Overseas assignments can present a considerable headache for HR professionals. Melissa Yen looks at some of the latest developments in the area, strategies for lightening HR’s load and how a leading organisation approaches the issue of international mobility
As the war for talent intensifies and employees’company loyalty decreases, global relocation programs are becoming an increasingly popular method of recruiting and rewarding high achieving staff. But as HR professionals know, the success of any global mobility program depends upon the fulfilment of employees’ professional and personal needs.
How the objectives of the organisation impact upon its relocation program, how to select the most suitable candidates for international assignments, how to determine the success of each program and how they can be completed in the most cost-effective manner are questions that must be answered by HR.
According to Charlotte Furness of Toll Transitions, the relocation industry is experiencing a boom. To employees, first class relocation services and proactive support before, during and after a move do more to command loyalty than the equivalent in a salary increase.
“HR professionals are recognising that to attract top global talent to their organisation they need to be offering more than a good salary. Companies have to ‘sell’ the destination location almost as much as the position,” Furness says. As a result of this, she believes there has been greater emphasis on providing ‘settling in’ services, which can include local orientation programs and cross-cultural training as well as networking opportunities, especially for spouses.
As Sarah Cuthbertson, Ernst & Young’s manager of mobility explains, international moves are becoming an increasingly common part of recruitment and resourcing as the candidate-short market in Australia demands that searches be extended offshore. Ernst & Young encourages the sharing of its people across borders to assist with more effective resource management, skill advancement and most importantly, strengthening of its strategic markets such as China and India.
“As part of our People First strategy,” Cuthbertson says, “Ernst & Young look to create an environment where people can grow and our global mobility policies facilitate both personal and professional development. Our annual mobility programs also encourage the exchange of our staff worldwide and assist us to reward and retain our best people.”
Sandra Cittadini, director of global mobility for KPMG, adds that organisations are tending to move away from some of the more severe cost-saving initiatives, such as reducing the core elements that make up their ‘standard’ or ‘long term’ international assignment policies, in order to keep with their long term competitive strategy. Cittadini has also observed that companies are starting to review those policy elements which in the past may have been left to management discretion and not been supported by cost containment parameters. They are also starting to look at the level of non-compliance, or exceptions to policy where significant, particularly where there is no one individual in the company appointed as the ‘gatekeeper’ to administer the international mobility program and monitor the policy.
“In addition, the introduction of short term, project-based rotational assignments of between three and 12 months, and local ‘plus’ packages have become more popular, addressing the company’s requirement to be flexible when sending employees overseas or when trying to hire people on local conditions,” says Cittadini.
Meanwhile, as employee loyalty diminishes and company jumping increases, Shani Alexander, director of Relocations Made Easy, believes that “HR is looking to a range of integrated, cost-effective and even self-service solutions, as the traditional relocation package doesn’t suit every single assignment into the future.”
HR must communicate with payroll and finance in order to deliver a successful outcome for both the assigned employee and the organisation. In turn, it is essential that HR become involved with any international mobility program at its earliest stages. Having a seat at the planning table and being heard is a challenge Cittadini says will be faced by most HR professionals.
“Managing assignees is not just about policy terms and conditions, but about the organisation’s compliance as well. The risks associated with sending employees into a foreign environment, without addressing migration, tax, payroll and local employment conditions can be high, not only for the company but for the individual as well.”
In order to overcome scenarios where the HR manager has been advised just days prior to departure, or even worse, after the fact, that several individuals have been or will be assigned to a particular country, Cittadini stresses the importance of educating the business about the potential risks involved with inadequate planning: “HR have to be involved at the planning stage of these discussions. They cannot be bought in after the fact,” she says.
Not least because it is not just the welfare of the employee that is at stake, but also, potentially, the welfare of their family. Spouses who do not have the social framework of the company to rely on quickly feel isolated after an international move: “HR professionals should be conscious of this and pay particular attention to the emotional well being of international recruits. Many organisations overlook the need for post-relocation support, which is readily available,” says Furness.
Another challenge commonly faced by HR professionals, says Shani Alexander, is the initial difficulty of sourcing good candidates who go on to complete the relocation and assimilate smoothly into the new city and workplace and move onto permanent residency.
The greatest challenge for HR at Ernst & Young, meanwhile, is in managing the continual demand for mobility. “Recruitment remains both locally and internationally focused. However, there is room for growth on the international side. The challenge is to secure high calibre candidates and to have them arrive in Australia within the shortest of timeframes. Our labour agreement with the Department of Immigration and Multicultural Affairs facilitates our international resourcing, but we are still hindered by the worldwide skills shortage,” says Cuthbertson.
A dedicated mobility team made up of assignment services managers, migration agents and tax advisors is also used to ensure the movement of people is seamless throughout the pre-assignment, on-assignment and repatriation phases.
When attempting to demonstrate return on investment for international assignments, it is essential that HR communicate the importance of the investment they are making to the rest of the business as well as demonstrate the benefits the program will provide and the costs that will be incurred.
“We strongly encourage our clients to prepare detailed cost projections, to ensure they understand up front the full cost of the assignment. This includes the compensation methodology to be used, benefits, net/gross allowances, social security and home and host country tax,” says KPMG’s Cittadini.
Furness also suggests building a business case from internal data by looking at both the successes and failures of international recruitments. “Failure of an assignment will be even more expensive. Research suggests somewhere in the range of two to three times an employee’s salary. Close to 50 per cent of relocations fail because of cultural difficulties and family issues,” she says.
For Ernst & Young, taking into account the main aims of the international assignment, wether it be to develop new business, strengthen markets, advance skills and industry experience or retain and reward high calibre staff is a must. “The return will vary and, therefore, the business case must capture the overall assignment objectives from the outset. This is done through selection, career management and repatriation planning to ensure the right people are placed in the right place, at the right time,” says Cuthbertson. “Career management is a priority and whilst our global mobility policies provide the ‘how to’ around this, an international secondment is a two-way commitment. Both the assignee and the firm have a responsibility to make it a success so that the return on investment is realised.”
According to Alexander, preparation is the key. She stresses the need to have well conceived HR policies in place rather than acting in an ad hoc way. Gaining access to resources and knowledge that will enable HR consultants to respond efficiently to the myriad of compliance issues such as tax, health and visas is a first step.
“Help the candidate prepare and set proper expectations of the new city so they don’t turn around and go home soon after arrival [forcing] the company to bear the extreme cost of a failed relocation,” says Alexander. “Failed assignments because a candidate has unmet expectations of the new city can cost the company $100,000 and they then have to do it all again.”