When you consider how factors like families, location, and the cost and standard of living can vary widely across relocations, it’s no surprise that companies offer incentives to help their assignees succeed and adjust. This practice can be an excellent way to help solidify the relocation process while also lowering risk. We take a look at the differences in incentives and what makes up a hardship incentive.
Many factors can affect what is regarded as a ‘difficult’ relocation, such as the standard of living or even the type of work environment
What is considered a hardship incentive?
A hardship premium or incentive is something that is provided when an assignee is relocating, temporarily or permanently, to a destination that is considered more difficult than their original location. Many factors can affect what is regarded as a ‘difficult’ relocation, such as the standard of living or even the type of work environment. Many companies understand that sometimes moving to a new location might be a very difficult process for an assignee, and that an extra financial incentive may help to convince the assignee of the new placement.
While hardship and mobility incentives might appear to the same, they are actually provided for very different circumstances.
Hardship versus mobility incentives
Here are some common factors that can push the need for extra incentives:
Origin vs. destination location (Hardship & Mobility)
Family size (Mobility)
Environment (Hardship)
Cultural differences (Mobility)
Assignee level (Mobility)
Salary (Mobility)
Standard of living differences (Hardship)
Safety (Hardship)
Mobility incentives are geared towards providing a potential assignee with an extra benefit
While hardship and mobility incentives might appear to the same, they are actually provided for very different circumstances. Mobility incentives are geared towards providing a potential assignee with an extra benefit pushing them towards accepting the assignment. A typical scenario like this would be when a high-level executive that has a family is being asked to relocate from London to Tokyo. The quality of life isn’t going down, but the change in regions and culture could cause the potential assignee to reconsider asking their family to pick up and move to a new and very different place.
Hardship scenarios usually involve someone moving to a less appealing location
Hardship incentives, on the other hand, tend to be used as an extra push to relocate on top of the mobility incentives. Hardship scenarios usually involve someone moving to a less appealing location, whether it be due to safety concerns, a lower standard of living, remoteness, or another reason. Some areas of assignment that commonly include a hardship incentive are India, Bangladesh, China, Southeast Asia, and countries in the Middle East and Africa.