Recently, I presented to a group that included two payroll specialists from a well-known consulting company. I asked them how many U.S. domestic employees they paid in comparison to expatriate employees. The answer was 25,000 domestic workers versus 300 expatriates. Then I asked what percent of their time those 300 (1%) took in a typical week. Their answer: the majority.

Those who are saddled with the responsibility for administering expatriate payrolls know all too well the reality of this statement. But ever optimistic, we hope for easy answers.

Why does this small population present such difficulty even for experienced and seasoned payroll professionals? How can we alleviate the pain? The good news is that with a little examination of the unique aspects of expatriate payroll, strategies to improve the program can be developed and implemented. Let’s first define expatriate (expat) payroll administration.

Expatriate payroll administration is the set of activities that result in

• accurate delivery of compensation, benefits, and other policy-driven expatriate allowances in one or more currencies and
• compliant reporting and tax payments in one or more countries concurrently

Managers with responsibility for expat payroll administration can strengthen their performance by recognizing gaps in their technical capability and their payroll operating structure in order to design solutions that address them. Here are a few tips that may help:

Tip #1: Develop Relevant Specialized Skills, Competencies

To effectively administer payroll, you’ll need a working familiarity with:

• foreign payroll and tax law
• domestic tax law regarding international transfers
• tax treaty basics
• expatriate policy
• tax equalization
• intercompany accounting
• foreign exchange concepts
• gross-ups
• totalization (certificates of coverage)
• employment law

These important areas of focus are often outside of the training and experience of even veteran payroll professionals. If you have gaps on your team, you can get training or rely on outsourced specialists for advice until these gaps are closed. Without these skills and competencies, it is hard to imagine operating an effective expat payroll program.

Tip #2: Design and Implement a Controlled Process for Shadow Payrolls

Within the industry, the term shadow payroll is sometimes used to describe the home or the host country payroll. Either description is correct. In either case, keeping the expatriate employed by the home country company and reported via his/her home payroll often protects service time, benefits, social security, and equity program participation.

The effective interaction of the home and host payroll is critical for accurate payroll reporting, tax payments, and error-free net pay delivery to the expatriate. For example, full worldwide reporting of employer compensation for U.S. outbound expatriates will usually be required even as the host payroll often reports the same compensation. This is executed by reporting, paying, and taxing correctly in what may be two jurisdictions, two currencies, on two different pay frequencies without overpaying or underpaying the expatriate.

It can be complicated, but some basic workflow and process mapping will work wonders. This can be achieved by building a team that includes your payroll, HR, accounting, tax, and treasury functions. Once the working model is in place, it can be replicated efficiently.

Tip #3: Provide Clear Instructions for Expatriate Payroll Administrators

A fatal flaw of expatriate payroll administration is failing to provide useful direction to those on your team responsible for expatriate payroll updates. These professionals are often focused on the task of managing massive volumes of reporting in consistent ways for domestic employees. They have little time to handle issues including tax equalization payments, rent paid in foreign currency, home leave, hypothetical tax and foreign gross-ups. Asking payroll staff to make individual decisions on reporting standard expatriate pay elements will distract them from the time required to deal effectively with the majority of their pay slips.

It’s critical to get assistance in translating your policy into accurate paycode descriptions with underlying general ledger logic. You can start by working with your tax department or external tax advisor to create a taxability grid that identifies how each individual policy element is to be taxed.

Tip #4: Separate Your Expatriate Employees From Your Domestic Population     

Within your payroll structure, consider setting up an international division or even a separate EIN to house the expats. This allows payroll staff to separately manage the group. It allows for greater visibility of expat transactions, for easier quality control and expat-specific management reporting.

Improving Expatriate Payroll is Not Impossible

A friend of mine in the global payroll business recently told me in his slow and perfect Texan drawl: “Domestic payroll is about payin’. Expat payroll is about pain.”

There is no denying that expatriate payroll administration is complicated. But with attention to training, allocation of roles and responsibilities to the right resources (internal or external) as well as structural design, dramatic improvements to your expatriate payroll operation can be achieved.

David Leboff is President and co-founder of Expaticore, a leading provider of expatriate payroll and local national payroll solutions based in New York. Dave has worked in international human resources and expatriate program management for more than 25 years.

Source: expaticore

Like any emerging hub, India presents both opportunities and challenges to companies eager to expand within or establish operations in the country. Because of the soaring cost of living, salaries, and infrastructure bottlenecks in India’s capital cities (i.e. Mumbai, Delhi, and Bengaluru)² expansion into the country’s regional cities (i.e. Jaipur, Lucknow, and Bhubaneswar) is evolving at a quick pace.

Companies relocating talent into India face several housing challenges, including high costs², low housing availability², and poor housing infrastructure². Companies should be aware of these challenges and incorporate specific policy components and remuneration strategies to overcome these hurdles prior to initiating a relocation into the country.

Housing Among Top Challenges in India

Corporate housing represents one of the greatest challenges companies face in India. When exploring relocation options in the country, companies can expect to experience the following:

High costs: Obtaining a rental property in India is one of the most expensive and complex elements in an international assignment package.

Besides high rental costs, companies face a number of budgeting variables when renting housing in India. These variables include security deposits, stamp duties, registration fees, and broker/solicitor fees. If companies don’t adequately budget for these expenses early in the relocation process, they risk budget overruns once in country.

To put India’s high housing costs into perspective, consider the cost variance between renting an apartment in New York City and renting an apartment in Mumbai. The average cost for an unfurnished three-bedroom apartment in New York City is $90,000 per year³. A comparable apartment in Mumbai costs $107,000 per year⁴, before adding a security deposit, broker fees, and applicable stamp duties and registration fees.

Housing availability: There are no multiple listings available in India, and there are only a few housing agents that represent various properties in the country. Companies must contact these agents individually to obtain a complete listing of the rental properties available. Short-term housing is mostly unavailable in India, and lease periods run for a minimum of 11 months.

When budgeting, companies should factor in utility payments, including those for telephone, electricity, Internet, and cable television, as these items are not provided as part of a rental agreement. Tenants are responsible for purchasing (and refilling) gas in cylinders, but landlords typically cover water costs.

There are few furnished apartments available in India for the long term, and some furnishings might fall short of expatriate expectations. Unfurnished apartments are the norm, and these units generally do not have basic kitchen and household appliances, including air conditioning.

Housing infrastructure: Typically, companies rent houses in India as a “shell,” and the expatriate has to furnish it, not only with furniture and wall coverings, but also with kitchen appliances. Companies can negotiate these items when discussing the rental and lease arrangements with the landlord.

Because of the complexities involved in securing a lease for a rental property, many companies work with external consultants to assist in finding a rental home, sourcing furnishings, and negotiating a lease with the landlord.

Travel and transportation: In many cases, expatriates try to find housing relatively close to their work due to significant traffic congestions and road conditions, where a normal 30 minute car-ride in a western location can take one to two hours.  It can be a challenge to resolve all their housing, schooling and general day-to-day living requirements relatively hassle-free.

Since companies rarely permit expatriates to drive in India, companies should factor transportation costs into the relocation budget, and companies should pay close attention to the distance between housing, the office, and schools (if children are involved in the relocation) when searching for a rental property.

Remuneration and Benefits

It is evident from The SIRVA India Mobility Report that companies typically provide various incentives to encourage expatriates to relocate into India. For long-term international assignments, companies often calculate remuneration based on home base salary, a relocation allowance (often 10 percent to 20 percent of base salary), cost of living allowance, remote/hardship allowance, and international assignment premium.

Specific benefits for a long-term international assignment might include orientation visits, cross-cultural transition programs, dual career support, private transportation, household goods transportation, housing and utilities allowance, education assistance, health insurance, home leave travel, rest and recreation, tax filing assistance, and repatriation programs.

Domestic assignments in a formalized approach are relatively new to India and predicted to increase predominantly in Non Tier 1 locations.  Growth in business and lack of readily available talent in Non Tier 1 locations has driven the volume of domestic assignments.  At a minimum, for long-term domestic assignments, companies should consider a remuneration package based on home base salary, a relocation allowance (a varied amount based on family size and position) and a remote/hardship allowance when relocating to difficult locations, for example to Tier 2 or Tier 3 cities.

Specific benefits for a long-term domestic assignment might include orientation visits, company car, household goods transportation, housing and utilities allowance, education assistance and health insurance.

Keys to Success

For a smooth and successful relocation, companies looking to relocate employees to or within India should thoroughly evaluate the location, have appropriate policies and practices in place, and anticipate the needs of their potential expatriates.

Companies need to understand the location infrastructure, the type of housing that is available, international schools, travel distance between potential housing and facilities.

Companies should also consider engaging an external consultant with an “expatriate/western living mindset” to conduct an orientation and home search for the expatriate. The consultant should possess solid negotiation skills to negotiate an effective deal for the expatriate and the company.

Consultants can also assist with the lease review and signing process, complete a thorough condition report, help expatriates move in, and ensure the appropriate housing furnishings are delivered on time and as ordered.

India presents both opportunities and challenges for companies, but knowing what to expect and how to prepare when relocating expatriates into the country can reduce the risk of a budget overrun and increase the likelihood of a successful relocation.

There is more information on housing and other relocation challenges in India in SIRVA’s India Mobility Report. SIRVA developed the report to address the lack of readily available benchmark data and trends on mobility policy and practices for international and domestic assignments in India. The report is available at www.sirva.com.

1. Global Forecasting Service, Economist Intelligence Unit

Article:  India will grow faster than China in coming years, December 14^th 2011

2. McKinsey Global Institute

Article: India’s Urban Awakening: Building Inclusive Cities, Sustaining Economic Growth

3. Mercer

New York Housing Data (Dec 2011)

4. The SIRVA India Mobility Report, Vol.1, 2012.

Housing data provided by IOS Relocation, Mumbai (Dec 2011)

Nithya Abraham

International HR Consulting Services Analyst

SIRVA Relocation

Lorraine Jennings
Manager, IHR Consulting Services
Asia Pacific Middle East
SIRVA, Inc.

Source: SIRVA Relocation

Victoria Francis and Juliet Carp look at a case about a mother who was refused permission to return from London to Canada with her children and the practical implications for assignment managers…read more

When employees can make employment claims in Britain…

Why can’t I get a straight answer on whether British employment laws apply to our expatriate workforce?
Because the law is not clear.  Some years ago key legislation dealing with when British laws apply to employees working overseas was repealed, ostensibly to implement the European Posted Workers Directive (96/71/EC).  Since then we have been unsure about when British laws apply to expatriate employees.   Over the last few years a stream of high level legal decisions has offered some clarity, but many key questions remain unanswered.

Are employees who work in Britain covered by British employment laws?
Yes.  The starting point is that employees who work in Britain are subject to our employment protection legislation, ie our “mandatory” or “statutory” employment laws covering things like holiday, “unfair dismissal” and discrimination.

What if the employee or employer is not British? 
Generally, British employment laws apply in the same way whatever the nationality of the employer or employee. For example, if Jack, an American employee of a US corporation, works full time in London he will be subject to English employment laws.

Can the employer and employee “contract out” of British employment laws?
No. With some very limited exceptions contract documents cannot be used to avoid British statutory employment laws.  For example, whatever the paperwork says, the US corporation above will not be able to employ Jack “at will” whilst he is working in London. If Jack is an employee he will have an employment contract (even if the terms are not written down) and a notice period (at least as long as our statutory minimum for termination) and, subject to the normal qualifying criteria, will be protected on dismissal by English employment law.  The business can still dismiss Jack but, as our law stands, Jack would be able to make English employment claims as if he were a British “local hire”.

What if the employee only works for short periods in Britain?
It is currently accepted that the employee’s duties in Britain need to be more than just “incidental” to his work overseas, although the extent of the British duties required to trigger application of our mandatory employment laws is not yet clear.

If another country’s employment laws apply does that mean that British employment laws do not?

No.  It is possible for more than one country’s employment laws to apply at the same time (or for the employee to have no mandatory employment protection at all). So, for example, if the employee works two days in England and three days in France each week for the same employer it would be safest to assume that English mandatory employment laws will apply, and to seek advice from a French lawyer as well.

(Those familiar with the European Court of Justice Viking and Laval cases dealing with the interaction of the Posted Workers Directive and EU countries’ employment laws may note that British courts do not appear to have considered the impact of these cases on the territorial scope of our employment laws.)

What if an employee is sent to work outside Britain?

Our highest domestic court confirmed (in Lawson v Serco) that some limited exceptions are allowed to the general principle that employees must be employed in Britain (ie work here) to enjoy the protection of British “unfair dismissal” laws. (And, by analogy, other British employment laws.)  The following examples were given of employees who are covered:

1. “peripatetic” employees whose base is in Britain (eg pilots flying out of Heathrow);
2. employees working in a British enclave abroad (eg on a military base); or
3. employees posted by a British employer to work abroad for the purposes of a British business.

It has recently also been accepted (by our Supreme Court in Ravat v Halliburton) that an international commuter working on a rotational basis with 28 days working in Libya followed by 28 days resting at home in the UK could also be covered by British employment laws, on the basis that his connection with Britain was sufficiently strong.  It should be noted though that the detail of Mr Ravat’s arrangements was exceptional – and it is certainly not the case that all employees posted to work abroad by a British employer will now be covered.

Some of the factors taken into consideration by the Court when it considered the closeness of Mr Ravat’s connection with Britain have an impact on the clarity of answers in this bulletin.  For example, generally, nationality, governing laws, promises made by the employer etc do not determine whether British employment laws apply.  But these factors could have an impact in exceptional borderline cases like Mr Ravat’s when the closeness of the British connection needs to be assessed carefully.  Yes, not at all helpful for assignment managers who just want clear rules!

It is worth highlighting that an employee who remains employed by his British “home” employer while working abroad could potentially be covered by British statutory employment laws – but only in very exceptional circumstances.  They are unlikely to apply to most traditional corporate long term assignments where the employee is working for the benefit of a host company.

Will expected changes to the Posted Workers Directive make a difference?
We are expecting an EU announcement on changes to the Posted Workers Directive shortly (see the penultimate press release at europa.eu/rapid/pressReleasesAction.do?reference=AGENDA/12/11&format=HTML&aged=0&language=EN&guiLanguage=en).

This could be a significant development for businesses managing international assignments.  We do not yet know what changes will be made so will comment in more detail in a later bulletin.

Do assignment managers need to take the application of British employment laws into account when structuring a new assignment?
In practice, international assignments are rarely structured to avoid employment protection, particularly British employment protection, which has its limits.  Corporate tax, social security planning and immigration constraints are far more likely to drive the employment structure.  Also, generally, it is not possible to contract out of British statutory employment rights through the employment documents.  Once the identity of the preferred employer for the assignment is clear, time may be better spent in reducing the risk of disputes arising, than on trying to avoid the application of British employment laws.
For example, if arrangements to apply on termination of employment are well documented (such as notice periods, repatriation packages, the effect of early termination on housing and schooling, bonus, share plans, tax equalisation etc) there will be less incentive for expatriates to litigate.  It is also worth bearing in mind that uncertainty can lead to additional cost and delay for both parties.  Quick settlement will be easier to achieve if obligations under the contract are clear and the parties’ expectations are aligned.

What if a foreign law is chosen to “govern” the employment contract?
Written agreement that another country’s laws will “govern” the contract will not normally have an impact on the application of British statutory employment protection, (eg discrimination, “unfair dismissal” laws etc). However, choice of law will have an impact on contract claims (eg a claim for unpaid salary) and can also make a significant difference to whether some other countries’ laws apply.  British law should not be considered in isolation: the choice made in the contract should always be considered with all relevant jurisdictions.

Does the above apply to all employment-related claims?

No. different rules can apply to different types of claim.  This bulletin is focused on statutory/mandatory employment claims.  The rules could be a little different for some types of statutory claim and may be significantly different for some other types of claim for example personal injury claims, claims relating to post termination restrictions (“non competes”) or breach of contract claims.

So, should anything be done by assignment managers to protect business from the impact of British employment laws?
Yes.  Carefully drafted employment documents, “fair” and pragmatic employment practices and prompt attention to complaints can make a huge difference to whether claims arise at all, regardless of which laws apply.  It is worth ensuring that the business is generally aware at the outset of potential risks and costs if things go wrong and thought should be given to appropriate choice of governing law clauses before contracts are signed.  But, in most cases, the cost of in depth legal analysis of the particular assignment facts and consideration of strategies to avoid British employment laws will far outweigh the potential benefits.  Money may be better spent elsewhere.

Juliet Carp

Partner, English and international employment law specialist

Speechly Bircham LLP

+44 (0)20 7427 6412

juliet.carp@speechlys.com

Source:  Speechly Bircham

To help set the record straight (and by doing so, manage expectations), Global Relocation Management Company HCR have created a guide to typical properties you may find in the UK, including quick facts on housing styles, space and parking.

To get your hands on a copy click here

Cultural dichotomies represent challenge and opportunity on two levels. For the organization, miscommunication resulting from failing to address the challenge is too often a primary reason why globalization plans don’t succeed as quickly as anticipated, or why an assignee fails to function effectively in the host country. On the other hand, recognizing and addressing the impact of cultural differences proactively can minimize problems and accelerate individual productivity and assignment success.

Mobility departments and providers alike must help their executives and clients recognize the effect of these differences and provide training in strategies and tactics to help them prepare and succeed.

Typical Dichotomies

Cultural dichotomies can reach across many aspects of professional and personal life. Subtle differences in basic thought processes and decision-making patterns, for example, can significantly influence communication. The French education system, for example, puts a high priority on teaching deductive reasoning. Therefore, French managers typically require in-depth information and work under the assumption that the thought process itself must be correct in order to reach a correct conclusion. Americans, on the other hand, may tend to pay less attention to the process and focus more on the ultimate decision, which can be revised if new information arises. The difference between these two approaches to decision-making can strongly affect multiple aspects of business management.

How we view and process time can be equally important, and the differences can be frustrating for managers from other cultures. American and Northern European cultures typically take a monochronic approach to time, viewing it as something to be organized and managed. The result is an emphasis on schedules, timelines and deadlines. Many other cultures—including several in Southern Europe, Latin America and Africa—are polychronic. They acknowledge that time exists, but view it as nearly impossible to organize, manage or control. And because time never stops, it never runs out, so schedules and deadlines can be much more flexible.

Cultural dichotomies are typically viewed as differences between nations, but significant differences can exist even within national borders. An assignee moving to New York must adapt to a different lifestyle than one moving to Atlanta, for example. Doing business in Shanghai is very different from working in a second-tier, provincial Chinese city. Even within a company with a long-established global presence and corporate policies, what works in the Stockholm office may not work in Mumbai.

An Example: Reconciling Low-Context and High-Context Communication

The list of potential dichotomies stretches endlessly, but a closer look at a common example, variations in communication styles, illustrates the positive impact that cultural awareness and training makes in a global assignment.

Communication styles are often described as ranging from low context to high context.

Low-context communicators are direct, precise and explicit. They take care to include all the information they intend to communicate in their words themselves rather than in their context. The Dutch are often cited as examples of very low-context communicators.

At the other end of the continuum are high-context communicators, as exemplified by the Japanese. They tend to embed their important information in the context of the conversation rather than in the explicit words. Because high-context communicators seek to avoid confrontation or embarrassment, their actual words may seem to obscure instead of clarify their intent.

This dichotomy can make communication difficult between Dutch and Japanese negotiators. The former might plainly ask, “Please tell me why you don’t like the terms of this agreement.” And the latter, seeking not to offend, might respond, “There are many fine points in this agreement. A few points perhaps need some further study.”

If the low-context negotiator infers that the two positions are not too far apart, while the high-context party is in fact implying that there are significant differences to be resolved, the negotiation can quickly break down.

Such misunderstandings can be exacerbated in today’s business environment, where communication is often by e-mail or teleconference and thus more difficult to detect and interpret a statement’s implied meaning. However, communicators can be trained to mitigate this dichotomy, or even use their knowledge to enhance their communications.

At a strategic level, a low-context Dutch communicator can learn to structure meetings or teleconferences so as not to ask for on-the-spot reactions to ideas, because her Japanese counterpart might be reluctant to offer anything that could be interpreted as disagreement. Instead, she can provide background information prior to the teleconference and encourage participants to come with questions, which the Japanese can formulate so as not to risk disagreement or embarrassment. Similarly, she can invite comments to be submitted by e-mail after the teleconference, again avoiding the potential for confrontation.

At a tactical level, a low-context communicator can learn to avoid asking yes-or-no questions that might invite obfuscation. Instead of asking, “Can you deliver the report on Tuesday?” she might ask an open-ended question such as “What information do you need from me in order to prepare the report quickly?”

Awareness and Training Support Cross-Cultural Success

Of course, not all cultural dichotomies are so extreme. Britons and Americans, for example, tend to think of their cultures as similar. But both can profit from understanding that Britons tend to look for more high-context implications in communications and that Americans tend to be more flexible in revisiting decisions in light of new information or changing conditions.

What’s most important in each case is that companies raise their awareness of the impact cultural differences can have on the success of international assignees, teams and globalization efforts. The failure of an individual assignment can negatively affect the overall success of a company entering a new market—far beyond the substantial cost of repatriating and replacing the assignee and his/her family.

In contrast, companies can profit significantly from recognizing that equipping assignees to succeed culturally in their new environment is just as important as providing them with housing or visa services—and that investing appropriate resources in professional, individualized cultural training can pay real business dividends.

By

Kathryn Cassidy

Vice President and General Manager, Global Operations

SIRVA

Dean Foster

Founder and President

DFA Intercultural Global Solutions

A new report from Cartus Corporation, the leading provider of global relocation services, identifies 44 countries as key emerging markets for conducting business. The report, titled Mobility Challenges in Emerging Markets, is based on survey responses from 116 representatives of multinational corporations of all sizes that move from tens to thousands of employees per year. Overall, the survey found a highly diverse array of entrants in the “Emerging Markets” category.

The survey did show that of Cartus’ corporate clients who are planning to move their international transferees to countries deemed emerging markets, the so-called BRIC countries—Brazil, Russia, India, and China—that have held the top four spots in the recent past, still reign supreme:

• China took the top spot in the survey, with more than half (53%) of Cartus client respondents naming it as their company’s top destination among emerging markets, and India ranked second at 45%.

• Because China and India contain both highly developed and underdeveloped locations, however, the survey was limited to Tier II, III, and IV cities in those two countries (such as Chengdu and Sichuan in China, and Jaipur and Bhopal in India).

• Brazil (34%) and Russia (22%) were ranked third and fourth, respectively.

But the Cartus survey also pointed to revealing trends in the next grouping of destinations. Shown immediately below are the countries mentioned by at least five percent of respondents as being in their companies’ lists of “Top 3″ emerging markets:

• 5th: United Arab Emirates (UAE) (10%)

• 6th: South Africa (9%)

• 7th: Mexico (8%)

• 8th (tie): Malaysia and Saudi Arabia (6%)

• 10th (tie): the Philippines and Vietnam (5%).

Three of the locations listed among the top 10 key emerging markets—the Philippines, South Africa and Vietnam—have never been among the top 25 most common locations for relocation assignments, according to Cartus’ clients’ move patterns.

Other countries selected by Cartus clients as emerging markets include Indonesia, Bahrain, Egypt, Turkey, Qatar, and Cote d’Ivoire—several of which experienced political instability while the survey was being conducted. Asked whether they have implemented, or are considering implementing, any measures to deal with increased instability in an emerging market:

• 62% of companies said they have reinforced existing (or implemented additional) security;

• 52% of respondents have imposed, or plan to impose, travel restrictions for their employees.

“Corporations worldwide are clearly sending their employees to an unprecedented array of new locations that will pose an even broader range of challenges, both for mobility programmes and assignees on the ground,” says Kevin Kelleher, Cartus President and CEO. “In addition, the strong growth in international relocations underscores the need for global organisations to assess candidates very carefully to make certain they have the leadership and business skills that make them the right fit for the assignment.”

Importance of Emerging Markets

Emerging markets are defined by Cartus as those locations that have infrastructure, talent, or administrative difficulties that require targeted strategies for meeting recruiting, housing, education, transportation, culture, language, security and governmental challenges.

When asked how important emerging markets currently are to overall business strategy, compared with traditional markets:

• 51% of respondents said that emerging markets are more important

• 34% said “about the same,” and

• 9% said they are less important.

Asked how important emerging markets will be to overall business strategy during the next two years:

• 68% said “very important,” and

• 27% said “somewhat important.”

When companies were questioned why they are sending assignees to emerging market destinations, the top response (68%) was “to provide local leadership”—a common driver of long-term assignments overall.

• A close second (64%) was the response “provide project-based expertise”—a tactical driver that is often strongly associated with short-term assignments.

Further, the necessity of providing project-based expertise is indicative of the diversity of many emerging markets assignments and the premium put on assignees’ skills and self-sufficiency.

Challenges for the Future

When asked to name the top challenge of assignments in emerging markets:

• 51% of respondents replied “attracting candidates with the required technical/business skills”;

• 42% also cited “employee’s ability to adapt successfully to the location,” confirming the importance of being able to work effectively in a new environment.

Notably, financial issues, such as the ability to predict and control costs, ranked fifth in the list of challenges, thereby suggesting that emerging markets are so critical to future business success that the associated costs are less important than actually getting the job done.

“There is a delicate balance between controlling costs and ensuring the success of an assignment—a balance that mobility professionals must continuously weigh,” added Kelleher. “It is an issue that clearly illustrates the importance of good decision making—in policy development, programme design and employee selection—when planning and implementing non-traditional international assignments.”

Cartus Client Survey Names 44 Key Emerging Market Destinations

Numbers 1-31 were selected by respondents from a pre-populated list

13 other emerging market countries were mentioned via write-in (listed alphabetically):

• Bulgaria

• Cambodia

• Congo

• Costa Rica

• Cote d’Ivoire

• Ghana

• Guatemala

• Iraq

• Kenya

• Liberia

• Peru

• Serbia

• Slovakia

For a copy of the Mobility Challenges in Emerging Markets survey, visit www.cartusmoves.com/research/ and click on the “Emerging Markets Pulse Survey” thumbnail.

About Cartus
Cartus provides trusted guidance to organisations of all types and sizes who require global relocation solutions. Serving more than 60% of the Fortune 100 and providing service to over 160 countries, Cartus applies a half century of experience to help clients with their mobility, outsourcing, consulting and language and intercultural training needs. Honoured in both New York and London by the Forum for Expatriate Management in 2010 as “Relocation Management Company of the Year” and “Best Vendor Partnership,” Cartus is part of Realogy Corporation—a global provider of real estate and relocation services. To find out how Cartus’ greater experience, reach, and hands-on guidance can help your company, visit http://www.cartus.com; read our blog at http://www.cartusblog.com; or click http://www.realogy.com for more information.

Although the London 2012 Olympic Games may seem far off, Relocation Management Company, HCR are encouraging HR teams across the globe to start planning now on how their expats may be impacted. With a whopping 5.3million visitors estimated to descend upon London in July and August, there will be inevitable travel and logistical disruption across the six week duration of the 2012 Olympic and Paralympics Games.

In preparation for the mayhem HCR have compiled a useful guide to aid HR teams in managing the expectations of their expats. Topics covered in the guide include temporary accommodation, HHG shipments, Visa/immigration and the rental market.

Below is a selection of the some of the Key points raised by HCR:

• A number of associated media ranging from security to TV companies will be looking to obtain properties from as early as September this year, which will lead to a shortage of properties and increased rent from as early as October/November. Rents will be higher and property will disappear from the market far quicker than usual.
• Transport problems remain “one of the biggest risks” to the 2012 Olympic Games according to a London Assembly report (April 2011). The city’s transport network is already running at near-full capacity. With more than a million extra journeys expected across the busiest nine days, ensure assignees are prepared for delays by pre-warning them of the increased traffic in and around London at that time.
• Advance planning is advised where possible with regards to visas and immigration, due to the increase in visa requests for the games from media and athletics. UK visas should be applied for within three months before the date of travel.

To request a copy of HCR’s guide to relocating people during the London 2012 Olympic games please click here.

Source: HCR

International assignments continue to grow in importance as organizations pursue global business strategies. PricewaterhouseCoopers recently reported in “Talent Mobility 2020” (http://www.pwc.com/gx/en/managing-tomorrows-people/future-of-work/pdf/talent-mobility-2020.pdf) that international assignee levels have increased by 25 percent over the last decade, and the same report predicts an additional 50 percent growth by 2020. One result of this trend is the growing recognition of the need for comprehensive international assignment policies, systems and procedures for the administration of international compensation.

Managing international payroll, delivering consistent monthly payments and complying with specific tax regulations around the world can be challenging. Successful management typically involves numerous specialized resources within a company in partnership with knowledgeable outsource providers with expertise in international payroll compliance and administration. Two keys to successful international compensation administration are facilitating collaboration among all these resources and establishing a central point of coordination to ensure all aspects of the process function consistently.

End-to-End Collaboration

Effective compensation administration begins in the pre-departure phase of an assignment and continues through the repatriation of the assignee. In the pre-departure phase, the organization must make a series of decisions about the compensation package it plans to offer, balancing the necessity of working within overall corporate policies and budgets against the need to make the assignment attractive to the right candidate(s).

In addition to the potential assignee’s base salary, cost estimates must take into account a wide variety of factors such as the cost of a “preview” trip, the cost of moving household goods (both to and from the host country), in-kind benefits such as housing and transportation, possible tax liability in both the home and host country, cost-of-living and hardship allowances, and home leave trips. A variety of internal and external resources must typically collaborate in preparing this estimate. These resources may include HR, mobility, payroll and corporate managers as well as external sources such as a relocation company, international compensation consultant, and tax advisor.

The resulting cost estimate is often necessary for obtaining management approval of the assignment.  Cost estimates are also useful tools for the organization’s finance team (to build accruals and budgets) and for the management team when tracking the assignment’s long-term effectiveness.

With the assignment itself approved, a letter of assignment is prepared, which details all aspects of the mobility experience for the candidate, including base salary and benefits, additional remuneration, travel, housing and other factors unique to the particular assignment. This letter is used as the basis for initial candidate counseling in order to ensure he or she understands all aspects of the proposed assignment. As with the cost estimate, this counseling may require the knowledge, collaboration and coordination of both internal and external resources.

Once a candidate accepts the assignment, a balance sheet is prepared that outlines and tracks all compensation details. The balance sheet enables both the assignee and the organization to understand exactly how and where compensation will be delivered. It must be regularly updated to reflect any changes in company policy, hypothetical tax liability, fluctuations in costs of living indices or currency exchange rates, inflation or other factors that could alter the terms of the assignment.

The employer may also need to consider split payroll/payments, where part of the assignee’s remuneration is paid in the home country and the remainder is paid in the host country (in host country’s currency). Split payroll arrangements vary widely, depending on company policies, host-country regulations, labor agreements and other factors. Split payroll arrangements introduce a level of complexity in compensation administration, requiring collaboration between HR, home / host payrolls and finance teams.

Ongoing Administration

Once the assignment begins, ongoing collaboration with local pay agents and teams is essential. Whether the pay agent is internal or external, in the home country or the host country, monthly payments must coincide with the balance sheet. Creating a centralized reconciliation function with access to both home and host country pay data ensures pay instructions and delivery are interpreted correctly from country to country.

Ongoing collaboration with tax providers and local finance teams is also necessary. Tax providers, for example, must keep HR and payroll teams apprised of changes in host-country regulations. And host-country finance teams, which often process and issue expense payments, must submit their imputed income data to tax providers for inclusion in the compensation collection process.  Additionally, there may be the need to collect additional compensation data from third party providers who may supply benefits in kind.

Regularly scheduled compensation reviews (quarterly, at a minimum) should be conducted in order to ensure that compensation collection data is comprehensive and reasonable and to facilitate tax filing deadlines around the globe.

Repatriation and Total Program Coordination

Even after the assignee has returned to their home country, total compensation collection must continue until all assignment-related payments, expenses and benefits have been captured.

When all assignment-related costs have been collected successfully, these should be measured against the initial cost estimate to aid in the evaluation of the assignment’s success.  Actual cost data is also useful in creating assignment benchmarks for the company’s global mobility program and for budgeting future international assignments.

Throughout the entire assignment process, from pre-departure through ongoing management and repatriation, it is essential that an overall “coordinator” function be created to administer the complex collaborations among all the program’s resources, both internal and external.

For many organizations, this responsibility rests within their internal HR or mobility department and requires HR to wear many hats.  It can be difficult to hire (and retain) resources within the organization that are comfortable taking on this type of role as the duties are so varied – from working with tax providers, finance teams, pay agents and third parties, to creating and maintaining the balance sheet, reconciling the actual pay delivery, and ensuring the assignee is given the individual attention needed abroad.   Because of these complexities, many organizations prefer to utilize an external provider that specializes in international assignment compensation administration for at least portions of the administrative function.  External assignment administration providers can approach organizational processes from an unbiased, best-practices standpoint. External providers with worldwide reach and expertise can save organizations time and money over the long term by freeing internal resources to focus on other business priorities.  And a comprehensive, effectively administered program can substantially reduce the risk of errors and non-compliance.

Regardless of whether an organization chooses to manage its program internally or outsource that management to an expert compensation provider, a collaborative, coordinated approach to long-term international assignment compensation management will help ensure success in achieving global business goals.

By Sue Wines, Global Compensation and Payroll Services Practice Leader, SIRVA Relocation, www.sirva.com

A survey of 1,037 respondents across 44 countries and a broad range of industry sectors, making it the largest and most robust mobility survey report within the industry to date.

Benchmark Your Mobility Programme

• How does Your Company compare to 1,037 multinational organisations?
• Is cost management still the highest priority for 82% of mobility programme managers this year and how effective are organisations at tracking these costs?
• Has assignment activity within multinational organisations increased or dropped in the past twelve months?
• What are companies including in their assignment packages and how do they structure them?
• How many people make up a mobility department and what elements are outsourced?
• How many organisations use technology systems to manage their mobility programmes and what are the most commonly used systems?

These are the type of questions that the 2011 Global Mobility Survey answers that enable you to compare your mobility programme.

Regional Benchmarking Reports Available

Use the regional benchmarking reports to see how your organisation compares and get some great ideas on ways that you could improve your own mobility programme.  Reports available are:

• Belgium
• France
• Germany
• Italy
• Netherlands (The)
• North America (USA)
• Portugal
• Spain
• Switzerland
• UK & Ireland

Independently Research

The report aims to support Mobility Management Professionals by:

• Providing insights into key mobility trends and issues
• Identifying the prevalence of different mobility strategies
• Providing a definitive benchmark of mobility activity

The survey was commissioned by Interdean and undertaken in conjunction with independent research partner Circle Research.

View the Report:

http://bit.ly/GlobalMobilityReportFEM

Source: Interdean

The economic turmoil of the past few years, ongoing demographic trends and the continued globalization of business have combined to present unprecedented challenges to corporations seeking skilled workers in Europe and the relocation providers working to meet those corporations’ needs. How are these challenges affecting the way relocation companies do business in Europe? And what can be done to address these complexities successfully?

Europe’s Challenge

Europe faces a severe shortage of skilled workers. Workpermit.com recently reported on this shortage, citing an article by European Union (EU) commissioners Cecilia Malmstrom of Sweden and Laszlo Andor of Hungary. Malmstrom and Andor wrote that, despite high unemployment rates, countries throughout the EU face skill shortages in many professional sectors, including science, health, agriculture, engineering, tourism and information technology. Those shortages, they noted, are only expected to grow worse.

Simultaneously, global competition for talent continues to grow. If Europe is to remain competitive with fast-growing economies around the world, it must aggressively attract skilled workers.

A Patchwork of Immigration Obstacles

Despite the critical need to attract skilled workers from beyond their borders, many European countries have a wide variety of policies that make immigration a daunting challenge: for the immigrants themselves, for the corporations seeking to transfer or hire them, and for relocation providers. Examples from four major countries—Germany, France, the Netherlands and Switzerland—illustrate these challenges.

The largest economy in the EU, Germany faces the greatest shortage of professionals. According to workpermit.com, the Deutsche Well reports that German businesses state they cannot find the labor they need. Germany’s labor ministry has suggested increasing skilled-labor immigration as one essential means of closing this gap. But the country’s immigration policies continue to make it difficult for skilled immigrants to enter the country. In 2009, for example, only 2 percent of immigrants qualified as skilled workers.

France faces a similar shortage of skilled workers, yet it has traditionally been and remains one of the most heavily protected labor markets in Europe. The current shortages have encouraged new national policies designed to make the immigration process faster and easier. But in practice, the immigration process is still a challenge. Work permits for non-EU nationals must still be granted on a city-by-city basis. An immigrant worker with a permit to work in Paris, for example, must obtain a separate permit to work in Lyon. Because the time to process a permit depends upon the workload of individual local offices, it can be difficult for a corporation or relocation provider to predict how long the permitting process—and thus the relocation—might take.

The Netherlands has enjoyed sustained economic growth recently, thanks to national efforts to attract both international businesses and skilled workers, as reported by European American Business 2008. However, the separate processes for obtaining work and temporary-residence permits remain arduous. The employer must first apply for the immigrant’s work permit, after having fulfilled numerous requirements, which vary for workers coming from different countries. Then the immigrant must apply separately for a residence permit before beginning to work, a process that can take as long as a year.

Switzerland’s rules concerning potential skilled workers from outside Europe can also be complex. Before a corporation can apply for a work/residence permit for an immigrant worker, a corporation must document unsuccessful searches for Swiss or EU candidates, as well as the immigrant’s unique professional skills, significant experience and high level of remuneration.

A Possible Solution: The EU Blue Card

To improve Europe’s ability to attract highly qualified workers, the EU Commission issued a directive in 2009 authorizing the creation of the EU Skilled Immigration Blue Card, a residence/work permit that would allow skilled workers from non-EU countries to temporarily live and work in EU member states. Valid for a period of one to four years (depending on the worker’s specific project or position), the card would allow the worker to bring family members with them and to move among EU member states.

Applicants would be required to produce valid travel documents, proof of professional qualifications and a work contract or binding job offer with a salary commensurate with a “skilled” position, typically 1.5 times the average gross annual salary paid in the member state.

The Blue Card would give EU members a new tool to facilitate temporary work/residence permit procedures for skilled workers, but each country would use that tool in its own way. Member states are permitted to set individual quotas for specific skills and countries of origin and to adjust details such as minimum salaries to match the states’ specific circumstances. Overall, however, it is expected to streamline the immigration process for corporations, relocation providers and the aspiring immigrants themselves. Scheduled to take effect in summer 2011, the program still requires final approval by the EU Parliament and implementation by the individual member states.

The Ongoing Challenges

Even if (or when) the Blue Card program becomes a reality, a wide variety of implementation differences among the 27 independent-minded EU member states will still exist. Until then, corporations and relocation providers must continue to deal with the complexities associated with a continent full of individual national interests and politics.

The first step, then, in building an effective approach to Europe’s patchwork of immigration policies is to position European relocation services as specialized and consultative. These relocations require in-depth assessments of candidates, both new hires and transferees, to ensure they meet the specific skilled-worker qualifications of the destination countries. They also require time frames that allow for the completion of bureaucratic processes, often before orientation trips or other pre-move steps can be taken.

In addition, relocation providers must acknowledge the need, in many cases, for experienced partners with country-specific expertise in complex immigration policies and politics, and often with the in-country facilities and staff it takes to facilitate applications in a specific jurisdiction.

The immigration challenges associated with European relocations are many and ever-changing, but they also represent real opportunity for relocation providers to demonstrate in-depth understanding of individual countries’ economic and legal environments, to offer valuable consultative services, and to help their clients thrive and grow in the fast-moving European business environment.

By Francis Docherty, Director, Business Development, Europe, SIRVA

Source: www.sirva.com