TRENDS IN GLOBAL RELOCATION BIGGEST CHALLENGES

TRENDS IN GLOBAL RELOCATION BIGGEST CHALLENGES 2014 Survey EXECUTIVE SUMMARY SM

For a full copy of the Trends in Global Relocation: 2014 Biggest Challenges survey report, please contact your Cartus representative or send an email to trustedguidance@cartus.com. CARTUS biggest challenges 2014 Survey EXECUTIVE SUMMARY 2

Introduction & Objectives Cartus fourth annual Trends in Global Relocation: 2014 Biggest Challenges survey was conducted in August of 2014 and elicited responses from 164 mobility managers based around the world. Respondents are multinational companies with an average global relocation volume of 543 annual moves, representing more than eight million employees. The 11 Geographical Regions North America (including Mexico) Central & South America Europe (including Western Russia) Middle East Indian Subcontinent Southeast Asia (including Malaysia and Indonesia) North & Central Asia (including Eastern Russia) Greater China Africa Oceania (including Australia and New Zealand) Northeast Asia (including Japan and Korea) CARTUS biggest challenges 2014 Survey EXECUTIVE SUMMARY 3

Respondent Demographics Survey respondents represent organizations across all industry sectors, geographic regions, and ranges of relocation volume. Respondents by Industry Sector Manufacturing 21% Tech 16% Finance 15% Raw Materials 5% Pharma 4% Oil and Gas 5% Service/Media 20% Consumer Goods 14% Respondent Locations Number of Employees Moved Annually by Respondents Americas 66% 0 25 18% 26 100 26% 101 250 13% 251 500 15% APAC 19% 501 1,000 11% EMEA 15% 1,000+ 17% CARTUS biggest challenges 2014 Survey EXECUTIVE SUMMARY 4

Executive summary Following are the key findings of this year s survey, showing trending year over year for the leading findings and a look at some of our new hot topic areas. Cost Control, Housing, and Compliance are the Top Three Challenges for Relocation Managers Controlling relocation/assignment costs has topped the list of challenges for relocation managers for the past three years. This year, respondents cited as issues high cost of living, schooling, housing, and the need for continual exceptions in some locations. Housing and complying with laws and regulations round out the top three challenges, and have consistently been in the top three in recent years. In both traditional and emerging markets locations, lack of desirable housing and rental costs complicate the housing search. In the area of compliance, visa and immigration issues such as complex regulations, long processing periods, and changing regulations were cited as increasing challenges. Top Three Challenges (percent of respondents) 77% 47% 45% Controlling relocation/ assignment costs Housing Complying with laws and regulations Africa Named Most Challenging Region; India and China Take the Next Two Spots Respondents this year named Africa the most challenging region for managing relocation programs. Safety and security was named the region s biggest challenge, likely driven in part by concern over continued unrest in many areas. Moving into areas of limited infrastructure and transportation rounded out the top three challenges for the region. Last year s most challenging region, Central and South America, slipped to fifth place. The number two and number three most challenging regions, the Indian Subcontinent and Greater China, were high on the list of challenging regions last year as well number four and number two, respectively. The challenges within the regions did show some changes year over year; transportation, this year s top issue for India, was not even mentioned last year. Traffic and congestion are big issues in the region, and most companies provide cars and drivers for their assignees, which can increase costs. China s issues have remained fairly consistent, with intercultural issues topping the list. Intercultural issues are frequently cited as difficulties for assignees (particularly those who are from Western countries), and not only in locations outside of Tier I cities. (See chart on next page.) Most Challenging Region AFRICA CARTUS biggest challenges 2014 Survey EXECUTIVE SUMMARY 5

Chart 1: Most challenging regions and top challenges Region Africa Challenges 1. Safety and security 2. Moving into areas with limited infrastructure 3. Transportation Indian Subcontinent 1. Transportation 2. Intercultural issues 3. Moving into areas with limited infrastructure Greater China 1. Intercultural issues 2. Finding suitable local candidates 3. Controlling relocation/assignment costs North America Remains Number One for Importance to Business Goals North America, last year s top-ranked region in terms of importance to companies business goals, remains at the top of this year s list. Once again, it also remains at the bottom of the list of regions companies found most challenging for managing relocation, as the chart below shows. Greater China remained in the top three regions for both challenges and importance to business goals, indicating the need for continued attention to both issues and solutions for this critical region. Chart 2: Most challenging regions vs. importance to future business goals (percent of respondents with 4 or 5 on a 5-point scale) Challenge in Managing Relocation for Your Company Location Percentage Africa 69% Indian Subcontinent 55% Greater China 53% Middle East 51% Central & South America 47% North & Central Asia 36% Northeast Asia 32% Southeast Asia 32% Europe 21% North America 18% Oceania 15% Importance to Future Business Goals Location Percentage North America 51% Greater China 41% Europe 35% Central & South America 29% Southeast Asia 26% Northeast Asia 21% Middle East 19% Africa 19% Indian Subcontinent 15% North & Central Asia 11% Oceania 11% CARTUS biggest challenges 2014 Survey EXECUTIVE SUMMARY 6

North America Sees Largest Increase in Relocation Volume When asked into which regions they had seen the biggest increases in relocation volume over the past two years, respondents once again named North America, nine percentage points higher than last year (53% in 2014 versus 44% in 2013). Greater China, last year s number-two location, fell to number three this year, dropping eight percentage points, while Europe rose from number three last year to number two this year, with a one percentage point increase in respondents. Regions with the Greatest Increase in Relocation Volume (percent of respondents) North America 53% Europe 35% Greater China 29% Hot Topics Are Stealth Expatriates Returning? Companies Seeing an Increased Focus on Tracking Employees As many states and countries become more intent on capturing tax revenue, they are also becoming more diligent in pursuing taxes owed for employees on temporary or short term-assignments. These types of assignments have been increasing for a number of years and can give rise to stealth expatriates, employees who are not being tracked or their movement is not being reported on with regularity. Sixty-four percent of companies indicated that they are seeing an increased focus on tracking employees on assignment. This focus on employee tracking was also indicated in our 2014 Global Mobility Policy & Practices survey, where nearly half (47%) of respondents said that better tracking of assignees days in country was an area of increased focus in managing compliance risks. 64% of respondents see increased focus on tracking employees CARTUS biggest challenges 2014 Survey EXECUTIVE SUMMARY 7

Immigration Issues Intensify; Up-Front Planning is Key With visa and immigration regulations becoming increasingly complex and companies continuing to send their assignees to an expanding number of locations, an increase in focus in this area is not surprising. In fact, the number one immigration-related area in which companies are seeing an increase is the need for up-front planning due to the length of time it takes to obtain visas (83%). Internal compliance controls (58%) and the need for visa issues to be taken into consideration at the time of candidate assessment (57%) were also frequently noted by respondents. 83% said up-front planning for visas is key visa Companies Using Crisis Planning and Security Briefings to Respond to Safety Concerns When asked to respond to concerns about political instability or security issues, nearly half of companies are increasing crisis planning (47%) and security briefings (44%). The majority of respondents indicated that they were not increasing security for special groups, temporarily putting moves on hold, or repatriating assignees. Proactive crisis plans, including up-to-date lists of assignees in country, travel plans, and contact information, are examples of things companies have often found invaluable in emergency situations. Security briefings, both prior to departure and as needed at the host location, can give needed heads up information on developing situations and help assignees to take independent precautions for themselves and their families. Interestingly, only 18% of respondents said they were putting security in place for special groups such as women assignees or families, but this may reflect the position that a well-thought-out crisis plan includes all of those individuals and can be modified as needed for specific situations. Country-Specific Challenges Health, Environmental, and Medical Issues Lead Challenges in China Companies regularly report ongoing concerns with health, environmental, and medical standards in China in both Tier I and Tier II-IV cities. Specific issues include food safety, air pollution, paint toxicity in apartments, authenticity of mainstream medication, and others. Preventive measures such as masks and air testing are common. In some situations, facilities such as schools are reported to have taken extreme measures, including building domes over playing fields. Companies frequently see this as an issue leading to assignment turn-downs, or split family situations. Top Challenges in China Tier I Cities Heath, environmental, medical standards (including food, air 60% pollution) Costs 58% Regulatory issues (bureaucracy, 54% complexity, etc.) Top Challenges in China Tier II-IV Cities Heath, environmental, medical standards (including food, air 54% pollution) Appropriate schooling 51% Appropriate housing 49% Regulatory issues (bureaucracy, 49% complexity, etc.) CARTUS biggest challenges 2014 Survey EXECUTIVE SUMMARY 8

Housing Presents Biggest Challenge for Companies and Assignees in India In India, appropriate housing tops the list of concerns in both Tier I and Tier II-III cities. In major cities, ongoing issues with home maintenance are also a key concern, as units that appear very plush on the surface can be lacking quality (particularly from a Western point of view) in terms of plumbing, construction, electricity, and other items. Legal recourse can be very slow, taking from months to years, and the process may be unclear and frustrating for assignees to navigate. Additionally, there can be a lack of focus in getting maintenance work done on rental properties, and language and cultural issues, particularly in Tier II-III cities, can complicate the situation even further. Top Challenges in India Tier I Cities Appropriate housing 50% Ongoing issues with housing quality and home maintenance 50% Regulatory issues (bureaucracy, complexity, etc.) 47% Top Challenges in India Tier II-III Cities Appropriate housing 65% Appropriate schooling 52% Medical facilities 52% Regulatory issues (bureaucracy, complexity, etc.) 49% Regulatory Issues/Government Bureaucracy Impact Companies and Assignees in Brazil Regulatory issues/government bureaucracy top the list of challenges in Brazil (68% of respondents), followed closely by security (66%), and cost control (46%). Regulatory issues cover a variety of challenges in Brazil, from the country s restricted currency and payroll requirements to household goods shipping and regulatory complications. Survey respondents also frequently cited visa and immigration processes and timelines as problem areas for companies and assignees. Issues with cost control, also named as a key challenge, can stem from a number of areas. Prices for housing appear to be rising at a much slower pace than the astronomical levels seen between 2008 2012 (where housing price increases were up to 194% higher in key locations), but expatriates are still competing with a newly wealthy middle class for rental units as well as schooling spaces. Security and traffic congestion lead most companies to obtain cars and drivers for assignees and often for spouses as well another area of potential cost escalation. Regulatory issues #1 challenge in Brazil Top Challenges in Brazil Regulatory issues, government bureaucracy 68% Security 66% Cost control 46% CARTUS biggest challenges 2014 Survey EXECUTIVE SUMMARY 9

SM Related Cartus Research Following are several of Cartus recent surveys that we used as a reference point. For more information on relocation and international assignment trends and additional Cartus surveys, visit http://guidance.cartusrelocation.com/research-and-trends. TRENDS IN GLOBAL RELOCATION Global mobility policy & practices 2014 Survey report 2014 Global Mobility Policy & Practices Survey In this survey, respondents share how and where they are sending their transferring employees, the challenges they are facing, and the solutions they are employing. Download the report: http://guidance.cartusrelocation.com/research-and-trends-2014-globalmobility-policies-and-practices-survey. TRENDS IN GLOBAL RELOCATION TalenT ManageMenT and the Changing assignee Profile 2013 Survey report 2013 Talent Management and the Changing Assignee Profile Survey In this survey, respondents provide insight into the talent management aspects of their mobility programs and how these aspects are influenced by the profile of today s assignees. Download the report: http://guidance.cartusrelocation.com/research-and-trends-2013-talentmanagement-report. Industry Profiles To see how your program stacks up against your industry peers, email us at trustedguidance@cartus.com to request industry-specific profiles for the Global Mobility Policy & Practices survey or the Talent Management and the Changing Assignee Profile survey. CARTUS biggest challenges 2014 Survey EXECUTIVE SUMMARY 10

CARTUS biggest challenges 2014 Survey EXECUTIVE SUMMARY 11