In weighing up the true cost of an international assignment, what sort of measures should you be looking at?
In weighing up the true cost of an international assignment, what sort of measures should you be looking at?
– HR business partner in banking, Melbourne
What is cost? It all depends on definition. Is cost the total spend for goods or services or the value measured by what must be given, done or undergone to obtain something? No matter which approach is adopted, both direct and indirect costs must be considered. Direct costs being those that are tangible, definable, whilst indirect costs are more abstract and often indeterminable. With information at our fingertips it is a straightforward task to estimate direct costs; however, the estimation of indirect costs ( those associated with opportunities, the risk of non compliance and getting it wrong) seems as complex as ever. Or is it?
Companies often view international assignments as a cost to the business where balance sheets are based on the total spend of goods and services against original budgets. Total spend on one assignment frequently provides the basis for ‘costing’ the next generation of assignments and this often perpetuates the mindset of “how much is this going to cost me”.
It is hugely challenging within this type of culture to step outside the short term focus of what it’s going to cost, to one where longer term value becomes the driver. Companies adopting a longer term vision are more likely to embrace the concept of assignments as an investment where “value is measured by what must be given, done or undergone to obtain something”.
They are in a better position to understand the true cost an assignment using both direct and indirect metrics because in this environment the recognition and weighting of opportunity and risk management becomes part of day to day business.
Productivity and focus are best fostered in cultures where investment is recognised and emphasised above the total spend. Perhaps it is not that placing a dollar value on indirect costs is as complex as ever; perhaps it’s as straightforward as defining what cost means.
By Jo Andrew, general manager, Kent Corporate Solutions. Tel: 03 9271 5074
