A new era for global mobility in Asia Pacific?
The Forum for Expatriate Management reports on the challenges and trends in global mobility management that were explored at the FEM APAC Summit in Singapore, September 2016.
Home to three of the world’s most competitive economies (Singapore, Japan and Hong Kong) according to the World Economic Forum’s 2015-16 Global Competitiveness Report, APAC is still a relocation hotspot, despite the much-reported slowdown in the economy of region’s giant, China.
So as the city state of Singapore has transformed itself into one of Asia’s most competitive economies within just half a century, it seemed an appropriate location in which to examine the current state and future of mobility in APAC.
This year’s FEM APAC Summit in Singapore saw significant numbers of corporate delegates in attendance, and with an impressive line up of speakers matched by lively debate, some fascinating trends emerged.
Round Table discussions focused on key, recurring themes such as talent management, compliance and cost control and reported some surprising trends. One of the most frequently discussed issues was movement from and within APAC. A common observation and problem seems to be the lack of appropriate talent within the region among the indigenous population. This of course then means that talent has to be imported, or else indigenous workers need to go abroad, at least for a short period in order to gain the necessary skills and experience. But this can bring with it a number of challenges…
East to West: Expanding APAC operations outwards
Something of a mobility ‘explosion’ in China is being reported – the Global Business Travel Association’s 2015 survey showed that by the end of that year, China had spent even more on business travel that the US. However, the main beneficiaries of these placements are no longer North America and Europe, but other Asian countries. Once, it might have been assumed that movement within the region would be less problematic for mobility management, but the reality shows that the region is extraordinarily diverse, not just in terms of economic development, but in its culture and languages. Domestic moves within China too are not immune to such difficulties, because although written Chinese can be understood by most of the indigenous population, there are so many distinct dialects that the spoken language can be very different from region to region.
Added to this, financial challenges can be more sharply felt when workers from APAC are sent for training and development out of the region. In the US for example, there is an obvious gap in the cost of living and salary level, when it is paid in the home currency. In order to meet minimum salary compliance rules, many companies are now resorting to ‘topping up’ the worker’s home currency salary with US dollars, but there are still other complex issues around tax and pensions that can be difficult to solve.
Business travel vs. short-term assignments – what’s in a definition?
Thrown out for discussion was the vexed question of how should the global mobility industry define business travellers in the context of the increasing number of short-term assignments? The quick answer was that business travel can be defined by the 180 day rule, but as every global mobility manager knows, many business travellers will repeatedly go in and out of a destination within that time and the waters can quickly become muddied.
The consensus was that the crucial thing is for organizations to ensure that they have the correct visa for their employee. It is a duty of care issue certainly, but the discussions also highlighted the fact that many mobility professionals feel that the employee bears some responsibility to keep a check on their status too. Younger, less experienced business travellers and more junior employees undoubtedly need more hand-holding, but the seasoned business person should have some awareness of the issues. Of course, some companies have a greater appetite for risk than others, but as one speaker warned, do not believe those who claim to turnaround visas instantly, as experience shows that the process must be carried out properly, and in order to do so, it is likely to take several days to complete.
Dealing with the specific challenges of emerging markets
Attendees agreed that most global mobility policy is rightly driven from an organization’s HQ, but exceptions to the rule will always occur. A seemingly humorous remark pointed out that if an organization finds that it is dealing with 20–30% of exceptions, then it may be time to change that mobility policy – a sensible point. One policy will never fit all, so it is wise to build-in a certain degree of flexibility – especially when operating in emerging markets. Tax and immigration compliance are of particular concern in these countries and especially when managing long-term assignees. It is important to plan for the day when those assignees will return to their home country, and so it is never too soon to address issues surrounding their social security status.
It was agreed that fundamentally, managing assignments in emerging markets demands robust processes. There must be a clear resourcing and deployment strategy and a very firm grip on the myriad legal requirements. To this end, it is vital to evaluate and monitor the quality of third party relationships. Assignees from highly developed economies like the UK and US have high expectations, and so DSPs in emerging markets have to be able to deliver a really excellent level of service – especially for those ‘trailing spouses’ who may have to deal with faulty air conditioning, or a broken fridge in a completely unfamiliar location.
Another lively session looked at ways of managing costs in a challenging economic environment. It was posited that to streamline costs, it is absolutely vital to have in place three things: the right visas, insurance and type of shipment. While it was acknowledged that tailoring packages can allow some cost savings, it was accompanied by a warning that it might only be a short term saving because a disgruntled assignee can scupper a project, so the wider costs of a failed assignment can be extremely high.
It was also noted that it’s really important to factor in changing, or escalating costs too – older, more experienced expats with essential, in-demand skills such as engineering for example, will have more power to negotiate if they aren’t so keen to move on to a more challenging location. Younger, more junior employees may not have the same level of skills, but they may be easier to place in some respects because they are likely to see foreign travel as a way of developing their career, are less likely to be accompanied by their families and being generally less experienced, are also likely to be easier to negotiate with.
Greater diversity – and experience shows
Examining trends in APAC, contributors reported that they all saw more inter-Asia movement, with a decrease in the focus on sending people to the UK and US. And with an increasing focus on cost management and compliance, a host-based approach is becoming more prevalent. Part of the wider trend away from long-term assignments and towards short-term placements, the group also identified a growing diversity among those being sent into the APAC region. With a larger proportion of blended families, same sex couples and so-called Millennials going on assignments, there is a greater variety of cultural differences to consider. Older assignees, especially ‘Empty-nesters’ who might previously have been considered too well established in their home country to go on a long-haul assignment are actually being perceived as a more reliable option. Older people, with more work and life experience are seen as being less likely to panic in unfamiliar locations and situations and so they can often be successfully placed in more challenging destinations.
It was noted too, that global mobility should be about more than managing tax and immigration issues, and that if the people are managed well, and their careers nurtured and developed with a longer-term plan in mind, it can actually pay on-going dividends for both the companies and individuals involved.
Is Africa in APAC?
The keynote panel asked “What is APAC?” And at first glance, this might have sounded a rather banal question, but it quickly became apparent that opinion on the subject widely differed. Some contributors thought that in global mobility management terms, APAC included Africa and the Middle East, for example, while others saw Japan as being ‘outside’ of the economic region. There was also much debate over India’s status, with some perceiving India and China as belonging to two very different sub-sections of the region. While most of the Asian countries share a geographical area, it is certainly true that culturally, they are all very different. So the challenges associated with immigration regulations, and language and cultural issues should not be underestimated. It was widely felt that HR should be the hub that keeps all the varying teams connected. When moving into APAC, planning is key, and needs to be carried out 4–6 months in advance. And with immigration regulations changing frequently, it is vital that all the different offices and agencies keep in regular contact. Again it was emphasized that while speed is important in the immigration process, accuracy is vital.
Is the focus on top talent the best policy?
It was also noted that it can often be difficult to move indigenous Asians around and out of the APAC region and that it is essential that Asian headquartered businesses buy into the idea of global mobility and understand the value in sending their employees abroad.
Some contributors felt that businesses also tend to focus on sending their top talent on assignment, but that this was not always the best decision, because the right cultural fit is so important, and sometimes the most senior employees are not willing to adapt. It is also common for employees to be put on short-term assignments in Asia (particularly in China) because they often get restless, so when sending a worker to China or similar destination, it is wise for the global mobility manager to have another, more attractive destination held in reserve as a future incentive.
Whilst in APAC though, long-term assignees must have tax equalization, and while assignees away from home for up to two years can retain their pension in their home country, placements beyond that time require a different plan. The need for succession planning was also emphasized and it was agreed that businesses need to look much further ahead and try to identify ‘gaps’ that will open up in their talent later on.
New strategies for managing cost
Of course, cost is a perennially important issue. The primary purpose of sending people across the globe is to generate and increase revenue for a business, and so the cost of a global mobility program must be carefully scoped out. To achieve the lowest level of costs it was argued that it is necessary to benchmark locally, and then adjust, but it is also crucial to keep the equation balanced. Compensation packages must be carefully negotiated and the placement must be right for both the business and the assignee.
More discussion focused on the fact that international experience undoubtedly has huge benefits for the assignee’s career development – it is widely regarded as a prerequisite to advancement to senior level within an organization, so it was suggested that it should be made clear to the employee that foreign assignments are a form of reward in themselves.
The concept of ‘home’ too, became almost irrelevant after an extended or series of long-term placements, said some delegates, but it was still important to keep the door open for repatriation, so the necessary arrangements must be made to maintain them within the social security system.
Necessary preparation for APAC
When arguing the case for a global mobility program, metrics form a crucial part, but once the program is underway, the human touch is all-important. Empathy and understanding are the most in-demand skills of a global mobility manager – especially when dealing with problems across different time zones. In fact, this is where it is essential to have a local expert on hand. While the mobility program should be driven from the head office, the face to face contact that a local agent can offer an assignee is invaluable ¬– as long as the agent is being effectively guided and motivated by the HQ.
So how should global mobility managers prepare travellers for going into APAC? If the employee is simply on business trip, then extensive cultural training is unnecessary, in fact, some businesses deliberately shy away from it because they actually want their employees to project the ‘home’ culture of the HQ onto the overseas office. There is also a wider argument for cultural training to be given to the ‘host’ office too, so that employees in APAC gain an understanding of the working culture and practices of the parent organisation and can better understand the working methods of the assignee.
With long-term assignments however, the needs are quite different, and cultural training is essential, not just for the employee, but for spouses and accompanying family. This can only go so far though, said some contributors, citing the challenges presented by deploying assignees to more remote parts of Asia and China in particular. So for example, as more Tier 4 cities and rural areas in China open up to foreign business it has become clear that no amount of cultural training can soften the dramatic contrast between life in the West and these more remote locations. In response to this, it was reported that mobility managers are increasingly housing the employee’s family in Beijing where there is access to the expected level of accommodation, international schools and transport networks and services, while the employee works in the Tier 4 destination during the week and then is shuttled to Beijing for weekends.
So, As Singapore was named by the World Bank as the easiest of the 189 countries surveyed in which to do business, the FEM Summit delegates took full advantage of the opportunity to debate the burning issues that demand their attention. It looks as if there will be enough subject matter to continue that conversation for some time…