How to Structure a Localization Relocation Policy
When sending employees on an international assignment, one way in which we are seeing companies achieve flexibility and cost containment is through the use of localization. Localization is the integration of an employee into the compensation and benefits system of the host country. Let’s take a look at recent trends in localization, as well as some of the most common localization approaches being used.
Trends in Developing a Localization Relocation Policy
According to data from Cartus’ 2014 Global Mobility Policies & Practices survey, 58% of participants indicated that they have a formal localization policy—up from 2012, when only 47% of companies said that they had a formal policy in place.
When we asked, “What is driving localization within your organization?”:
- 67% of respondents cited containment of mobility costs,
- 51% said that it was part of their globalization strategy, and
- 39% pointed to career development opportunities in local markets
The localization approach used by organizations most frequently (named by 34% of respondents) was transition to local status immediately following an international assignment.
Most Common Localization Approaches
Some of the most common approaches to localization that companies are using in their global relocation program include:
- Transition of assignees from expatriate (assignment) terms to pure local entity terms, from a compensation and benefits perspective;
- Transition of assignees from expatriate (assignment) terms to a “local plus-type” package; and,
- Transferring employees into the destination location (also known as one-way transfers), where the intent is pure localization from a compensation and benefits perspective.
Cartus Consulting Solutions has developed a white paper that provides an overview of general practices and areas of consideration associated with localizing employees into a destination location. Please contact your Cartus representative, or email us at firstname.lastname@example.org if you would like to view this white paper. You might also be interested in our permanent relocation, short-term assignment, long-term assignment, and extended business travel solution papers, which explore the various assignment benefits and how and why they may vary depending on your company’s culture, assignment needs, and employee profile.