Why Companies Need To Do More For Their Globally Mobile Employees
With today's workforce becoming more globally mobile companies need to ensure that a move won't penalise the employee financially
I had the pleasure of attending the Forum For Expatriate Management's conference last month in Melbourne and it was great to meet some amazing professionals working in the HR and global mobility management space.
The speakers at the conference ranged from HR & global mobility specialists to compliance and service providers and the majority highlighted the same points:
- Compliance is escalating (there were some sobering examples provided that caught a lot of attendees attention)
- The role of a global mobility professional is becoming a lot more complex (you can't "wing it" anymore)
- There is pressure at the board level to ensure that each assignment is a success
- More has to be done!!
All depending on which report you read the failure rate with expat assignments ranges from 10-40%, which even at the lower range is still incredibly high. When you consider the hard costs of moving an employee (and their family) to a new posting and then the repatriation of that employee to be replaced with another employee it is incredibly expensive and this is not taking into account the intangible costs to the business - possible loss of market share, damage to the brand etc.
In their 2016 Global Mobility Trends Survey Brookfield Global relocation Services surveyed 163 global companies representing over 11 million employees worldwide. One of the key takeaways in this report was respondents indicating that when an assignment fails, 33% of the time it is due to family reasons and in 7% of the time it was dissatisfaction relating to compensation. Not everyone is able to move to a different country and live within a new culture so there will always be a percentage of assignments that will never work but from our experience one of the biggest contributors is financial stress.
I often get strange looks when I mention that expats face financial stress because of the long held perception that an expat is someone living overseas and receiving a large salary package (including housing allowance, maids, drivers, school fees etc) however as anyone in the human resources and global mobility sector knows this isn't the case anymore and employees are being asked to do a lot more with less compensation.
I strongly believe that financial stress can be one of the largest complicating factors in expatriate assignments. It is a widely known fact that financial stress can be one of the main causes of marital issues and that is not even adding all of the other complicating topics of becoming a expat including the children settling into school, the spouse being comfortable with the relocation and a hundred other topics.
Time and time again we are meeting with expats who didn't receive a detailed briefing before they left or were encouraged to sort it out themselves and it isn't until they're overseas that the problems start to accrue. In the last couple of years we have seen the Federal Government make a vast number of changes that affect everyone's financial circumstances, especially expats, but these aren't being communicated effectively to those who are about to or are already living overseas.
These problems could have been avoided if they were better informed before they left. By taking a structured approach and addressing each and every financial implication that a relocation may have on the employee you are removing one less issue that may become a problem down the track. Do they have a Self Managed Super Fund (SMSF), how will the move affect their existing property or investment portfolios, does the insurance inside of their superannuation remain valid whilst living overseas?
In today's digital age governments are sharing data and when you combine that with the tax regulators enforcing a more stringent compliance regime there is only one option for companies and their employees - be better informed. Ignorance isn't an excuse anymore and expats are being swept up in the changes.
In years gone by it was very difficult for governments to track and monitor these global assignments and expats could sail through their posting without considering a vast number of financial implications from the move but unfortunately these days are numbered. As we have seen from the United States governments' introduction of theForeign Account Tax Compliance Act (FATCA) global regulation is on the way in and other governments, including Australia, are quickly following in step.
Combining the facts that overseas assignee's are being paid less, government regulation & enforcement is on the rise and that companies are demanding that any money spent on moving an employee overseas is spent wisely then it is safe to say that more has to be done by companies to ensure that each assignment is given its best possible chance of succeeding by ensuring that your employees are fully informed.
Atlas Wealth Management has been offering this service to Australian companies for a number of years now and every time we conduct the review the feedback from the employee has always been a sense of relief knowing that they have one less thing to worry about when it comes to their move.
Brett Evans is the founder and Managing Director of Atlas Wealth Management, the first financial services firm in Australia to purely service Australian expats. Atlas Wealth Management provides financial planning and wealth management advice to Aussie expats in over 18 countries.