NOVEMBER TRENDS IN GLOBAL RELOCATION SURVEY BIGGEST CHALLENGES

Transcription

1 NOVEMBER TRENDS IN GLOBAL RELOCATION SURVEY BIGGEST CHALLENGES SM

2 Table of Contents Executive Summary 3 Topline Report I. What the numbers say II. What the respondents told us Statistical Supplement I. Regional rankings by c II. C by individual region Verbatim Supplement I. Most effective changes II. Recommendations to peers III. Future program changes IV. Other c

3 Executive Summary Overview The Cartus 2012 Trends in Global Relocation: Biggest C survey was conducted in the summer of 2012 and elicited responses from 193 international mobility managers based around the world. All major industry groups were well represented, and the respondents spoke for multinational companies that have a robust average global relocation volume of 392 annual moves. This study is a continuation of our investigation into the c faced by relocation managers, following a pair of 2011 pulse surveys that focused on domestic U.S. relocation and international assignments. It s a Big World, After All The 2012 study chose a different focus geographical c to shine a new light on what makes global relocation so difficult to manage effectively in both emerging and established markets. Specifically, we asked global relocation managers to evaluate c in each of 11 global regions we identified. In response, they gave varied rankings of problems particular to each region (e.g., payroll and currency issues in Central & South America; safety and lack of infrastructure in Africa, etc.). These rankings are the core of this report, a quantitative study based largely on respondent rankings of c by geographical region. Key Findings A majority of companies moving employees globally report significant c in controlling costs and complying with laws and regulations. Controlling costs was a significant challenge (rated a 4 or 5 on a 5-point scale) for 61 percent of respondents, followed by compliance (for 51 percent). Remarkably, every one of the 15 factors involved in global relocation, from housing to safety and security to intercultural issues for relocating families, was rated as a significant challenge for some relocation managers (see Chart 1). Chart 1. Top-Rated C Across Regions (percent of respondents considering individual relocation factors as significant c with 4 or 5 rating on a 5-point scale). Highest Challenge Level 40% or more selecting Middle Challenge Level 20-39% selecting Lowest Challenge Level Fewer than 20% selecting Controlling costs (61) Limited infrastructure (29) Economic instability (14) Complying with laws & regulations (51) Housing (41) Structuring compensation packages (28) Finding suitable local candidates (27) Transportation (14) Managing global nomads (13) Attracting qualified candidates (24) Payroll and currency issues (24) Intercultural issues (12) Language issues (8) Safety and security (24) Schooling (24) 03

4 executive summary Companies lack critical experience and expertise in global markets, even as their activity continues to increase. Companies are typically active in many, but not all, geographical areas. A total of 45 percent of respondents reported activity in at least half of the 11 global regions in the past two years, but only 15 percent reported activity in all regions. At the country level, the problem is more acute; even if companies do have activity in a given region, they are unlikely to have experience in many countries in these regions. This presents an immediate issue for the 74 percent of companies who said their total activity had increased in the past two years (source: Cartus May 2012 Trends in Global Relocation survey), particularly since they report expanding into a great many countries where they have no previous experience. Lack of global expertise reinforces the talent-related issues that companies face when determining who to send into these markets to accomplish organizational goals. As also reported in our 2012 Trends in Global Relocation survey, the assignee profile is shifting to older, more seasoned employees, which resonates in these more challenging markets where experience counts. Emerging markets are often critical to the company s future business goals and are also the most challenging for relocation. Underdeveloped regions, such as Central & South America and Greater China, rank high in business importance as well as in relocation c. In fact, these regions each placed in the top five in business importance, significant c, and recent increases in activity a true perfect storm! On the other hand, developed markets like North America and Europe, which ranked in the top three in both increasing activity and business importance, were among the least challenging regions. These regions ranked high in controlling costs and in compliance issues but also include a number of emerging market locations, such as Mexico and Eastern Europe, that present unique c of their own (see Chart 2). Chart 2. Most Challenging Regions vs. Importance to Future Business Goals (percent of respondents with 4 or 5 ratings on a 5-point scale). Challenge in Managing Relocation for Your Company Importance to Future Business Goals Location Percentage Location Percentage Africa 76 Greater China 48 Central & South America 64 North America 42 Greater China 61 Europe 33 Indian Subcontinent 60 Central & South America 27 North & Central Asia 58 Southeast Asia 27 Middle East 55 Middle East 21 Southeast Asia 34 Indian Subcontinent 20 Europe 23 Northeast Asia 17 Northeast Asia 22 Africa 13 North America 21 North & Central Asia 12 Oceania 16 Oceania 11 04

5 executive summary Business importance outpaces increased activity in some cases. It is important to understand that a region does not need to be active to present major c. In fact, lack of experience presents a different but no less serious difficulty. Anecdotally, Africa is considered by Cartus clients as the most difficult area to handle, and this survey bears out that assertion. However, activity in Africa increased for only 10 percent of companies over the past two years (only North & Central Asia had less growth). By contrast, North America, Greater China, and Europe, three of the most active regions to begin with, led in growth (see Chart 3). Chart 3. Companies with Significant Volume Increases Over the Past Two Years (percent of respondents with 4 or 5 ratings on a 5-point scale). Region Percentage North America 43 Greater China 37 Europe 28 Southeast Asia 25 Central & South America 18 Middle East 18 Indian Subcontinent 15 Northeast Asia 12 Oceania 12 Africa 10 North & Central Asia 6 Top c have direct implications for assignee success. In the regions that are considered the most challenging, the specific c all directly impact not only the company but also the well-being and success of assignees both in terms of their ability to perform on the job and for them and their families to settle in effectively. Specifically: Africa ranked first among regions in 12 out of 15 factors (factors detailed in Chart 1), many with personal and family implications whether the location was urban or rural; Central & South America led all regions in structuring compensation packages and payroll and currency issues, which can involve employees in complex bureaucratic issues; and Greater China led all regions in language issues and controlling costs. See Chart 4 for detail on the most significant c and their implications. 05

6 executive summary Chart 4. Leading Regional C. Region Most Significant C Implications Africa Central & South America Greater China Safety and security Intercultural issues Limited infrastructure Transportation Finding suitable local candidates Safety and security Complying with laws and regulations Payroll and currency issues Language issues Intercultural issues Transportation Housing Schooling Standard policies may not work Alternatives like split-family arrangements may be needed Bureaucracy adds significantly to the time needed to relocate employees Planning must begin well before any assignment is initiated, particularly in Brazil Expansion into less developed locations brings up multiple infrastructure issues Competition for qualified employees/recruits has intensified What Works Best? Relocation managers repeatedly report that they are managing relocation globally but applying specific strategies to deal with issues that vary by geographical region. Three of the main solutions they are using and recommending to their peers are assignee selection, preplanning, and flexible policy approaches. Relocation success depends increasingly on selecting the most capable and adaptable candidates. Companies are looking for better matches between assignees and the geographical regions they are asked to travel to. The May 2012 Trends in Global Relocation survey documented an assignee population that was older and more experienced than reported in a similar survey two years earlier. This trend is particularly important in emerging markets, where the ability to be immediately productive is key. The greater attention being given to global nomads, who are defined as employees who are able to move easily from assignment to assignment, reflects this trend. Pre-planning is essential. Compliance with local laws and regulations was rated a significant challenge (4 or 5 on a 5-point scale) by more than half of the respondents for Africa, North & Central Asia, Central & South America, and the Middle East. Issues of visa and immigration, payroll and compensation, and bureaucratic hurdles make it necessary for assignments to be decided upon and initiated months in advance six months or more, in the case of Brazil, for example. 06

7 executive summary Policy flexibility is required to manage relocation successfully in different geographical regions. To give themselves more options in moving employees to different locations, companies are relying on a number of policy approaches, including policy tiering, local plus arrangements, core/ flex policies, commutation, and rotational assignments (see Chart 5). In certain locations, where infrastructure is weak and safety is a concern, split-family policies are the recommended approach because they provide a more palatable solution to schooling, medical, and other family issues. Chart 5. Strategies Already Implemented or Being Considered (percent of respondents). Policy Strategy Percentage Tiering and targeted relocation policies 55 Local plus policies with enhanced benefits 42 Core/flex policies 35 Temporary relocation types, such as commutation 26 Temporary rotational assignments 26 Split-family approach 9 Overall, the data and the qualitative input from respondents reinforces the degree to which companies traditional and standard policies and approaches are being put to the test by specific issues: global expansion, demographic shifts, and the continually competing needs of cost control, flexibility, and talent management, both on recruiting, retention, and development fronts. The complete results of the report are contained in the three sections that follow, providing data and insights that can help companies assess risks, c, and best practices to apply in their own programs. Topline Report, which provides an in-depth analysis of c in key regions and of the most difficult policy and program factors. Statistical Supplement, which provides detailed response data for each region and each policy and program factor. Verbatim Supplement, which lists the actual comments of many of the respondents to openended questions on what has been successful for them, what they would recommend to their peers, and what they would like to implement in their programs. 07

8 Topline Report I. What the Numbers Say Gaining a Regional Perspective Dividing the globe into 11 regions is a helpful device for isolating issues that vary according to geography and major differences did, in fact, emerge. Still, such a device has its limitations. Sharp contrasts may exist in terms of the c within a region (for example, within Southeast Asia, Singapore is generally considered a low challenge, and Indonesia a high one). Moreover, the degree of challenge attributed to different regions can be influenced by the individual countries they contain and the issues that are particular to each country. Nevertheless, the regional breakdown we selected resulted in relatively discrete geographical units that respondents were able to discriminate among in a statistically meaningful way. Regional Activity Respondents were first asked which geographical regions they relocate employees to and from. North America and Europe were clearly the most active regions (see map with percent of companies active in each region indicated). Although this weighting reflects the fact that most companies are headquartered in these two regions, the fact that smaller companies as well as larger ones responded to the survey (the median annual relocation volume was 100 moves, compared to an average volume of 392 moves), paints a broad overall picture of global relocation activity. The 11 Geographical Regions Europe (including Western Russia) North & Central Asia (including Eastern Russia) North America Greater China Middle East Indian Subcontinent Northeast Asia Africa Southeast Asia Central & South America Oceania 08

9 topline report Chart 6. Geographical Regions That Companies Relocate Employees To or From (percentage of respondents). 82% 43% 29% 73% 37% 31% 55% 46% 38% 50% 44% Despite the prominence of North America and Europe, only 82 percent of respondents reported activity in North America and 73 percent in Europe. Remarkably, only 15 percent of responding companies noted activity in all 11 regions. Africa and North & Central Asia were mentioned the least, but nearly a third of respondents had relocation activity in these regions in the past year. These data, taken together, present an interesting profile of the average company active in much, but not all, of the world and, consequently, with enough experience to manage relocation well on the whole but lacking expertise in a number of geographical regions where they are active now or potentially in the future. The Broad Picture The following chart (Chart 7) lists the top three c reported for each of the 11 regions analyzed. [Note: The full definition of each region for example, Europe (including Western Russia) is provided here, but is shortened hereafter.] The striking conclusion this chart points to is that 12 of the 15 factors appeared as one of the top three c identified in the 11 regions. 09

10 topline report Chart 7. Top Three C By Region. Region Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Challenge 1. Controlling relocation/assignment costs 2. Complying with laws and regulations 3. Housing 1. Intercultural issues 2. Safety and security 3. Complying with laws and regulations/finding suitable local candidates 1. Safety and security 2. Moving into areas with limited infrastructure 3. Intercultural issues 1. Complying with laws and regulations 2. Intercultural issues 3. Schooling 1. Intercultural issues 2. Housing 3. Moving into areas with limited infrastructure/safety and security 1. Language issues 2. Intercultural issues 3. Transportation 1. Language issues 2. Controlling relocation/assignment costs 3. Housing 1. Intercultural issues 2. Finding suitable candidates 3. Schooling 1. Controlling relocation/assignment costs 2. Structuring compensation packages 3. Finding suitable local candidates/housing 1. Controlling relocation/assignment costs 2. Complying with laws and regulations 3. Housing 1. Safety and security 2. Complying with laws and regulations 3. Payroll and currency issues 10

11 topline report And the Winner Is Africa was, without question, the biggest geographical challenge for responding companies. This region ranked high as a challenge in nearly every aspect of international relocation. Interestingly, Africa has seen the least amount of growth in relocation volume, next to North & Central Asia, over the past two years (refer to Chart 8), although it receives a disproportionately large amount of attention. In short, companies do not need to be expanding their operations in Africa to experience c. For some, these c may actually be preventing them from growing in the region to the extent they would like. For others, the due diligence needed to prepare for expansion has been time consuming. Chart 8. Regions With a Significant Increase in Volume in the Past Two Years (percent of respondents). Region North America Greater China Europe Southeast Asia Central & South America Middle East Indian Subcontinent Northeast Asia Oceania Africa North & Central Asia Percentage Increases in volume can be attributed to various factors from generally improving economic prospects to specific company strategies in a given country or region. Activity in the most developed regions (North America and Europe, in particular) likely reflects a cyclical rebound in relocation activity, while China clearly has a large developmental component. The biggest surprise in this ranking, aside from Africa, is the Indian Subcontinent. As a growth area, India appears to be lagging behind China; more than twice as many companies reported a significant increase in relocation volume in Greater China (37 percent), compared with the Indian Subcontinent (15 percent), over the past two years. China s pre-eminence is underscored by its relative importance to the future business goals of participating companies (see Chart 9). Almost one-half of respondents (48 percent) said that Greater China was among the most important, followed (not surprisingly) by North America (42 percent) and Europe (33 percent). Again, the Indian Subcontinent was rated lower (at 20 percent) than many might expect, ranking behind Central & South America and Southeast Asia at 27 percent and the Middle East at 21 percent. Chart 9. Most Critical Region(s) to the Company s Future Business Goals (percent of respondents). Greater China North America Europe Central & South America Southeast Asia Middle East Indian Subcontinent Northeast Asia Africa North & Central Asia Oceania Region Percentage

12 topline report Africa ranked near the bottom (13 percent) in importance to the company s future business goals. Nevertheless, it would be a mistake to discount frontier regions such as this, where expansion not only in raw materials exploration but also in other, more traditional business areas is taking place. To illustrate, the industries represented by Cartus 50 top clients expanding into Africa include banking and consumer products as well as technology and engineering. Regional C The heart of the geographical part of the survey was a series of questions that allowed respondents to rank 11 regions on the degree of challenge posed by relocation in general, as well as 15 other factors. The summary charts provided in the Topline Report list significant c (i.e., those rated as a 4 or 5 on a 5-point scale). To illustrate, Chart 10 ranks the regions on the overall question, managing relocation for your company. Note: Comprehensive charts for all 15 factors plus the overall managing relocation for your company question can be found in the Statistical Supplement. What the chart demonstrates is that Africa constitutes a significant challenge for more than three-fourths of respondents with activity in that region (76 percent). The next five regions (Central & South America, Greater China, Indian Subcontinent, North & Central Asia, and Middle East, in that order) are closely packed between 55 and 64 percent, more than 20 percentage points ahead of the remaining region. [Again, the degree-ofchallenge rankings do not reflect volume.] This is not to say that the regions are easy to manage, despite the larger gap between the groups. Only three regions (Oceania, at 51 percent; Europe, at 48 percent; and North America, at 46 percent) were viewed by more than one-quarter of respondents as not a significant challenge, rating 1 or 2 on the 5-point scale. (See Chart A, Statistical Supplement.) Chart 10. Challenge: Managing Relocation for Your Company (percent rated 4 or 5 on a 5-point scale). Geographical Region Africa Central & South America Greater China Indian Subcontinent North & Central Asia Middle East Southeast Asia Europe Northeast Asia North America Oceania Percentage Rated a Significant Challenge Factors that Pose C When the 15 individual factors were separated from geography, and respondents were asked to rank them as c to managing their overall global relocation programs, controlling relocation/assignment costs and complying with laws and regulations ranked first (61 percent) and second (51 percent) (see Chart 11)

13 topline report Chart 11. Ranking of Overall C (percent of respondents). C Percentage Controlling relocation/assignment costs 61 Complying with laws and regulations (including visa, immigration) 51 Housing (availability, suitability, price) 41 Moving employees into areas with limited infrastructure 29 Structuring compensation packages 28 Finding suitable candidates in the local market 27 Attracting qualified candidates to go on international assignment 24 Payroll and currency issues 24 Safety and security 24 Schooling (availability, wait list issues) 24 Economic instability 14 Transportation (public transport, driving, car & driver, armored cars) 14 Managing global nomads (assignees who relocate frequently but don t tend to have a true home country) Intercultural issues impacting the assignee and family in day-to-day living activities Language issues impacting the assignee and family in day-to-day living activities Comments from two respondents on c currently being faced gives a sense of the difficulty and frustration that can attend compliance. 99Very quick evolution of local tax laws affecting expatriate cash flow (example: Indian Provident Fund, loss of LAFHA in Australia). 99Constant tax law changes around the world as local, state and federal governments tighten their belts. An increase in tax authorities challenging credits and tax notices even though tax filings are properly prepared according to the laws in place. Fishing expeditions that cause our company time and money to hire tax professionals (to defend c) when no laws have been broken and tax filings are absolutely accurate. Housing ranked third, with 41 percent considering it a significant challenge. Its effect is felt over a broader scale than some other factors, such as safety and security. It also touches both infrastructure and supply and demand issues. In developed areas, such as Tier I cities, housing is acceptable but costly and in high demand. In less developed areas, the housing itself often fails to meet standards acceptable to assignees, leading to alternative solutions, such as split housing, where feasible. 13

14 topline report As a global ranking, the list in Chart 11 is generally consistent with prevailing industry sentiment and with recent Cartus surveys (2011 Biggest C and 2012 Trends in Global Relocation). Applied to individual geographical regions, however, these factors take on greater or lesser importance. A good example is payroll and currency issues, which was classified by 24 percent of respondents as a significant challenge, but which jumped to 58 percent in Central & South America (see Chart 12). The difficulty that certain Latin American countries present with respect to payroll and currency regulations is illustrated by two contrasting respondent comments: 99Brazil is too expensive. We are moving our operations away to Argentina as a result. 99Argentina: recent imposition of a 62.5% tax on transactions not done in local currency. It is safe to say that identifying c is a moving target under the best of circumstances. Chart 12. Degree of Challenge Relating to Payroll and Currency Issues (percent rated 4 or 5 on a 5-point scale). Geographical Region Central & South America Africa North & Central Asia Indian Subcontinent Greater China Middle East Europe Southeast Asia Northeast Asia Oceania North America Understanding Africa Overall, Africa was the clear winner in terms of regions with c. Of the 15 factors we asked managers to rate by country, it ranked highest in degree of challenge 12 times, and its lowest rank was second (see Chart 13). Chart 13. Among the 15 Categories of Relocation Issues, the Number of Times a Region Ranked in the Top 3 in Significant C (4 or 5 rating on a 5-point scale). Percentage Rated a Significant Challenge Region Degree of Challenge Total Times Ranked in Top 3 Africa Middle East Indian Subcontinent Greater China Central & South America North & Central Asia Northeast Asia 2 2 Southeast Asia 1 1 Europe North America Oceania 14

15 topline report Bottom line: everything is more difficult in Africa. The top five concerns are safety and security (92 percent of respondents rating its degree of challenge at 4 or 5), intercultural issues and limited infrastructure (76 percent each), transportation (74 percent), and finding suitable local candidates (73 percent). Viewed through this lens, Africa is categorically unlike any other region: it is huge; with few exceptions it is underdeveloped; and it is generally lacking in stability. Its major c result less from complications in political/economic/administrative areas than from a lack of infrastructure that makes it difficult to separate personal not to mention family concerns from focusing on business opportunities. These circumstances promote higher costs, increase the incidence of exceptions, and drive more creative approaches to program administration. For example, some companies are moving into locations with literally no infrastructure, with no suitable housing, schools, or medical facilities, and with security as a major issue. If a split-family situation is legal, companies may consider hosting a family in the nearest suitable city. Otherwise, many companies are recommending that the family remain at home and are making policy adjustments to accommodate this arrangement. This may help mitigate issues of qualified candidates refusing to accept an assignment. These circumstances also create a refined type of selection process that favors employees who are not tied down by family and/or national ties (so-called global nomads ), but are highly qualified and highly mobile. We have shown how different regions rank by potential c. An equally revealing metric is an analysis of each region individually, ranking the c within it. The following chart (Chart 14) presents c for Africa. [Note: Charts for each of the 11 geographical regions are included in the Statistical Supplement.] Chart 14. C in Africa (percent rated 4 or 5 on a 5-point scale). Geographical Region Percentage Rated a Significant Challenge Managing relocation Safety for your and company security Managing relocation Safety for your and company security Moving into into areas with limited infrastructure Intercultural issues Transportation Finding suitable local candidates Housing Attracting qualified candidates Schooling Complying with laws and regulations Payroll and currency issues Economic instability Structuring compensation packages Language issues Controlling relocation/assignment costs Managing global nomads

16 topline report Central & South America As a region, Central & South America (see Chart 15) is notable because three issues pose consistently dramatic problems for companies working there: safety and security (62 percent rating it a significant challenge), complying with laws and regulations (58 percent), and payroll and currency issues (also 58 percent). Compared with other regions, these c ranked third, second, and first, respectively. The most difficult areas, based on individual countries mentioned, are Brazil and, to a lesser extent, Argentina, where the regulatory climate is complex and changeable. Interestingly, economic stability (just 36 percent rating it a significant challenge) is a minor issue and finding suitable local candidates (41 percent) and attracting qualified candidates (33 percent) are also less troublesome issues. Preparing for assignments into Brazil, particularly long-term assignments, is time consuming and can be very costly. The immigration process itself can take from three to six months to finalize. During this time, the assignment compensation, the amount that will be deposited into the employee s Brazil payroll, must be determined, weighed against local compensation standards, and approved before the immigration documentation can be completed. Chart 15. C in Central & South America (percent rated 4 or 5 on a 5-point scale). Geographical Region Percentage Rated a Significant Challenge Managing relocation for your company Safety and security Complying with laws and regulations Payroll and currency issues Structuring compensation packages Housing Transportation Moving into into areas with limited infrastructure Schooling Controlling relocation/assignment costs Finding suitable local candidates Intercultural issues Economic instability Attracting qualified candidates Managing global nomads Language issues

17 topline report Greater China Greater China (see Chart 16), while generally acknowledged as a difficult location, with 61 percent considering it a significant overall challenge, still ranks far behind Africa (76 percent) and even somewhat behind Central & South America (64 percent). Certainly, companies have of necessity gained experience in managing mobility in areas of this country that range from cosmopolitan to essentially undeveloped, but the major c remain issues that are faced by assignees and their families directly rather than by the company. Thus, the highest ranking c are: language issues (54 percent), intercultural issues (53 percent), transportation (50 percent), and housing and schooling (49 percent each). Attracting qualified candidates (34 percent) is a much less severe problem, although finding suitable local candidates is, as expected, a bigger problem (42 percent). Interestingly, Greater China is one of only two regions (the other is Central & South America) out of 11 where relocation managers rated managing relocation for your company as a more significant challenge than any of the individual component issues they rated. Psychologically, China remains, in this sense, the most difficult region to manage, which can be explained not only by the variety of issues and locations to be managed but also by the sheer volume of activity that is centered in this region. Several trends illustrate this point: There is an increasing trend to move to third- and even fourth-tier cities, where infrastructure c become extreme; Multinational companies are increasingly faced with competition from locally headquartered companies for top talent, making it more difficult to find suitable local candidates; and A 2011 social security ruling requires employers to provide coverage for foreign workers, raising issues of both cost and compliance with relation to 200,000 individuals with work permits. Chart 16. C in Greater China (percent rated 4 or 5 on a 5-point scale). Geographical Region Percentage Rated a Significant Challenge Managing relocation for your company Language issues Intercultural issues Transportation Housing Schooling Controlling relocation/assignment costs Complying with laws and regulations Moving into into areas with limited infrastructure Payroll and currency issues Finding suitable local candidates Structuring compensation packages Attracting qualified candidates Managing global nomads Safety and security Economic instability

18 topline report Indian Subcontinent India (see Chart 17) dominates this region and demonstrates strong contrasts. Economic instability (27 percent) and language issues (32 percent) are, in relative terms, extremely minor c compared to intercultural issues and housing (at 64 percent each). While the breakdown between 4 and 5 ratings are not reflected on the chart, more respondents rated intercultural issues a 5 (biggest challenge) than a 4 (33 percent vs. 31 percent), illustrating the severity of this issue. Similarly, 28 percent scored moving into areas with limited infrastructure as a 5 (equal to the number scoring it a 4). This rating reflects the difficulty in finding appropriate schooling, housing, and medical resources in smaller cities. In response, some companies are resorting to split-family policies where the family resides in the nearest big city. Additionally, even though language is generally not an issue in the region, assignees and their families face multiple c from crowding, pollution, food, lack of privacy, communication style differences, and the inability for spouses to work. Chart 17. C in the Indian Subcontinent (percent rated 4 or 5 on a 5-point scale). Geographical Region Managing relocation Intercultural for your company issues Intercultural Housing issues Managing relocation for your company Housing Safety and security Moving into into areas with limited infrastructure Transportation Complying with laws and regulations Structuring compensation packages Controlling relocation/assignment costs Payroll and currency issues Attracting qualified candidates Schooling Finding suitable local candidates Managing global nomads Language issues Economic instability Percentage Rated a Significant Challenge

19 topline report Other Regions The remaining regions were marked by various c that relate specifically to their mobility environment (see Chart 18): Chart 18. C in the Remaining Regions (percent rated 4 or 5 on a 5-point scale). Region Challenge Percentage Rated Significant Middle East Intercultural issues 68 Safety and security 60 North & Central Asia Complying with laws and regulations 60 Northeast Asia Language issues 47 Southeast Asia Intercultural issues 47 Finding suitable candidates 46 Europe Controlling relocation/assignment costs 41 Oceania Controlling relocation/assignment costs 27 North America Controlling relocation/assignment costs 24 Complying with laws and regulations 24 Note: Refer to the Statistical Supplement for full charts of each region. 19

20 topline report Most Challenging Countries Regions may be challenging as a whole, but individual countries often stand out as major problems all by themselves. When asked if any individual country was posing particular c, respondents volunteered the names of 19 countries, from Brazil to Nepal. The most frequently mentioned countries were Brazil, India, China and Saudi Arabia. The comments relocation managers made when asked to name a specific country that was posing a particular challenge for them show variety and frustration (see Chart 19). Cultural issues are a given, but administrative compliance is a growing challenge. Not only are certain countries notoriously bureaucratic in managing immigration, time-in-country, and other compliance issues, but political protectionism and the prospect of new sources of revenue are motives that can also make the rules difficult to manage, expensive, and changeable. The trend that once lowered barriers in the Eurozone has not become a precedent globally, and relocation managers often have an uphill battle in dealing with regulations and compliance issues throughout the world. Chart 19. Comments Related to Specific Problem Countries. Europe (including Western Russia) Italy Immigration rules Russia Immigration/cost Middle East Turkey Immigration Saudi Arabia Obtaining transportation Africa Nigeria New project start-up for company the market traditionally caters to single status working on rotation as opposed to physically relocating families North & Central Asia (including Eastern Russia) Russia Immigration/cost Indian Subcontinent India Due to their immigration laws and the c posed in obtaining work visas India Constant changes in law and infrastructure problems India Government c, legal c, immigration c India Tax and immigration compliance India Payroll c; difficulty getting money wired out of India India Very strong cultural identity Greater China China Ever changing social and local tax laws in a country with such a high tax rate is very difficult; in particular, directives from Beijing rarely provide local tax bureaus with process, leaving us at the mercy of local tax bureau interpretation China Tax and immigration compliance China Very strong cultural identity Hong Kong Schooling 20

21 topline report Northeast Asia (including Japan, Korea) N/A Southeast Asia (including Malaysia, Indonesia) Singapore Housing costs, school availability Malaysia Security issues Oceania (including Australia, New Zealand) N/A North America (including Mexico) The U.S. Immigration and schools Central & South America Chile A new assignment location for us; with that come all of the complexities of how to set up the assignees pay, immigration requirements, etc. Brazil Availability of places at international school, immigration, safety Brazil Difficult immigration and employment procedures Brazil Regulatory environment Brazil Split payroll Brazil 13th month payroll Brazil Too expensive; we are moving operations away to Argentina as a result Argentina Recent imposition of 62.5% tax on transactions not done in local currency Argentina Too many complications on everything Panama Immigration rules 21

22 topline report II. What the Respondents Told Us In addition to the quantitative questions related to regions and c, we asked relocation managers for their own personal comments on the implications of these c. The heart of this part of the survey was the answers to three open-ended questions: 1. Describe the changes you have made in your relocation program (in one or more regions) that you feel have been the most effective. 2. What recommendations would you make to fellow relocation managers to avoid or manage c you have encountered? 3. What changes would you most like to make in your own program to make it more effective? Interestingly, the key themes that respondents expressed were very infrequently related to geographical locations, but more to sound management approaches. As such, they emphasized, above all, planning, communication, and flexibility. Solutions What are the strategies that companies are putting into place in response to these c? While diverse in nature and often either generally applicable to their overall programs or, conversely, very specific to the region in which they are being implemented, the approaches that companies cited fall into a few broad areas, detailed below. Different Approaches to Program Management and Administration When asked how they managed their global relocation program, companies were evenly split between the two most frequent approaches cited (see Chart 20). Chart 20. Approach to Managing Relocation Globally (percent of respondents). Program Administration Approach Percentage Managed from a central location Managed centrally with some regional decision making Managed regionally 15 Other 7 In fact, the larger companies were more likely to manage centrally with some regional decision making, a choice that permits the level of flexibility needed to meet regional c without losing control of costs. Specific approaches to administration that respondents implemented include: 99Obtaining executive buy-in for Global Mobility involvement for all cross-border transfers. 99Implementing a central point of contact for advice on global moves. 99Providing more regional HR input to processes. 22

23 topline report More Creativity in Policy When asked about strategies their company has implemented or is considering putting into effect in the future, companies indicated a broad array of approaches. Core/flex, local plus with enhanced benefits, and tiering were mentioned by the largest number of companies (see Chart 21). Chart 21. Approach to Managing Relocation Globally (percent of respondents). Policy Strategy Percentage Tiering and targeted relocation policies Local plus policies with enhanced benefits Core-flex policies Temporary relocation types such as commutation Temporary rotational assignments Split-family approach Comments included: 99Implementing a lite tier, with expat-lite approaches which in some cases appear similar to local-plus, and light relocation packages as a cost reduction measure for junior moves or rotational assignments. 99Building additional diversity sensitivity into their policies, such as support for same sex couples and divorced employees with custody issues. 99Unaccompanied short term assignments, and several weeks at host destination, several weeks home alternatives. Companies also reported approaches that responded to geographic needs: 99Changed household shipping to a tri-regional model. 99Moved from single international policy to multiple policy types. 99Went to an outbound assignee model, aligned by geography and line of business; this has helped to streamline work and strengthen internal and external partnerships. Other approaches included: 99Introducing a host local policy for developmental assignments. 99Simply undertaking policy review and updates and enhancing communication to stakeholders. 23

24 topline report Flexibility vs. Control Respondents contributed a number of thoughts on what they were doing to introduce a better balance between flexibility and control. 99Going from reimbursements to allowances. 99Developing a more comprehensive local package to help permanent transfer employees transition to the host location. 99Building new approaches to address assignees situations in their different life stages. 99Providing a housing allowance instead of lease to improve flexibility while reducing administration. 99Implementing a bandwidth of choice so that the business can select what is appropriate according to individual circumstances, budget, and local custom and practice. More Pre-Planning and Communication! A number of the approaches mentioned indicated companies increasing focus on communication and involvement of key stakeholders upfront. 99More involvement with finance up front to help gain executive pre-approval. 99More pre-discussions! Educate and communicate with regional and local HR to ensure they fully understand the program and processes. 99Get more involved with regions in the planning phase before decisions are made. 99Communication is key; develop strong partnerships with relocation and tax service providers develop communication tools for your HR community and employees with regards to policy. Wish Lists Companies also listed a variety of changes they would like to make in their own programs to make them more effective. Among them were: Better Preparation Including Communication and Training 99Educate leadership on risks and requirements for global mobility ensure a better understanding of the impact on business if the company is non-compliant. 99Create candidate pools. 99Require upfront planning for the business. 99Set clear and better expectations for new hires. 99Establish more lead time for employees before going on assignments, and deliver more upfront counseling. Control and Cost Containment 99Limit exceptions to hold down costs. 99More structured and tiered policy approaches for challenging locations like India and China. 99Introduce and/or standardize localization and permanent transfer policies. 99More catch-all payments rather than multiple discrete allowances in a narrowly defined policy. 24

25 Statistical Supplement I. Regional Rankings by C The summary chart below displays the rating for managing relocation for your company, using a degree of challenge scale from 1 (low) to 5 (high). This chart is then repeated for each of the 15 component c. Two of the center columns combine ratings of 1 or 2 and 4 or 5, which can be interpreted as not a significant challenge and a significant challenge. Below the chart is a ranking of companies on the degree of challenge in this factor. A. degree of challenge in: managing relocation for your company Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa Central & South America Greater China Indian Subcontinent North & Central Asia (including Eastern Russia) 25

26 statistical supplement B. Degree of challenge in: controlling relocation/assignment costs Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Greater China Africa Northeast Asia (including Japan, Korea) Central & South America Indian Subcontinent 26

27 statistical supplement C. Degree of challenge RELATING TO: the need to move employees into areas with limited infrastructure Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa Indian Subcontinent Middle East North & Central Asia (including Eastern Russia) Central & South America 27

28 statistical supplement D. Degree of challenge relating to: economic instability Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa Indian Subcontinent Middle East North & Central Asia (including Eastern Russia) Central & South America 28

29 statistical supplement E. Degree of challenge in: complying with laws and regulations (including visa, immigration) Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa North & Central Asia (including Eastern Russia) Central & South America Middle East Indian Subcontinent 29

30 statistical supplement F. Degree of challenge relating to: structuring compensation packages Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa (tie) Central & South America (tie) Middle East Indian Subcontinent North & Central Asia (including Eastern Russia) 30

31 statistical supplement G. Degree of challenge relating to: payroll and currency issues Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Central & South America Africa North & Central Asia (including Eastern Russia) Indian Subcontinent (tie) Greater China (tie) 31

32 statistical supplement H. Degree of challenge in: finding suitable candidates in the local market Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa Middle East Southeast Asia (including Malaysia, Indonesia) North & Central Asia (including Eastern Russia) Greater China 32

33 statistical supplement I. Degree of challenge in: attracting qualified candidates to go on international assignment Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa Indian Subcontinent (tie) Middle East (tie) North & Central Asia (including Eastern Russia) Greater China 33

34 statistical supplement J. Degree of challenge in: managing global nomads (assignees who relocate frequently but don t tend to have a true home country) Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa Middle East Indian Subcontinent Southeast Asia (including Malaysia, Indonesia) Greater China 34

35 statistical supplement K. Degree of challenge: that language issues cause for the assignee and family in conducting day-to-day living activities Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa Middle East Indian Subcontinent Southeast Asia (including Malaysia, Indonesia) Greater China 35

36 statistical supplement L. Degree of challenge: that intercultural issues cause for the assignee and family in conducting day-to-day living activities Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa Middle East Indian Subcontinent Greater China North & Central Asia (including Eastern Russia) 36

37 statistical supplement M. Degree of challenge: housing (availability, suitability, price) Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa Indian Subcontinent Greater China (tie) Central & South America (tie) North & Central Asia (including Eastern Russia) 37

38 statistical supplement N. Degree of challenge RELATED TO: transportation (public transport, driving, car & driver, armored cars) Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa Indian Subcontinent Middle East (tie) Greater China (tie) Central & South America 38

39 statistical supplement o. Degree of challenge RELATED TO: schooling (availability, wait list issues) Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa North & Central Asia (including Eastern Russia) Greater China Southeast Asia (including Malaysia, Indonesia) Central & South America 39

40 statistical supplement p. Degree of challenge RELATED TO: safety and security Geographical Region Degree of Challange Low... High Europe (including Western Russia) Middle East Africa North & Central Asia (including Eastern Russia) Indian Subcontinent Greater China Northeast Asia (including Japan, Korea) Southeast Asia (including Malaysia, Indonesia) Oceania (including Australia, New Zealand) North America (including Mexico) Central & South America Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge To p 5 (4 + 5 ratings) Africa Central & South America Middle East Indian Subcontinent North & Central Asia (including Eastern Russia) (tie) Southeast Asia (including Malaysia, Indonesia) (tie) 40

41 statistical supplement II. C by Individual Region europe (including western russia) Geographical Region Degree of Challange Low... High Managing relocation for your company Controlling relocation/assignment costs Moving into areas with limited infrastructure Economic instability Complying with laws and regulations Structuring compensation packages Payroll and currency issues Finding suitable local candidates Attracting qualified candidates Managing global nomads Language issues Intercultural issues Housing Transportation Schooling Safety and security Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge 41

42 statistical supplement middle east Geographical Region Degree of Challange Low... High Managing relocation for your company Controlling relocation/assignment costs Moving into areas with limited infrastructure Economic instability Complying with laws and regulations Structuring compensation packages Payroll and currency issues Finding suitable local candidates Attracting qualified candidates Managing global nomads Language issues Intercultural issues Housing Transportation Schooling Safety and security Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge 42

43 statistical supplement africa Geographical Region Degree of Challange Low... High Managing relocation for your company Controlling relocation/assignment costs Moving into areas with limited infrastructure Economic instability Complying with laws and regulations Structuring compensation packages Payroll and currency issues Finding suitable local candidates Attracting qualified candidates Managing global nomads Language issues Intercultural issues Housing Transportation Schooling Safety and security Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge 43

44 statistical supplement north & central Asia (including eastern russia) Geographical Region Degree of Challange Low... High Managing relocation for your company Controlling relocation/assignment costs Moving into areas with limited infrastructure Economic instability Complying with laws and regulations Structuring compensation packages Payroll and currency issues Finding suitable local candidates Attracting qualified candidates Managing global nomads Language issues Intercultural issues Housing Transportation Schooling Safety and security Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge 44

45 statistical supplement indian subcontinent Geographical Region Degree of Challange Low... High Managing relocation for your company Controlling relocation/assignment costs Moving into areas with limited infrastructure Economic instability Complying with laws and regulations Structuring compensation packages Payroll and currency issues Finding suitable local candidates Attracting qualified candidates Managing global nomads Language issues Intercultural issues Housing Transportation Schooling Safety and security Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge 45

46 statistical supplement greater china Geographical Region Degree of Challange Low... High Managing relocation for your company Controlling relocation/assignment costs Moving into areas with limited infrastructure Economic instability Complying with laws and regulations Structuring compensation packages Payroll and currency issues Finding suitable local candidates Attracting qualified candidates Managing global nomads Language issues Intercultural issues Housing Transportation Schooling Safety and security Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge 46

47 statistical supplement northeast asia (including japan, korea) Geographical Region Degree of Challange Low... High Managing relocation for your company Controlling relocation/assignment costs Moving into areas with limited infrastructure Economic instability Complying with laws and regulations Structuring compensation packages Payroll and currency issues Finding suitable local candidates Attracting qualified candidates Managing global nomads Language issues Intercultural issues Housing Transportation Schooling Safety and security Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge 47

48 statistical supplement southeast asia (including malaysia, indonesia) Geographical Region Degree of Challange Low... High Managing relocation for your company Controlling relocation/assignment costs Moving into areas with limited infrastructure Economic instability Complying with laws and regulations Structuring compensation packages Payroll and currency issues Finding suitable local candidates Attracting qualified candidates Managing global nomads Language issues Intercultural issues Housing Transportation Schooling Safety and security Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge 48

49 statistical supplement oceania (including australia, new zealand) Geographical Region Degree of Challange Low... High Managing relocation for your company Controlling relocation/assignment costs Moving into areas with limited infrastructure Economic instability Complying with laws and regulations Structuring compensation packages Payroll and currency issues Finding suitable local candidates Attracting qualified candidates Managing global nomads Language issues Intercultural issues Housing Transportation Schooling Safety and security Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge 49

50 statistical supplement north america (including mexico) Geographical Region Degree of Challange Low... High Managing relocation for your company Controlling relocation/assignment costs Moving into areas with limited infrastructure Economic instability Complying with laws and regulations Structuring compensation packages Payroll and currency issues Finding suitable local candidates Attracting qualified candidates Managing global nomads Language issues Intercultural issues Housing Transportation Schooling Safety and security Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge 50

51 statistical supplement central & south america Geographical Region Degree of Challange Low... High Managing relocation for your company Controlling relocation/assignment costs Moving into areas with limited infrastructure Economic instability Complying with laws and regulations Structuring compensation packages Payroll and currency issues Finding suitable local candidates Attracting qualified candidates Managing global nomads Language issues Intercultural issues Housing Transportation Schooling Safety and security Highest degree of challenge Secondary degree of challenge Lowest degree of challenge Lesser degree of challenge 51