Last update: December 5, 2020
Groupon, though an international powerhouse, relies heavily on local business. This means presence is required to make connections in local markets, and higher investment and setup costs. Behind the snazzy apps and fast webpages, there is a huge underbelly of more traditional operations that bring value to local customers. We’re reiterating the need for local presence but this is fundamental to businesses abroad with international relocation.
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Global Mobility in 2018
The face of Global Mobility is changing quickly:
- 32% of HR directors expect global workforce mobility to have a high or very high impact on their workplaces.
- 73% of companies don’t maintain a candidate pool for future international assignments (1)
- 82% of engineering and manufacturing firms state they are making efforts to reduce international assignment costs (2)
- PwC’s report ‘Talent Mobility: 2020 and Beyond’ forecasts a 50% growth in the number of internationally mobile employees by 2020 (3)
Facing this, what can HR and senior management do to make a real-world success of their international projects?
Make a solid business case
Global mobility is almost synonymous with the franchise. Companies place trusted employees in a sink or swim situation and provide the necessary resources to make it a success.
For your business, this is necessary both to correctly analyze an upcoming project and to prove viability to the C-Suite. So treating your global mobility as you would any other business will help to create a professional, planned and robust business model. A clear business case should consider the following:
As you go through this list, you will quickly find areas that will strengthen your case for a mobility program or even the opposite; it is just as important to prove the invalidity of an international assignment.
Permanent Establishment (PE)
When is a global mobility program not a global mobility program?
Due to the increase in global mobility, tax authorities worldwide are updating regulation, making compliance with local laws and tax setups a critical factor for business with international facing operations.
Governments are dissecting global mobility projects piecemeal to find discrepancies, and HR departments are quickly adapting, both to decrease their own costs (eg. fintech) and make sure that business on an international circuit continues to run smoothly. More disclosure and near-total transparency have become the new norm.
It is in the interest of countries to enforce permanent establishment on foreign companies to profit from tax implications.
Global Employment Organization (GEO) companies offer support international businesses by offering services to employ staff in target destinations, many operate across the world in a range of specialist sectors.
These companies create a legal barrier between your company and the tax area you will be working in. But whether this implies your company is liable for PE depends largely how strict the target destination is. In expat rich countries, these legal loopholes are slowly being eroded. In many sectors, using these services (in contracts longer than 6 months) will not be enough to insulate your company against PE.
Global Mobility professionals are finding themselves stuck between a rock and a hard place. Company-wide protocol and strategy provide the bedrock of the company’s bottom line. Yet this is crossed against the need for quick response to crises and fast decision making according to a new (foreign) business environment.
This means HR departments need to be in close contact with major stakeholders to implement new strategies, aligned closely with existing business practices in the interest of making successful Global Mobility projects. The double-edged sword is that this can lead to a lack of effective governance and higher costs as a reaction to unexpected situations. Where protocol minimizes costs, global mobility costs are in many cases unable to follow similar protocols due to the need for “quick” (ie. more expensive) solutions.
The internal candidate pool for your global mobility program needs to be maintained and nurtured. HR should be aware of existing employees that are willing to join a GM program. International assignments are considered as important in career development. For your team, working abroad will introduce a wealth of new skills, and international projects allow your younger employees to learn negotiation, leadership and conflict resolution.
Think about the team members that have the skills required for a successful international assignment and international relocation. Skills such as languages, accounting and law are obvious benefits, though character traits such as creativity and problem solving might be even more desirable.
External support for employees across the world is essential for two reasons.
Firstly, and obviously, for the benefit of the employee who will be under pressure to find his/her feet. This can be managed by helping with administrative tasks as well as pre-selecting accommodation, international schools. visas and work permits.
But also internally, it is easy for colleagues to take on an out of sight out of mind approach to a GM project, exactly at the time that good coordination and communication is needed most. There is likely to be a skills gap left by the outgoing employee, so plan ahead to either hire cover temporarily or manage the skills-gap with existing employees (and further developing internal skills) on his international relocation.
Some way to go
It seems that though global mobility has risen so quickly, companies don’t yet have the measures in place to effectively manage it. There is a disconnect between the statistics that show companies’ awareness of the demand for global mobility programs, and the low rate of success. Companies must become better focussed at improving and supporting their international employees with a more business-like approach to global mobility.