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Despite growing role, function seen as low priority, lacking ROI
Organizations report that their global mobility programs are critical to supporting new business growth, improving financial performance, and enhancing employee engagement, succession planning and talent management.
But organizations also say the mobility function remains a low strategic priority. And while many new expatriate assignments are predicted for the new year, a majority of companies report that their global mobility programs do not deliver value for the money spent.
Mobility Program Benefits Recognized
Global mobility professionals are taking on an increasingly strategic talent management role in large organizations, according to the Forum for Expatriate Management’s Managing Global Mobility Survey.
Global mobility’s growing strategic role is leading more companies to outsource administration, the survey found. The top three outsourced global mobility services are tax (outsourced by 89 percent of respondents), removals and household goods (84 percent), and cost of living data (80 percent).
The trend can also be seen in a shift in reporting relationships. While nearly half (48 percent) of respondents to the survey reported that global mobility professionals currently report into the compensation and benefits function, 38 percent and 22 percent said they should report into HR or talent management, respectively.
The benefits of tying global mobility and talent acquisition are acknowledged. Eighty-five percent of respondents to PricewaterhouseCooper’s (PwC’s) 2014 Modern Mobility Survey agree that mobility is important to meeting business objectives. Two-thirds of respondents expect to be partnering with the business to strategize for future talent needs by 2017, compared to 44 percent today. Only 34 percent of mobility professionals see themselves continuing to focus on the day-to-day delivery of mobility operations by 2017, and 62 percent plan to support the development of global talent.
“Business executives need HR and mobility teams to partner more closely with them, think longer term about their international workforce requirements, help access, develop and retain the talent required, and incentivize people to move to the locations where the business needs them to be,” said Peter Clarke, global leader for global mobility services at PwC. “This will require HR to work in a much more integrated way, drawing on talent, mobility, resourcing and succession planning expertise.”
Sixty-five percent of top-performing companies with global mobility strategies reported a positive impact on financial performance, new business growth and talent retention, according to Unlocking the value of Cross-Border Assignments, a Harvard Business Review Analytic Services survey report, sponsored by EY.
The greatest benefit to having a global mobility strategy according to the EY survey was developing local successors (55 percent), followed by capitalizing on new market growth (54 percent) and enhancing corporate culture (46 percent).
One respondent to the survey said: “By transferring employees internationally, the company benefits from knowledge and intercultural exchange, empowers global alignment, and is strengthening its position as a global employer and important player in the industry. A main driver to increase employee engagement is personal development. Driven by challenges and career growth, top performers are looking for international exposure and experience; and therefore, global mobility is crucial.”
Nine in ten organizations polled in the PwC survey said they plan to increase their number of expatriate workers in the next two years. The report predicts that the number of people going on global assignments will increase by 50 percent by 2020. “It’s not surprising that organizations are expecting a jump in the number of people that are globally mobile,” said Clarke. “It is a great way for businesses to fill skills gaps, enter high-growth markets, attract employees and develop their people. For some businesses, international experience is now a must-have for anyone taking on a leadership position,” he said.
Seventy-two percent of EY respondents said that they anticipate more global mobility demand over the next two to three years. Those respondents regard new market growth as the principal driver behind the growing need for global mobility (60 percent), followed by an increased demand from candidates for cross-border assignments (36 percent), skills gaps in particular markets (32 percent), skills gaps in the organization (30 percent), and mergers/acquisitions (26 percent). Talent development is the top use for metrics used by EY respondents (64 percent) to evaluate workforce needs over the next few years.
Further drivers for the growth in mobility and its tie to talent acquisition include predicted changes in the availability and location of global talent. According to the PwC report, more than 50 percent of graduates ages 25-34 are likely to be living in emerging markets by 2020 (including China at 29 percent, India at 12 percent and Indonesia at 6 percent).
“In an increasingly global market, the race for talent is a key determinant of success,” said Dina Pyron, EY global human capital leader. “Companies should take stock now of where the gaps are in their workforce, and develop a robust strategy to address that gap.”
Failing toMeasure the ROI of Global Mobility
Despite the increasing recognition that global mobility and strategic talent management are aligned, the function remains a low priority for many companies. Forty-three percent of respondents to the EY survey indicated their companies did not have a global mobility strategy and instead handled mobility needs reactively or on an as-needed basis. Eighteen percent of respondents were not even able to identify who served as the lead on global mobility within their organization.
And despite the anticipated significant rise in global assignments, only 8 percent of global organizations responding to the PwC survey were able to put a cost on their mobility programs and just 9 percent measure the program’s return on investment (ROI). The research revealed that 30 percent of companies aren’t even sure how many of their employees work overseas each year.
“Our research highlights that there is currently too much disconnect between organizations’ mobility policies and their business needs, with only 6 percent confident that they are aligning the two,” said Clarke. “Businesses need to have a clear global mobility strategy which is based on growth priorities and what skills they are going to need and where, backed up by plans on how they are going to source, deploy, manage and motivate employees who work internationally.”
When respondents were asked in the EY survey whether they measured the return on investment of global mobility, “the overwhelming response was no, or not yet,” according to the report.
The top two challenges cited for measuring mobility ROI ranged from having no companywide metrics in place to mobility ROI not being seen as a priority.
“Organizations’ failure to measure the cost and value of their programs will cost them dearly in the long run,” said Clarke. “Many businesses risk wasting considerable money sending the wrong people to the wrong places, overpaying for expats when local talent is available in-country or offering large financial packages when people are more motivated by the development opportunity. Many businesses are also losing valuable talent at the end of their assignment, as they have no plan for their returning role.”
Roy Maurer is an online editor/manager for SHRM.
Follow him @SHRMRoy
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