Sunday, 15 January 2012

How Do You Hedge an IA?

Companies and employees both hedge on international assignments. Employees hedge against lack of opportunity and employers hedge against the cost.

How Have Companies Hedged International Assignments?

There are two business drivers that underpin policies:
  • Short-Term Assignments. Commuter and short-term assignments, assignments without families, and selecting single male employees have been used to control costs and hedge against poor return on investment.
  • Family Issues. To hedge against family problems that result in employees returning home early, companies have made the decision to go on an international assignment easier for families by offering short-term assignments. They have also created employee-only assignments and decided not to offer education costs for children as part of the compensation package.

The False Economy of Short-Term Assignments

Hedging, Not Just for Pork Bellies!
Short-term assignments impact the growth of the host country operations and send the message that you aren’t committed to the operation, the employee, or the host country.

Customers may choose another company to do business with when they realise that they can’t build long-term relationships with you. And, if you keep costs down by reducing the length of assignments or restricting benefits, employees start looking for new roles before the assignment ends.

How Should I Hedge?

A better way to hedge against increasing costs and family problems is to develop insurance policies that pay out when an assignment fails and strategies that address employee development and innovation instead of minimising costs.

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