Warren Heaps – Birches Group LLC
It’s now almost the middle of 2011, so the 21st century is well underway. The new realities of global business are upon us:
- Companies are expanding from developed countries into new, high-growth markets in the developing world in record numbers.
- Global talent is being snatched up across borders on a regular basis.
- Companies are sending expats to new locations, and breaking new ground with each assignment.
- Companies headquartered in developing markets like India, China, Brazil and South Africa, to name a few, are expanding along with multi-nationals from more established markets.
- Demographic shifts will result in an increasing number of workers being sought from developing countries to replace the ageing workforce in North America and Europe. In fact, McKinsey predicts that by the year 2040, the largest working-age population in the world will reside in Africa.
So what does this have to do with global mobility? A lot!
The fundamental approaches to global mobility were developed after World War II in the U.S., by the predecessor firm to what became ORC Worldwide (now part of Mercer). They were asked by the U.S. government to figure out a way to pay Americans to move temporarily to Europe to help rebuild under the Marshall Plan. At that time, all of the employees were men. They moved overseas with their wives and children for a few years, and then returned back to the States. The famous “balance sheet” was born.
Now think about what has changed in the world of global mobility since 1945! For example:
- Assignees no longer come just from the U.S. or other developed countries. Countries in Latin America, Asia and Africa that previously were only destinations for expatriates are now sources of talent.
- Families have changed. Assignees are no longer always men (though mostly still are). Assignees might not be legally married, or might be legally married to a same-sex spouse. There might be kids, or perhaps not.
- Assignees might be very young, such as new graduates looking for adventure and development before they settle down. Or they might be older (dare I say, like me?), with kids in college or beyond, and have the flexibility to relocate, travel and the like.
- Finally, assignments are just as likely to be between developing countries as between developed ones. For example, consider with all the investments being made by China, India and Brazil in Africa, how many assignees from those countries there will be. I met a client recently in Kenya, whose company just made a purchase of a business in Africa. He was an Indian expat, and was working together with a Nigerian expat in Nairobi.
So the assignment demographics have certainly changed. But what about the policy approaches? This is the area where, I’m afraid, there has not been nearly enough change. Sure, there are multiple approaches for different types of assignments. Most companies have a long-term policy, a short-term policy, maybe a commuter policy, and perhaps a development policy for low-cost “volunteers” like the aforementioned young people who want an adventure and are willing to go native.
Let me challenge you a bit to think about this differently. All of the policies mentioned above have as their central feature the fundamentals of the old, 1945 balance sheet. They are mostly designed to “keep people whole” or pay assignees similar to their peers, in the case of a move from a low-cost to a higher-cost locale. All policies have to deal with questions around long-term benefits such as pensions, health care coverage, and a host of other issues related to the ultimate goal — repatriation back to the home country. Sometimes, packages include incentives to move based on harsh conditions (i.e., hardship), although pure incentives such as foreign service premiums are quite uncommon. Is that the right focus?
Figuring out the pay is the easy part. You can always pay more, after all, and eventually you will get that part right. But still, it’s hard to get folks to take assignments. You need to think about two things that are distinctly different from the economic approach of the balance sheet:
- Impact on family
- Impact on career
For impact on family, look at how easy or difficult it is for families to assimilate into a new location. Can the spouse find a job? Are there high-quality schools, and warm, inviting communities? Is it a place where people look forward to moving, or do so reluctantly, and with some reservations? You can develop an “assimilation factor” to address these variations. Perhaps a pay package in line with local peers, plus some expat benefits for schooling and housing would be enough, if an assimilation allowance was included as well.
Career impact is a two-fold issue – for employee and spouse. For the employee, it’s about finding a way for the company and the employee to take advantage of skills acquired during the assignment in the next one, and recognizing the fact that people change and grow with an expatriate experience. So few companies really value such experience, and many expats end up leaving to join a company which does. For spouses, it’s a much tougher battle due to restrictive immigration laws. Don’t let that stop you, though. Be creative. And participate in lobbying efforts to ease the restrictions on working spouses on assignment.
Finally, provide a real incentive for tough assignments. Go beyond cash – offer unique career opportunities, such as research sabbaticals, or breaks to allow key staff to pursue more personal goals. Partner with an NGO and assign your expat to help them following a tough assignment. And change the “balance” in the balance sheet, by putting more money and services into the assignments that are of strategic importance to your company, and offer less for others.
How has your company addressed the issue of changing demographics, high costs and difficult assignments? Please share your experience in a comment.
More About Warren
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