Assignment Glitches: Is Your International Relocation Planning Foolproof?
CompassGUIDES - Oct 2005
By Diana Matwichuk, CompassGUIDES Tax Specialist
Glitches? Not on your assignments. They are well-planned and operate with military precision. You’ve been sending people around the world for years and your company’s policies cover everything. Or do they?
Complacency over the preparation of assignees for seemingly mundane tasks carried out internationally can result in reduced productivity as the assignees sort out personal matters. The assignee commences the assignment in an agitated state and the company temporarily experiences decreased productivity, which translates to financial loss.
Urgently Seeking Cantonese Translators
One of our clients recently experienced an assignment planning mishap, somewhat at arm’s length, when they seconded a Chinese national for a 6-month assignment in their banking software business. “Mr. Chang” was loaned to them by their Asian client for the purpose of providing Chinese text to the software, and spoke no English. Apparently put on the next flight to the southern United States, he adjusted quickly to American life by leaving his house at 6AM every day in order to avoid traffic when riding his bike to and from work. From all appearances Mr. Chang was a healthy and motivated assignee.
It came as a great surprise, then, that Mr. Chang would fall ill one day quite suddenly, particularly given his robust fitness regime. When the abdominal pain persisted, he was rushed to hospital and a Cantonese translator was frantically sought.
Diagnosis - ruptured appendix. As a result of Mr. Chang’s speedy departure from his home country, the Chinese employer had neglected to arrange for healthcare insurance, and our client was hit with a $30,000 medical bill, not to mention translator bills and substantial loss of productivity. Needless to say, the financial surprise made its way to the appropriate payment source, but not without a carefully worded explanation of the importance of including healthcare insurance as a critical step in assignment planning for the United States.
Laying Cable in Paris
Cultural preparation is another matter that assignment managers often neglect to include in their international assignment planning. It is easy to assume that matters such as utilities are handled in the same manner as on home turf. Not so.
International assignee to France, Heather Hill will attest to this. Manager for Western Europe region at a multi-national leader in the IT sector, and an organizational guru by nature, Heather thought she had everything lined up to establish utilities for their rental in the Paris suburbs. What no-one thought to inform her of was that she would be expected to dig the trench in which the cable would be laid - from the house to the sidewalk!
Assignment managers should think through every detail of moving to the host country, in order that the relocation unfold smoothly for assignees. (Tour or use our online Assignment Manager’s Planning Checklists for this purpose at www.compassguides.ca/content/login_splash.php)
Tea with the Water Man in Sharjah
On a more positive, but equally amusing note, travel to Sharjah, United Arab Emirates (UAE), where Canadian assignee spouse Corinne Duncan arrived at her new house to find a massive bill for water use prior to their arrival. Fresh water in the UAE is not abundant, and therefore not cheap. The very Canadian response would have been to promptly phone up the utility and matter-of-factly demand a new bill adjusted to their date of arrival.
Fortunately, Corinne had prepared culturally for the assignment in the UAE and took a different approach. Pregnant, and with a young child in tow, she visited the water man at his office and shared a cup of tea each time. In fact, she did not even bring up the delicate issue of the water bill until she had exchanged pleasantries with the water man over tea on several occasions! The problem was swiftly resolved – but the storyline could just as easily have taken another, much more costly route.
Multi-national employers who are committed to ensuring that their international assignments are successful, both financially and from the assignee perspective, will devote effort to thorough assignment planning. It is not enough to put an employee on a plane and ensure that their chattels are packed in shipping containers. All aspects of the relocation, from cultural preparation, benefits and tax, must be thoroughly researched and matched with documented company policy.
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 Help Desk for more information about international assignment planning (www.compassguides.ca/content/helpdesk/index.php ).
The author wishes to thank international assignees Heather Hill and Corinne Duncan, and our unnamed client for their contributions to this article.