The Borderless Organization: A New Approach to Addressing the 21st-Century Global Mobility Challenge January 24, 2010

Posted by aicvisa in Company News, Global Migration.
Tags: company, economy, employment, expat, Global Migration, human resources, Immigration, International, migration, outsourcing, technology, trends
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A New Approach to Addressing the 21st-Century Global Mobility Challenge

When it comes to the global mobility of their workforces, we believe that many companies have one foot planted firmly in the future and one stuck in the past. Clearly, expansion into new markets around the world is one of the most effective ways for executives to meet investor demands for high growth. It’s also clear to us that soaring global competition and worldwide demographic changes are driving up the number of key employees who cross borders to work – a trend that is accelerating quickly.

In fact, according to a 2005 survey,1 47 percent of companies reported an increase in the size of their expatriate populations in 2004, and 54 percent anticipated further growth in the coming years. As further substantiation of the trend, the survey results indicated that two-thirds (62 percent) of companies reported an overall workforce expansion at their companies, and 84 percent also reported that there has been an increase in expatriate activity in locations where there was expansion. In both instances, these results were record highs for the survey, which has been conducted for 11 years. What’s more, shifting needs are forcing companies to deploy workers in new markets faster than ever before to take advantage of emerging opportunities before their competitors.

To address these 21st-century changes and challenges, companies must search for effective new human capital strategies to complement their business strategies. In particular, they must look for more effective ways to manage the global mobility of their workforces – the new mix of global projects, short-term assignments, commuters, permanent moves, and global careerists requires careful management.

In the meantime, most companies are coping by relying on conventional expatriate workforce strategies that, in some cases, are decades old. What worked well in a much different world of business – one in which the main expatriate problem was how to send a few people from established markets and businesses across a few borders to work – is no longer efficient. In this decade, we are witnessing the beginning of the baby boom retirement
phenomenon, and by 2010, American businesses will face a labor shortage of more than 10 million workers.2 As a result, most companies will be under increasing pressure to source and develop talent outside of established markets and deploy that talent to emerging business opportunities.

In this new world of global talent management, reliance on traditional mobility approaches, models, and tactics may end up hurting some companies’ bottom lines and could well pose significant compliance and other problems in the near future. Therein is a potential opportunity for forward-looking companies: if they take a new, more encompassing approach that aligns their global mobility programs with their core business objectives, they could soon outdistance competitors that fail to jump into the future in the same way. This paper describes the components of such an approach.

Conventional expatriate workforce strategies worked well for many companies when the main problem was how to send a few people from established markets and businesses across a few borders to work. Today, most companies are looking for policies that help them manage the global mobility of their workforce – the new mix of global projects, short-term assignments, commuters, permanent moves, and global careerists.

What you don’t know can hurt you
Companies should seek new approaches to mobility when their conventional programs and policies make it very difficult to keep a handle on their globally mobile workforce. Even where the traditional expatriate population is tightly managed, the same rigor is often not applied to mobility on a broad or comprehensive basis: How many mobile employees are there? Who’s involved in what projects? Who’s involved in short-term and rotational
assignments? Who’s commuting? For what and why?

In a survey conducted in 2005,3 62 percent of the companies responding were seeking alternatives to long-term assignments. Ninety-three percent of those companies cited cost as the main decision driver behind this trend away from the traditional expatriate assignment. Among the alternatives cited by the respondents were such tactics as localization (57 percent), local talent development and hiring (48 percent), short-term assignments (39 percent), business travelers (36 percent), and permanent transfers (26 percent). However, these “solutions”
tend to focus on moving employees across borders in a reactive, short-term goal oriented fashion. In that regard, the basic global mobility model remained unchanged – it was simply being dressed up in new clothes, as it were.

Information, of course, is the most basic requirement of effective management and business performance. Companies forced to rely on conventional expatriate HR policies find it difficult, if not impossible, even to know the costs of global mobility, let alone control them or report them. That in turn adversely impacts their ability to calculate their return on investment in global mobility.

Most conventional expatriate policies also make it difficult for even the most conscientious global companies to know whether their HR practices around the world are in compliance with local tax and labor laws. This can be especially risky in the post-9/11 era, when local governments, armed with better technologies and fueled by fears of terrorism, have increased their scrutiny of expatriate workers and immigrants to simultaneously protect
workers’ rights and their citizens in general. At the same time, local tax authorities have heightened enforcement of tax compliance by both individuals and corporations to increase tax revenue and contribute to government coffers.

In addition, because conventional approaches to expatriate employees typically focus on handling individual cases, they make it extremely difficult for companies to make a global evaluation of their workforce needs. Knowing what works most effectively for one mobile executive doesn’t help companies know if their most productive and cost-effective talent is working in areas that provide the highest ROI. Companies may also do a good job of moving a single executive overseas, but find it impossible to quickly scale up a workforce to seize a hot opportunity in another country.

Finally, and most fundamentally, conventional approaches to expatriate employees often prevent top executives from getting critical information about whether the way they use their globally mobile workforce is aligned with their business objectives.

Out of the past, into the future
The good news is that many companies are finding ways to leave behind outdated processes and procedures, and are seeking to implement new and effective global mobility strategies and programs. To embrace the new era of global talent management, they are refocusing, transforming, and realigning their approach to employee mobility.

Some specifics to consider:
Refocus. Companies need to improve how they develop the information that will help them understand the costs,
requirements, and opportunities presented by a global workforce that encompasses thousands of employees a year moving across borders. Critical activities in this refocusing process include:

• Defining global mobility support for initiatives and aligning global mobility programs to support the business’ strategic priorities
• Refocusing vendor partners to provide strategic and consultative global mobility services to executives and line managers
• Providing strategic, design, and consultative global mobility services to vendor partners and assisting in resolving complex issues
• Responding to employee inquiries and processing global mobility transactions to reduce vendor partner and center of excellence involvement in routine administrative tasks and inquiries
• Ensuring that vendor partners provide contracted activities, measuring performance against the service level agreement, and coordinating vendor activity to meet current operational, future capacity, and project needs
• Outsourcing non-core-competency functions and/or those that are more efficiently delivered by a third party

Transform.
Companies then need to get down into the gritty details of their operations. They must make changes to technology platforms, human capital management processes, human resource policies procedure and programs, vendor management, and compliance management. Above all, they need to transform the focus of their global mobility programs from addressing the needs of the expatriates to addressing the needs of the global business,
thereby recognizing that the needs of the workforce are a key element of the effectiveness of that transformation. This involves:

Identifying technology changes and enhancements to support the long-term global mobility strategy

• Providing tools to help the business plan for assignment costs
• Leveraging an HR portal to provide manager and employee selfservice capabilities
• Using a global mobility intranet or portal to find policy and process information, view assignment-related information, and conduct basic transactions
• Defining reports and analytics to measure global mobility effectiveness and assignee experience over the course of an assignment
• View global mobility talent movement, aggregate trends, and performance as a result of assignments
• Standardizing policies across global mobility service offerings
• Streamlining procedures to support global mobility service delivery
• Establishing service level agreements to ensure an effective relationship between global mobility and the business

Realign. Finally, companies need to realign their global mobility programs. That is, they must make sure that everyone in the business understands the new capabilities the company has brought on board in order to better manage expatriate workers and make them assets that contribute directly to company performance. This means:

• Focusing on risk and cost management to drive the brand and value of global mobility
• Understanding services and capabilities of global mobility and communicating the value and brand of global mobility
• Providing talent management services that effectively address the demand for global talent
• Supporting positive assignee and family experience
• Understanding global mobility solutions and their capabilities to support their assignment
• Viewing global mobility as a provider of valuable, high-quality services

A well-managed global mobility program can help companies pursue …

Improved compliance and better managed risk, by providing more information about local labor and tax laws and facilitating a compliance mechanism. Better managed and potentially reduced costs, by introducing structures to support cost-efficient and globally consistent and compliant programs and to provide executives with detailed data on the total costs of the global workforce. Increased return on investment, by providing executives with information needed to more effectively deploy human capital to projects with high rates of return.
More efficient global sourcing of talent, by providing more information about what talent is available where and when around the globe. The 2005 Global Relocation Trends Survey results indicated that 48 percent of companies are looking to hiring locals to attempt to decrease their dependence on expatriate talent.4 While this number is promising, this strategy will be ineffective if it is not pursued as part of an integrated and comprehensive talent management strategy. More effective talent management, by making it possible to quickly gear up or gear down to meet the demand for talent. Better alignment with business objectives, by providing executives critical information about how well the global workforce is being used to help boost business performance. Better customer service, by making it possible for companies to use the global workforce to more effectively respond to changing customer needs.

Beyond borders step by step
Through our work with forward-looking companies, we have found that moving a company’s global mobility policies into the 21st century first requires a thorough self-assessment. This involves gathering as much information as possible about the current state of the organization’s expatriate workforce, including numbers of workers, compensation and benefits, support costs, trends, and local laws and regulations. The chances are good that the information is available, but widely dispersed.

The next step is to take this data and analyze it through the prism of the company’s near- and long-term business objectives – the ultimate question being, is our global workforce helping us reach those objectives?

This will lead to step three, setting objectives for the global workforce that will help the company achieve its business goals. Finally, a company should lay out a step-by-step plan for bridging the gap from where its global mobility policies are today to where it wants them to be.

What’s in it for me?
Simply put, taking a more strategic approach to global mobility can help transform a mystery into a business asset. By refocusing, transforming, and realigning their global mobility policies, companies will have the transparency and knowledge they need to help them navigate the dangers that cling to the current approach – compliance problems, lack of equitable treatment, hidden costs, and missed opportunities. More importantly, companies will be able to move people across borders more efficiently to pursue their business objectives. Strong global mobility programs will enable companies to more effectively attract, retain, and reward high-value employees who want to work across borders.

The expatriate profile is shifting. As the 2005 Global Relocation Trends Survey5 reported:

• Female participation is at an all-time high, and for the first time, women have broken the 20 percent barrier and
• constituted 23 percent of the expatriate population.
• Over half (54 percent) of expatriates are between the ages of 20 and 39, compared to a historical average of 41 percent.
• The number of married men, which has traditionally been the largest segment of the expatriate population, is at an all time low, as is the percentage of assignees with accompanying children (51 percent).

The onus is on global businesses to identify, capture, and retain this talent on a global scale. With a global mobility program, they will also finally have the management tools they need to seek to obtain a higher ROI from the expatriate workforce. Finally, the conventional approach to moving workers across borders worked well when the business requirements were more basic: send a relatively small number of expatriates overseas, keep them in their positions for an extended period of time, and provide them with special benefits. In the 21st century, companies need an approach that is more like a modern army’s mobile strike force. Because major opportunities can appear so quickly anywhere in the world, companies must be able to shift the “right” people rapidly into the “right” place at the “right” time for as long as necessary. A realigned global mobility program provides that capability.

Think of the possibilities
Shedding old ways of doing things can be hard, but the rewards can be great. Companies that embrace the potential of new approaches must first align their global mobility policies with their core business objectives. In an increasingly global marketplace, that will give them a huge advantage over competitors.