HR New Growth Agenda: Become More Effective by Enhancing a Mobile Workforce

by Marillyn Tefft, Senior Researcher 6. May 2013 11:04

Providing credible, defensible, and robust cost-of-living data to support a mobile workforce can aid HR and mobility professionals in meeting the “Big Three Challenges to HR New Growth Agenda” outlined in KPMG’s Rethinking Human Resources in a Changing World. The challenges identified are as follows:  

  1. Maintaining a balance between global and local in term of managing, hiring, and identifying talent.
  2. Managing flexibility in workforce policies and supporting virtual work styles without losing employee loyalty and impeding career development.
  3. Engaging and retaining the best talent with an increasingly mobile workforce.

Justifiable cost-of-living analysis and reports make mobility attractive to key talent while demonstrating HR and mobility professionals’ value to the business.  There are a variety of approaches to calculating cost-of-living adjustments, and it is important for professionals to provide consistent estimates that satisfy corporate mobility policy goals, address cost containment, and result in a successful temporary assignment or relocation.

About one-third of total US corporate sales are now generated overseas. According to the 2012 Trends in Global Relocation Survey by Cartus, about 57% of companies expect to increase the number of employees they transfer this year and next.   Below are some issues to consider when evaluating which data provider to use for your cost-of-living differentials:

  • The cost-of-living differential should vary by salary level.  Expenditure patterns for the percentage of a budget spent on housing, goods and services, transportation, health service, and taxes are determined by the income level. A suitable cost-of-living adjustment/payment for goods and service while on an assignment may be very different for an employee earning $50,000 than an employee earning $150,000. Further, a management/professional lifestyle spending pattern is different from that of a student or retiree.
  • Housing is typically the largest expenditure component. The specific location within a city and the actual amenities included with the housing are a large determinant of cost. Housing costs near the business district and close to international schools can be much higher than in other parts of the city. It is key to know the exact neighborhoods from which the housing data is collected and what features are included or excluded in the figures.
  • The prices of goods and services may vary substantially within a city.  It is important to understand that most expats purchase a substantial percentage of “familiar” goods and services in the international districts rather than local shopping areas for at least the first year.

User-inputted data, such as the cost of a taxi ride from the airport to downtown, offered by several free/low priced cost-of-living websites is an interesting tidbit.  However, consistent, comparable, and timely data should be used to build a comprehensive cost-of-living differential report.  To ensure a credible analysis, the detailed considerations outlined above should be included. ERI’s Relocation Assessor® & COL Survey allows users to create unlimited COL comparison reports for domestic and international locations that factor in these issues.