By Olivier Meier, Mercer
As we move towards the middle of the year, it is always fruitful to consider how much progress has been made on key policies and strategies to date. Clearly every organisation has its own set of challenges to address, but perennial issues to think about include:
- How should the mobility team be positioned within the organisation?
- In what ways are careers evolving for mobility professionals?
- How can we anticipate mobility issues and react quickly to major changes in the global workforce?
Here are some action points to help your organisation make genuine progress this year.
1. Anticipate Geopolitical Headwinds and Implement Policy Stress Tests
The global political backdrop is nothing if not turbulent and factors such as the unpredictable nature of American politics, the ongoing Brexit negotiations, and the future of Europe as well as tensions in northeast Asia have certainly dominated the headlines in the year to date. The fundamental question is: Are we witnessing a slow-down of globalization and a return to national barriers that could impede talent mobility? In recent years, barriers to mobility have been progressively lifted by the joint efforts of governments and companies, but it is now clear international mobility cannot be taken for granted – even within the EU, as Brexit is showing.
The first impact of this uncertainty will be on the purchasing power of assignees. Last year, the euro and the US dollar (as well as the currencies pegged to it) fluctuated by more than 10% against each other, and the roller-coaster is showing no sign of slowing down. The uncertainty related to Brexit will continue to weigh on the British pound.
Adapting to rapid tax, immigration, and compliance changes will also be high on many companies’ priority list. Be sure to look beyond the dramatic headlines to identify potential changes for pensions, access to benefits, tax, and compliance that will affect your employees and their short- and long-term financial perspectives.
Rather than wait for events to happen, it is useful to plan hypothetical stress tests and ask yourself: What changes could derail current mobility policies or lead to a compliance breach? What could be the direct and indirect consequences of major geopolitical events? Can you communicate clearly to assignees about brutal currency fluctuations and the adjustments that your company may need to make to compensation packages to offset these fluctuations?
2. Revisit Your Compensation Approaches
The first step in the compensation review should be to discard any remaining misconceptions about current international compensation practices.
The chief misconception concerns moves between high-paying and low-paying countries. Most emerging markets have very steep compensation curves, which mean that junior employees might have lower level of salaries, while top managers have higher salaries by international standards. As a result, when dealing with emerging markets, companies face these typical scenarios:
- The traditional expatriate models (using a balance sheet approach) work best for junior and mid-level managers, while top managers are typically too expensive to compensate on a home-based approach.
- Conversely, lower-level employees' salaries might be so low that a modification to the traditional balance sheet approach might be required to give them sufficient purchasing power in the host location.
- Further complications arise from the fact the definition of what constitutes a local salary is not always clear. A growing number of countries (China is a good example) have segmented “local” salary structures with different levels for location nationals, local nationals with extensive international experience, locally hired-foreigners, and expatriates.
These evolutions have multiple implications for assignment compensation approaches. The first one is that they open up new opportunities to compensate employees on local plus and local approaches, including in the so-called “low-paying countries”. Another is that the “silver bullet approach” might not work: expatriate compensation is not so much about selecting one perfect approach – the balance sheet or a local approach – as it is about building a structured segmented compensation policy to deal with different assignment situations using a range of approaches applied consistently. Finally, speed is an increasingly important factor in compensation and career management. Employees from emerging markets and millennials share the same appetite for speedy promotions and change. Traditional models based on annual salary review and slow progressive career evolutions struggle to cope with double-digit salary increases and an expectation of bi-annual career discussions.
3. Review Your Policies to Ensure That They Work for All Employees
Despite receiving a lot of publicity over the past few years, improving diversity is an ongoing challenge. The progress on the road to gender parity is slow and companies still struggle to build truly inclusive workforces, especially at managerial levels. It is time for the mobility function to take ownership of the diversity issue and implement practical steps to foster diversity among international assignees and challenge the status quo.
From a practical perspective, this means reviewing policies to ensure that they provide adequate support and are flexible enough to meet the needs of women, new family types and minorities.
Connecting with the team in charge of fostering diversity within the organization would also be a wise move: if international assignments are instrumental to prepare key talent for leadership roles, the diversity team should have a say in mobility issues and the mobility team should be actively engaged in diversity discussions.
The inclusion of third-country nationals is another unfinished task. The issue is hardly new: the growth of lateral moves between emerging markets has outpaced the traditional assignments from HQ countries for the past 15 years. Companies are becoming less HQ-centric and more global in their outlook and approach, but many of the traditional mobility models still fail to meet the need of assignees form emerging markets.
Examples of policy mismatches include difficulties calculating packages for assignees on low income, the definition of the family model (what about the extended family and parents?), and schooling support for non-Western children.
4. Re-evaluate the Purview of the Mobility Team
Historically, the mobility function has been built to manage traditional long-term assignments and to a lesser extent short-term assignments. Yet a whole host of new forms of mobility have emerged over recent years – including commuters, business trips, locally hired foreigners, expatriate gig workers, virtual moves, and third-country assignments – and these have prompted companies to reassess the scope of mobility management. Should the mobility team get involved in some of these new assignments types?
There is a strong business case to leverage the expertise of the mobility teams in compliance, tax, and relocation to address a wider range of issues. Whether or not the mobility function should also cover new types of mobility depends on each organization’s specific HR setup, processes, and resources. This could be an opportunity for the mobility function to become more strategic and to align mobility better with the new realities of global businesses.
5. Prepare Your Global Mobility Elevator Pitch
A mobility policy cannot just be an accumulation of unrelated guidelines about allowances and benefits. As policies become more segmented and flexible, sending a clear message about international assignments is more important than ever. Policies can neither address all questions nor anticipate all issues. The main challenge for mobility professionals is to establish a robust and logical framework that can be applied for routine tasks as well as special cases that are not explicitly covered in the policies.
- Are you aiming for a strict equalization approaches?
- Are you trying to guarantee a minimum level of support?
- What does it mean from a practical perspective for the different aspects of international assignments?
Ultimately, the answers to these questions will define your mobility “brand” and the key messages that you want to communicate to expatriates and management. Throughout the year, regularly ask yourself: Can you define the logic behind your policy in a couple of sentences?
6. Help International Assignees Focus on the Essentials
Mobility discussions often focus on package details or short-term problems. It is easy for the company and employees to lose sight of the bigger picture: in the long run, the main concerns of most employees are healthcare, financial security, family issues, and career development.
The workforce is ageing fast and is expected to live longer. This raises a host of questions in terms of health coverage and retirement financing. Many millennials are starting their career with debts and are not even planning for their distant retirement, but the rise of the gig economy and more frequent jobs changes will eventually force employees to plan more effectively for their future.
While companies are not responsible for the individual choices made by their employees, they have a responsibility to help these employees make educated choices through training, coaching, and facilitation. For expatriates, this is about connecting the assignment experience with their long-term personal and financial goals.
7. Return on Investment (ROI) and Metrics: Make Sure the Basics Are in Place
Based on Mercer’s 2017 Worldwide Survey of International Assignment Policies and Practices, a staggering 77% of companies reported that they had not established a way to determine the ROI of international assignments. The challenge is usually to gather all the relevant information, be able to integrate indirect costs in the equation, and find a way to measure objectively the impact of the assignments on the overall business results.
Even if there is not always a perfect method to measure the total ROI of assignments, you can put basic metrics in place around three mobility management dimensions: the ROI of international assignments (business impact/alignment); the ROI of the mobility function (efficiency/processes); and the ROI for assignees (attraction/retention).
This implies using the right mix of objective (financial) and subjective measures (including opinion surveys for assignees as well as employees managing assignees). Being able to communicate factual information to management is critical for the successful internal positioning of the mobility team and for bridging the gap between HR and finance.
8. Take a Step on Your Digitalization Journey
As the pace of digitalization accelerates, HR risks becoming disconnected from the expectation of assignees (especially the new generations) and the requirements of management.
For many years, the main discussion was about outsourcing versus keeping tasks in house. Now, automatization is becoming an increasingly important third aspect to consider. Calculations, reporting, and even some employee-facing tasks are being replaced by automatized processes including using self-service tools and chatbots able to answer most common questions.
For some organizations, digitalization could be an opportunity to bring some of the tasks that were previously outsourced back in house. For others, it is a means to reduce internal workloads with external online self services.
Adopting new technology is as much about understanding the workforce’s mentality and capacity to change as it is about identifying new tools. Auditing where the company stands on these issues is an important first step on the digitalization journey.
9. Upgrade the Team’s Skills
It is all too easy for mobility teams is to be perceived as purely an administrative function focused on basic tasks. Global mobility stands, on the contrary, at the crossroads of a company’s talent management, business expansion, diversity, and compliance strategies.
Mobility teams can take advantage of their unique positioning within the organization by presenting themselves as internal experts on a range of issues including international compensation and benefits, compliance, tax, relocation, and diversity.
However, this means the mobility team needs to acquire more skills, such as the capacity to build compelling business cases, statistical literacy (using metrics), having an understanding of technology and of the IT mindset, as well mastering the art of storytelling (i.e., conveying the right message to management and assignees and explaining mobility policies in the wider business context.).
Assessing the learning requirements of the team and prepare for new challenges should be a priority in a time of rapid changes in the workplace.
Contact the author: Olivier Meier
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