By Olivier Meier, Mercer
As pressure mounts on mobility teams to deliver value, companies are trying to measure the return on investment (ROI) of mobility more accurately, with the objective of finally ending the perception that talent mobility is an expensive exercise without clear value. Being able to quantify the benefit of mobility is a way to relate it to tangible business objectives and better communicate its value to top management.
However, several problems make the calculation of ROI difficult: we have a clear understanding of direct costs, but indirect ones are more difficult to capture. The question of value is even more challenging. According to Mercer’s 2020 Worldwide Survey of International Assignments Policies and Practices Survey, half of companies do not define assignment failure, many have a narrow definition of success (e.g., merely completing the assignment), and others have only limited information about the performance of assignees.
If we want to understand the value of mobility, we need to add one more step before attempting to calculate the ROI. We need to understand the different mobility outcomes.
Defining the outcomes
We need to differentiate three types of interrelated outcomes:
- Business outcomes. These outcomes are related to business growth and profitability and the acquisition of market share and new clients. This is often the priority for top management, but measuring these business outcomes in isolation does not tell much about the value of mobility itself or to what extent these business outcomes can be attributed to the action of moving employees.
- Mobility outcomes. These are related to the process of relocating employees. The outcomes could be about the employee (satisfaction and wellbeing of the assignee and the family, as well as retention and performance) or about the receiving business unit (did it benefit from the assignment?) or the mobility teams (how efficient was the assignment process?).
- Talent management (workforce) outcomes. These include the career of mobile employees, their skills, their experiences, and how these were affected by mobility. These outcomes affect the talent pool and the capacity of the organization to address skill gaps. It helps to reveal some of the indirect costs and benefits of mobility as well as of the long-term value.
A narrow focus on business outcomes fails to capture the role of mobility. An assignee can be successful for a year but fail to train local peers or grow the host business for the longer term. A narrow definition of ROI could misrepresent this short-term success as a high-value move. In reality, it brought very little to the business over the long term. Similarly, a good business outcome (such as growth of the host business) leading to the loss of talent (bad experience in assignment or absence of post assignment career planning) is not a success for the business either.
Likewise, focusing purely on the mobility or the talent management aspects would fail to connect these outcomes with the financial aspects of the business. It would lead to perception that mobility is, at worst, all about costs or, at best, a heavy investment to maintain employee satisfaction and retention with unclear long-term business benefits.
The different outcomes could reinforce each other: talent management outcomes can drive a strong talent pipeline that will in turn drive better business outcomes in the future. They can also conflict with each other: short-term profitability and cost control can be at odd with mobility experience and talent management. In practice, there will often be trade-offs between these different aspects of mobility.
When the balance among the different outcomes is too skewed, the overall value of mobility is at risk. This might not be always immediately visible. Assignees may apparently be very satisfied (good support leading to a positive mobility outcome), but mobility does not benefit the talent pipeline (no career management process post assignment), or the business value of the assignment is questionable (no evidence that the receiving business unit is performing better).
Assessing the outcomes
For each type of outcome, several types of indicators should be used. These indicators can include quantitative inputs (e.g. figures from finance) as well as feedback from the stakeholders (employee and line management interviews).
Talent mobility outcomes and examples of indicators
|Business outcomes (specific to tasks assigned)
||Direct and indirect costs, profitability increase, revenue growth, client acquisition, processes and compliance rules implemented in receiving unit (versus prior to an assignment, versus performance of local peers).
|Mobility outcomes (specific to the action of sending an assignee)
||Assignee satisfaction survey, receiving unit feedback, training completion (assignee or local peers depending on the type of assignment), assignment completion rate, mobilization metrics (time to activate assignments), mobility promoter score (likelihood of former assignees to recommend an assignment to a colleague).
|Talent management outcomes (specific to skill sourcing/talent brokering and career management)
||Retention rate, internal labor market analysis (career progression measurement), talent pipeline analysis, skills gap analysis, career parity, pay progression, diversity and inclusion metrics.
Some indicators are short-term ones, while others require digging deeper into the long-term impact of mobility. The retention rate at the end of the assignment is a poor indicator of a successful outcome if taken in isolation. Many assignees resign one or two years after their assignment as they perceive their skills are not used or no new suitable career opportunities are available. Longer-term retention rates can be measured using an internal labor market analysis. This type of analysis shows not only if former assignees stay in the organization but also their career progression. In many cases, the career of former assignees stalls as organizations fail to leverage their newly acquired skills. In these cases, retention is not a positive sign: the employees do not progress in their career anymore and the organizations are burdened with demotivated, underperforming talent.
Making sense of the outcomes
Taking into account the type of assignments
Over the past twenty years, companies have increasingly segmented their mobility programs by assignment purpose: business critical moves, developmental moves, self-requested moves. The purpose of the assignments influence how we assess mobility outcomes. A business critical move is more likely to be focused on business outcomes. However, failed mobility outcomes (bad experience for the assignee) or talent outcomes (not career benefit or loss of talent) could invalidate the business outcome. For developmental moves, the focus is on talent outcome. In other words, the expectations in terms of learning and subsequent career progression are higher than for other types of moves. Yet, mobility and business outcomes cannot be ignored. A lack of understanding of what the development moves add to the business results (even indirectly or over the long term) would make developmental unsustainable in the eyes of management.
More generally the importance of mobility in the general business strategy also influences the outcome analysis. How strategic is mobility in a given organization? If mobility is considered as a strategic exercise, the expectations in terms of outcomes will far outmatch the ones in a company that uses assignments in an opportunistic way to plug ad-hoc talent gaps or accommodate employee requests. The level of value generated and the granularity of the analyses required will be different. For companies with a strategic view of mobility, it has to generate over time significant, measurable value consistently, whereas for organizations with more opportunistic views of mobility, a more high-level assessment of the value of ad-hoc moves might be sufficient.
Problems of attribution and the perils of correlation
Attributing an outcome to the mobility process and more precisely to the actions of a mobile employee is a delicate process. Is the successful outcome the result of the assignee? Would it have been different in the absence of assignment? An outcome has to be attributed to the assignee and to the fact that the person has been mobile to be relevant to help measuring the value of mobility. If one of these two conditions is missing, the impact on value is questionable.
The problem is in no way limited to mobility: HR has always been struggling with performance evaluation. Is the employee performing exceptionally, or is this person simply in the right team, at the right time but in reality not contributing the performance of the business? Furthermore, a decision may be the right one in the short term but the wrong one for the long term. A common example in mobility management is the choice of a compensation approach that saves costs for the short term but generates long-term, ongoing costs for the company. A narrow vision of the mobility outcomes in terms of scope and duration can be misleading.
The development of analytics is increasingly helping HR separate facts from opinions, but for mobility professionals the task is more challenging. The temptation to correlate a minor change in policies with a positive outcome must be resisted. In reality, the complexity of the factors make it difficult to evaluate outcomes. That is not to say that measuring the value is impossible, but it requires a combination of different elements:
- Analyses at a relevant level (depending on what you want to achieve/how strategic mobility is for the organization)
- Exploring different angles (analyzing the different outcomes and how they interact with each other)
- And the persistence of results over time (there is a human tendency to mistake luck and randomness with good performance)
Finding a reasonable path
We should not give up our efforts to define the right formula for assessing ROI, but setting up a dashboard to monitor the different outcomes of mobility is a useful first step. Such a dashboard is in itself a complex exercise that requires input for multiple teams (starting with finance and talent management), but it helps focus on what should be a first goal. This is not so much about finding one simple formula as determining a pragmatic way to monitor the value of assignment by taking into account its different aspects and producing reports that are good enough for the purpose of management decisions in a given organization.