This Week in Leadership (Nov 22 - Nov 28)
Surging COVID cases have leaders debating their return-to-office plans. Plus, business books for the holidays and tips for launching a second career.
For millions of US workers, years of relatively small raises remain a point of frustration. But a new study suggests one answer may be to set their sights abroad—and reap some eye-opening increases.
Indeed, workers under age 35 are seeing earnings rise by an average of 35% after moving abroad, according to a recent survey of 18,000 expatriates by the bank HSBC. Pay for those workers jumps, on average, from $39,500 to $54,000, says John Goddard, HSBC’s head of retail banking and wealth management. By contrast, US wage gains are relatively modest, up only about 3.7% over the past year.
Older workers are getting some impressive pay boosts too. Expats aged 35–54 reported an increase in their average income of about 25%, according to HSBC, while those over 55 got an average 9% bump. “If you are willing to go abroad, there are companies and markets that don’t have as robust a talent pipeline,” says Dan Kaplan, a senior client partner for Korn Ferry’s CHRO practice. Such companies stretch from Turkey to Malaysia, with Saudi Arabia and other Gulf nations providing some of best pay opportunities.
The increases abroad may partly be due to US corporate pressures to keep pay under control at home. “US companies are far more aggressive at managing the salary-expense line and have managed to limit wage merit budgets to improve profitability,” says Bob Wesselkamper, the global head of Korn Ferry’s Rewards and Benefits Solutions practice. By contrast, he says, non-US companies are more inclined to award regular wage increases because of local labor practices and the even the power of national trade unions.
Expats can also benefit from the lower cost of living in many countries outside the US. In China, for example, the cost of living for an American might be 50% to 60% less than in the States, says Ben Frost, a London-based solutions architect and pay expert with Korn Ferry. In Spain, expenses are roughly 20% lower.
But while there may be pay advantages to taking a job abroad, talent pros caution that that alone shouldn’t drive workers to take overseas jobs. Finding work back home afterward, for one thing, may not be easy, and many multinationals are better at encouraging overseas tours than planning returnships. “For most, it’s not about the pay,’’ says Wesselkamper. “People may even take a pay cut if necessary because of the value to enhance their careers by having global experience.”
Indeed, the HSBC Expat survey results confirm this. Almost half of expats under 35—47%—headed overseas to further their careers, and 40% said they did it to challenge themselves. More than half, 55%, said their overseas work has helped them become more confident, while 71% said they learned new skills. These attitudes suggest that a posting abroad is far more important to career advancement within a major multinational firm than was the case 10 or 20 years ago. “We used to say that we want workers who have traveled and have a passport,’’ says Kaplan. “Now US companies want a more global worker, and European companies want to bring on Americans who have lived and worked abroad and can think globally.”
For his part, HSBC’s Goddard says he’s noticed from the latest expat survey data that lifestyle choices seem to be playing an increasing role in location preferences. Traditionally, financial hubs such as Hong Kong and the US have scored high for career-driven individuals, but this year expats have prioritized well-being, quality of life, and welcoming communities, meaning the league table for most-desired countries has quite a different look.
The result is that Spain, Vietnam, and Turkey climbed up the ranks, with Spain’s gain over the year being particularly remarkable—a jump from 10th to fourth place. “From Catalonia to the Costa del Sol, expats are feeling benefits to mind, body, and soul,” the report says.