By Olivier Meier, Mercer
Never have so many people worked from home as during the COVID-19 crisis. It is also the case for mobile employees: many have been repatriated and are trying to maintain business continuity from their home country or a third country. Others are still in their host locations but working from home.
How can we leverage this new-found agility and retain virtual assignments as a viable option going forward? The debate is not about replacing all traditional international assignments by remote working – there will always be a need for mobile talent to relocate abroad to address urgent business issues or for training purposes. Rather, a virtual assignment is one more tool in the growing arsenal of options that companies need in order to deploy their global operations.
The difficulty of evaluating the success of virtual assignments
Are international employees working remotely really as productive as their peers working onsite? Anecdotal evidence from the crisis indicates that it might often be the case, but it does not mean that all virtual assignments are equally effective in all companies.
The first challenge when analyzing the success of virtual assignments is to evaluate comparable situations. Using virtual assignments to replace traditional relocation has not been a frequent practice. There are not many clear-cut scenarios where a well-defined virtual assignment replaces a traditional expatriate assignment. Very often, some forms of ad-hoc arrangements are offered to employees when relocating to the host country is difficult. Furthermore, trying to close the debate and find a definite answer applicable to all companies across industries would be misleading. Even within the same industry, experience show that companies face different outcomes when implementing virtual work due to their specific work practices, company culture, and processes.
This does not mean we cannot evaluate the pros and cons of virtual assignments for a given company. It is possible to break down the barriers to virtual assignments into different factors and then analyze how the organization scores against these factors. The analysis should also take into account to what extent potential barriers and problems can be mitigated. Such an analysis might not always settle the debate but it is a first step to frame a more structured discussion and build a business case.
Building a checklist
Here are eights factors to help determine if a virtual assignment constitutes a feasible alternative for a given scenario. When performing a detailed analysis, more factors can be added, a weighting can be assigned to these factors, and a final score calculated based on the factors selected.
1: Work characteristics
How can the required tasks be performed remotely? How frequently does the assignee need to be onsite in the host location (in a plant, in lab etc.)? Is there a need to visit clients and meet in person with local peers for specific tasks? The time required onsite gives a first indication of the type of assignment that could be used: on-going basis (traditional assignment), frequently (commuter, project assignments), or from time to time (virtual assignment complemented with business trips).
Analyze the job description, required tasks, workflows, and processes. Interviewing local management and former international assignees can provide new ideas, alternatives and suggestions for improvements.
Digitalization of tasks, more frequent short travels between the home and host locations, redefining the job, and breaking it down into different tasks that could be split between the virtual assignee and a local peer.
2: Work and technology setup
Is there a local office where the virtual assignees could be based or will they be working from home? Can HR and IT support the virtual working locally?
A range of scenarios are possible: from having virtual employees working for an office in the home country with full support available to virtual assignees working from home in a third country location where no local support is available. The work setup has an impact on performance, work continuity, as well as on duty of care for the company.
What technology is available to support remote work? This includes not just the basics (phone, email, video conferencing solutions etc.) but also specialized tools required to perform their specific tasks. Are the technology and communication channels reliable or subject to disruptions due to poor equipment or infrastructures in the location where the virtual assignees are based? Are there any technical compatibility or data security issues?
An HR and IT assessment can be performed to list potential issues.
Could new digital solutions address some of the issues? Would automating some of the workflow facilitate the task of assignees, management, and HR? Setting up virtual assignments is an opportunity to rethink the assignment management process and build a business case for new technology.
Having virtual assignees instead of relocating employees can avoid a host of compliance issues, but it can also trigger new problems.
Are there employment law issues (minimum wage, social security coverage, pension, healthcare rules) that would make the situation more complex and costly? What about tax liabilities? Could the work performed by the virtual assignee lead to a permanent establishment in a location where the company previously did not have tax liability?
Tracking mobility is essential even for virtual assignments. Virtual assignees remaining in their home countries might assume they don’t have tax liabilities in other countries. In reality they may have involuntary tax liabilities in a new country because of repeated business trips or due to the nature or beneficiary of the work they perform from home.
Ultimately, the company is likely to be responsible for any tax compliance breach even if these issues are the results of choices made by employees.
Exchanging information back and forth across countries can increase risks of personal and essential business data breach.
Finally, duty of care is applicable regardless of the nature of the assignment and location of assignee. Can the company effectively support a virtual employee based in a location where limited support is available and where the company does not have an office?
Review the regulations, tax, and compliance rules in all countries involved (home and host location as well as in cases where the virtual assignee is working from another location, a third country).
Is it possible to work with compliance, legal, and tax team to optimize current arrangements? What are the different contractual setup options, and can they address some of the problems?
4: Cost considerations
Using virtual assignments can reduce or eliminate relocation costs. However, having virtual assignees based in high paying countries or locations with high tax and social security costs can be expensive over the long-term.
In the case of a virtual assignee based in third country, what part of the relocation costs will be covered by the company?
Hidden indirect costs and mismanaged compliance issues can lead to additional costs. We cannot assume that a virtual assignment will automatically lead to lower costs.
Even if the costs are lower than for a traditional assignment, cost sharing between business units can be problematic. In theory, the business unit benefiting from the work of the virtual assignment should bear the costs. In reality, some business units cannot afford a highly paid virtual assignee based in an expensive location.
Both direct and indirect costs need to be captured. The long-term implications of the virtual assignment need to be analyzed, especially if the duration is not as well defined as for a long-term assignment.
Different compensation approaches can used. If the virtual assignment results from a personal choice from the assignee, additional costs could be shared between the employee and the company. Could it reduce costs to use a different virtual assignee setup and contractual agreements?
5: Readiness and acceptance
The cliché about perception being reality holds true: the perception of virtual assignment by management and employees has an impact on actual performance ratings and ultimately on satisfaction and productivity. If remote workers are perceived by their line managers as less productive, they might receive lower performance ratings and become disengaged. While flexible working may have benefits, it can generate anxieties and trust issues among managers and employees. The same is true for virtual assignments.
Previous experience with remote working in the company can shed light on acceptance of virtual assignees. If working from home is already part of the company DNA for local employees and commonly accepted by managers, setting up virtual assignments is easier. If, however, working from home is the exception or is associated with negative feedback from management, it will be more difficult to implement it for mobile employees.
It’s not just a question of perception: practical readiness needs to be taken into account. Do employees and manager know how to organize themselves and use the right tools to be productive at home? Do they have previous experience working remotely, or have they received training?
Perception and readiness are not the biggest barriers to virtual assignments, but they are the most underestimated. Experience shows that companies with no practical issues with virtual working sometimes encounter problems because of the mindset and preconceptions of management and employees.
Employee and stakeholder surveys can help us understand the attitude towards virtual working. Over time, it’s also possible to review the performance ratings and career progression of employees working remotely. Lower ratings may be an indicator of perception problems (out of sight, out of mind) as much as of a real lack of productivity.
Lessons for virtual assignments can be drawn from flexible/remote working practices for local employees. Mercer's 2020 Global Talent Trends Study details that the most effective strategies for flexible working include training for managers and employees, visible instances of career progression, building trust, measuring and reward contribution, technology, and redesigning jobs. These strategies are largely effective for overcoming some of the barriers to virtual assignments.
|Strategies that make the most difference for flexible working
|Training for managers to enable flexible working
|Visible instances of career progression for flexible workers
|More trust between the organization and its employees
|Ability to measure and reward contribution
|Better technology to enable flexible working
|Training for individuals to make flexible working effective
|Job redesign to enable flexible working
Source: Mercer's 2020 Global Talent Trends Study
6: Cultural issues
The cultural issues go beyond the question of perception and readiness. Some employees and their managers might be ready and tempted to use virtual assignments, but the practice may clash with the culture of the company or fail because of cross-cultural differences.
Is the company culture paternalistic and control-oriented, or more flexible and laissez-faire? What about “office politics”? One of the greatest fears of expatriate is losing the connection to their home unit. A virtual assignment can go a long way to alleviate that fear if the assignee remains in the home location, but it could also exacerbate the situation if that person were working for a third country or has limited contact with the host destination benefitting from the work. Leaving the official organization charts aside, what are the real, informal collaboration patterns in the company: who is talking to who, what informal support is provided? Who is isolated and who is well connected?
Different nationalities (cultures) have different ways of working and communicating. Distance and virtual working assignments can exacerbate these cross-cultural differences, creating misunderstandings and impeding productivity. Is the national culture of the team that will work with the assignee individualistic or group oriented? Will the virtual assignee risk being perpetually viewed as an outsider? Do local peers need to develop a personal relationship with the assignee to work effectively with that person?
Here is a simple example: employees from direct individualistic and task-oriented cultures are more ready to work remotely with a stranger than other people from cultures that value groups and personal relationships. Ultimately the different cultures are equally able to adapt to virtual work, but the initial setup and support requirements might be different.
The company can perform cultural preference analyses (culture calculator) to understand how diverse teams work internationally. Collaboration network analyses can shed light on how employees communicate with each other and reveal unofficial support networks not captured in organization charts.
If personal relationships and having a local network are important, the company could initially send the virtual assignee on a short-term assignment or an extended business trip to build connections in the host location. A process review and new collaboration tools can improve ongoing communication between business business units. Providing cross-cultural training for both the assignees and their local peers can avoid misunderstanding and foster trust.
7: Value for employee
What’s the value proposition of virtual assignments for employees? Opening up international opportunities for employees who would normally not be mobile? Offering an opportunity to rejoin the workforce to talented workers who were forced to take a break for family reason? Is it about lifestyle, flexibility, and work-life balance? What’s the likely impact on satisfaction and retention?
Employers should not make too many assumptions about what employees want. Preferences should be measured with employee surveys and regular feedback. A design thinking approach can be used to better understand the specific preferences of each group of employees.
Could more customized support increase the satisfaction of virtual assignees? Is it possible to introduce flexible benefits to make them more relevant for virtual assignees (e.g. swapping education allowance for childcare.)
8: Value for company
Aside from cost saving, virtual assignments could be a way to expand the talent pool. Candidates who would not be willing to relocate to the host locations could now be considered for a virtual assignment. It could also help build resilience and compliance: by building a distributed workforce (teams spread over different locations) the company is less susceptible to disruption and can ensure business continuity.
However, virtual assignments could also have the opposite effect: could it make the company more susceptible to disruptions depending on where the virtual assignees are based?
The barriers to traditional mobility should be analyzed. How many candidates are refusing to move due to the lack of attractiveness of some locations and family issues? An audit of processes can help determine the benefit (or lack of benefit) of having distributed workforce.
If the virtual work could make the work more subject to disruptions, what process and technology changes could alleviate that?