By Olivier Meier, Mercer
The recently released 14th edition of the Global Risks Report, prepared by the World Economic Forum with the support of Marsh & McLennan Companies and other partners, examines the evolving macro-level risk landscape and highlights major threats that may disrupt the world in 2019 and over the next decade. It describes the major challenges that governments, companies, and individuals will have to face, including abrupt technological changes, more frequent natural disasters, geopolitical tensions, and risks of social turmoil.
At a time when many mobility discussions are focused on flexibility, self-service, and the long-heralded disappearance of the traditional expatriate assignments, this depiction of global risks provides a stark reminder that international talent mobility remain a complex exercise that can put employees in harm’s way physically, emotionally, and financially.
The new generations are not necessarily better equipped than their predecessors to manage security issues, financial problems, health considerations, and other types of risks. More than ever, companies need well-thought strategies to manage risks.
Risks linked to global mobility cover a much bigger range of issues than just security and compliance. Risks impacting the assignee and the organization can be:
- Physical: for example, health or security issues threatening the employees.
- Psychological: repeated stress affecting assignees and their families – ultimately impacting performance and leading to talent attrition.
- Operational: disruptions to the business in the host location.
- Data-related: moving talent implies circulating their personal data across jurisdictions – this leads to increased compliance risks.
- Financial: ultimately many of the issues are likely to result in additional costs for the organization and in some cases for the assignees themselves.
- Reputational: mismanaged assignments can lead to a negative perception of mobility programs and even impact the overall employer branding.
It is important to bear in mind that risks can be invisible. An invisible risk is one that results from an issue that the HR department is not aware off. It could be the result of an assignments happening under the radar – moves that are not tracked by mobility team. A risk that increases with the multiplication of new assignments types such as commuters and extended business travelers. It could also be related to a family issue that has not been discussed with the company.
In all cases, organizations have duty of care and are likely to be held accountable if problems arise.
Understand the true meaning of duty of care
The concept of duty of care is coming back in force, and it is not only limited to a legal obligation to preserve employees; it also extends into reputation and moral issues. In the strict sense, duty of care is about taking all possible steps to ensure the safety, health, and wellbeing of employees. This is a legal requirement that companies cannot ignore. But the scope of duty of care is wider than many think and applies, to a large extent, to the family of the assignees – it is applicable if the family is relocated to the host location with the employee but sometimes also when the family doesn’t live abroad and just visits the assignee for a short period of time.
If a problem arises, the impact to the company’s reputation could be disproportionate: the news that the company is not looking properly after its assignees would spread fast on expat networks and in discussion groups. It requires a proper assessment.
Assessing risks: probability, impact, and perception
Potential issues that could affect the organization and the assignees need to be analyzed across three dimensions:
Integrating these dimensions is important because ignoring one of them (most frequently the actual probability or the perception) could lead management to focus on the wrong priorities or misread assignees’ apprehensions.
For example, when asked about the main risk when sent to a hardship locations, many employees and line managers would mention personal safety and terrorist attacks. However, statistically the right answer when considering frequency and fatality is driving. Accidents happen in developed countries, but driving is significantly riskier in some hardship locations where the condition of the roads and the behavior of local drivers depart markedly from the situation in the assignee’s home country. Furthermore, in countries with a weak rule of law, even a minor traffic incident could lead to entanglement with the local police or violent disputes with locals.
In practice this means that while companies still need to have comprehensive security measures to prevent terrorist attacks – no compromise is possible on security measures – they also need to address the more frequent practical issues, as well as the overall risk perception bias of assignees. Terrorism is rare but foremost among assignees’ concerns, while driving, although not perceived as problematic, is a far more likely cause of personal injury. This perception gap need to be addressed – a succession of negative experiences for assignees due to ongoing dissatisfaction, excessive stress, miscommunication, and more generally an accumulation of minor incidents in the host location could lead to talent loss.
Expanding the definition of risk: talent risks
Many organizations take for granted that expatriate turnover is higher than for locals. Many figures circulate about typical expatriate attrition, but the validity of these figures is dificult to gauge due to the absence of common definition and lack of contextual information. In any case, losing highly qualified mobile talent can become a significant burden for the company. Assignee attrition can result in:
- A loss of know-how: assignees are usually selected for their skills and high potential.
- Wasted investments: assignees are more expensive than local employees, and the companies invest a lot to support assignments.
- Unbudgeted costs might result from the need to replace talent.
- Delayed business development and lower productivity might occur until a suitable replacement for the expatriate is found.
The lack of clear definition of failed assignments is another problem when trying to evaluate talent risks: in Mercer’s 2017 Worldwide International Assignment Policies and Practices, 52% of respondents indicated they didn’t have a definition of failed assignments.
The organizations who do have a definition commonly use criteria such as assignment completion and meeting business objectives. However, these criteria remain vague and don’t capture all possible scenarios. Failed assignments are not just about employees terminating assignments prematurely. They are also about low productivity while on assignment, assignees who leave the company shortly after the end of the assignment, or even the lack of succession planning in the host location.
Digging deeper through the roots causes of failed assignments and their consequences through the use of detailed metrics and analytics can shed a new light on the question of cost containment and reveal that the high cost of expatriate packages – often the cause of uproar and criticisms – pale in comparison to the cost of missed business opportunities and talent loss.
The first step to assess risks that could lead to failed assignments is to understand the degree of hardship in the host location.
Assessing the degree of hardship of a location
Companies need clarity about the situation on the ground to make informed decisions. The governmental sources provide reliable high-level information at country level and on major cities but the level of details might not be sufficient. Governmental and other publicly available sources also tend to a have a scope and purpose than it not relevant for companies. Companies require a different yet objective source to assess the quality of living of assignment locations.
The level of granularity of the assessment matters. In some locations crimes involving mafia and various traffics can inflate crime figures but don’t constitute a threat to assignees. In others countries, on the contrary, wealthy foreigners are prime targets.
Furthermore, not all expatriates are equal when facing risks or, more precisely, risks might be different for various assignee groups.
Risk and talent diversity
Assignees can be the target of discrimination because of their nationality, ethnicity, religion, social class, gender, sexual orientation, disability, or age. This is further complicated by the fact that some minorities are invisible. Family members of the expatriates themselves can also be the target of discriminations. These issues could be easily overlooked by the company unless they are flagged by the assignees themselves.
An accurate assessment of the degree of discrimination for all assignee groups in each location is needed. A difference should be made between objective barriers (legal or widespread problems) and subjective perception or prejudices that can addressed through training and communication. Whenever possible prejudices should be fought, but it is important to recognize objective difficulties. The assessment of objective hardship levels is important to differentiate real barriers to mobility from simple preference or convenience matters. Compliance and legal teams should be involved in the process for the most problematic locations.
Diversity Location risk assessment
||Examples of possible actions
Severe legal restrictions/risk of criminal charges (imprisonment/death) or widespread problems leading to violence
- No go.
- Engage with career management team to find alternative.
4– Very high
Legal restrictions including visa issues and risk of fines or common issues with serious consequences when dealing with locals.
- Avoid in the absence of practical solutions to address issues.
- Involve compliance and risk management teams.
- Exploring alternative assignment setup (commuting, single assignment) if family is the issue.
- Engage with career management team to find alternative.
Common issues due to customs/cultural issues with moderate impact on assignee’s daily life
- Awareness and intercultural training.
- Proactive facilitation to address common questions.
- Consider alternative assignment setup.
Occasional issues with low impact on assignee’s daily life.
- Awareness and intercultural trainings for assignees, HR and management. Mentoring.
1 -None or very low
There are rarely problems
- Communication on the importance of diversity
Expats versus locals
Treating expatriates differently from local employees can damage the credibility of the company and lessen employee engagement. In worst case scenario, it raises ethical questions and could trigger liability issues.
The Fukushima disaster provides a good example: expatriates in Tokyo were not in direct danger but there were health concerns that were difficult to evaluate at the time of the disaster. Companies had to determine if they were going to evacuate their assignees, only the families of the assignees, or ask everybody to stay as the situation was expected to be soon under control. The challenge for the companies was to understand the implications of these decisions and what message it was sending to both expatriates and Japanese employees.
The 2014 civil war in Libya provided an even more dramatic example with the evacuation of thousands of foreigners and the relocation of locals. Many multinationals recognized that leaving some of their local workers was not an option. This was the right choice but it stretched the resources of these organizations to the limit and proved to be difficult from a logistic perspective.
Furthermore, boundaries between expats and locals are often blurred. The multiplication of employee categories – including global nomads or locally hired foreigners who don’t benefit from a guarantee of repatriation and who were not relocated by the company in the first place – can complicate the task. In case of emergency, this could lead to situations where the company has to evacuate employees to a third country which is not their home location or repatriate them to a home country that they left so long ago and where they don’t have accommodation, a local support network, or family left.
There are also situations where expatriates prefer to make their own choices and companies are tempted to grant them more flexibility.
The risk of excessive flexibility and laissez faire
Determining how much flexibility you can give to assignees is a delicate exercise. Experienced expatriates might be tempted to decide for themselves. Too much flexibility is a risk – and it is not a question that can be mitigated by putting disclaimers in employees’ contracts. Companies cannot wash their hands of these issues.
This flexibility has to be managed carefully and done within reason. Employees might sometimes be willing “to take a chance” but companies have a duty of care and cannot put assignees in harm’s way. Good communication, cultural training, and careful planning can sometimes alleviate some concerns but not always solve all problems in all locations.
Tips to mitigate risks
- Audit what risks, compliance issues, and problems international assignees could face in the host destinations. Establish a duty of care checklist to ensure that no issue is being left out. Establishing this checklist might involve different departments – take a broad definition of duty of care and don’t limit it to the most obvious security risks.
- Understand that the new types of mobility (such as short assignments, locally hired foreigners, and gig workers) as well as the increasing diversity of expatriate population could increase risks or at least make them more difficult to track.
- Ensure integrations of the different tracking systems: assess the need to better link travel or tax system to the HR and mobility management systems. Make data submission and reporting easier though mobile apps and real-time reporting systems.
- Assess your company’s resources in each host locations and if other companies operate in these locations. It makes sense for organizations with more limited resources to pool resources with other companies and develop a network to provide a detailed evacuation strategy as well as on-going support for assignees and their families. Reaching out to other companies operating in the same hardship area is a priority for HR teams.
- Ensure that assignees are fully prepared for assignments. Cultural trainings should be provided not just to understand the basic of the host country culture but also to increase awareness of potential issues. Anticipate health problems by providing pre-assignment health screening and explore new solutions like virtual doctors.
- Encourage open communication: provide communication channels to allow employees to speak up about possible issues but without intruding into their personal lives. Involve the family in the discussion whenever possible. The role of the receiving country is important: local HR, line management and coworkers should be involved in the discussions.
- Allow employees to turn down assignments without facing consequence for their career. Give them the possibility to discuss concerns with someone who is not their direct manager. Similarly, the HR or the mobility teams should be in a position to say no to management and employees if the level of risk is not acceptable.
The role of talent mobility teams
HR and Mobility managers are not always directly responsible for all compliance and risk management issues, but they are in a unique position to act as expert advisers and educate the business about potential problems in an internal context, coordinate activities, and anticipate issues. Furthermore, they are on the front line when it comes to assessing the risks of losing mobile talent.
The increasing involvement of mobility managers in major business issues lead to questions about the responsibilities and purview of the talent mobility function. It opens up more opportunities for talent mobility team to play a more strategic role in the organization and get recognized for that.