A Reflection of Needs
Workforce mobility is starting to take a more custom, consultative approach in order to thrive in today’s competitive landscape.
The global transformation of business continues to alter workforce mobility patterns with many organizations revising their approach to long-term overseas assignments and shorter-term commuter arrangements, based on geopolitical, macroeconomic, and even demographic factors. As organizations seek advice and assistance to tackle this evolving paradigm of workforce mobility, it is breeding a range of new services. Chief among them is consulting services, data analytics, and benchmarking. Other trends include more boots on the ground in foreign locales, as well on-site personnel at the client facility as virtual extensions of its HR staff.
“Our services tend to mirror what is going on in the industry, and right now this is increasing globalization, particularly with regard to emerging markets,” says Deborah Graham, vice president and head of global consulting at Dallas-based Paragon Global Resources.
As more organizations extend their presence into these geographic territories, they are not fully relocating employees and their families on multi-year long-term assignments, as oil and gas and chemical companies, for instance, did a decade ago. Rather, companies are carefully weighing the opportunities of these assignments against the cost and other risks, and comparing these to alternatives like short-term assignments and even commuter arrangements.
“The work structure is so different,” Graham explains. “You can send a more senior executive to the new geographic market, who can stay just a short while and hire locally, then maintain communications with these employees 24/7 using mobile tools in the cloud. The same executive may return to the region on more of a commuter basis to check in on the operation and nurture the relationship with the overseas staff.”
Back and Forth, and Back
The bottom line is that while workforce mobility overall continues to grow, the assignment types are increasing at different speeds. This trend is affirmed by the biennial Cartus 2014 Global Mobility & Practices survey. Roughly half of company respondents to the survey expect mobility volume to increase in the next two years, but the assignment type projected to grow the fastest is developmental—an executive dispatched to an emerging market for planning and training. Next up is short-term travel, followed by extended business assignments.
At the core, a client’s industry sector, strategic growth plans, talent sets, and market objectives will drive its workforce mobility strategy. One company may prefer complete reassignments, while another finds shorter- duration stays most effective. Consequently, relocation services providers are enlarging their services to comprehensively address all possibilities. “Our clients are asking for not only for our regular resources, but more unique types of services,” says Joy Gulik, director of client services at Dallas-based Xerox Relocation and Assignment Services.
She cites a particular case in point: requests from some clients for onsite HR consultative services. “They’re looking to beef up their relocation strategy and have found value in having one of our experts literally on site at their location,” Gulik explains. “They want someone on hand immediately to respond to questions like whether a short-term or longer-term assignment is best, how much each type of assignment might cost, and for us to assess the family, regulatory, tax, immigration, and other issues before they make a decision.”
On their roster currently are two clients that are leveraging these consultative services, although Gulik comments that many more are inquiring about the onsite service. “HR today is more strategic and busy, and it makes sense to have someone there to quickly assist these discussions as a business partner,” she says.
Questions regarding relocating family members on long- term assignments are also increasing. While not a new issue, client inquiries have evolved to address the rather sudden change in the constitution of the traditional family. Not only are most families today headed by two breadwinners, a growing number are also comprised of same-gender parents.
While a decade ago same-sex marriage was virtually non-existent in the U.S., most states have now given their legal support to such unions, and the U.S. Supreme Court will soon rule in two cases that may require all states to follow suit. The issue from a workforce mobility standpoint is that many countries lag well behind these developments. Since Title VII of the Civil Rights Act bars discrimination in job promotions, and many overseas assignments are viewed as a positive progression in an employee’s career, employers in the U.S. may be stuck between a rock and a hard place.
“Several clients are coming to us with advice on this complex subject,” says Graham. “It’s a delicate balance to respect an employee’s marital rights, and at the same time inform them of the dangers of relocating to a particular part of the world. In many cases, the decision is theirs (the employee’s).”
Interestingly, the number of long-term assignments in which family members accompany the assignee was down by 14 percent percentage points (90 percent to 76 percent) in Cartus’ survey. Same-sex marriage aside, many companies are determining that complete relocations are not as necessary as they were. The study attributes the decrease to growing concerns related to emerging markets, “which can be unsuitable for families.”
Another well-worn trend is the use of mobile devices by employees to efficiently manage the many aspects of a long-term relocation or reassignment. What is new in this regard is that providers are beginning to make marketable use of the data produced by these electronic interactions.
For instance, data can pinpoint potential problems in a particular geographic location, such as transportation, housing trends, and regulatory issues. “Our clients increasingly ask us about predictive data that keeps them ahead of the curve,” says George Bates, senior vice president of global sales at Denver-based Graebel Relocations Services Worldwide.
The firm’s clients want sharper insight into potential costs and talent retention issues. “Five years ago, a client would have us move 100 people to Shanghai and that was it,” Bates says. “Now they want to know, based on our data, roughly how many of these employees are likely to be promoted, which would affect their future compensation and benefits. They want to know the percentage of the employees that are likely to find other jobs, which affects recruitment costs. Our internal data, blended with external data, helps them make better resource allocation decisions.”
The information also assists the benchmarking of one region’s business prospects versus another region. For instance, an organization with just enough capital to move into just a single new geographic market wants assurance that it is deploying its skill sets in the most cost- effective and financially productive region.
Xerox Relocation is leveraging data analytics for another growing need—to help clients navigate the constantly evolving regulatory landscape, particularly in emerging economies. This information informs decisions on whether or not an assignment should be long-term, short-term, or a commuter-type arrangement.
Sheilah Smith, the firm’s director of global tax and expatriate services, provided the following scenario as a case in point. “In Asia-Pacific, lax enforcement of immigration laws is no longer the case. Today, when someone travels to China, for instance, and the immigration officer stamps a business traveler’s passport or travel visa, he or she is adding up the time spent by this person in the country over the previous twelve months,” Smith says. “If the length of stay exceeds a certain threshold, it can trigger income tax and related interest, penalties, and fines. If not paid at the time of inquiry, the person may be sent home.”
Added to this risk are the different rules in each country on what constitutes a more permanent length of assignment for tax purposes. In some countries, just three two-week stays can trigger a tax, whereas in others the length of time is longer. Making this more problematic is that these rules change constantly. “It’s the employer’s responsibility to accurately withhold and report the employee’s income taxes,” Smith says.
By having a firm grasp of each employee’s length of stay in a particular location, and up-to-date knowledge on each country’s income tax laws, companies can make more informed decisions on which employee to send to which location. “If Bob is to go to China in April, but only has three days left in the length of time the country allows for a short-term stay, then it might be best to send Mary to China, assuming her length of stay in the country over the past twelve months is significantly less,” Smith explains.
On the Ground
As clients become more global, walking in these footprints makes sense. Up until recently, this was accomplished primarily through joint ventures and partnerships with local service firms, especially in extremely remote places like Malaysia, Africa, and the Middle East. This is now changing, with providers like SIRVA finding value in putting its own people on the ground in these locations.
“We’re continuing to build out our infrastructure to reflect this new paradigm,” says George Parr, chief marketing officer at the Oakbrook Terrace, Ill.-based firm. “This is a key trend we’ve identified over the last three to five years—clients wanting to be able to physically access our specialized staff in the locations they operate in. They want the highest quality experience and the smoothest transition possible for their assignees on a consistent basis. You can’t do this by patching together services.”
To satisfy its clients’ demands, SIRVA has acquired multiple relocation providers across the globe. Over time, it has augmented their staffs with its seasoned relocation specialists to ensure its culture of consistently high-quality workforce mobility services and assignee experiences is implemented.
At Graebel, a related development is working closely with the governments in emerging economies to ensure a smoother employee transition. “Moving someone from Los Angeles to Denver is not a big deal, but moving a family from Los Angeles to China is rife with challenges, such as the housing infrastructure, the dependent children’s education, and access to the activities they routinely enjoy,” Bates says.
“Say the 12 year-old daughter of an assignee to Peru is an adept soccer player—the star of her school’s team in the states,” he adds. “By acting as a conduit with the relevant agencies within Peru’s government, we can help match up the right school for the child. This could even be a factor in the employee’s willingness to take on the assignment. We’re going the extra mile now to provide more of these front-end consultative services.”
Another growing consultative service is advising on the items that a relocating family should bring with them on an international assignment. Graham from Paragon says the firm regularly counsels assignees to restrict the volume of household goods they export to the new location. “For long-term assignments, it is not uncommon for families to fill several containers with their stuff,” she says. “Not only does it cost their employer a lot of money—I’ve seen duties in Russia exceed $50,000—but do they really need to bring along Grandma’s 200-pound armoire?”
A related issue is the feasibility of storing the entirety of household goods in the states upon relocation. When families return home and move into a new house, they typically sell a significant portion of their furniture and other items. “My advice to clients is to provide an incentive to the assignee to rent a furnished home for long-term relocations and to rent smaller storage facilities in the states,” says Graham.
The best part of this recommendation, she adds, is that upon the family’s return, it now has some of the employer’s cash to buy a new couch and dining room set—a fine “Welcome Home.”