Taking your business overseas – the need for Global Mobility services
Cross-border employment challenges do not just apply to big multi-national companies (MNCs); many firms are involved in international business and deploying people internationally, with the management of international employees being referred to as Global Mobility.
Although many MNCs will have developed a strategy that addresses moves driven by business need and employee development opportunities, very few smaller companies have an international strategy in place for either international resourcing or the business overall.
So what is Global Mobility and why might your business require a Global Mobility review?
For some modern agile businesses, often there will not be a proper strategy, with the business going where a customer requires. Therefore, a key purpose of any review would be helping the internal Global Mobility resources in understanding and sharpening the overall strategy and then deriving improvements from there.
Global Mobility comprises a broad range of HR activities and stakeholders from international resourcing, compensation and benefits, talent management, inclusion and diversity, leadership development and expatriate tax & social security.
Some of the issues faced by Global Mobility management include:
- not being prepared
- lack of resilience in difficult situations
- poor relocation assistance
- wrong immigration papers
- wrong candidate selection
- the wrong amounts, late, to the wrong bank accounts.
A review of the effectiveness of a company’s approach to their Global Mobility set up might include analysis of each of the following areas:
A key aspect of operational effectiveness is cross-functional coordination and communication; this might include mapping cross-border decision-making processes and authorisations that enable information to flow across internal and external networks.
Equally, internal resources need to ensure an effective approach to the collective learning and skills development of people responsible for managing international deployments; which might include a review of how feedback from previous assignments is collated and shared, and how intercultural awareness is part of any training.
Global Mobility budgeting and assignment cost projections are often unhelpful, as they do not approach the analysis from a broad perspective.
The costs of Global Mobility are the cumulative effect of a number of different elements. Typically, companies limit their focus to internal administrative and operational costs and external vendor contracts. However, to achieve more quality and value we would instead recommend prioritising:
- ensuring the selected employees are the best fit to work cross-border
- ensuring the employee value proposition is supported with the best type of investments in international employee benefits and support
- ensuring tax effective remuneration by understanding the tax and social security costs involved.
Cost optimisation is not just about cost reduction – it is examining how you might make the current spend work better.
This could involve an evaluation of:
- existing long and short-term assignment policies – do they need to be updated to incorporate the evolution of deployment types?
- any structured decision making process intended to help the business assess the fit between open positions and candidates
- spend on assignment allowances and benefits – how are these amounts determined? Who makes decisions about them and any other ad-hoc expenses?
- the design of tax effective remuneration, including the home and host country impacts
- how the internal resources invest in their understanding of the tax legislation and specific tax efficient approaches available, to support both the policy and overall assignment decision making processes.
Perceptions of complexity and change across the financial, legal and compliance domains and company-specific external risk factors can drive a review of Global Mobility risk.
Often internal Global Mobility resources will not be fully aware of all regulatory and stakeholder pressures, nor who has which roles and responsibilities for tax risks relating to internationally mobile employees.
Some of the major components of a review of Global Mobility risk minimisation would include:
- financial compliance and reporting internally and externally, disclosures, bookkeeping, internal controls
- legal compliance in terms of immigration, work permits, visas, contract compliance, tax compliance, eg. personal income tax and social security, payroll withholdings and VAT, cross-border data privacy
- reputational damage resulting from bad behaviour, inadequate employee support, poor compliance history
- corporate tax considerations such as Permanent Establishment exposures, and transfer pricing arrangements
- instances of expatriate employees working without work permits or the wrong visas.
- failing to register for local social security in the host country
- not coordinating immigration and tax planning.
Less experienced internal Global Mobility resources often overlook the importance of choosing the right person for the job and preparing people for assignments.
A review would examine a company’s approach to the intercultural challenges for internal teams coordinating across borders as well as the cultural aptitude of the employees deployed.
This is the biggest success factor of an international assignment – with the right person it can often work in spite of the process; with the wrong person, the risk of things going wrong rises exponentially.
Global Mobility reviews are not just the domain of big businesses. If your company is deploying people overseas in any capacity, you should consider a review in order to determine your strategy and prevent costly errors. Any review you undertake should offer recommendations for improving the effectiveness of the operations and aligning Global Mobility objectives to international resourcing strategies. Key to the development of solutions is the reconciliation of the change recommendations for all four aspects of international resourcing, ie. strategy, policy, tax planning, and operations.
Neela Chauhan, UHY Hacker Young
This article is a part of the UHY Hacker Young “Prosper Magazine” Third edition of 2019. Read the full magazine here.