Assignments to emerging markets such as Africa and China will increase over the next year, with almost half of global companies planning to increase the number of staff they send to these locations.
According to the Global Mobility Effectiveness Survey 2012, compiled by consultancy Ernst & Young, this number is expected to almost double over the next three years.
The report suggests that many global companies are directing new investment and staff resources into emerging markets, while trying to maintain profit margins and revenue in their established regions. It adds that an improved global mobility function could have a pivotal role in supporting and driving company growth.
Box 1: Ernst & Young’s recommendations for global mobility teams
Short-term assignments to emerging market countries are fuelling growth and are predicted to increase by one-fifth in the next two years, while long-term assignments will increase by 11%.
However, practical and personal issues could be hampering organisations’ success in diversifying into new markets. The report found that 45% of the companies felt their global mobility function was understaffed, while 68% worry that they don’t have the right mechanisms in place to manage the payroll, tax and security issues of sending someone to an emerging market. Compliance issues such as tax reporting and immigration paperwork also put pressure on company resources.
Stephanie Phizackerley, human capital partner at Ernst & Young, said: “There is a real disconnect between global mobility departments’ aspirations and day-to-day operations, with the number of assignees increasing significantly. The lack of control frameworks for managing payroll, tax and social security compliance, together with the increased level and complexity of its workload, could result in exposing the business to risks through strategic oversights and operational lapses.”
The key challenges faced by companies when relocating staff in emerging markets are:
- tax compliance (19%);
- immigration issues (18%);
- compensation and benefits (16%);
- housing and schooling (13%);
- policy management (13%); and
- payroll (5%).
The report also identified repatriation as something that needs to be handled carefully once an assignment is over. While 46% of assignees within respondents’ companies returned to another position with the company, 11% resigned. Regionally, African companies lose the greatest number of staff at the end of an assignment, with 26% of returning assignees resigning within two years of repatriation.
Phizackerley added: “To meet the many challenges that organisations face, it is essential that talent management and global mobility are integrated to make sure that expertise and experience are exploited to the best advantage. Growth is the primary goal for many organisations and it is essential to use your best talent to stay ahead of the pack.”
To be successful, the report concludes, employers need to offer “a consistent and joined-up HR experience” and align their mobility strategy better with their overall business strategy.