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Global business getting easier

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It’s no secret that technological and transport advances are making the world a smaller place. Never has it been easier for businesses to expand into new markets than in today’s working environment. Article by Marc Burrows, Head of International Executive Services, KPMG  Aimee Higgins, BIO Mobility Lead, KPMG

Yet despite the rapid development of communications technologies, multi-national groups still see a clear need to place their key people in overseas jurisdictions to facilitate expansion. The difference, compared to just a few years ago, though, is that the way in which employees are deployed is changing. Where once an overseas placement was regarded as a perk to be enjoyed, today there is an increased focus on delivery – with high levels of pressure to ensure these moves deliver on expectations. 

In a poll of companies carried out by KPMG, 75 percent of respondents said long-term foreign assignments were becoming less necessary (or that they could be reduced) and yet a similar proportion (76 percent) of those taking part also expected to see an increase in international placements over the next five years. These apparently contradictory findings reflect changes in the way that companies are moving staff. What we’re seeing is fewer of the traditional long-term assignments and a rise in shorter, flexible and project focused assignments. Hand in hand with that has been an abandonment of the traditional ‘colonial’ assignment model. Where once a business might have deployed a senior manager from London, Paris or New York to run a national division in an emerging market, today skills are being identified and nurtured within emerging markets with a view to deployment elsewhere around the world. Placements, it seems, are now being conducted through a matrix rather than running out from the centre.  Unilever, for instance, which operates in more than 90 countries, deploys foreign staff into around 70. And these mobile workers are themselves drawn from about 70 countries.

Of course, increased mobility increases risk – the risk of rising costs, non-compliance with local laws and regulations or the risk of creating a disengaged, nomadic workforce. All of which begs the question: how do you minimise risk whilst enhancing business performance and engaging talent?The first step is to ensure there is global oversight. More than half of the managers taking part in KPMG’s poll said they used spreadsheets and manual systems to organise assignment demographics and pay, rather than dedicated assignment management software. It’s a finding that reflects one of the major challenges facing multi-national businesses. There is a need to deploy staff strategically, but the demands of the trading environment, coupled with a trend towards more flexible placements, means that managers must often move quickly in moving staff on a needs-must basis. The use of decentralised systems to manage these quick moves suggests many assignments take place under the radar.

Indeed, our client experience suggests that many assignment decisions are devolved to line managers rather than administered by HR at a higher level. This makes it extremely difficult for companies to analyse the effectiveness of their global mobility programme. Businesses are right to react quickly and there is a clear need to move people rapidly to wherever they are needed, but that does not have to mean constant improvisation. Systems can be put in place to facilitate global oversight and allow businesses to obtain accurate information and make informed decisions. But more than that; if businesses are to succeed in the global village they must put these systems in place.To enhance business performance it is imperative that assignments deliver the required return on investment. In the KPMG survey it emerged that fewer than 20 percent of respondents believed their businesses fully understood the costs of overseas assignments. It’s no surprise as, historically, the overseas assignment has been viewed as a perk for talented staff and the idea of calculating value didn’t enter into any equation. The truth however – especially in our new cost-conscious world – is that a clear picture of costs is the baseline in measuring return on investment.

In addition to salary and any bonus, relocation benefits are offered to ensure an appropriate standard of living in the host country and to facilitate the move of the employee and, if relevant, their family. In addition the local taxes, social security, pension and split of who bears these costs (employee or employer) create significant additional costs. Meanwhile, at an administrative level, there is a question of whether premium assignment management services (with minimal disruption to the assignee) should be used or a self-service approach. The latter appears to be cheaper but there may be hidden costs if problems emerge that have to be rectified.

Given the high costs involved, companies must think strategically before they decide whether to send employees on an international placement and be clear on the business objectives. Challenges should be made about the purpose of the move. Is a specific skill required to deliver on a client contract? Is it part of the career development plan of a future leader of the business? Are they training local staff to build up capabilities in a new location? The answers to these questions should drive the level of investment made by the business.  In other words, if just one in four senior executives believe that the typical 3-year posting is still a business necessity, these postings should not be allowed to happen without adequate due diligence and justification.

There are still many employees who believe that swapping their briefcase for a suitcase is a sign of career success. It is also still true to say that the agile business must remember that engaging talent is critical to business success. Put these two factors together and it quickly becomes clear that talent management of assignees is crucial to the long term success of a business. So it is worrying that 67 percent of respondents did not know whether their employees felt engaged with the organisation while working away from their home countries. Worse still is the fact that 50 percent said that more than half of employees placed overseas are no longer on the payroll two years after returning home. Somewhere on the journey home staff engagement seems to be flat-lining.

Working in a foreign country is seen by a great many employees as both a privilege and important waystation in the development of their careers but the ongoing loyalty of key members of staff clearly can’t be taken for granted. Businesses must consider ways and means to keep staff engaged not only while they are on placement but also on their return. This requires clear goal setting for the assignment which also incorporate a vision as to the position they may return to in their home country. There also needs to be a commitment by the home country to connect with the employee on a regular basis and a commitment by the host country to facilitate integration and promote professional and personal development.

KPMG has worked with clients to build solutions which facilitate connectivity with assignees whilst overseas – both between the home country and the assignee and within the assignee population itself. Our work makes it clear that the more touch points that can be created with the assignee throughout their placement, the less likely they will become lost in the ether. It’s also important to recognise the increasing variance in the demographics of today’s workforce. In some countries, and indeed in some industries, the workforce is getting older and this has implications in terms of the willingness and ability of individuals to work in foreign countries while maintaining family commitments. There are also more women in the workforce who are juggling commitments to children with the pressures of working life. Add this together and it quickly becomes clear that there is a need for a more personalised approach to moving people around the world – one that is flexible enough to acknowledge and cater for individual circumstances and promote diversity. At the same time, it must be something that delivers value for the business – it has to be more than just ‘nice to do’. Companies who achieve the balance will ensure that the best talent in the business come to the fore when global opportunities arise.

www.kpmg.com

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