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GLOBAL MOBILITY SERVICES
6-8 October 2015
Rome, Italy
2015 Global Mobility Forum
Understanding the "Plus" in Local Plus Policies
Bill BarronPartner
Kathy SodermanManaging Director
3© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Agenda
Compensation Philosophies
Case Studies
Your Experience
Q&A
CompensationPhilosophies
5© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The Policy-Building Challenge
Competitive/Attractive
Hand-holding
Cost-Effective
Empowerment
Flexibility
HomeEquity
Host Equity
Control/Compliance
6© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Policy Development Considerations
Reflect corporate philosophy, culture and structure
Align HR strategy with company’s business strategy
Benchmark/reflect best practices
Minimize costs/maximize return on investment
Address both personal and professional needs of assignees
Minimize special deals and exceptions
Plan for future
7© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Compensation Philosophies
Compensation philosophies will differ from policy to policy within an organization…Prevailing are:
1. Home-based
2. Host-based
4. Headquarters
5. Better of Home or Host
3. Blended Home or Host
8© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
KPMG Survey 2015: Assignment Compensation
Which of the following statements best reflects the intention of your assignment policy’s compensation approach?
9© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
KPMG Survey 2015: Taxes
Which statement best describes your approach when addressing the assignment tax costs in relation to the assignee’s earnings?
10© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Local Definition
A Local Plus package is an approach where the company pays their employees transferring internationally based on the local pay structure which will typically include:■ Local Salary
■ Local Incentive Compensation
■ Local Benefits
■ Local Payroll
This approach will apply to:■ One way international transfers
■ Localized expatriates
■ International direct hires
■ Locally Qhired non-native individuals
11© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Local Plus Selection Drivers
There is paritybetween home
and host.
Host country has higher pay scale
that home country.
Difficulty accessinglocal housing market.
Developmental moves for more
junior employees with fewer at home
obligations.
12© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Local Plus Elements
Housing
Dependent Education
Relocation Assistance
Immigration Assistance
Tax orientation
Tax preparation
Home Leave
13© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Advantages & Disadvantages
Advantages
Pay and allowances may be delivered easilyMay promote more consistent administrationCould promote perceived equity amongst assignees at the host locationCompliance and managing data may be easierMay lower overall assignment costs
Disadvantages
x Impedes continued participation in home country programs (company-related, pension, social, etc)
xAny need for home country currency will require supplemental assistancexMay complicate moving assignees to new assignmentsxMay complicate repatriation
14© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Pitfalls
Employer Costs
Benefit Issues
Employee Experience
Forgetting to Phase Out
FX rates
Case Studies
16© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
2. Project lead1. Analyst 3. CEO 4. Director
Policy Selection
How would you structure a policy to meet the needs of both assignee and the business? Let’s explore a few scenarios.
Purpose Finance analyst sent abroad for global experience. Subsequent assignment likely
Specialized expertise needed to roll out new initiative
CEO for foreign subsidiary, return home at end of assignment
Operations director permanent transfer to head department
HomeHost Duration
SingaporeUnited Kingdom24 months
PolandIndia6 months
USHong Kong36 months
AustraliaGermanyPermanent
17© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Scenario 1 - Analyst
2. Project lead1. Analyst 3. CEO 4. Director
Purpose Finance analyst sent abroad for global experience. Subsequent assignment likely
Specialized expertise needed to roll out new initiative
CEO for foreign subsidiary, return home at end of assignment
Operations director permanent transfer to head department
HomeHost Duration
SingaporeUnited Kingdom24 months
PolandIndia6 months
USHong Kong36 months
AustraliaGermanyPermanent
Pol
icy Long Term
Host PayrollLocal SalaryTax Protection
Plu
s HousingRelocationTax Preparation
What if host location is India instead?
18© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Scenario 2 – Project Lead
2. Project lead1. Analyst 3. CEO 4. Director
Purpose Finance analyst sent abroad for global experience. Subsequent assignment likely
Specialized expertise needed to roll out new initiative
CEO for foreign subsidiary, return home at end of assignment
Operations director permanent transfer to head department
HomeHost Duration
SingaporeUnited Kingdom24 months
PolandIndia6 months
USHong Kong36 months
AustraliaGermanyPermanent
Pol
icy Short Term
Home PayrollHome SalaryEqualized
Plu
s Per DiemTemp LivingExcess BaggageTax Preparation
What if duration is 18 months instead?
19© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Scenario 3 – CEO
2. Project lead1. Analyst 3. CEO 4. Director
Purpose Finance analyst sent abroad for global experience. Subsequent assignment likely
Specialized expertise needed to roll out new initiative
CEO for foreign subsidiary, return home at end of assignment
Operations director permanent transfer to head department
HomeHost Duration
SingaporeUnited Kingdom24 months
PolandIndia6 months
USHong Kong36 months
AustraliaGermanyPermanent
Pol
icy Long Term
Home PayrollHome SalaryEqualized
Plu
s COLAHousingEducationRelocationTax Preparation
What if assignee localizes in Hong Kong?
20© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Scenario 4 – Director
2. Project lead1. Analyst 3. CEO 4. Director
Purpose Finance analyst sent abroad for global experience. Subsequent assignment likely
Specialized expertise needed to roll out new initiative
CEO for foreign subsidiary, return home at end of assignment
Operations director permanent transfer to head department
HomeHost Duration
SingaporeUnited Kingdom24 months
PolandIndia6 months
USHong Kong36 months
AustraliaGermanyPermanent
Pol
icy Permanent
Host PayrollLocal SalaryLaissez faire
Plu
s Temp LivingRelocationTax Preparation
What if assignee resides in France and could commute?
21© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Summary of Scenarios
1. Analyst 2. Project lead 3. CEO 4. DirectorScenario Singapore
United Kingdom24 months
PolandIndia6 months
USHong Kong36 months
AustraliaGermanyPermanent
Structure Cost Effective & Empowerment
Cost Effective & Hand Holding
Attractive & Hand Holding
Cost Effective & Empowerment
Philosophy LT Host ST Home LT Home LT Host
Tax Policy Protection Equalized Equalized Laissez Faire
Allowances • Home Leave (annual)• Relocation allowance• Tax preparation• Destination services• Temporary living• Auto Disposition• Host “peer” allowance• Actual tax withholding
• Per diem or COLA• Lease ER Paid-furnished• Small air shipment• Tax preparation• Unaccompanied• Home leave (1 every 3
months)• Home actual tax
withholding• Transportation
• Home Leave (annual)• Relocation Allowance• COLA• Relocation allowance• Housing &
Transportation(Allowance or ER Lease)
• Tax Preparation• Destination services• Dependent Education• Auto Disposition• Hypo tax withholding• Club membership
• Temporary living• Relocation allowance• Host-based salary• Tax prep in year of
transfer• Destination services• Tax Gross Up• Actual tax withholding
Your Experience
Q&A
Thank youPresentation by Bill Barron &Kathy Soderman
25
© 2015 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
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