Reduce costs with a better policy-exceptions system

Exceptions are unexpected allowances and benefits provided to an international assignee that sit outside of the scope of an international assignment policy. Often managers sign off on exceptions, looking only at the direct cost and not realising there can be large associated tax costs.

One of the first steps in planning a successful international assignment is to establish a budget. Companies will often need to make exceptions to policy from time to time, to accommodate the varied needs of individual assignees. Hence, most companies set aside a contingency budget to cover unexpected costs relating to an assignment. Most companies use a rate of 5%-10% from the total budget to determine contingency.

Policy exceptions tend to fall into three categories:

1. Many ‘under-the-radar’ policy exceptions tend to occur during the initial salary package negotiations between a line manager and an employee. These negotiations may tend to go unreported as they are not tracked by the international mobility team even though these types of costs are a common cause of budget creep.
   
   
2. Exception requests commonly arise prior to a relocation typically after an employee’s look-see visit to the assignment location. Accommodating an employee’s request for an extra guest room may seem reasonable, but what might seem like a small exception to an assignment policy can result in a big cost to the company. Assignees are notorious for comparing packages, and if an exception is made for one, it often becomes typical practice as subsequent assignees expect similar provision to be made for them.
   
   
3. Genuine exceptions may arise beyond the control of the assignee or the company such as extended stays in temporary accommodation due to shipping delays in household goods or extra education costs due to the limited availability of schooling choices.

Process for authorising exceptions
To keep costs down, a company will need to implement a well-defined process for managing and authorising policy exceptions to realise cost savings in programme administration.