EDITORIAL & OPINION — COMMENTARY — Benefits rival adventure for overseas workers

For many North American miners, future prosperity will depend on the performance of operations in remote parts of Africa, Asia and Latin America. However, these companies sometimes find that employees are reluctant to travel to faraway lands.

Some staff members thrive on the sheer adventure of a back-country camp somewhere high in the Andes, but many have been known to take a more sober approach. Specifically, they want to know what’s in it for them financially. If they feel that their pay package and benefits do not compensate them for the hardship, loneliness and danger, they will simply decline the assignment.

Human resources issues can turn a promising mineral play into a serious problem.

It is essential that companies with operations in other parts of the world develop a policy on international placements, and that this policy is made clear to employees.

A common approach is the “home-based” policy, which means that the employee will be able to have a standard of living, and a rate of savings, equivalent to what he or she would have received in the home country. This involves determining all of the costs that would be faced by the person at home, including taxes, goods and services, a savings component and the provision of comparable housing. This total is then compared to what it would cost to provide the same lifestyle in the new country, and the compensation is adjusted accordingly.

Others prefer a “destination-based” policy, which provides competitive compensation but no foreign assignment allowances or adjustments. This is often more economic from the company’s point of view, and carries the added benefit of helping employees blend into the local environment. However, some employees will not take a foreign assignment without all of the comforts of home.

Many employees will want a “foreign assignment premium” — that is, financial compensation — for the dislocation of their lives. It is also common to pay a “hardship premium,” particularly if the camp is remote. In a place such as Brazil, exploration is not done on the beaches of Rio — the work is upcountry.

These pay adjustments do not need to be entirely out of the company’s pocket. The federal government, in a bid to encourage foreign mineral exploration, allows reduction of a Canadian resident’s tax liability through an overseas employment tax credit. This provision is intended to help Canadian companies in mining and related industries compete in the global resources sector and employ Canadian residents.

As well as the financial issues, employees need to know that their other needs will be looked after. They need “appropriate” living conditions. While few mining camp employees would expect the services available in a major city, they will expect some provisions for recreation, entertainment and medical care. They also expect an evacuation plan in case circumstances become dangerous.

In planning a rewarding international placement, pre-assignment cultural and language training can be a tremendous help in allowing an employee to settle into a new environment.

Post-placement issues also need to be considered, including career planning and strategy for the worker’s eventual repatriation. Without adequate attention to this, there is a good chance the returning employee will leave the company as a result of career frustration. Therefore, employees must remain “in the loop,” possibly through regular visits to the home office. Be sure that the person has a mentor at the home office who can provide updates on corporate developments. If other employees see that a returning expatriate is expected simply to fend for himself, they are less likely to accept a foreign posting themselves.

Proper planning can make such a posting a rewarding experience for both the company and the employee.

— The author is a partner in KPMG’s International Executive Services practice.