By Mercer's Yvonne Traber, Mario Ferraro, and Melissa Mata
No matter what part of the globe you’re overseeing operations in, there are always new trends, policies, and regulations to keep up with.
Indeed, this is true for any part of the world, but if you’re overseeing international assignments in Latin America, Asia, or Europe in particular (or even some combination of the three), you must be aware of how their vastly different cultures and societal structures will impact your policies. And, even if you’re not currently overseeing any employees or operations within these regions, you can still learn how contrasting policies in one part of the world will often impact talent mobility efforts in another part of the world—and vice versa.
Here, you’ll find a detailed overview of these contrasting mobility perspectives in Latin America, Europe, and Asia, as well as how they affect the global workforce efforts of many HR professionals around the world. But before you can understand the current mobility landscape of each region, you must understand the economic state of each region—after all, the two are very often closely intertwined.
Current Economic Outlooks by Region
The Latin America Economic Outlook: Varying Laws & Political Uncertainty
HR professionals attempting to manage expats in Latin America must contend with a particularly challenging and diverse economy. Amongst other things, varying inflation rates and ongoing currency fluctuations throughout different countries are complicating pay initiatives and practices, making it increasingly difficult for mobility experts to estimate appropriate costs and expenditures. But what are the underlying causes of this growing labor complexity?
Complex Legislation
For one, Latin America has long had an extremely complex legislative framework. As a result, calculating compensation factors such as appropriate base pay or severance salaries is harder in some countries than in others, but especially in those countries where mandatory premiums and other legal requirements have to be factored in.
Lack of Societal Retirement Benefits
HR professionals managing employees in Latin America must also address retirement-related matters as well, especially since there are far fewer social security agreements in place than in European or Asian countries. As a result, many companies operating in Latin America provide a lump sum for their individual contributions. However, when taking this approach, these companies should always address their lump sum wherever their payroll is established. If they don’t do this, they may risk opening a door to severance-related liability issues and other unpleasant legal implications.
Political Instability
Finally, talent mobility experts must remain mindful of Latin America’s precarious political environment. Many of the countries in the region have potentially game-changing prospects for their upcoming elections, while other countries have much more complex political considerations to be weary of. Regardless, the political environment as a whole is undoubtedly unstable, and that means many employees assigned there will be susceptible to hardship costs, additional security assurance, and similar considerations.
The Asian Economic Outlook: Rapid Expansion & Fierce Competition
Driven by Youth
As the home to 4.5 billion people, Asia is an undeniable economic powerhouse. However, in spite of its international impact, it's also an incredibly young continent, at least demographically. In fact, the current median age throughout the region is only 30 years old. Because of this, the Asian talent pool will continue to overflow with recently graduated yet highly qualified professionals, and this will serve to continue the rapid economic expansion taking place throughout the region.
Country-to-Country Economic Variations
In regards to wage levels, quality of living, cost of living, and tax laws, Asian countries are very diverse. For example, countries like Korea, China, Japan, and Singapore have highly developed economies, while countries such as Laos, Bangladesh, and Myanmar are just beginning to make their marks on the global business landscape.
Tapping into Growth Potential
Nevertheless, global HR professionals around the world are finding huge potential in Asia as a whole. Even though the more developed countries have long served as the economic engines of the continent, other Asian economies are becoming increasingly lucrative markets that other countries will want to invest in.
Indeed, many external multinationals view the whole of Asia as a massive playground in which they to invest, grow, and expand their operations. As a result, Asia will continue to generate significant demand for talent, and this growing talent demand will force HR professionals to start looking beyond the traditional economies such as Japan, China, Singapore, and Korea to maintain adequate staffing.
However, when you take all the cultural differences and economic variations into account, it raises an extremely valid question: Can there possibly be one particular strategy that works for the whole of Asia? Will a strategy that works in Myamore work equally well in Singapore? The answer, quite frankly, is “no.” This means that balance is key; you must be able to implement flexible strategies, techniques, and philosophies that can be branched out into location-specific strategies whenever necessary.
The European Economic Outlook: Diverse Workforces & Assignment Approaches
Many European companies are currently questioning whether or not they should move to a host approach versus maintaining a home-country contract approach. That’s because, when looking at regional or country-specific talent demand trends, there are many unique obstacles to overcome. Just like in Asia, this is increasing the necessity for flexible strategies, techniques, and philosophies in order to attract and retain talent throughout different areas of the continent.
Workforce Diversity
Also similar to Asia, the European workforce is incredibly diverse, and this diversity is only growing with the passing of time. HR professionals are tweaking their talent mobility strategies to address the varying needs resulting from this diversity, often times on a case-by-case basis. From expatriate assignments to extended business travelers to simple commuters, growing diversity is certainly changing the way talent mobility is being approached.
Varied Assignment Approaches
HR professionals managing a global workforce in Europe must also consider whether or not locally sourced talent is the more affordable and practical solution for any assignment. Again, just like in Asia, there is a large pool of international talent on the ground in European countries that can be recruited locally, but HR professionals must carefully consider whether to put these employees on a purely local contract based on local conditions, or provide more customization with their contracts.
Unique Mobility Challenges
Regardless of which option is ultimately chosen, creating practical yet flexible plans is a constant challenge for today’s European HR professionals. However, the predominant task is to always narrow in on a framework that can be applicable to any kind of move.
There are also multiple talent mobility challenges that are wholly unique to Europe, as well. For example:
- Growing security risks and concerns in response to attacks and natural disasters.
- The widespread and still-emerging implications of Brexit.
- Stricter regulations resulting from mounting immigration concerns.
- Tighter tax regulations which are limiting many once-common expat concessions.
Of course, these are just a few high-level examples. The true implications of many Europe-specific issues—especially Brexit—have still not yet fully come to fruition, forcing many talent mobility experts to only have guesses as to what the immediate future will bring for their expatriate management efforts.
Current Talent Mobility Outlooks by Region
Key Talent Mobility Outlooks for Latin America
HR professionals handling expatriate assignments in Latin America need to be mindful of the varying wage differentials throughout the region. For example, a director-level employee who moves from Chile to Mexico will not be as attracted to compensation on a local-plus basis at the new location. This is because that total annual cash compensation would be reduced by an average of 60%—not a particular attractive incentive to encourage an international relocation.
Similarly, legislative variations throughout the region are something to pay close attention to. This is why more and more companies are starting to consider a host-residency contract. This way, organizations don’t have to face double-labor obligations in both their home and the host countries, which saves them time, costs, and undoubtedly a lot of unwanted paperwork in the process.
Key Talent Mobility Outlooks for Asia
As mentioned before, Asia has historically been seen as a sort of playground for western multinationals, and many of the host locations were restricted to places like Hong Kong, Tokyo, Singapore, and the like. Of course, this trend continues today, but for years, the balance-sheet approach has been the most common approach for western multinationals carrying out business in Asia.
Tapping into Emerging Markets
While these historic trends are all still intact, they’re also subtly changing to accommodate today’s needs. In other words, things are slowly yet surely becoming a bit more diverse. Western companies are still sending expats to Asia in droves, but the host locations are expanding beyond the traditional Hong Kong and Tokyo-based selections.
Nowadays, however, there is a much broader range of host locations being explored and developed. There is also a huge increase in the number of Asian organizations utilizing overseas assignments. This is arguably one of the most important implications to keep in mind because it has a direct implication on the international competition for talent, which directly impacts the business models of many global mobility companies.
A Post-Western Era
It’s also worth mentioning that, in many ways, these gradually emerging trends are reflective of what could be considered a “post-western” era of global mobility. These post-western tendencies must be reflected in your own policies, especially since many of the more-traditional policy structures were created using a western mindset. For example, even the western interpretation of a traditional family size is incompatible.
You can see this disparity in action when you observe how many of today’s western policies have based the “traditional family size” around one husband, one wife, and one or two children—sometimes three. However, from an Asian perspective, the “traditional family” also includes the uncle, the aunt, the grandparents, cousins, and so much more.
As a result, when you’re moving an Asian employee around, they are going to have unique concerns. But, if you’re still assessing this Asian expatriate assignment through a western lens, those considerations will be neglected, and the employee will undoubtedly be let down when it comes to being rewarded properly.
Key Talent Mobility Outlooks for Europe
Many multinational companies based in Europe utilize the balance-sheet approach, but many companies are also moving onto and experimenting with different approaches, as well. For example, local and local-plus approaches are becoming increasingly popular methods of responding to new and emerging trends throughout the world, especially when it comes to dealing with permanent moves or international hires. After all, whenever one has to satisfy a particularly diverse pool of mobile talent, the hardest challenge is figuring out how to define an equitable compensation structure.
To overcome this challenge, more and more European companies are questioning whether it’s best to move to a more personalized approach to satisfy increasingly diverse and variable needs. Of course, the exact level of flexibility required for each assignment depends on their employee’s unique skills and job types.
Providing adequate support to spouses is also a recurring issue for many multinational European companies managing their expatriate assignments. To better satisfy the needs of their workers (and their workers’ loved ones), some companies are attempting to lessen the overall length of their many assignments, while other companies are becoming more mindful when it comes to timing their assignments. This means keeping workers happy by figuring out when an international or domestic relocation will work best for the employee and his or her family, then striving to accommodate these preferences.
Finding the Right Mobility Solutions for Your Global Workforce
There are many takeaways to be gained from these contrasting mobility perspectives, and each one is important for expatriate management professionals to keep in mind for the future. To continue international expansion and success, talent mobility managers must pay attention to the many nuances taking place around the world—whether in Latin America, Asia, or elsewhere. In this case, “paying attention” will also require HR managers to be open to new approaches if they provide a more practical and affordable solution.
In addition, international assignment and global workforce managers must also keep up with how emerging trends, laws, and cultural considerations are impacting expatriate compensation and other key global workforce policies. Flexibility will be the key to sustaining growth in the years to come, meaning one-size-fits-all policies will become less and less functional. However, if you keep up with these shifting regional dynamics, you’ll be able to adapt when necessary. In turn, you’ll be able to provide appropriate career opportunities for your different generations of employees, while also ensuring organizational growth well into the future.
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