Trends in Global Relocation BIGGEST CHALLENGES Findings ... · Ranking of relocation challenges for...

Trends in Global Relocation

BIGGEST CHALLENGES

Findings for Companies With More Than 500 Moves

CARTUS | BIGGEST CHALLENGES 2015 SURVEY REPORT | FINDINGS FOR COMPANIES WITH MORE THAN 500 MOVES | 2

Findings for Companies with

MORE THAN 500 MOVESThis report is based on Cartus’ 2015 Biggest Relocation Challenges survey and reflects the responses of clients who move more than 500 employees annually. The report provides insights into this sector’s particular issues and indicates where they differ significantly from overall responses to the survey. There were 31 companies in this group, with 52% coming from the Americas, 35% from the EMEA region, and 13% from APAC.

The regions in which companies in this sector saw increased activity mirrored overall results, but levels were mostly higher than what overall survey respondents reported. Companies in this sector saw a larger increase in volume to North America (59%) compared to 48% for overall respondents. They also saw much higher increases in activity to Europe (56% compared to 42% for overall companies), the Middle East (37% compared to 27% overall), and Central & South America (26% compared to 18% overall). This is most likely not only a product of their larger volume of moves (and typically larger employee bases), but also the industries that these larger companies are in. Also, as larger U.S. multinational organizations look outward for growth, move volume into emerging markets will increase.

When considering the importance of regions to companies’ business goals, the top three regions were ranked in the same order for companies moving more than 500 employees as they were for overall respondents but were named more frequently—North America (18 percentage points higher than overall) and Europe (19 percentage points higher than overall) as examples.

Region(s) most critical to the company’s future business goals (percent of respondents)

North America (including Mexico)

Europe (including Western Russia)

Greater China

Middle East

67%

49%

63%

44%

37%

34%

33%

25%

More Than 500 MovesOverall Respondents

Respondents in this sector had several comments on specific areas:

� North and South America will remain one of the large markets in the oil and gas industry.

� Russia’s manufacturing industry will possibly grow to one that can match and compete for the demand in Europe.

� The large oil reserves in the Middle East continue to attract production and reservoir management activities.



MORE THAN 500 MOVESTop ChallengesRanking of relocation challenges for this sector generally mirrored the responses of respondents overall. Not surprising with larger programs, controlling relocation/assignment costs topped the list of challenges for this sector, with 80% stating that it was their biggest challenge, slightly lower than overall respondents (78%). Rounding out the top three were complying with laws and regulations (five percentage points lower than overall respondents) and housing (which was 10 percentage points higher than overall). Compensation, allowances, and payroll came in as the fourth ranked challenge (40%), a little bit lower than overall respondents.

Overall ranking of challenges (percent of respondents)

Response More Than 500 Moves Overall Respondents

Controlling relocation/assignment costs 80% 78%

Complying with laws and regulations (including visa, immigration)

57% 62%

Housing (availability, suitability, price) 43% 33%

Compensation, allowances, and payroll 40% 44%

Safety and security 17% 13%

Schooling (availability, wait-list issues) 13% 16%

Intercultural issues impacting the assignee and family

10% 10%

Environmental and medical issues 7% 10%

Transportation (public transport, driving, car & driver, armored cars)

7% 4%

Language issues impacting the assignee and family

3% 3%

CONTROLLING COSTS

As mentioned above, cost control remains the top concern for all survey respondents, as well as for companies moving more than 500 employees. Half of companies in this sector (50%) said that cost control concerns were increasing versus 45% of overall respondents.

When looking at the reasons why costs increase, managers making decisions outside of policy was named as the number-one cause by 43% of survey respondents. The second most common cost control concern for this sector was exception requests from employees at 38% (24 percentage points lower than overall respondents). The reason that this issue may not be as pronounced in this sector is that companies with this volume of moves are more likely to have formalized policies in place. Housing budget not accurate and policy not flexible enough rounded out the top four, both much higher than overall respondents. If housing budgets are viewed as not accurate, and the company policy is viewed as not meeting the needs of the transferring employees, exception requests and “managers making decisions outside of policy” are predictable outcomes. Policy components and tiers likely need to be reviewed and adjusted as appropriate.



MORE THAN 500 MOVESNot highly ranked, but still much higher for this sector than for overall respondents, was too many assignments/relocations, named by 14% of companies in this sector compared to just 4% of overall respondents. With a larger volume of moves comes a larger expenditure of money. In a cost control environment, this will naturally draw a closer focus. When asked what other cost control challenges they were facing, companies in this sector mentioned the following:

� Tax and housing costs for long-term assignments

� Tax and household goods costs for permanent transfers

� Inadequate assignment planning

� Lack of appropriate tracking tools to measure spend

� The tendency of some countries to want to do their own thing and not follow the global mobility program, centrally managed processes and policies

� Cost pressure is particularly strong for intra-regional one-way moves and all long-term assignments

Most common cost control concerns (percent of respondents)


Managers make decisions outside policy 43% 52%

Exception requests from employees 38% 62%

Housing budget not accurate 33% 21%

Policy not flexible enough 29% 17%

Decentralized program management causes inconsistent policy application

24% 19%

Allowances are too generous 19% 18%

Policy too rich 19% 20%

Too many assignments/relocations 14% 4%

Hardship premium too generous 10% 4%

Inadequate tax planning 10% 18%

Need for educational support 10% 9%

Mobility incentive too generous 5% 5%

Policy too flexible 5% 7%

COMPLIANCE

While challenges with compliance are increasing across all sectors, visa complexity (higher than overall companies by 18 percentage points) and visa wait times (higher than overall companies by 10 percentage points), were particularly acute for this sector. Immigration requirements came in as the third-ranked challenge, pretty much in line with overall companies. With a larger sized program, the task of managing visa complexities and changing immigration requirements is obviously even more difficult. The reason behind visa complexity in this sector may be due to an increased focus on compliance and the bureaucracy of a larger organization slowing the process down, particularly when moving to emerging markets. Visa wait times will be a challenge, as these types of companies may be moving into emerging markets where they are not as established. One of the main comments of companies in this sector was that the business has unreasonable expectations on turnaround times for tasks such as acquiring a visa.



MORE THAN 500 MOVESWhen asked what other compliance challenges they were facing, companies in this sector mentioned the following:

� Changes in tax affecting immigration (i.e., economic employer and the limiting of visas because of it)

� Increasing audits in all areas (tax, social security, and immigration)

� We have no centralized tracking system or responsibility and we are exposed to immigration compliance risk. We are compliant, but it is a struggle to fight back when the business wishes to do something else

� The laws and regulations in some countries change often, so a robust and knowledgeable team of experts is vital to manage this

� The challenges go beyond tax and immigration, they have to do with the sheer mass of movements into many countries and the need for local registration, even before entering the country

Compliance challenges (percent of respondents)


Visa complexity 73% 55%

Visa wait times 73% 63%

Immigration requirements 53% 54%

Tax compliance 47% 60%

Tracking assignees on temporary assignments (“stealth expats”)

33% 45%

COMPENSATION, ALLOWANCES, PAYROLL

The top issues facing companies in this sector and their assignees in the area of compensation, allowances, and payroll, was a three-way tie aamong currency fluctuations, determining home/host pay approach, and payroll taxes, all at 50%.

Also frequently named as challenges by companies in this sector were:

� Managing the net pay approach across varying payroll platforms without the ability to run hypothetical pay due to limited assignment length

� Adjusting benefits and allowance to allow a certain quality of life

� The political stability in certain countries affects currency values

� Growing markets and inflation push up the cost of living, and policies and allowances take time to adjust and amend



MORE THAN 500 MOVESCompensation, allowances, and payroll challenges (percent of respondents)


Currency fluctuations 50% 51%

Determining home/host pay approach 50% 41%

Payroll taxes 50% 43%

Shadow payroll 42% 41%

Foreign currency restrictions 33% 20%

Split payroll requirements 33% 44%

Pension portability 17% 38%

HOUSING

Inadequate inventory was the biggest challenge named by clients in this sector by far (77%), a full 27 percentage points higher than overall respondents (50%). High costs (69% of respondents) was named the second biggest challenge, five percentage points higher than overall respondents. These challenges may highlight that, in locations where companies may have high volumes, particularly in emerging markets, the issue with inadequate inventory may come up more frequently, and high costs may arise due to pressures on satisfactory housing stock, especially acute in particular locations where housing is limited, or competition from other assignees or locals is strong.

Companies in this sector experience challenges with quality not meeting assignee expectations, although at 46% it is six percentage points lower than overall respondents. Requests for exceptions were the same for this sector and overall respondents (46%).

Housing challenges (percent of respondents)


Inadequate inventory 77% 50%

High costs 69% 64%

Quality not meeting assignee expectations

46% 52%

Request for exceptions (different housing, higher allowance)

46% 46%

Lease practices (including payments protocols, landlord favoritism)

31% 34%

Long commutes to work or school in order to keep housing affordable

15% 11%

Need for security installations 8% 2%

Companies in this sector were slightly more likely to use housing norms (54%), compared to 52% of overall respondents. However, more companies in this sector (46%) said that they were not using housing norms. Cartus advises the use of housing norms after the appropriate amount of research and data collection has been done and the policy is documented.



MORE THAN 500 MOVESHot TopicsThis section provides insights into some of the hot topics that we are seeing in the industry and that have been identified by respondents to our recent surveys.

ALTERNATE POLICY OR MOVE TYPES

Feedback from clients, customers, and the relocation industry indicates that a number of emerging move and policy types (defined below) are increasingly being employed by companies to accomplish their relocation goals, both for cost savings and career development reasons.

Employee-initiated assignments or relocation: moves requested by employees on voluntary basis.

Expat lite: policy type with reduced benefits.

Permanent transfers with repatriation: employees repatriate from a permanent transfer for some reason.

Talent swaps: two individuals from different offices or regions “exchanging” jobs on a temporary basis.

Usage of most of the emerging move/policy types was higher for this sector (with the exception of permanent transfers with repatriation) compared to overall respondents. Respondents in this sector were more likely to use employee-initiated assignments (11 percentage points higher than overall respondents), and 54% said that they have an expat lite policy type (eight percentage points lower than overall respondents).

Does your company have any of the following policy or move types? (percent of respondents)

Employee-initiated assignments or relocation

Expat lite

Permanent transfers with repatriation

Talent swaps

69%

58%

54%

46%

35%

37%

31%

25%

More Than 500 MovesOverall Respondents



MORE THAN 500 MOVESEmployee-Initiated MovesThe main benefit of employee-initiated moves for this sector by far is cost savings, named by 61% of respondents (15 percentage points higher than overall respondents). Coming in second, named by 50% of companies in this sector, was employee career development (14 percentage points lower than overall respondents). Challenges cited by this sector included:

� Determining clearly if the move was employee-initiated, so differentiating from other moves where more support is provided

� Inconsistent practice in terms of what is offered and parameters of benefits when offered, so it creates inequity among the assignee population

Over half (56%) of organizations in this sector said that employee-initiated assignments were increasing (nine percentage points higher than overall respondents), and another 39% said they were staying the same. Far more companies in this sector said that they have a policy to accommodate employee-initiated moves (89% in this sector compared to just 53% of overall companies), an indication this this policy type is more mature for this sector.

The top three types of support typically offered by this sector for employee-initiated moves are visa acquisition (71%), relocation travel (65%), and household goods shipments (53%), all higher than overall numbers. Lump sum or relocation allowance only was named by companies in this sector only half as much (12%) as it was for overall respondents. Over half of the companies in this sector (56%) require a payback agreement for this move type, six percentage points lower than overall respondents (62%).

What types of support do you typically offer for employee-initiated moves? (percent of respondents)


Visa acquisition 71% 67%

Relocation travel 65% 51%

Household goods shipment 53% 42%

Temporary housing 47% 43%

Tax return preparation 41% 48%

Home finding/area orientation 29% 28%

Lump sum or relocation allowance combined with specific benefits

24% 21%

Lump sum or relocation allowance only 12% 24%

Do not provide support 6% 10%

Talent SwapsBy far the major benefit of talent swaps indicated by organizations in this sector is employee career development (88% compared to 90% for overall respondents), followed by employee global awareness in a distant second place (38% compared to 48% for overall respondents).

The number of companies in this sector that said talent swaps were on the increase in their organizations (38%) was 10 percentage points lower than overall respondents (48%). Another 50% of respondents in this sector said that their usage was staying the same.



MORE THAN 500 MOVESWhen asked what challenges they were facing with talent swaps, companies in this sector mentioned the following:

� Cost constraints

� Provision of adequate housing

� Transportation for move types from 6-12 months

“Expat Lite”The primary purpose of this type of assignment for this sector—as it is for overall respondents—is cost savings, at 54% (but 13 percentage points lower than for overall respondents). The move type is also being used most often by this sector for developmental assignments and to support lower level employees, both named by 46% of companies in this sector. Organizations with this size of move volume are able to offer more of these types of developmental assignments, so they are seen by employees as an opportunity for career advancement, and companies can scale back support.

Companies in this sector were most likely to scale back home country-based compensation (46%), eight percentage points higher than overall respondents. In second place (tied with home leave and spouse partner assistance) was dependent education support (named by 39% of companies in this sector, far lower than the 57% of overall respondents). Companies in this sector seem to have heeded the potential impact of scaled-back benefits that affect families, as these have an impact on the ability of the employee to succeed on assignment.

Which of the following benefits would you typically scale back in this policy type? (percent of respondents)


Home country-based compensation (expats placed on local pay)

46% 38%

Dependent education support 39% 57%

Home leave 39% 32%

Spouse/partner assistance 39% 46%

Home country housing (lease cancellation, property management)

31% 45%

Home country automobile (loss on sale) 23% 39%

Home finding 8% 43%

Permanent Transfers with RepatriationIn this sector, slightly more companies (44% compared to 43% for overall respondents) saw employees returning from permanent transfers at the company’s request. Correspondingly, repatriating at the employee’s request was seen less frequently in this sector compared to the overall number (33% versus 37%). Only 29% of companies in this sector saw this trend increasing, much lower than overall respondents at 46%, with the majority (57%) saying that it is remaining the same. There was also a significant difference in the most common duration after which an employee on a permanent transfer repatriates: 83% of respondents said 2 to 3 years compared to 44% of overall respondents.

Travel back to the departure location (67%) was the most common area of support by far provided by this sector, 15 percentage points higher than overall respondents. Five other areas of support followed at just 33% each, mostly lower than overall respondents.



MORE THAN 500 MOVESAreas of support for permanent transferees: (percent of responses)


Travel back to departure location 67% 52%

Home country pension portability 33% 58%

Housing 33% 46%

Major expense items (home sale, etc.) 33% 46%

Tax equalization 33% 52%

Schooling 33% 27%

Cultural training 17% 24%

Education assistance 0% 18%

REPAYMENT AGREEMENTS

An overwhelming majority of respondents in this sector (77%) stated that their company’s use of repayment agreements was expected to stay the same, in line with overall respondents. Another 18% said that they expected the use of repayment agreements to increase. The most frequent parameter for repayment for this sector was full repayment if employee terminates within 12 months, named by 27% of respondents (14 percentage points higher than overall respondents).

When looking at the expenses that are expected to be paid back for this sector, relocation allowance (74%), household goods shipments (61%), and relocation travel (57%) were the leading expense types.

Expenses expected to be repaid (percent of respondents)


Relocation allowance 74% 79%

Household goods shipment 61% 73%

Relocation travel 57% 60%

Temporary living 44% 64%

Housing allowance 35% 47%

Education assistance 30% 38%

Home leave 30% 40%

Spouse assistance 30% 39%

Other allowances 30% 30%

TALENT MANAGEMENT

Organizations have known for some time that building effective linkages between talent and global mobility will help to ensure that assignments truly contribute to company business strategies. When asked to what degree they felt their organization had formed linkages between global mobility and other HR-related functions, this sector was higher in several areas compared to overall respondents:

� They were most likely to develop a talent pool for future assignments (52%), 15 percentage points higher than overall respondents



MORE THAN 500 MOVES � They were also more likely to ensure that assignment objectives are incorporated into the employee’s

performance review while on assignment (50%), compared to overall respondents (44%).

Tracking post-assignment employee advancement (61% for this sector, 11 percentage points higher than overall) and tracking post-assignment retention (57%) are highest on the list of strategies being considered for this sector, indicating an increasing awareness that the return phase of an assignment is where the company is most often vulnerable to employee attrition and loss of expertise.

ACHIEVING ASSIGNMENT ROI

When taking a look at the steps organizations are taking to ensure that they are achieving the greatest value from their assignments, responses for companies moving more than 500 employees were higher in nearly all areas. Looking at succession planning and repatriation earlier in the assignment process was named most frequently by this sector (80% compared to 53% for overall companies). The next highest areas named by this sector were assigning mentors to work with global assignees and increasing focus on candidate preparedness for assignments, both named by 50% of companies in this sector, and both named far more frequently than overall respondents.

Generally, this sector seems to be a little bit further ahead in effectively implementing steps to achieve the greatest ROI within their organizations. Also, this sector’s larger investment in assignments warrants looking at ROI more closely and maximizing their talent. Companies in this sector may also have more structured groups within their HR function to tackle some of these individual areas. As companies experience post-assignment losses of key talent, a shift toward putting steps into place to ensure getting the most out of assignments will become increasingly important.

Steps organizations are taking to ensure they are achieving the greatest value from international assignments (percent of respondents)


Looking at succession planning and repatriation earlier in the assignment process

80% 53%

Assigning mentors to work with global assignees 50% 30%

Increasing focus on candidate preparedness for assignments 50% 44%

Implementing a formal leadership approval process prior to initiating a global assignment

45% 48%

Generally capitalizing on skills acquired through knowledge transfer post-assignment

40% 26%

Focusing on ensuring a suitable position for the employee, post-assignment

40% 36%

Reviewing assignment objectives at the beginning of the assignment

40% 38%

Increasing usage of candidate assessment programs 20% 22%



MORE THAN 500 MOVESWhat Respondents Told UsRespondents to the 2015 Biggest Challenges survey were given the opportunity to comment on changes to their program that they’ve made that were most effective, and which changes they would like to make to improve the effectiveness of their program. Here are some comments from companies moving more than 500 employees about the solutions they are deploying to improve the success of their programs.

� We need to change from the typical assignment approach (home country balance sheet; global policy; tax equalization) to one that asks what the need and the role is, and then sending someone based on those answers

� We are creating more flexibility in our policies to fit business needs/budget

� We would like to consider reducing allowances for senior employees

� We are looking to develop new policies to make our program more flexible and in line with employee’s needs

� Changing to host administration (versus home) and developing regional policies

� We consolidated the global mobility function into one location and in one team

� For the professional development programs, we are engaging greater collaboration among the program coordinators, participants, and our Talent Management group

� Partnering with an organization such as Cartus that has the appreciation and understanding of the local culture and priorities associated with a move

� Implemented core/flex policies

� Having significant upfront consultations between global mobility and the business to determine the best fit arrangement

� Review lump sum payment in lieu of household goods shipment

SUMMARY

Overall, when asked whether they agreed with the statement that “the impact of an international assignment on an assignee’s career is positive,” 91% of respondents in the more than 500 moves sector said they agreed, compared to 81% for overall respondents. This is not surprising in companies with large assignee populations and generally larger mobility functions, and it supports the likelihood that companies are paying more attention to, and realizing the importance of, how international assignments support employee growth, business value, and retention.

Companies in this sector will need to support their focus on cost control and compliance by ensuring that they have properly structured policies in place to avoid costly exceptions and potentially costly, and damaging, legal issues. As visa and immigration compliance is a major challenge for this sector, additional upfront planning and up-to-the-minute advice is critical. Companies in this sector have done a fairly good job at putting steps into place to link talent management and global mobility. This will need to be a continued area of focus to recruit the best employees and achieve the best return on investment for their assignments by retaining their talent.

Related Cartus ResourcesFor more information, visit www.cartus.com to request the full 2015 Biggest Challenges survey and view other informational resources. You can also get valuable relocation information sent directly to your inbox by subscribing to the Cartus Blog.

Trends in Global Relocation BIGGEST CHALLENGES Findings ... · Ranking of relocation challenges for...

Documents

Transcript of Trends in Global Relocation BIGGEST CHALLENGES Findings ... · Ranking of relocation challenges for...