2023 talent mobility trends: mid-year review

By Olivier Meier, Mercer

After the slowdown of the past few years, mobility recovery is well on its way. A recent Mercer study on international assignments practices revealed that more than half of companies expect an increase in the following types of mobility in 2023 and 2024:

• Business travel (70%)
• Virtual assignments (59%)
• Short-term assignments (59%)
• One-way transfers (57%)
• International remote workers (56%)
• Internationally hired foreigners (56%)
• Locally hired foreigners (54%)

And 45% expect to see an increase in long-term assignments again, compared to 15% who anticipate a decrease.¹

1. Work from anywhere

Sixty percent of all participants allow short-term/temporary international remote working, and close to 40% have a formal policy in place.

For long-term/permanent international remote working, almost 27% have a specific formal policy in place. A further 10% have remote working guidelines as part of other policies, and 38% have an ad-hoc approach or informal guidelines.²

Observations

Two powerful forces are driving the evolution of work from anywhere. The first is the lifestyle expectations of employees fueling the growth of employee-driven moves — from short-term “workations” to long-term remote working. The second is driven by business efforts to boost agility and resilience, along with cost containment, by redistributing jobs and tasks and widening talent pools through virtual and international remote working.

Temporary international remote working is becoming a common benefit for employees. The next steps are addressing issues related to longer-term international remote working and leveraging opportunities to hire from anywhere. This requires navigating a complex array of international hiring options (hiring where the company has an entity, exploring other types of contract workers and freelancers, and use of solutions like employer of record) and, increasingly, linking mobility not just to talent management but also to recruitment.

2. Mindful mobility package flexibility

Eighty-three percent of companies rate policy framework flexibility as important or very important.

Sixty-two percent are currently reviewing or planning to review policy flexibility.

Eighty-nine percent want to improve the mobile employee experience (this was the number-one priority).³

Observations

Avoiding inconsistent experiences is essential. Too much flexibility could mean widely different experiences for employees. Organizations now try to design flexible policies by first accessing the desired experience.

Duty of care is increasingly understood in a broader sense — supporting the well-being of the assignee and the family from health, social and financial perspectives. This is fueling reflection on how to design core/flex policies that support the whole family (as opposed to core/flex approaches based on minimum compliance requirements).

The objective of flexibility is to enter into a new lifestyle contract with employees and not just fine-tune individual mobility package items. Flexibility is perceived as the next big thing that will attract, retain and motivate talent.

3. Making sense of the new world of reward

Forty-eight percent of companies are currently reviewing or planning to review their compensation approaches for mobile employees.

Forty-six percent are reviewing or planning to review their localization policies.⁴

Observations

A growing number of companies are moving ahead with pay-for-skills approaches. This has a direct effect on mobility management since pay for skills could drive the development of location-agnostic salary structures in certain cases.

Remote working also challenges assumptions about salary benchmarking. Organizations are reconsidering whether an employee’s location is the most relevant factor. For certain skill sets, the real benchmarking might be based on a broader international talent pool rather than purely on local salary considerations.

Efforts to increase pay parity and transparency force companies to refine their reward logic for mobile employees. This fine-tuning is less about having one specific compensation approach than it is about clarifying and justifying the logic behind differences — and, in some cases, aligning with new compliance requirements (for example, EU directives.)

4. Addressing the cost crisis

Companies rank the cost-of-living crisis as the most severe global risk over the next two years, peaking in the short term.⁵

The fact that the cost of moves is too high for the business is a large barrier for 33% of companies and a very large barrier for 11%.⁶

Observations

The persistence of relatively high inflation in many countries means purchasing-power issues remain a priority for many employees. This is not only a question of cost-of-living allowances; it’s a broader question about base pay and the total value of the reward package. There is a double risk for international assignees. First is the potential impact of moves on their purchasing power (such as the evolution of exchange rates — especially due to the fluctuations of the US dollar in 2023 and inflation differentials). Second is the broader impact of inflation on all employees when local salary increases don’t fully compensate for inflation.

Many organizations are trying to resolve the tension between cost containment and talent attraction and retention by exploring nonfinancial incentives and improving the overall employee value proposition. The challenge is to balance the effort to provide new incentives with the necessity to maintain competitive pay. The inflation crisis is also a reminder that employee priorities aren’t stable over time. Employees might be attracted by new incentives but revert to basic pay in times of financial difficulties. Assumptions about the alleged preferences of certain groups should be replaced by a thorough and regular survey of employee expectations.

5. Bridging data and technology gaps

Mobility activities that are deemed digitalized or highly digitalized include package calculation (27%), assignment cycle management (25%) and coordination with vendors (22%). Providing insights through metrics (17%), coordination with other HR systems (19%) and assignment experience/interaction (14%) are viewed as less digitalized.

The main obstacles to mobility management digitalization include budget constraints (a large obstacle for 40%), integration in existing systems (39%), time to implement (32%) and lack of adequate internal resources (31%).⁷

Observations

There is a disconnect between the pace of technological advances and the evolution of skills, mindset and legislation. Upskilling HR teams and mobility functions to catch up with these rapid changes and leverage new technologies is high on the personnel development agenda.

Leveraging metrics and analytics can help mobility teams build business cases and connect with talent and business management. Pressure is mounting on HR teams to justify the costs of mobility. The answer might not be found in an elusive ROI measure but rather in a cluster of metrics focused on talent acquisition and retention.

Technology-related risks are increasingly part of the HR and mobility agenda. These risks include data privacy concerns (such as cross-border data transfer as well as input into chatbots) and uncertainties about the impact of AI on diversity. 

6. Allowing talent to flow to work

Only 29% of mobility professionals report that their mobility programs are aligned or even totally aligned with their organizations’ talent agendas. Fifty-one percent report that they are partially aligned but need progress. Twenty percent indicate that they are not aligned.

Forty-one percent report that ensuring that global mobility plays a greater role in talent management is a priority. Thirty-five percent say it’s a high priority.⁸

Observations

Ten years ago, mobility policy segmentation was driven by assignment type and duration. The challenge now is to manage a much more fragmented mobile workforce — driven by new forms of mobility but also by diverse forms of employment and work setups (link to home/host/third country, based in an office/at home, in a country with a business entity or not, in-house employees versus freelancers). The need for consistency means international talent and mobility teams are getting involved in discussions that are outside their traditional purview.

There is still progress to be made in many organizations to remove barriers to talent mobility. These barriers are related to affordability (including cost-splitting issues between business units), the lack of incentives for managers to let go of their best talent and act as talent brokers, the lack of transparency of internal marketplaces, and the limited recognition of cross-functional moves.

7. Inclusive and purposeful mobility

The average percentage of female assignees globally (20%) remains far from achieving parity (25% in North America, 22% in Europe, 17% in Latin America and 13% in Asia).

Few companies report that environmental, social and governance (ESG) considerations currently play an important role in mobility. But nearly 60% have started to take measures to address the potential negative environmental impacts of their mobility programs.⁹

Observations

Inclusion is about fighting biases through training and communication but also analyzing processes that lead to imbalances. Companies are increasingly considering issues of pay transparency, career equity (the types of assignments offered to women and minority groups) and the impact of new ways of working.

Groups of employees might benefit from the various forms of remote working. However, like part-time work, remote work could open new opportunities in the short term but limit career progression over the long term. The impact is uncertain and depends on each company’s culture and processes.

The pressure of taking ESG considerations into account when making management decisions is slowly but steadily trickling down to the mobility functions. Organizations are realizing that global mobility should be more purposeful; that is, reviewing mobility approaches should take into account the impact of moves on all employee groups, families, local communities and the environment. Business cases for new assignments are increasingly required to include these ESG considerations.