Events
Geopolitical Climate Changes and the Impact on Global Mobility
Coordinated Universal Time
Presenter(s):
George Parr
Chief Marketing Officer
SIRVA Worldwide Relocation & Moving
Taryn Kramer
Vice President, Global Consulting
SIRVA Worldwide Relocation & Moving
VIDEO TRANSCRIPTION (Starting at 4:00)
What is Going on in Geopolitics?
George Parr: Good morning. So if you look at our first slide you'll see we are certainly living in some interesting geographic times globally. No matter what part of the world you look in, there are a variety of geographies and types of changes that are impacting the overall geographic and political landscape from the Brexit situation in the UK, to the U.S. election, to the slowing economy in China, and oil and gas challenges down in South America.
These changes in this environment that we're living in are certainly creating some interesting challenges for mobility leaders globally as well. And this morning we're going to talk through what the potential impact of those changes for the global mobility industry is going to be.
Two of the areas that are probably more on most people's mind than others given the respective economies impact on the global economy, is the situation in the UK with Brexit and the change in administration here in the United States. So we will look at those two first and put a spotlight on those as far as what impacts they're likely to have to businesses on a global basis.
A Closer Look: Brexit
So Brexit back in June of last year, the UK announced their intent to leave the European Union and there has been a lot written recently as they are starting to negotiate the process of actually leaving the EU. And this has certainly created a lot of ambiguity and uncertainty as far as what this will ultimately mean to both companies and the people living in the UK and across the EU. Some of the areas that are clearly going to be impacted by Brexit is both immigration and financial.
So from an immigration standpoint, the biggest impact is primarily going to be between the UK and the EU and we're likely to see a tighter...or a tightening rather of immigration laws between the UK and the EU. We're already seeing companies attempting to proactively take action in response to these immigration changes.
From a financial standpoint, we've seen impacts to the currency of the UK as they're anticipating leaving the EU. And then also we have seen recent legislation around household goods and the process for them going through customs and taxation implications on those.
A Closer Look: U.S. Election
As we turn to the next page in the U.S., we see that with the new administration in Washington, a lot has been talked about certainly from an immigration standpoint and what that will potentially mean to the flow of people both into and out of the U.S. And then from a commercial standpoint, it's clear that there's going to be impacts and possible withdrawal and renegotiation of pacts like NAFTA, TPP or TTIP.
And certainly, there's anticipated reform between the U.S. and China in terms of trade policies, and the housing market is likely to continue to tighten based on described policies intents from the new administration in terms of a robust housing market getting even stronger as regulation in that area is likely to lessen.
How Geopolitics Impact Global Business
So if you look at overall the likely impacts to business through the geopolitical landscape, we anticipate that certain industries are going to be impacted more so than others. Certainly, tech and financial services are two that most think will have a greater impact than others. The cost of manufacturing, the cost of doing business for companies with tighter taxation, tighter regulation on immigration could certainly increase the cost of doing business. Uncertainty is as we've seen historically is never a good thing for the markets. And then we may actually see companies reevaluating their globalization plans as these changes begin to take shape and take hold.
So I'm going to turn the presentation over to Taryn Kramer now to speak specifically about how these geopolitical changes are likely to impact the talent mobility space. Taryn?
How Geopolitics Affect Your Mobility Program
Taryn Kramer: We have a stat on the next slide that shows that 77% of CEOs are concerned about the availability of key skills. I think it's a message that most of us on the phone have been hearing consistently for the past few years. Struggles with where to find the appropriate talent to fill some open positions and some gaps that they have locally.
The other set we have here is that 71% of Millennials desire to work abroad. So you would think that those two would combine together to solve the problem, but the reality is that the changing world today and the changing environment that we have today, really is putting some restrictions on the ability to actually address both of those needs from both the CEO and organizational perspective as well as from the employee perspective.
How Geopolitics Affect Your Mobility Program: Strategic Shift in Talent Management
So to really take what George said and move this on to what does it mean for your program. We see a big opportunity for those in the mobility space to really get more involved in some of the strategic discussions that are taking place at the organizational level. Moving away from being a purely operational support function which has historically been the role of mobility, to being a key player in making some decisions around pipeline and what the options are to look to solve some of the shortages or challenges that your organization may face. So this is a great opportunity to demonstrate some knowledge and some expertise in this area and to really approach some of the senior leaders within the organization with a real action plan on how you can address some of those challenges that you may be facing.
We've also before all the sort of turmoil started taking place, we were definitely seeing a shift in the types of relocations or moves that were happening. Consistently over the past couple of years, there has been a shift away from the longer term...the traditional longer term assignments to more alternate assignment types. What we're seeing is a drastic increase in the number of short-term assignments, we're seeing an increase in the number of business travelers that are being used to address some of these talent shortages that are taking place both domestically and globally.
If some of these new immigration rules go into effect, that could really put a bit of a wrench in some of the talent management plans around where organizations are drawing their talent from and where they're sending them to. So it's an opportunity and really a critical need for organizations to really start to look at alternate talent pools to start pulling from or sending to in order to address some of those needs.
There's also a bit of an ethical factor that comes into some of the decisions around candidate selection. Traditionally, candidate selection has been about having the right person with the right skill-set and perhaps a bit of an element of cost in there. For some organizations, cost plays a bigger role in those decisions. Now we're starting to see that there's a bit of an ethical element that's being thrown in there as well to say what is the nationality of this individual, what's the lead time that we need based on some of the immigration constraints that are in place today? Also, some reluctancy on the part of the employee to potentially move because of some of the immigration challenges that may exist out there. So we're starting to see that where the person is coming from or where they're going to is really starting to play a bigger role in some of the decisions around the deployment of talent.
How Geopolitics Affect Your Mobility Program: Rising Mobility Costs
Sorry, I skipped one. In terms of mobility cost, we're definitely noticing a trend of organizations to get in front of this. We have some large corporations that are already starting to plan for some group moves, to move very significant populations from one location to another. There's obviously a cost associated with that, it also presents some challenges in terms of housing availability, availability of just your vendors to meet the needs of your population moving. Driver shortages when it comes to household goods shipments, also some considerations for the shift in a compensation approach where you start to move large groups of people. All of this can have a significant impact on the overall cost of your global mobility program.
How Geopolitics Affect Your Mobility Program: Increasing Complexity and Administration
As I mentioned earlier, we're also seeing an uptake in the use of business travel in lieu of the more traditional longer term assignments. Along with that comes increased focus on compliance needs related to those travelers, organizations are struggling with how to effectively identify, monitor, and track those folks that have in the past fallen quite under the radar. There's governments and authorities that are putting more and more focus on business travelers as a source of revenue. There's increased communication between different authorities within a certain location to make sure that visas, work permits align with the ultimate tax filings that the individuals do and their contributions from a withholding perspective. So definitely some challenges there in terms of managing large pockets of movement to address some of the geopolitical issues that are out there.
I think everyone's well aware of the challenges associated with just keeping up with the immigration changes. In the U.S. alone, I think we had a two-week span where it was very much up in the air in terms of what was going on with some of the immigration restrictions that were put in place. We see that continuing on for the foreseeable future until there are some determinations made there.
Changing talent demographics. So having to look at different talent pools. As I said earlier to fill some of those resource gaps that we have, different nationalities being pulled far more heavily than they have in the past. Your policy that you have in place may not necessarily address the needs of those people, and it's not necessarily a one-size-fits-all policy that can be applied to your mobility population because the demographics are so varied within that one group. Definitely a trend towards a more customized approach for package development on an individual basis that really reflects both the needs of the organization as well as the needs of the employee.
And definitely, increased scrutiny and audits around mobility populations, making sure that from a compliance perspective all individuals have the appropriate visas in place, appropriate work permits, making sure that all payroll, tax withholding, and reporting requirements are adhered to. So just an overall focus on compliance.
Recommendations for Navigating the Changing Geopolitical Landscape: Don’t Panic
In terms of next steps, overwhelmingly, the message is, "Don't panic." I think the past couple of weeks in the U.S. and just on a global basis, things changed but then it takes a long time to actually get them implemented. Brexit is a perfect example. That came out a while ago and it's going to be a couple of years before anything actually starts to take effect. So the biggest advice that we can give to companies right now is just to understand how the changes or the potential changes from a geopolitical and immigration and compliance environment will impact your specific business and mobility objectives.
Every organization is going to be a bit different in terms of their population demographics and the potential impact of these changes. So just getting a better understanding of what's going on in the world and how that potentially is impacting your population. I think we've learned that reacting quickly is not necessarily necessary because things change and they change very quickly. So it's more about just having some awareness of what potentially could happen and planning accordingly.
It's an opportunity, as we said earlier, for the mobility team to really get out in front of senior management within the organization to proactively communicate where there are some potential issues or challenges that may come into play. I think there's also an opportunity for the mobility teams to get involved in some of the kind of business planning and company objective discussions where pulling talent from alternate locations is really the existing solution. It's a great opportunity for the mobility teams to have a seat at the table, to get involved in those discussions to be able to offer some perspective in terms of what the potential challenges may be, not only from an immigration compliance perspective but also just from a logistical perspective related to housing...long-term housing, temporary living accommodations and just the availability of those in some of the locations that you may be looking at. Looking at where there are some real talent gaps or potentially there's a need to focus more on learning and development, to train from within versus having to import people from locations that may present a bit of a challenge.
I think it's also an opportunity for the mobility teams to get in front of their leadership to really stress the importance of planning and looking at the pipeline and having enough runway in order to meet the needs of the business. I think that that's traditionally a very big challenge for mobility teams is getting the business to engage the mobility teams well in advance so that they can have their talent available on the day that they need them. We're often under a bit of a crunch, and more so now than ever, it's important to have that runway in front of us.
Recommendations for Navigating the Changing Geopolitical Landscape: Take an Inventory
Take an inventory. Understand who your population is and not just your traditional assignment population that are on the long-term, short-term, perm transfer, some of the alternate longer term are perm transfer moves, but also your business travelers. As I think everyone is well aware, there's an increased focus on business travelers primarily from a revenue perspective for authorities in certain locations. But now I think that the spotlight is being shown to make sure that everyone is compliant from an immigration perspective. And you may have folks that are traveling from certain locations that are falling outside of the radar of the mobility function, but that potentially are impacted by some of these changes that we've been talking through.
So understand who you have out there, do some analysis. We do have some information around countries that may be impacted by some of the changes that may come down the pipeline ultimately. So really focus on those populations, have those conversations with your business partners to say, these are who you have, this is potentially what you need to do for these folks, and really get in front of the issue. So be proactive versus reacting when and if something happens.
It's important to review all the intra-EU relocations either to or from the UK just to understand how Brexit potentially impacts those folks. Make sure that you have plans in place to address any gaps in services or compensation that may exist. And take a look...it's a good opportunity to take a look at your policies that you have in place right now. Are they structured in such a way that they're flexible enough to address some of these potential challenges that may come up?
There may be adjustments that are needed to cost of living allowances based on shifts of populations from their existing location to another, to really respond to some of the changes that are happening. Make sure that your shipping policies are up and again adequate and sufficient, and obviously visa and immigration as well. You want to make sure that you have a policy in place to ensure that everyone that needs support related to visa and immigration and tax as well, make sure that the policy specifically indicate what support the employee is entitled to, make sure that you have vendors in place to actually deliver that support, and then a process as well to help to manage that.
Recommendations for Navigating the Changing Geopolitical Landscape: Make a Plan
Proactive, proactive, proactive is sort of the message of the day. No one wants to be caught behind the ball on this one, so make sure that there's a plan. You may have to export people rapidly from a certain location, you may have to communicate very quickly to those impacted folks in your employee pool related to travel restrictions or potential delays in either entering or exiting a location. So make sure that you have those plans and those communications in place and ready to go.
As I said previously, build extra time into the assignment planning process. So communicate with your business partners so that they're clear on some of the potential delays related to visa and immigration, make sure that they have, as I said, enough runway to really get in front of that. Make sure that they're sort of backing into the date that they need their talent so that you're ensuring that visa and immigration compliance is in place on day one for the employee.
Link up with some of the internal business partners that you work with like legal, tax, and finance. I'm sure that lots of functions within any organization are really looking at their plans as it relates to some of the changes that happen on a global scale, make sure that the mobility plans related to this are really linked into that. I think mobility is in a great position, inherently as part of our lifecycle we work with the internal partners within the organization such as legal, tax, and finance. So make sure that you're continuing to loop in with them making sure that all the plans sync up together and that you're all working together to ensure that these folks or the impacted employees are taken care of.
And then review any duty of care policies and procedures that you have. If you don't have a duty of care policy or procedure in place, it might be time to really work to get something out there. We saw particularly, with some of the U.S. stuff that happened, there was a bit of a panic in making sure that there were policies, procedures, communication protocols in place to react very quickly to help support the employees there in some of these impacted locations or that have a visa or residency that's impacted. Making sure that you're able to communicate to them quickly, making sure that you can provide some assurance to them, that you are prepared to handle whatever their needs are and get them either in or out of a location very quickly.
Recommendations for Navigating the Changing Geopolitical Landscape: Use Your Partners
And then use your partners. All of you likely are engaged with vendors to help support your mobility programs and processes. It's really important to look not only...the news you can get online and through mainstream media sources is great, but I think being able to link in with your providers, particularly your immigration provider, really plays a key role in your ability to address some of these challenges. So make sure that you're signed up to get any updates, alerts based on any changes that happen, factor that into some of the preparedness work that you've done already in terms of understanding who your population is.
Work with your immigration providers to say, "Here's our population. Help us to understand who's impacted and what potentially we can do to help support these people from an immigration perspective, if and when some of these changes take place."
Work with your mobility providers or your mobility vendors to make sure that if you have to quickly export people, are they ready to go in terms of household good shipments, what's available in terms of temporary living opportunities or options. Are we set up to quickly shift some compensation structures or implement some new allowances very quickly as needed? Really providing some logistical support to your employees that may be impacted by some of the changes that are happening.
Questions & Answers
"Should our company be taking any action now?"
I think right now obviously what's going on with Brexit I think is a little still very vague but a little bit more clear than some of the other challenges that are happening globally. I think again there it's going to be slow-moving to implement, so the actions that can be taken right now are really focused on planning versus implementing anything. So again, just understanding who your populations are, where your population is, what the profile of your population is, what's their citizenship, what's their nationality, what visas do they hold? We are seeing a focus on some visa types specifically. So making sure that you have your arms around any folks that have that type of documentation.
Also, plan for multiple scenarios. I think there's for some of these proposed changes there may be some variations that could actually get implemented, so make sure that you're set up to make sure that you can handle all of those multiple scenarios. It's really kind of disaster planning at its finest, right, making sure that everything is set up to act very quickly when and if this comes through.
"What if we don't have any local relocation policies for European mobility? Does it make sense to build up a policy framework for intra-EU movement before Brexit takes hold?"
Yeah, absolutely. We're seeing more of an increase in the need for domestic policies outside of traditionally where you see them which is U.S. and Canada. So absolutely, I think having a formal policy in place that really articulates a support that's provided for domestic moves is absolutely a best practice. It may be that there's a policy in place that really addresses some of the requirements for movement tied to Brexit or some of the other local things that are happening. But definitely, a best practice is to have domestic policies in place to support that.
Question around what we see companies doing to manage business traveler compliance, question of the day or the year I should say. We get a lot of this and I'm sure lots of organizations are really trying to focus on this. And there's a lot of solutions out in the marketplace right now. I think the biggest challenge is getting in front of the immigration piece. From a tax perspective, and immigration as well, it's important to have something in place whether it's a technology-enabled solution linking with your travel provider or some sort of process in place that links in with just your mobility users or your larger business partners.
Creating some awareness around the potential issues that arise from the use of business traveler...travel, I'm sorry, specific to how it impacts the employee as well as the organization. Organizationally, there are some risks related to PE and payroll reporting and withholding and things like that, that really need some attention. So it's not just an employee issue, it is potentially an organizational issue.
Being able to have a solution and a process in place that really enables the identification tracking and monitoring and then also having policies and processes in place that help support. We see a lot of focus on just being able to identify these folks, but what do you then do with them, who has oversight for the population, what support is appropriate for that type of movement, is it just compliance or is there an additional need for say temp living or things like that, making sure that you have a defined policy in place to help support that.
And then making sure that you have...you can slot them into a process to really manage them, making sure you have vendors engaged that are able to support business traveler movement, in addition to your more traditional assignment types.
"So what is the best way to get the buy-in/partner with senior leaders to provide and communicate any impact on global mobility changes and impact on the talent pool?"
So I guess, first and foremost, getting a seat at the table. So really being able to demonstrate how critical mobility is in addressing some talent and organizational growth needs within the company. The movement of resources both domestically and globally is really critical to being able to advance some talent objectives whether it's employee development, employee retention or just offering the opportunity for employee...to attract employees.
If you recall the earlier stat that we provided which was 71% of Millennials desire to work abroad at some point in their career. Being able to advertise and demonstrate that that is, in fact, an opportunity within your organization, so really to attract some of that talent. I think it's demonstrating that you have the skill set and the competencies to really engage in some of those strategic conversations. Traditionally, mobility has been very operational in nature, so it's changing the profile of your mobility team, it's really focusing on the scope of services of the mobility team to enable the team to have the resource or the capability as well as the time to engage in those conversations. That's really kind of the key there.
And I think going with some data and some information around where assignments are successful, some ideas potentially around your program demographics and how that aligns with some of the talent gaps that may exist within the organization and demonstrating how mobility can help to fill those gaps.
Subsequent to that, or related, is how you can better align mobility with talent management. Again, it's engaging with the talent management function to have those conversations to say from a talent management perspective, what are the priorities, what's the strategy, what are the requirements? And then being able to demonstrate that the mobility program aligns with those and can support those objectives whether it's through process. So really having mobility involved early on in some of these discussions around who to move, where to move them, why to move them, what's driving the relocation or the move? Stressing the importance and the value that mobility brings to those discussions based on all the data and the information and the experience that the mobility team has.
And then also from a policy perspective, ensuring that the mobility policies and programs really sync up with those talent management and talent development objectives. Ensuring that there's enough flexibility in the policies that are available to help some of the different drivers for that talent-based movement and making sure there's flexibility in there to support the organizational needs as well as the employee needs.
"With the recommended flexibility to address the geopolitical climate comes the possibility of inconsistencies within the company between assignments. How do you address the balance between these two things?"
Yeah, so, definitely a challenge. As I mentioned very early on in the presentation, there is a movement towards more individualized packaged development rather than a one-size-fits-all policy. So, very traditionally, we saw that there was one policy to address long-term moves, one policy to address short-term, and one policy to address perm transfer moves, purely based on assignment duration. We then saw a shift to say not all long-term assignments are created equal, we have people at varying levels within their career, we have varying drivers behind that move, and we don't necessarily need to provide the same support just because someone is on a long-term assignment.
So there was that add of additional factors or characteristics that were looked at to really determine the most appropriate support for the employee. We're now shifting towards, "Can we have some guidelines in place that sets some parameters around where a certain provision is provided to support the employee?" There are some parallel limits in terms of the support that's provided, but I don't necessarily need to provide that support for every individual that moves under that profile. It's really looking at the employee-specific needs and saying, "We understand that your needs may not be the same as one of your peers that's moving from the same location to the same location."
So offering the ability to design a package...again still within parameters because you still want to manage cost, but offering the ability for business leaders and in conjunction with employees to really design a package that's most suitable for that employee. I think as we start to look at some of the...what we referred to earlier, some of the ethical challenges that now come into play when considering who's the most appropriate employee for a move type, I think we'll start to see that there are some significant changes in terms of what people need from an ethical or a religious or just a cultural perspective. And all of that will need to be embedded in the policy support.
So it's equitable in the sense that you're really looking at what people need and providing support aligned with those needs, but not necessarily equitable in terms of everyone getting the same support.
"What is the assignment time for business traveler versus short-term assignment?"
So if I'm understanding the question correctly, short-term assignments are very traditionally defined as anything under 12 months. So any assignment that's intended to last less than 12 months would be classified as a short-term assignment, typically that lower range is 3 months, so it's 3 to 12 months.
Business travelers typically fall within that zero to three-month timeframe. Business travelers are characterized where they don't relocate, so there's no physical relocation into the host location or the destination location. Rather it's frequent travel on a weekly basis or a monthly basis to one location or multiple locations. The short-term assignments typically do involve a relocation, not necessarily a relocation of the family but of the employee. So that's really the differentiator there.
A question around communicating with relocating employees and whether or not that should be happening right now.
I think as we've talked through, being prepared is key, there may be certain pockets of your population that do require a bit of proactive communication now probably just to say, "Look, we know what's going on, we have something in place to address your needs and some of your concerns if and when we need to." So more of just kind of a reassurance that you're ready to go if you need to.
Again, reviewing duty of care and business continuity and response plans just to provide some guidance to employees that may be impacted. I think it's probably best practice to have a bit of a script from the mobility team as well as from a business perspective to be able to address any concerns or questions that the employee may have. And to just be consistent in terms of the message that's provided from across the organization related to how you will support these people, ensuring that you're focused on making sure that they have everything they need to be supported. If they need to immediately be removed from a location or if they have family concerns related to some of these changes, making sure that you're able to address that.
Question around how do you stay on top of these changes, which is a great question.
It's changing all the time, so staying on top of it is definitely a challenge. As I mentioned before, mainstream news is definitely a great source of information, although I think we're all aware that you can get some conflicting views on what's going on depending on what channel you're listening to. But industry news is always better. You engage with vendors who have specialized knowledge and expertise and whose job it is to stay on top of all of these changes, and who can translate that to what it means for your mobility population. You don't see that happening in mainstream media, they're not saying, "Hey mobility leaders, this is what you should do."
So really working with your providers and your network and partnering with your internal stakeholders to make sure that everyone is receiving the same information, everyone is focused on what needs to be done, and you have a consistent plan in place that incorporates all the different elements of mobility and all of the different partners. And then, you're not just operating in a silo but you're operating as a collective group to help address some of these concerns.