Case Study: Stepan Asia Pacific

When Brent Tignor, regional HR manager Asia Pacific for Stepan, shifted to Singapore about three years ago to help the global chemical manufacturing company set up its regional headquarters, he knew it was going to be a huge move.

Growing the American business in Asia meant a strategic move was necessary, and Tignor was in charge of “building a new organisation from scratch”, doing a significant amount of hiring and moving their already-established staff in the Philippines to their newly-acquired factory in Singapore, as well as relocating several people from outside entities.

“As well as this, the move has also been about understanding Stepan’s policies and procedures and culture, and leveraging that to install that here,” he says.

It has been a big job for a well-established company that has been running for more than 80 years, and Tignor says the journey through Asia is a very real learning curve.

An overview of Stepan’s relocation benefits programme

Before delving into the particulars of relocation within Singapore, it’s important to understand the company’s relocation programmes on a wider scale, then uncover how that has been translated locally, Tignor says.

Within Stepan’s relocation programmes, the company offers three types of packages. At the higher level, as with most companies, they have their permanent relocation plans, followed by relocation plans within the organisation’s legal entities – i.e. Stepan in the US to Stepan in Europe – and finally, temporary, long-term assignments, which can range from six months for a specific project to up to a year.

From a highly structured point of view, the first type of relocation is Stepan’s most robust. An outside vendor, Weichert Financial Services, is used to help HR decide what components are used in each package, and to what level.

“Weichert have a global presence and are our outsourced managers of relocation,” he says. “They help set us up with relocation in the region, help us to process payments, and such. We also get information from them, as they have data on what are standard practices.”

Tignor, who has been based in Singapore for about three years, says the use of an outside vendor to help manage relocation has been blessing since the company started managing more expatriate assignments.

“As we have grown globally, we’ve been getting more expats and it’s natural they become more of a burden on us and our resources, so using them (Weichert) helps us to better manage this.”

Rigid or flex?

On the whole, Stepan’s relocation packages are split into three policies – programme A, B and C. Programme A is designed for senior management, senior management new hires and management and sales. Programme B is for professionals, experiences new hire and PhDs, while Programme C is for inexperienced new hires.

The programmes are all structured and apply to everyone, leaving HR with the task of slotting relocated staff members nicely into one of them. However, as with any relocation packages, there is often a need to be flexible.

“However, there are exceptions that are made from time to time, so I would say that our philosophy with relocation packages and offerings would be core plus flex."

While for the most part Tignor says fitting people into their various policies is “cookie cutter”, there are reasons some relocated employees need some flexibility.

“There are times when someone says, ‘I’m going to lose this if I leave the country’, or, ‘I can join you if I can do x,y,z’. It could be a salary issue or a bonus issue – some things we can bend on some we can’t.

“It’s not perfectly defined. As part a business decision we have to ask ourselves, ‘Is this a smart move for us?’ With flex we have latitude to be able to write [the agreement] into their offer letter, telling them to refer to the core programme, plus attachment A, B or C which might be an addition or exception from the policy.

“However, I would say 85% of the time people just fall into our core relocation packages.”

Housing issues

One of the biggest issues Stepan has with relocation from the US is staff being hit by the housing bubble. Shifting can cause staff and their families to run the risk of losing a large sum of money on their house, which is where the company can step in from time to time.

For example, Stepan may be able to implement their purchase policy, whereby the company can buy the home if it is not sold within a certain amount of days for the appraised price.

“That is typically not offered ... but if someone is in a particular bind the company might agree to buy the house or cap the losses at X amount. Without this, that person might not be able to move,” Tignor says.

The second option is to provide temporary living when the company is not prepared to purchase the house, but the owner is having a hard time selling because of difficult market conditions.

Stepan might pay for up to three months of temporary living, which can be extended on a case-by-case basis.

Relocating staff from the Philippines to Singapore

Although implementing these programmes is a huge job on its own, around two years ago Stepan Asia Pacific made the decision to shift their joint operations in the Philippines to Singapore, and base themselves here as a regional hub for their expansion into Asia.

This strategic decision to establish Singapore as the regional HQ meant relocating all staff in the Philippines here, after acquiring a plant locally. These employees were told their jobs were shifting to Singapore and were asked whether they would like to relocate. The majority said yes.

On top of these permanent relocations within this shift, Stepan also managed two expat relocations within the company, as well as one external relocation – a man from Mumbai hired for a senior management position.

Although all relocations were logistically difficult, they all presented their own unique challenges to the company.

“An expat relocation is not the same [as other types of relocation] as they are generally not moving all of their possessions over for good, and they are generally renting housing, not purchasing,” Tignor says.

This type of relocation includes standard payments for sundry items staff need to purchase upon moving to a new country, as well as for the movement of good via plane or cargo shipping.

But while it sounds simple enough, the difficulties begin to arise when considering other factors, such as the strength of an employees purchasing power in their new host country and retirement and pension matters.

Relocation difficulties

One of the biggest problems, Tignor says, is keeping an employees purchasing power whole when compared to their home country.

“For example, when we move people from the Philippines and you convert their local salaries into Singapore dollars, you cannot live on that here,” he says.

As well as this, the company also has to take into account any payments needed up front for rental properties and schooling, which can be a large amount in Singapore.

“The first thing we do is identify exactly what we need to pay these people – of course there is an offset – but you have to keep them within the same area of their purchasing power in both countries, while taking into account what they need to settle upfront.”

This is where flex comes back into the picture – often, an additional relocation bonus can help relocating staff offset some of those immediate expenses.

The second difficulty the company faces is less about the package and more about the relocation process – handling a relocating employee’s retirement plan.

“This problem is particularly unique to Singapore because if you come here with only an Employment Pass, you are not subject to CPF,” he says. “Some people don’t want to be subject to CPF, but for long-term savings and retirement in Singapore you need to be a part of that. These people are in no-man’s land when they come over.”

To counter-balance the potential lack of retirement funds for external staff, the company presents an expectation to relocated staff that when they join the company in Singapore from overseas, they will take the measures to become a permanent resident.

“You can’t make people do it ... but we want to use it as a motivation for them to do it, because otherwise it will cost the company more,” Tignor says. “It’s not about the money though, it’s about looking after employees and saying we want them to have savings; we want them to have a retirement.”

It’s a tough line, in a sense, because the company will not provide anything from a retirement perspective until the employee initiates and goes through the process of becoming a PR.

“If you have done that and been rejected, then we will put into place what mirrors that of our US investment programme,” he said.

“We do immediately cover medical insurance. But in order to encourage them to set up here long-term with a better system in place within the country, we want them under that system.”

On top of these particular difficulties, Tignor’s job also entails every other aspect of setting up HR in a new region – from talent management and succession planning, to performance management policies.

“The third thing has been my own personal development,” he says. “Part of my progression and development plan within the company has been to help us expand our international exposure and cultural agility.

“It’s been frustrating at times but there is a lot of excitement to it. The learning curve has been straight up.”