Is your mobility program ready for a surge in activity?

    

global-surge-activity

An article on mobility strategy during a global pandemic that has significantly curtailed global travel? Surely you jest! However, there may be no better time than now to address your mobility program and its ability to scale with your organization’s global goals. Call us optimistic, but, based on recent discussions with clients and related news reports, we foresee what could be a surge in global mobility later this year once global vaccination efforts ramp up. Now is the time to evaluate your mobility strategy to ensure your organization is ready once the floodgates open. So where do you begin?

Review potential business needs, challenges, and program capabilities

Due to COVID-19, the volume of your company’s overall global movement has likely been reduced. Take this time to understand your organization’s global goals and mobility needs and review your resources, policies, and processes. By planning ahead, your organization can be ready to move forward quickly when global travel restrictions ease.

To understand if your mobility program is prepared, it is critical to understand changes to your organization’s mobility needs and to make sure the right talent is still available. Here, it will be important to maintain communication with your organization’s leadership, key business unit leaders, and stakeholders. Key questions to consider include:

  • What types of mobile workers will be needed by your business and what new challenges will need consideration to support your employees as a result of the pandemic? For example, will lingering unemployment result in challenges for accompanying spouses to find work in the Host location? If so, will you need to provide additional spousal assistance to attract the appropriate assignment candidates?
  • Are there new locations for mobile employees that may require upfront review and planning to ensure your organization understands immigration, tax, payroll, and legal requirements?
  • For existing locations, have there been changes in tax or legal requirements that may impact your organization or employees? For example, will lingering immigration restrictions impact the ability to support needed scenarios, including business travelers and commuters?
  • Is there a “backlog” of cross-border needs that will result in a large increase of moves when borders open? Are previously identified candidates still willing to travel? Are your vendors prepared to scale up if you are expecting changes in volume or new locations?

Establishing a cross-functional mobility strategy team can be a great way to make sure that key stakeholders are sharing information and are on board with policies and processes. Be sure to include your counterparts in HR, tax, payroll, and legal. It is particularly important that information is shared between the mobility and corporate tax teams. Mobile employees can create corporate tax issues, and corporate tax and transfer pricing policies can impact the taxation of mobile employees.

Once your organization’s goals are understood, the next step is to assess your organization’s internal team capabilities and bandwidth. As many companies have witnessed organizational changes over the past year, some questions to consider include:

  • If your organization is planning to enter new countries when travel reopens, do you have organizational experience and capabilities in these locations? For example, are there established entities that may be able to assist with payroll issues? Are there HR and legal contacts that may be able to assist in identifying benefit requirements for new assignments?
  • Were there headcount reductions due to the slowdown? If you expect a large increase in the volume of mobile employees, there may be a need to identify additional resources or better leverage technology.
  • Does your team still have the same level of experience and capabilities it had prior to the onset of COVID?

Certain tasks your team previously managed in-house may need to be outsourced if gaps in experience exist or if your team will lack the bandwidth to properly handle organizational needs once travel restrictions are lifted. For a more complete list of questions to consider in evaluating potential outsourcing needs, checkout our outsourcing checklist. If you work with outside vendors, it is important to keep them updated on changes to your strategy, policies, and processes.

If you and your organization are in the early stages of global expansion, you may need guidance from seasoned professionals, including relocation management companies, mobility tax service providers, and immigration law firms, to guide you in where to start. Your local Society for Human Resource Management or Worldwide Employee Relocation Council chapters can provide you with a list of mobility service providers, and the global mobility community is ready and willing to have those initial discussions with your team.

Plan for success

Global mobility is an important strategic, but often expensive, investment by your organization. To illustrate the potential costs, consider that for a longer-term (greater than one-year) assignment, a common rule of thumb is that the tax costs can equal three times the base salary. For that reason, the tax costs for a US assignee with an annual base salary of $100,000 could approach $300,000 over the duration of a three-year assignment to many Host locations, when factoring in the tax impact of additional assignment-related benefits and the tax gross-ups associated with a tax equalization approach. The total assignment costs, per our example, could exceed $1 million, not including the time spent for your company’s internal time and administration.

And despite these expensive investments of time, talent, and money, many organizations view their international assignments as less than successful, with failure rates often reported of 40% or greater. Although there is debate on how to measure overall success, there are areas within your mobility program, such as your policies and process, that are within your control that can impact the “success” rates as defined by your company.

Global mobility policy review

The establishment of appropriate policies is critical if your organization is going to have a strategic and efficient mobility program. Failure to have policies that are well understood in your organization will inevitably lead to delays in deploying talent, misunderstandings on compensation and benefits, and additional tax and administrative costs. Here, it is important to understand that there is no “one-size-fits-all” approach. Before drafting a global mobility policy, consider the following:

  • What types of mobility scenarios are needed by your organization? Do your policies support these scenarios and provide appropriate benefits to attract the needed talent?
  • How has the pandemic impacted your organizations mobility needs? If you have employees “working anywhere,” have you created policies that outline factors such as eligibility and available company support? Take a look at our Work Anywhere Checklist for your Mobility Program for questions to consider.
  • If you have established polices, have they been reviewed to ensure they are still appropriate from tax, employment law, and industry perspectives? If you have new Home or Host country locations, it is important to consider whether your policies are providing appropriate benefits and that tax and legal requirements are appropriately addressed.
  • Are you finding the need to continually make policy exceptions? If so, that is a sign that your policies may need to be adjusted to allow for fewer negotiations. Decreasing these exceptions will speed up your talent deployment, will lessen internal administration and exception tracking, and may reduce overall costs.
  • Do your business unit leaders, key global stakeholders, and employees understand your organization’s polices? Training and development of resources to communicate your policies can save time and improve the mobility experience for your employees.

Review and improve processes

In addition, to reviewing your policies, now is an excellent time to review and improve your processes. Two areas of focus that can have an immediate impact on your program include employee experience and cost budgeting and planning.

Employee experience

Have you reviewed your mobility process from the perspective of your mobile employees? If your organization truly sees mobility as a strategic investment, it makes sense to ensure your mobile employees are happy. Some possible initiatives to review and improve employee experience include:

  • Interview your candidates and ask for their candid feedback.
    • Did your pre-decision process prepare them for their assignment?
    • What was their onboarding process like in the Host country?
    • Did your external vendors support them appropriately?
    • How could they have been supported better at different points in the process?
  • Work with your vendors to map out the “end-to-end” process. Here, it is important to consider how your company and vendors are interacting with your employees from the moment the individual is considering a mobile assignment until the individual repatriates.
    • Is information being requested multiple times and if so, is there a way to reduce these duplicate requests?
    • Is information being provided at the time the individual needs it? Can some information requests be delayed to less hectic parts of the process?
    • Are all communications clear and concise? Are they being provided by the correct contact? Do your vendors provide too many points of contact?

Cost budgeting and planning

Organizations put considerable effort into obtaining the lowest possible fees when requesting service proposals. So, it is surprising to then see the same organizations put minimal effort into controlling the tax costs of an assignment. Tax is one of the biggest components of an assignment, so minimizing tax costs has the most significant potential for controlling total global mobility spend. The first step in minimizing tax costs is to have a tax cost projection prepared.

Tax cost projections can be used to compare tax costs between assignment types or lengths, to evaluate the cost/benefit of tax planning opportunities, and to budget for tax costs on an accrual basis. By establishing and updating these budgets over the duration of the assignment, tax surprises can be properly managed.

For more information on cost projections and cost accruals, see:

The current pandemic-induced slowdown in mobility activity may provide your organization the needed “breather” to focus on strategic issues that you didn’t have time to address pre-COVID. By taking time now to review your program capabilities, resources, polices, and processes, you can make sure that your program is prepared to support organizational goals when a resurgence in globally mobile employees is again possible.

Schedule a call with our team to see how we can provide assistance.

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Author Eric Loff

 
With more than 20 years of global tax experience, Eric serves as the Managing Director for GTN's West Central region. He is known for leading by example and finding the strengths in others; improving communication so all participants are engaged in a project; and serving as a bridge between a company and its expat employees. As a specialist on managing international assignment programs and the related tax, human resource, and payroll matters, he serves as a frequent speaker on global mobility topics. +1.763.252.0642 | eloff@gtn.com 
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