2009-05-19
SHANGHAI— The financial turmoil and global economic crisis are forcing companies to look more closely at expenses and seek efficiency gains in their businesses. In order to maneuver through the storm, many companies have to take measures to decrease various operation costs such as personnel expenditure, improve the return on investment on human capital expenditures and maintain focus on the long-term business objectives of the company.
Due to the economic crisis, companies start to reconsider the management of their expatriate assignment and package in the downturn, according to The Impact of Economic Downturn on Expatriate Study 2009 conducted by Hewitt Associates, a global human resources services company. The study revealed that only 11.3% of companies will expand the expatriate population in 2009 and 51.7% will maintain it. Before the downturn, 56% of companies had plans to increase their expatriate headcount in 2009. Most of companies which decrease the population of expatriates either repatriate them earlier or don't extend current contract/assignment upon completion.
The study also showed that Global and Asian Assignees at the levels of director and manager are mostly affected while there is continued demand for Top Executives.
In additional to assignment, expatriate's cash package is also affected, mostly on salary increase rate. Before the downturn, the average salary increase rate for Assignees, which refer to expatriates who are assigned by home country to China, is 5%-6%, and 8.1% for China Hired Foreigners and Returnees according to 2008 Expatriate, China Hire and Returnee Compensation & Benefit Study. However, the rate has sharply reduced to 0.9% and 2.7% respectively after the downturn.
Besides the assignment and salary increase rate, we have also seen market action of other benefits reduction like housing budget. However, to better determine and analyze how deep is the impact of the economic downturn on the expatriate cash and benefit package, Hewitt has kicked off 2009 Expatriate, China Hire and Returnee Compensation & Benefit Study.
About Hewitt's Expatriate, China Hire and Returnee Compensation and Benefits Study
Hewitt has been conducting Expatriate, China Hire and Returnee Compensation and Benefits Study on annual basis since 2001. In the most recent study of 2008, 170 companies participated and provided almost 3,000 incumbents data. It profiles six different categories of expatriates: Western, Hong Kong/Singapore, Taiwan, Other Asian, China-Hired Foreigners, and Chinese Returnees. The study is in joint cooperation with the American Chamber of Commerce, the Manufacturers' Business Council, the British Chamber of Commerce, Chamber de Commerce et d'Industrie Française en Chine, China Australia Chamber of Commerce, and the Delegation of German Industry and Commerce. It particularly focuses on how expatriates, returnees and China-hired foreigners are paid when working for organizations in China. For more information, please send email to: grace.zhou@hewitt.com.
About Hewitt Associates
With more than 65 years of experience, Hewitt Associates (NYSE: HEW) is the world's foremost provider of human resources consulting and outsourcing services. The company consults with more than 2,300 organizations and administers human resources, health care, payroll and retirement programs on behalf of more than 340 companies to millions of employees and retirees worldwide. Located in 35 countries, Hewitt employs approximately 23,000 associates. For more information, please visit http://www.hewittasia.com.
In China, Hewitt is the largest HR consulting and outsourcing firm, with nearly 200 associates in Shanghai, Beijing, Guangzhou, and Hong Kong. The firm has spent the last decade building a China business that meets the diverse human capital management needs of clients, who represent large and well-known foreign invested and local Chinese enterprises. Hewitt's research such as Total Compensation Measurement and the Best Employers in China study are widely recognized as leading sources for HR, benefits and compensation trends and information in China.
