Anne Rossier-Renaud is a Senior Consultant at Mercer. Anne has a wealth of information about international assignment policies and practices. After explaining Mercer’s survey approach, Anne discusses the latest trends for the different types of assignments including short-term, commuters, intra-regional transfers, global nomads, developmental, and permanent moves.
Anne, why don't you start by explaining your role at Mercer?
I'm responsible for Mercer Global Mobility policies and practices surveys. In other words, I'm responsible for identifying emerging trends and topics of interest, gathering data, and compiling reports on multinationals’ global mobility programs so as to provide targeted benchmarking insights to our clients.
One of these surveys is the Worldwide International Assignment Policies and Practices Survey (WIAPP) which focuses on the different mobility programs that most international companies have, and more specifically on policies and practices related to their compensation approaches, allowances, and benefits provided for what we have called "Typical Long-term Assignments." We see that the number of the international assignments or moves continues to increase, but not necessarily for this kind of long-term assignments lasting two to five years, with family and planned repatriation to the home country. We now see an increasingly diverse mix of international assignment types that multinational companies use to meet their evolving business needs, but also to align with changing patterns in the global workforce. We focus on this trend in our Alternative International Assignment Survey (AIA). The AIA covers one-way transfers, short-term, talent development, and intra-regional assignments, plus commuters and global nomads. In the 2013 AIA survey, we had included Local Plus assignments. In the 2016 edition, we focused instead one one-way transfers in general and tackled Local Plus practices, whether for one-way transfers or other types of assignments, in a separate survey.
How many companies do you survey with each edition?
Our latest Worldwide International Assignments Policies and Practices survey had over 830 participants. It is the largest survey in the industry.
In the 2016 Alternative International Assignments survey, we had a little over 300 participating companies. The number of participants depends on the assignment type. Some are very popular and common, like the one-way transfers or short-term assignments, for which there were over 200 participants. Some others, like the global nomad, had a little less than 100 depending on the prevalence of the assignment type among international companies.
I assume the surveys evolve over time based on the world of mobility, right?
Yes, absolutely. The survey contents and questionnaires evolve according to what we see in the market. But we also try to keep some consistency in the questions to facilitate the updating process for respondents. Whenever possible, we ask the companies to refer to their previous responses and tell us what changed. We enable companies that have already provided responses in a previous survey edition to access their submitted responses to make it easier for them.
Let’s discuss the findings for each type of assignments – starting with short-term assignments (assignments lasting 3 to 12 months).
Short-term assignments are one of the assignment types that have increased the most. There has been a significant increase in short-term assignments over the past five to 10 years. They are often viewed as a good alternative to long-term assignments for certain jobs or projects because they are perceived as easier to manage than long-term assignments. Usually, they can start quicker, they involve no family move – the family stays in the home country – and they are potentially less costly for the company. Recently though, there seems to be greater flexibility on the part of the employers with allowing assignees to be accompanied on short-term assignments. However, “allowing” does not necessarily mean more support and more costs for the company.
It's the most common alternative type of assignment that companies have. But short-term assignments cannot always replace long-term assignments and need to suit the purpose. They are not the magic solution to move people easily, and they pose their own challenges too.
A common challenge is that short-term assignments may exceed their planned duration. This triggers many issues related to compliance, immigration, tax, etc. A short-term assignment extended beyond 12 months could become more expensive than a typical long-term assignment.
The family issue is also a significant one and companies sometimes struggle to relocate assignees on a single status, with the family staying in the home country, for an extended duration. Setting and enforcing a strict duration for short-term assignment is a key element in making sure that a company can manage compliance, immigration, and tax. Companies have become much more careful in making sure that they are tax- and immigration-compliant. And this increased awareness had an impact. In the previous edition, we had a higher proportion of companies who said that one of their main challenges was controlling the short-term assignments’ length. In this edition’s results, it looks that this has become less of a challenge.
Family issues can be a deal breaker for short-term assignment just like for long-term assignment, can’t they?
Yes, and I would say that in general, employers now seem to be more open to accommodate individual situations in terms of family grouping. They have become more flexible and are more inclined to allow long-term assignees to leave on single-status and, on the other hand, allow short-term assignees to be accompanied, so as to try and overcome the challenges and barriers to mobility linked to family. However, this does not always mean, for the short-term assignees, that the accompanying partner is supported or considered in the determination of the housing or living costs arrangements.
What are the key findings of the survey regarding commuters?
Sometimes it's difficult to understand what a commuter is and how to distinguish them from short-term assignments or even business trips. We defined commuter as an employee who splits role between two locations; typically, the commuters remain in their country of residence and regularly work for a few days or weeks each month in usually one, but could be several, other countries.
The commuting status can be initiated by the company to meet business needs when, for example, the employee’s responsibilities are split across countries. Commuting status can also be used temporarily before a long-term assignment to minimize disruption of the family life, children's education, or spouse's career. But it can also be the employee's choice to live somewhere else than where his/her actual job is. And sometimes, it is just a mix of both. When we look at the most common patterns of commuting, we can see commuting mainly between neighboring countries. The most frequent commuting countries are between the U.S. and Canada, Hong Kong and China, the UK and France, the UK and Netherlands, etc. Intra-European commuting is facilitated by the EU legislation and intra-regional commuting in general is obviously made easier from a practical mobility perspective and from bi- or multi-lateral agreements.
The average commuting assignment duration is the same as in 2013, which is about 15 months. But we now see more companies that limit the maximum duration for a commuting assignment. Half of them would limit the duration of the assignment compared to 11 percentage points less in the previous survey. Commuting too long could raise significant immigration, compliance, and tax issues, not to mention family issues. More countries are becoming proactive about making sure those employees who should pay taxes in a country they travel to and work in or generate revenue from, do so. It is becoming increasingly important for employers to track the number of days that their employees spend in different countries so that they can remain compliant regarding residency and tax. Our latest survey results showed that just over half of the respondents track the number of days commuters spend outside of their country of residence. Having tracking systems in place is a good way to monitor traveling patterns of mobile employees and can be invaluable in case of emergency or disaster recovery situations.
Commuters are usually paid their home country salary and receive compensation for their living costs in the non-residence country. Most receive a per diem allowance.
What about one-way transfers?
We see more and more one-way transfers as global talent sourcing is made possible, globalization is driving business operation relocation, and due to the increasing willingness of employees to market and relocate themselves to another country for career opportunities or life experience. Accordingly, this is the second most prevalent type of “alternative” move, after the short-term assignment, for which companies have a policy. More than two-thirds of our respondents reported that they have a formal policy to handle one-way transfers.
One-way transfer policies are primarily policies applied consistently globally, but about one-quarter of respondents reported having a global policy with specific add-on elements according to where the employee is transferred permanently – in other words a more flexible and location-specific approach. Such add-on elements would typically cover the education of the children (in cases where local schools are not suitable) or help with housing when transferees, as foreigners, don't have the same access to housing as locals, or because they should live in specific neighborhoods for security reasons. A key question related to these benefits is whether they are provided indefinitely or cancelled or phased out after a few years to limit on-going costs for the company. In many cases, they are not phased out.
For one-way transfers, maintaining the link with the home country is less important as there is no clear prospect of coming back to the home country. So, very often and as much as possible, a local approach for compensation and benefits is used for these one-way transfers. Most companies stick to a pure local structure for establishing the compensation of their one-way transfers but about one-third of our survey participants indicated that they would compare the local compensation level to what the employee had back in the home country and make sure that the person doesn't lose in terms of purchasing power, housing, tax, and social security costs. Most of the top countries where employers have one-way transfers are countries with competitive compensation structures or tax systems like the US, UK, Singapore, or Switzerland, which makes it easier to stick to the local compensation and benefits structure. But we also have China, a country that offers many career opportunities, as one of the main destinations for one-way transfers.
Most companies will offer relocation assistance to one-way transferees, such as helping the employee and the family with temporary housing, shipment of household goods, travel, and so on.
One of the main issues companies face with local packages is benefits, which are sometimes complicated to align with local market practices. Survey results show that multinational companies usually try to align benefits with local plans or handle them on a case-by-case basis, depending on where the employee is coming from, on the portability of some benefits between the home and the host country, and whether the company needs to have some form of international plan.
Let's move on to assignment where the focus is on training the employees and preparing them for leadership positions – the “developmental moves”.
We talk a lot about talent as the main asset of companies. In the World Economic Forum “Talent Mobility Good Practices” report Mercer collaborated on, talent mobility in the broad sense was stated to be at the heart of business competitiveness and success. Surveys confirm that many companies have talent development programs in place, integrating international mobility as part of their talent development strategy.
The results of the 2016 edition of the Alternative International Assignment survey show that over 60 percent of responding companies have talent development assignments.
We wanted the survey to enable distinction of talent development assignments between what we would call early-career assignments and talent development assignments for career leadership development purposes. More respondents (82%) had talent development assignments identified as career leadership development than as early-career (67%), and about half of the respondents had both types of talent development assignments. However, while our respondents indicated that on average 74% of their early career assignments had a strict developmental purpose this percentage was down to 59% for the career/leadership assignments. Assignees on career/leadership development are usually a little more experienced than early career employees and their international assignment can fill in both business need and talent development purposes.
Nevertheless, even when they distinguish between the two talent development assignment types, most respondents reported that they would not differentiate their practice for early career from their practice for talent/leadership development.
It is also interesting to see that a significant number of respondents don’t have criteria to say if an employee is eligible for the early career development (37%) and even more for the career/leadership development policy (52%). And more than half said the talent development policy was not connected to the company-defined career path. They have a policy or practice and they use it, but that doesn't mean they use it with consistent eligibility criteria.
What are global nomads?
We define global nomads as employees who have undertaken several consecutive assignments and are sent from country to country without being tied back to any home country.
The survey results showed this is the least prevalent assignment type, even less prevalent than in the 2013 survey. This may be related to the fact that the workforce is becoming more and more mobile in nature, geographically and from an employer perspective: the number of freelance or contract employees increased substantially in the US, for example.
A number of companies do have a formal global nomad policy, but as the workforce becomes more global and mobile, the need for a dedicated, distinct “company-owned” globally mobile talent pool decreases. Furthermore, creating a specific global nomad policy can be costly as companies would typically provide enhanced compensation and benefits packages to international employees in this category, to compensate for the need of “full” mobility. However, when we asked companies their top challenges in managing global nomads, a higher number of companies responded that the cost was less of a concern than in the previous survey.
Other main challenges are taxation, managing benefits, and retirement. Long-term or deferred benefits can be a challenge for the person who is moving and not returning to a “home” country. Companies typically offer global nomads a package similar to long-term assignments, but we see more companies using an international compensation approach (i.e. an international salary structure disconnected from both the home and the host location) rather than a home-based approach for global nomads than for other assignment types.
Then, when we are talking about home country, the question is how to define "home" if the person is moving from assignment to assignment. When asked how they define home for these global nomads, survey respondents indicated that they typically defined home as the country of hire.
Another element of distinction between global nomads and “typical” assignees is the mobility premium. We found that providing a mobility premium is more prevalent for global nomads than for other assignment types, even if this prevalence slightly decreased from the previous survey.
Most companies provide home leave for their assignees, especially for the long-term ones. The purpose of the home leave is usually to keep a link with the home country whether socially or business wise, keep ties with colleagues, be a pro-active actor in the career plan, or talk to people in the home country for the next steps upon repatriation. The survey findings show that global nomad is the assignment type for which the highest percentage of participants would allow the international assignee to spend home leave elsewhere than in the home country.
We also found that the duration of assignments for global nomads is shorter than for the typical long-term assignments (two years versus three to five years). This information is in line with what we have observed from the previous edition. These global nomads must be mobile and available wherever their skills are needed.
The last category surveyed is intra-regional transfers.
Companies used to use intra-regional transfers to cut costs and benefit from regional similarities in terms of culture and pay scales that neighboring countries are likely to have.
Differentiation of assignment types by geography is less prevalent than segmentation of assignments by duration or type of mission. Policy segmentation is usually more driven by differentiating assignment types according to the strategic value they bring to the company coupled with the developmental value of the assignment for the employee, than by geographic considerations. And the cost efficiency that intra-regional policies are likely to bring could also be achieved with a more holistic mobility program approach, including segmentation.
It was the assignment type for which the smallest percentage of respondents had a formal policy. Yet, the main reported challenge was managing exceptions and managing benefits.
Is there anything else you'd like to say or to sum up the results of the findings?
The world of talent global mobility is changing. Companies need agility and flexibility to address evolving talent global mobility needs and challenges. We see more and more alternative assignment types and one global policy fits all does not work any longer. Yet compliance constraints and increased complexity and expertise requirements as well as talent management imperatives make it necessary to have clear frameworks to manage mobility. The more assignment types, the more the need for clear policies to address them in a consistent way that makes sense for the company, both in terms of cost efficiency and achievement of the mobility program objectives. At the end, the global mobility program should ensure that the company can have the right people for the right positions at the right placed for the right cost, today and tomorrow.
For more information about Mercer’s Mobility data: https://mobilityexchange.mercer.com/data-solutions