Mercer webinar series...deprivation, poor nutrition, life in a stressful environment lead to chronic...

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Mercer webinar series

30 April 2020

Olivier MeierYvonne Traber

Copyright © 2020 Mercer (US) Inc. All rights reserved. 2

1 - Focusing onprioritiesManaging uncertaintyAssignee wellbeingMaintaining trust

Agenda

3 -LookingaheadRedeploying yourmobile employeesManaging adistributed workforceVirtual assignments

2- ManagingpackagesAssignee packageCost-of-living issuesHardship allowances

3

Focusing onpriorities

1. Managinguncertainty

2. Maintainingtrust

3. Assigneewellbeing


1 - Managing uncertainty

Source: Mercer Covid-19 Pulse survey – answers as of 29 April 2020

How are companies planning to handle assignments overthe next two years?

Implemented a reduction 3%

Planning or considering implementing a reduction 8%

Planning or considering implementing an increase 2%

We don‘t plan any changes 27%

Not sure monitoring the situation 60%

Copyright © 2020 Mercer (US) Inc. All rights reserved.

1 -Managing uncertaintyA checklist

Tracking and assessingTracking all mobile employees: distinctions are irrelevant when dealing with duty of careAssessing special needsAssessing obstacles to mobility team’s activities

CoordinatingBetween home and host locationsBetween functions (HR, talent management and risk)With service providers

SupportingCommunicate effectively and directlyReallocate allowances / introduce flexibility in policies


2 - Maintaining trustAsking the right questionsIf you don’t ask key stakeholders about their coronavirus concerns and expectedeconomic impacts, your mobility strategy may be perceived as callous or tone deaf.

Assignees and their familiesWhat are the most important information and forms of support they require right now?How has the crisis impacted their ability to perform their work and collaborate withcolleagues?Has the crisis changed their expectations and intentions post crisis?

ManagementWhat are the business priorities affecting talent mobility?Do the business has a clear picture of where their assignees are?What key information/metrics are required to make decisions?

Service providersHas the crisis disrupted their services?How can they assist assignees and families during and post crisis?


3 - Assignee wellbeing in time of crisis

Physical wellbeing:Lack of physical activities, sleepdeprivation, poor nutrition, life ina stressful environment lead tochronic health problem. TheCovid-19 is not the only dangerobjective is to anticipate healthproblems.

Financial wellbeing:Long-term consequences of thecrises are not always anticipated(e.g. health insurance, savings,currency issues). Help employeesbridge through financialdifficulties and avoid rashdecisions.

Social wellbeing:Creating a sense of connectionwith a wider community at workand in the daily life is a conditionfor employees to maintain theirwellbeing during difficult times.

Emotional wellbeing:Emotional wellbeing is influencedby the other wellbeingdimensions. The stress of the crisiscan be increased further by theworkload, company expectations,family situation.


3 - Assignee wellbeing in time of crisis


Employee support initiatives

Introducing new employee mental health programs 29%

Reminding employees about existing mental health programs 79%

Establishing optional wellness & socializing moments forremote workers 52%

Implementing new recognition programs for employees whogo above & beyond during the outbreak

18%

Making special arrangements for vulnerable employeepopulations 38%

Conducting internal surveys, interviews or focus groups tobetter understand what employees are thinking

35.5%

9

Managing assigneepackages

4. Managingallowances

5. Cost-of-livingissues

6.Hardship

allowances


4- Managing allowances during emergenciesFinding the right logicDo you need to complement your existing policies to address exceptionalcircumstances?

The logic behind your policy should inform decisions about payments to assignmentsdue to unexpected circumstances.

For example, if the logic of your long-term assignment policy is based on equalization(no gain/no loss) ask yourselves:

Are we creating additional costs for the assignees and their families because of theassignment?

If we ask them to work from home/remotely will they have additional expenses?

In case of unplanned repatriation, will assignees face double costs or require temporarysupport?

Are there categories of employees who are more vulnerable during the crisis andrequire additional support and face higher expenses?


4 - Applying the logic: If an evacuation is implementedwill expatriate-related allowances continue?

Practice Prevalence

Yes, all allowances are continued withoutinterruption

43.2%

Yes, some allowances are continued, whileothers are suspended

4.7%

Yes, but varies based on the length ofevacuation 15.5%

No, all allowances are suspended for theperiod of the evacuation

15.5%

Other 20.9%

Source: Mercer’s Business Responses to the Covid-19 outbreak survey February 2020


5- Managing Cost-Of-Living fluctuationsThe two factors to monitor: exchange rates and inflationdifferentials


5- Managing Cost-Of-Living fluctuationsExchange rates during the crisis• The US Dollar (USD) has been strengthening against many major currencies in recent months.

• If these employees are paid in home country currency and need to exchange funds into the host country forlocal purchases, they will be directly impacted by these fluctuations.

• Their Cost of Living Allowance or Goods and Services Differential will adjust over time, but in most cases, itdoes not respond immediately to exchange rate changes in real time.

Exchange Rate USD 1 =Country/Market Currency January 2020 April 2020 % Change of USDSouth Africa ZAR 14.0396 18.8754 34.44%Brazil BRL 4.0349 5.3043 31.46%Mexico MXN 18.8806 24.0916 27.60%Russia RUB 62.0553 74.9885 20.84%Norway NOK 8.8077 10.4816 19.00%Turkey TRY 5.9497 6.9477 16.77%Australia AUD 1.4300 1.5764 10.24%Argentina ARS 59.8434 65.9262 10.16%Poland PLN 3.8051 4.1737 9.69%Canada CAD 1.3045 1.4088 7.99%United Kingdom GBP 0.7611 0.8050 5.77%Euro EUR 0.8938 0.9215 3.10%


5 - Managing Cost-Of-Living fluctuationsAction planExchange Rate

• March and April 2020 saw exchange rate movements.

– Off-cycle COLA updates should be considered for those assignees, especially those inthe US, who are negatively impacted by the FX rate and need additional COLA. Afluctuation threshold can be used (typically 10%).

– Off-cycle COLA updates may need to be put on hold for those who would experience adecrease in COLA as they may be experiencing scarcity of certain goods and thedecrease may cause additional stress.

• We recommend monitoring the FX rates which affect your population frequently.


5 - Managing Cost-Of-Living fluctuationsAction planPricing & Shortages

• Mercer will publish updated pricing as scheduled on 4th May 2020.

• Certain locations have warrant a pricing re-check in April due to shortages of selectedgoods – fresh fruits and vegetables, frozen meals, pasta, rice, toilet paper and babydiapers.

• The average price variation for resurveyed items and locations ranges from -9% to 10%.local brands are selected more often compared to imported brands

• Products with highest demand are more often sold in smaller packages and moreexpensive

• Shops have often decided to switch brands for which temporary shortages have beenobserved

• Due to panic buying, the availability of goods was volatile. Stocks were often notreplenished fully and in time but prices remained consistent

• No significant changes in the accommodation rental prices


6- Hardship allowances: distinguishing betweentemporary hardship and lasting issuesLasting changes: Mercer issued an interim hardship increase recommendation for some locations in March. Allcities will be surveyed again in September.

Temporary adjustments: given the speed of the evolution of the crisis, Mercer has created a methodology whichcan be applied in any location as required. A distinction can be made for assignees still working on site and thoseworking from home.

The methodology is based on the number of infected cases per country/state/provinces/market (for largecountries such as Australia, Canada, China or the Unites States we recommend considering the number ofinfected cases per province, state or region and not per country due to their size):

Mercer recommends keeping the above additional hardship premium as exceptional and temporary until thenext Mercer Quality of Living (QOL) & Location Evaluation Report (LER) update release in November 2020.

COVID-19 AdditionalHardship Allowance Option

High Risk & StrictConfinement/Emergency

Measures

Medium Risk & LimitedConfinement

Low Risk & No MandatoryConfinement

Reported Cases 20,000 and above Between 1,001 and 19,999 Less than 1,000Mercer Additional HardshipAllowances Option 5.0% 2.5% 0.0%

17

Looking ahead

7. Redeployingyour mobileemployees

8. Managinga distributedworkforce

9. Virtualassignments


7- Re-deploying yourmobile employees Re-sending assignees and normalizing

existing assignments

Take the pulse to understand assigneesand management intentions

Compliance audit

Anticipate year-end discrepancies: actualversus budgeted costs, cost allocationbetween countries/units, exceptions topolicies

Performance review – changes to takeinto account the crisis


7- Redeploying your mobile workforce:Anticipating challenges

Potential challenges Possible answers

Aftershock in some locations (e.g. instability in emergingmarkets)

Monitoring and tracking of assignees in hardship locations, reviewevacuation/emergencies plans and integrate lessons from thebeginning of the crisis, proactively communicate with assignees inthese locations.

General cost-cutting across the business in response to arecession

Prepare cost overviews. Identify major cost drivers (limited talentpool, type of assignment, on-going & long-term costs versus short-term costs) and don’t just focus on package reduction (e.g.eliminating mobility premium)

Change in business strategy: shortening the supply chainsReflect about the need for regional moves and trainingrequirements for local/regional talent (developmentalassignments), anticipate regulatory issues

Reassess flexibility in policies and in work practiceWhich flexible policies worked? Which ones contradicted duty ofcare and had to be discarded during the crisis


8- Managing a distributedworkforce Integrating lessons from the crisis:

Are mobile employees contributing tothe resilience of the business?

Are the distinctions between the types ofassignees, local hired foreigners andlocals relevant during crisis?

Is the official purview of the mobilityteam limiting its effectiveness? Shouldroles and responsibilities be reviewed?

Are there collaboration gaps between HRand mobility teams?


8- From traditional mobility to managing a distributedworkforce: a sense of direction

Managing expatriation Managing an international distributed workforce

Managing individual moves Managing an international talent network

Expatriate versus localsA mix of assignees, locally hired foreigners, thirdcountry/virtual assignees and locals with internationalresponsibilities, working together

Clearly defined purview for mobility and HR teams.Fixed teams manage pre-defined groups/categories ofemployees.

Mobility and HR as advisors for the company. Internalgigs/ad-hoc temporary teams (“flash teams”) to managespecific groups of mobile employees and projects.

Mobility teams collaborating with career management,benefits teams, risk, compliance and other HR teams

Multidisciplinary teams

Tracking moves On-going monitoring of the situation of employees

Integrating assignees in the host location. Managingculture shock and expatriation/repatriation transitions

Fostering collaboration, team building and addressingcultural issues in dispersed teams


9- How to retain virtualassignments as a viable option?


Challenges associated with flexible working

Manager’s ability to oversee work of virtual teams 38.5%

Employees are experiencing mental health issues, social andeconomic anxiety 35%

Work processes and metrics are not supporting flexible working 18%

Teams have difficulties communicating and collaboratingvirtually

16%

Inability to translate cultural strengths in the virtual environment 15%

None of the above 33.5%


9- How to retain virtualassignments as a viable option?

Source: 2020 Mercer Talent Trends study


9- How to retain virtual assignmentsas a viable option?

Building a feasibility checklist – 8 factors

1. Work characteristics2. Work and technology setup3. Compliance4. Cost considerations5. Readiness and acceptance6. Cultural issues7. Value for employees8. Value for the organization


The mettle of managers is not judged on their ability to deliver

results in the golden years when businesses grow fast and

unhindered but on their ability to stay on course in stormy times.

HR teams should also be judged on their capacity to help preserve

the wellbeing of employees and business continuity during

emergencies. Now is the time to build more resilient and agile

talent mobility approaches.

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Benchmarking

Pulse survey:https://www.mercer.com/our-thinking/career/covid-19-global-survey-coronavirus-impact-to-global-market.html

Upcoming webcastsImpact of Covid 19 onTalent MobilityMay 19, 9am GMT

Q&A / Mercer COVID 19 resources

Mobility Exchange TalentMobility page

• https://mobilityexchange.mercer.com/covid19

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