towers watson, global-mobility-talent executive report

A Global Talent Mobility Study Regional Differences in Policy and Practice

Rapid business globalization has demanded that multinational organizations reexamine their talent mobility practices to compete effectively in the talent war. While the increased focus on talent mobility is universal among organizations, existing policy and process vary depending on overall business strategy and organizational maturity. Organizations are developing local talent as well as deploying personnel from the United States and Europe to emerging markets in Asia Pacific and Latin America.

While Asian multinationals started globalizing 20 years ago, the overall globalization process did not truly accelerate until the past decade. As a result, their talent mobility process was more inward-focused (domestic) than outward-focused (global).

Now, armed with strong local currencies and ample credit, and encouraged by Asia’s relatively quick emergence from the global recession (compared to many developing markets), Asian companies are aggressively entering new markets and becoming global players. However, as a result of their late entry into the globalization arena, these companies have to compete fiercely against mature American and European multinationals in an already crowded talent market.

This background prompted researchers at Towers Watson and workforce mobility association Worldwide ERC®to partner in surveying mobility professionals across these three regions to study the following questions:

• How are organizations headquartered in Asia, Europe and the United States changing the way they approach talent mobility as part of their talent management strategy?

• How different are the existing policies and processes across these three regions? Are there commonalities in the overall process?

• How effective is the current mobility structure in attracting and retaining key talent?

Among the key findings from over 100 participating companies:

Talent Management • Sixty-seven percent of Europe-headquartered companies and 53% of U.S.-headquartered companies report that they have an organizational development/talent management group with primary responsibility for talent management, compared with 21% of Asia-headquartered companies.

• Fifty percent of survey respondents indicate that decisions about international assignments are made as part of an integrated talent management process.

• Of those, 91% of Asia-headquartered companies involve the human resource department in these decisions, compared to 86% of Europe-headquartered companies and 100% of U.S.-headquartered companies.

“The focus of talent mobility

should no longer be

country centric, but with

a global focus to reflect

the dynamic global talent

landscape”

— Vice President, Human

Resources, a European

multinational

Candidate Selection • Across all regions, business needs and the assignee’s knowledge and expertise are consistently cited as the key criteria for international assignee selection. Career development is considered by 56% of Asia-headquartered companies, 73% of Europe-headquartered companies, and 44% of U.S.-headquartered companies. Language capability is considered a more important selection criterion by Asia-headquartered companies (44%) than it is for Europe-headquartered (33%) or U.S.-headquartered companies (17%). “Soft” factors such as cultural or social adaptability and family situation are less widely considered in candidate selection.

• Family circumstances are considered by only 16% of respondents in selecting candidates for international assignment. This is surprising, given that a family’s inability to adapt to host country culture, and family/personal situations are cited as the primary reasons for failed assignments by 21% and 57% of respondents, respectively.

Mobility Program Management and Administration • The overall structure for managing the international assignment process is centralized at headquarters for 60% of U.S. companies, compared to 50% of European companies and 34% of Asian companies. Fifty-six percent of Asian companies report sharing the responsibility for international assignees between corporate headquarters and the regional/local offices.

• Mobility program outsourcing is more prevalent among European and U.S. companies — 69% of Asia-headquartered companies note that no portion of their program is outsourced.

• Regardless of headquarters location, 80% of respondents agree that the reporting manager in the host country is primarily responsible for performance review and formal development of employees on assignment.

Policy • Just over half of organizations (54%) report that they made revisions or additions to their global mobility policy in 2010 or 2011. The most prevalent revisions were intended to create a more formal and clearly defined mobility policy.

• Sixty percent of respondents anticipate major global mobility challenges over the next two to three years. The most frequently cited challenge is cost control.

• Eighty-seven percent of European companies and 85% of U.S. companies report using a global mobility policy, compared to 51% of Asian companies.

• Regardless of headquarters location, the most commonly outsourced functions are relocation and tax preparation services.

• The kind of assistance companies provide to their international assignees is generally not affected by the type of market (emerging or developed) the assignee is moving to or from. To clarify, most companies provide employees sent on assignment from a developed market to an emerging market the same policy provisions as they would for an assignee sent from an emerging market to a developed or another emerging market. This is true regardless of assignment type.

• Across regions, the overwhelming majority of companies keep traditional expatriates (82%) and short-term assignees (90%) on their home-country remuneration plan. Approximately two-thirds of respondents remunerate permanent transferees and cross-border new hires on the local or destination area plan. Only a small percentage use local-plus plans for expatriates, regardless of the type of assignment. Asian-headquartered companies, however, are more likely to than their U.S. or European counterparts to use local-plus packages.

• Just shy of one in four Asian companies provide mobility assistance for domestic partners of traditional expatriates, compared to 67% of Europe-headquartered companies and 73% of U.S.-headquartered companies. Nearly all respondents provide assistance for dependent children and legal spouses to accompany traditional expatriate assignees to the destination location.

• The majority of companies, regardless of headquarters location, do not provide assistance for other domestic relatives who reside with the employee.

“Talent strategy will focus

on specific markets that

our company want to

develop and invest in and

not necessarily for specific

function.”

— Senior Director of

Relocation Services,

U.S.-headquartered

multinational

Assignment Costs — Traditional Expatriate Assignments • Roughly two-thirds of companies report spending approximately two to three times the assignee’s annual salary on each traditional expatriate assignment.

• The United States has the highest percentage of companies (54%) with an average expenditure of approximately three times an assignee’s annual salary, while 8% of European companies have an average expenditure per assignee on traditional assignment of four times annual salary.

• Asian companies overall have the lowest average expenditure for a traditional expatriate assignment, with just over half (53%) spending twice an assignee’s annual salary.

Types of Assignments • Just over half of assignees (53%) are on traditional expatriate assignments. Short-term assignments are a distant second, followed by permanent international transfers, cross-border new hires and localizations.

• Just less than one-half of traditional expatriate assignees are considered executives (47%). By contrast, executives comprise only 22% of short-term assignees and 33% of cross-border new hires. Executives account for 28% of localizations and 32% of permanent international transfers.

• Eighty-seven percent of Asia-headquartered and 39% of U.S.-headquartered organizations report that most localizations occur in Asia. European companies are more likely to localize assignees within Europe (75%).

Challenges to Talent Mobility • Only about one-fifth of Asia-headquartered companies cite the loss of dual-income as the result of a move as a challenge faced by their mobile employees, compared to 85% of Europe-headquartered companies and 60% of U.S.-headquartered companies. Rather, Asia-headquartered companies identify language skills and education issues as bigger assignee challenges.

• The majority of companies, regardless of headquarters location, cite prohibitive cost as the most significant challenge related to their traditional expatriate assignment programs. Compensation and tax-related issues are the most difficult challenges facing companies sending employees on alternative assignment types.

*Percentages do not total 100% due to rounding

0% 20% 40% 60% 80% 100%

Apprx. 4 timesassignee'sannual salary

Apprx. 3 timesassignee'sannual salary

Apprx. twice assignee'sannual salary

Apprx. 1 yearof assignee'sannual salary

USA

Europe

Asia

All

22 40 37 2

20 35325

23

19

46

27

23 8

54

Average Annual Expenditure per Assignee on Traditional Expatriate Assignment*

Traditional ExpatriateAssignments

Short-term Assignments

Localizations

Permanent InternationalTransfers

Cross-Border New Hires 18%

7%

13%

9%

53%

Types of Assignments

Further information

Please contact Towers Watson or Worldwide ERC®:

Towers Watson Cathy Loose +81 3 3581 5436 cathy.loose@towerswatson.com towerswatson.com

Worldwide ERC® Mariam Lamech +1 703 842 3400 mlamech@worldwideerc.org worldwideerc.org

Copyright © 2012 Towers Watson and Worldwide ERC®. All rights reserved.

About Towers WatsonTowers Watson is a leading global professional services company that helps organisations improve performance through effective people, risk and financial management. With 14,000 associates around the world, we offer solutions in the areas of employee benefits, talent management, rewards, and risk and capital management.

About Worldwide ERCWorldwide ERC®, the workforce mobility association, networks and educates more than 10,000 mobility professionals, and is the recognized industry authority on assignments in the U.S. and major global traffic areas.

®

TW-AP-12-24564