Navigating Challenging Markets when Relocating Employees
As companies expand their global footprint, global mobility leaders need to manage the risks, issues, and opportunities that arise when relocating talent to challenging markets.
According to BGRS’s 2016 Global Mobility Trends Survey (GMTS), China has been among the top three destinations for international assignments for the past 15 years. Furthermore, China, Brazil, and India have been among the top five countries emerging as new destinations for international assignments for the better part of the past ten years. These same countries are also consistently reported as the most challenging locations for both assignees and global mobility leaders.
This article will focus on the challenges presented to global mobility leaders when moving assignees into countries such as China, Brazil, and India; however, the topics discussed can also be applied to all emerging markets.
Challenging Factors in Rapid Growth Markets
The challenges for assignees and accompanying family members moving to emerging markets are unique to each specific country; however, what is universal is the need to understand the issues, proactively address them, and provide the right benefits to ensure the overall effectiveness of their mobility programs.
Secure, Affordable Housing
Emerging markets often struggle with managing urbanization; this can translate into assignees having trouble locating adequate housing. Rental prices are driven largely by the proximity of good schools and daily commute times and differ dramatically in different provinces. Sometimes, housing options may seem initially suitable, but once leased present assignees with ongoing maintenance challenges.
Safety and security can be a factor as well. In Brazil’s larger cities, for example, most assignees choose to live in closed condominiums or gated communities with 24-hour security, which carry a steeper cost than other housing options. Also, recent currency fluctuations and the devaluation of the Brazilian Real mean rental prices have been fluctuating rapidly, and landlords are sometimes reluctant to agree to longer term leases.
To best address many of these concerns, companies should ensure adequate home search assistance is provided by the mobility policy. In addition, proven local destination services providers should be used, especially ones that have demonstrated local relationships with local landlords and agents.
Access to Quality Education
Often concerns about schooling can overshadow the assignment acceptance process, and the global mobility team may need to provide extra support. Relocating with children to emerging markets can present families and their employers with an even more unique set of challenges. It is critical to understand which international school options are available. Other considerations are school location and how it matches up against a family’s needs. Due to the lack of adequate schooling in many emerging markets, the cost of educational support can be considerably higher than in other metropolitan locations.
Companies should consider engaging the services of a specialty educational assistance provider; they can help assignees navigate all the complex strategies required by the local school placement process.
Safety and Security
Safety and security can pose concerns for both companies and assignees moving to certain emerging markets. Safe, secure expatriate style housing is available in some countries, but many times safety and security can be mixed. For example, housing may be located in a gated community that is safe, but in order to go to work or school, the assignee or family would need to go through an adjacent area which is less safe. These gated communities often equate to a high cost rental market.
Providing adequate information and security training up front to assignees is essential. Larger companies sometimes engage their internal security departments to provide location based security training prior to the assignment start; third party specialty companies offer security training as well. In addition, offering assignees international medical and travel assistance is an important benefit that is sometimes overlooked by companies
Overall Quality of Life
Concerns about quality of life in emerging markets tend to focus on air quality. Top assignment destinations such as China and India have poor air quality in some cities from pollutants such as vehicle emissions, industry, construction, and residential fuel burning – among other things.
There is variation around how companies are responding, yet many are taking the approach to educate, empower, and assist their employees in understanding the health risks and are offering solutions to minimize their risk. Solutions range from education, up front assessment of respiratory issues, providing assignees face masks and air purifiers, and offering additional rest and relaxation trips. Other support may include access to adequate medical facilities and overall healthcare options.
Global mobility leaders need to explore whether the home country medical plan will provide adequate coverage while on assignment. If not, the company should be prepared to offer a global medical insurance option to ensure access to routine healthcare services.
Cultural Adaptation
Respondents to the GMTS indicate that assignees’ inability to adapt to the host location is the second most common reason for assignment failure. Many global mobility providers will offer customized settling-in assistance programs. Services may include, among other things, providing guidance with opening bank accounts, acquiring tax identification, and obtaining driver’s licenses.
Beyond assistance with the initial logistics assignees need strategies to adapt quickly and hit the ground running. According to the GMTS, companies indicated that nearly one in five assignees (18%) experience notable difficulty in either adapting to the local culture or in conducting day to day job requirements in an unfamiliar business environment. A critical component of a successful relocation is the implementation of a comprehensive intercultural training program. Intercultural training programs develop cultural awareness by providing the knowledge, skills, and tools to enable the assignee and their family to successfully transition to new cultures.
Mitigating Risk and Ensuring Compliance
According to the GMTS, respondents cite compliance as tied for first place for the top assignment management challenge facing companies today. As regulatory pressures increase and governments around the world strengthening enforcement of laws and regulations, global mobility leaders are increasingly focused on ensuring their programs are compliant.
Immigration
One of the more pronounced challenges companies and assignees face is the complexity surrounding immigration compliance. Emerging markets pose unique challenges based on stringent immigration processes that often include a wide array of documentation. The assignee’s home/host combination can further complicate the process. For example, an Indian citizen transferring to Brazil will likely face a longer immigration process than someone emigrating there from the United States. This is partly due to increased demands from the host country based on the citizenship of the individual, but also on the complexity of obtaining information from the home country. Regional and provincial variation adds further complexity.
Working with an immigration provider will help companies navigate the actual requirements of the process. Educating both the assignee and the company on the amount of time it could take to obtain the visa is crucial to setting the right expectations up front.
Tax
Often in response to their current economic situation, countries may look to increase revenues through changes to tax laws. Furthermore, informational reporting requirements as well as withholding and payroll delivery compliance needs vary by country. This coupled with the appropriate tax structures needed to address such items as deferred compensation arrangements, foreign pension plans, and complex local benefit laws are also major factors with moving talent into emerging markets.
Ensuring mobility stays in lockstep partnership with a global tax provider will inform the path to compliance for global mobility programs. New regulations requiring changes on a local level can also require global process changes and necessitate strong coordination between global and regional mobility stakeholders to ensure continued compliance.
Tips for success
As the globalization of multinational companies continues, the landscape of mobility continually evolves. Emerging markets provide opportunities, while creating new standards for talent acquisition and management. Global mobility leaders have a key role in ensuring the success of a company’s mobility program and the business. Actions global mobility leaders may want to consider include:
- Develop a deep understanding of mobility’s stakeholders
- Engage proven supplier partners
- Review mobility policies for best practices
- Communicate well and set expectations
By having an understanding of the issues and developing a strategy to address them, global mobility leaders can better manage the risk inherent in moving talent fluidly into and out of emerging markets and can position the mobility function as a driver of the company’s overall business success.
This article first appeared in extended form in the January 2017 issue of Benefits Magazine. Excerpted with permission.
Gain valuable good practices from three of BGRS’s experts In the Spotlight: Suppliers in Emerging Markets.