Companies are using global mobility to compete in a constantly expanding corporate world. Though the concept isn't new, global mobility programs have evolved with a changing international workforce to help smooth the transition and support employees and families once they arrive in a host country.
Further, the programs are used to support the growth of a business in new markets and to accelerate the development of managers with a global mindset.
These high-potential employees get a chance to practice corporate leadership, and employers use these transitory positions for talent needs, including knowledge transfer, technical skills and employee development.
Companies have been international since colonial days, but post-WWII major multinationals began sending more employees around the globe to establish best business practices and transition acquisitions smoothly, explains Ed Hannibal, North American mobility business leader for Mercer.
According to Jonathan Pearce, a principal at Deloitte Tax LLP, global mobility programs have been growing over the last decade.
"In 2009, we did see a slowdown due to the economic crisis, but there has been an upturn in mobility again in 2010," says Gail Rabasca, vice president of global services for Mobility Services International.
"Many corporations have lessened the number of long-term assignments due to the overwhelming cost and have instead redesigned policy to utilize short-term, commuter and rotators ... which is considerably less costly," she says.
Usually a third-party firm, like Mobility Services International, helps employers run their program, for which varying profiles exist, including long-term assignments, short-term assignments, commuter assignments and permanent moves.
A strong global mobility program does "everything from the preplanning stage to repatriation, and that is implicative of ex-patriot payroll and compensation," says Rabasca.
Major business centers - Buenos Aires, Caracas, Frankfurt, Hong Kong, London, Melbourne, Mexico City, New York City, Paris, Shanghai and Singapore - were standard primary market destinations, especially in the 1990s and early 2000s, and continue to be popular for global mobility programs today, experts say.
However, over the last five years Rabasca has seen a push into emerging markets in Eastern Europe, Russia, Southeast Asia and African countries like Ethiopia, Kenya, Nigeria, South Africa and Uganda.
Further, Hannibal adds, employees also are moving both ways: Not only are Americans being sent abroad, but often workers from foreign offices move to corporate headquarters as well.
The old "colonial model" (from headquarters to smaller market) is giving way to a more global approach that sources talent from maturing talent markets like India (especially in the technology field), Brazil and Russia, says Pearce.
"While it varies greatly, a rule of thumb used by mobility specialists is that it costs an employer three times more to have an expat filling a role than to have a local employee in the role, estimates Pearce.
The industry average for a typical three-year global mobility assignment for an employee and family costs approximately $1.5 million, but could potentially go as high as $2 million for a hardship location, depending on the length of assignment.
What's more, housing, schooling, Foreign Service premiums, spouse financial support, immigration responsibilities (including taxes in both countries), cost of goods and services, and the disposal or maintenance of the home country's house or cars all add up to an expensive transition.
And of course, all experts stress the importance of a robust cultural and language-training program.
These costs do not even including repatriation. "You can't be penny wise and pound foolish when you're sending someone on assignment, particularly in a hardship location," says Rabasca. "You want to be able to not just throw money at them; you want to be able to give them the appropriate tools and guidance that they need."
Employers should have a global relocation policy that defines benefits levels, allowances and compensation changes, but these factors vary depending on the employee, the assignment and general corporate ideology, she says.
Companies also need to equalize tax liability in a process of tax equalization, making sure an employee remains whole from tax liability both in the home country and the foreign location.
Organizations with a lot of employee mobility typically have an internal function that manages tax issues, compensation, immigration and relocation, and develops policies and practices accessible to employees and their managers.
A successful assignment starts with a selection and assessment process to identify employees who will be successful in a particular environment, experts say. During this stage, it's important for employers to set expectations and provide information about the adjustment, what the employee is entitled to and what resources are available.
While the Internet has a wealth of information on assimilating and ways to network, on a more personal level, many cities also have expat communities, which help provide a social network for expats and their families.
Some companies have buddy programs in which the mobile employee receives advice from someone who has gone through that experience, explains Pearce.
Once employees reach their destination, destination services providers are coordinated through relocation companies and aid employees with their home and school search, and facilitate the acquisition of driver's licenses or any other registration. At times, they offer an allowance for public transportation, which also helps employees assimilate into a new culture.
Another form of support would be allowances for spouses and family, commonly called a "support fund."
In addition to financial support, employers need to help employees and families through their cultural adjustment.
When employees relocate, they often move through various stages of cultural adjustment. At the beginning, there is often a sense of excitement about everything that's new in the host country. However, as employees start focusing on their new roles, they sometimes get disoriented.
"When employees get into that state that we call paralysis or culture shock, there is often a productivity gap between how they performed historically and how they're performing in the new location. Providing coaching and mentoring through that culture adjustment curve can help mitigate those things," Pearce says.
Beyond cultural concerns, there's also a host of legal issues to plow through. First, employers must decide in which country the employee will be employed.
For example, should a U.S.-based employee going to Hong Kong maintain employment in the United States or be terminated and rehired in Hong Kong? The answer to this question affects whether the employee can continue to contribute to their U.S. 401(k), along with other compensation and benefit issues.
In addition, it's essential that the employee and family enter a host country with the appropriate entry and residence documents. Immigration processing takes time and should be undertaken in the earliest stages of assignment, advises Rabasca.
Lastly, taxes are a thorny issue in making sure the employer is appropriately reporting compensation on payrolls in both countries. In addition, benefits provided to mobile employees often are taxable, so employers may need to ease the financial burden on those.
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