3).

 
Your assignee
(marked in figure 1 with red diamond)
Assignee’s peer
(marked in figure 1 with a cross)
Industry group
Engineering & technology
Engineering & technology
Home country
Taiwan
United Kingdom
Host city
Paris
Paris
ECA points
125
125
Net take home pay
97500
121975
Accommodation
Company pays
Company pays
Utilities
Company pays
Employee pays
Transport
Car allowance
No
Club
No
No
Education
Yes
No
Bonus
28 500
12 250

Figure 3: Example listings

In this example, which compares two assignees working in the same country, the same industry and jobs of the same size, we can see that although your assignee has a lower net salary, the full package detailed in the report makes it clear that they have a more generous benefits package. This includes a car allowance and a utilities allowance that the other assignee would have to pay for out of their net salary, as well as a significantly higher bonus.

Provision of benefits and the approach to salary calculations can vary significantly by country. For example, being provided with a status car on assignment in Nigeria is important for personal security, as well as being culturally significant, so 73% of expatriates receive a status car or car allowance. In Japan, on the other hand, one of the safest countries in the world and with sophisticated public transport systems, the proportion of companies providing car benefits is much lower at only 43%.

Another example of variation between countries is the currency expatriates receive their salaries in. As Figure 4 shows, while splitting the salary, usually between home and host currencies, is the most common approach, there is a significant difference between countries. Expatriates are more likely to be paid in host currency in the US or Brazil, for example. This is the case in the US because of the power and prevalence of the US dollar and in Brazil because of restrictions over salary delivery, meaning much of the salary must be paid in local currency. On the other hand, in Ghana and Cambodia, it is quite common to be paid in a third-country currency such as the US dollar because of the weakness of the host currency or because US dollars are widely used in the host country. While splitting the delivery of the assignment salary is often the preferred option, because it protects the assignee against exchange rate movements, local knowledge through surveys such as ECA’s MyExpatriate Market Pay survey can prove invaluable in setting up in new markets.

Figure 4: Salary delivery currency for selected countries

Understanding how salaries and benefits combine to create a total net expatriate package in your countries of operation is a necessity for remaining competitive in today’s increasingly globalised market. Directly benchmarking against other multinational companies will provide insights into how your competitors are responding to the increasing array of complexities we see in global mobility, and is an important aid in developing your own strategy.

  FIND OUT MORE

ECA’s MyExpatriate Market Pay reports provide an in-depth and personalised guide with which to compare your current expatriate salary and benefits policies against over 10,000 jobs across a wide range of industry groups in 140 countries around the world. The survey is open until 1 September and participants receive free country-specific benchmarking reports for each country that they submit data for.

  Please contact us to speak to a member of our team directly.

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