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Minimizing Assignment Costs: 8 Key Guidelines for Assignment Managers

CompassGUIDES - March 2006

By Diana Matwichuk, Assignment Planning Specialist

With their broad scope, urgency and inclusion of unfamiliar tax jurisdictions, international assignments have potential to spiral out of control in terms of cost. According to the Canadian Employee Relocation Council (CERC) 2005 Employee Relocation Policy Survey, “the average cost of a permanent (international) relocation ranges between $50,000 and $100,000, and just fewer than 20% of firms (surveyed) reported average costs of over $200,000 for a temporary international assignment.” These are not insignificant investments.

When the heat is on to staff up international projects, the quickest options are often chosen, and these options can exclude key components of soundly-planned international assignments. Fast solutions have a premium price tag, and this can come back to haunt assignment managers when the relocation invoices have been tallied up.

However, it need not be so. Assignment managers can cover all bases, on time and within budget, if eight key guidelines are followed.

1. Document Policies and Procedures

Assess the company’s competency for documenting policies and procedures, and outsource this function if required. Accurate and comprehensive documentation is important to avoiding misunderstandings with assignees, and resultant lawsuits. Significant time and effort can be saved through the provision of quality documentation of policies and procedures in the form of Employee Handbooks, and in particular Online Assignment Guides, as answers to assignment questions are readily available and accessible from anywhere in the world. Education and communication are key to the retention of assignees, in whom a significant investment is being made.

2. Develop and Document an Assignment Tax Program

Expatriate tax planning can achieve significant savings when a plan is developed for the entire assignment. A planned approach ensures that the most advantageous tax avenues for assignees and the company are chosen, and that available tax incentives are utilized. Documentation of the Assignment Tax Program ensures that assignment tax policies are firmly established and available to all assignees, thus avoiding misunderstandings and potential lawsuits.

3. Document Contractual Relationships

Ensure that all employee and customer relationships are documented by way of signed contract. Clearly lay out all terms of the relationship, including tax issues, in order to avoid lawsuits, monetary penalties and faltered relationships. (See Taxation and Accounting Protocol)

4. Prepare Detailed Budget

Research and gather all necessary information to ensure that your assignment budget is as accurate and realistic as possible. Budgets which are too generous tend to encourage overspending, however budgets should accommodate the higher level of expenses and administrative time required for the establishment and maintenance of an international business structure.

5. Develop a Culture of Productivity

Implement programs which are employee-oriented and enhance productivity, motivation and retention. Productive employees help to keep assignment costs under control, by reducing the need to hire additional manpower.

6. Assess Internal Infrastructure

Determine whether your company has the internal resources required to plan and maintain all aspects of the international business, or if it should consider outsourcing key functions. If the expertise is not available internally, it is often more economic to outsource functions which require depth and breadth of experience.

7. Understand Host Country Laws and Practices

Investigate and become familiar with corporate, tax, immigration, human rights, banking and operating laws and practices in the host country. Preparation can avoid unpleasant surprises, a tarnished corporate reputation and possible monetary penalties or law suits.

8. Establish an Assignment HelpDesk

Regardless of the thoroughness of documentation and extent of pre-departure counseling provided, it is expected that assignees will have questions while working abroad. Extracted from their familiar sources for information, assignees will be at a loss as to how to get answers to these questions, and productivity could decrease if the company does not provide a channel for information.

Ideally, links to the company’s assignment helpdesk will be incorporated into up-to-date and web-accessible online documentation, the first line of support for assignees. If assignees are unable to find answers to their questions in their Online Assignment Guides, they can immediately link to the company’s assignment helpdesk for a timely answer.

Summary

At CompassGUIDES ™ , we develop cost-effective assignment tax programs for Canadian companies sending employees around the world and bringing international consultant expertise to their Canadian projects. These Assignment Tax Programs provide detailed advanced tax planning, including policies, procedures and employment contracts, which serve to minimize costs and mitigate any risk of litigation.

In concert with this strategic assignment tax planning, we assist multi-national employers with their preparation and provision of assignment documentation, including the possibility of offering these guides online to employees anywhere in the world with internet access. Visit our International Assignment Planning Help Desk for more information about international assignment planning.

 


Tel: (403) 531-2200 
Fax: (403) 263-1826


Web: www.compasstax.ca
Suite 600, 1333 8th Street SW
Calgary, Alberta Canada  T2R 1M6


Tel: (403) 531-2200 
Fax: (403) 263-1826


Web: www.compassguides.ca
Suite 600, 1333 8th Street SW
Calgary, Alberta Canada  T2R 1M6