Decoding Global Mobility – “Three Ps” Might Help! 0

Decoding-Global-Mobility

“Posting employees from one country to another can be a complex undertaking. There are many interdependent elements and variables to consider and manage. These can include immigration, payroll, employment law, remuneration planning, employment tax, social security, vendor management, shipping just to name a few. The Three “Ps” of Policy, People and Process provide a scalable model to create a seamless Global Mobility Experience”

– Lee Hamilton

As anyone involved in global mobility knows, posting employees (Assignees) from one country to another can be a complex undertaking. There are many interdependent elements and variables to consider and manage. These can include immigration, payroll, employment law, remuneration planning, employment tax, social security, vendor management, shipping and house hunting to name a few. This complexity can be significantly increased where there are multiple moves to different countries and numerous internal stakeholders to manage, all of whom are likely to have different priorities.

Of course, in addition, at the heart of an international assignment is the individual, the assignee and sometimes his/her family, who will also have they are own business and personal needs. An organization that is dealing with global mobility for the first time and does not have the in-house expertise, managing all of these elements in a coordinated and seamless fashion can seem like a mission impossible.

Procreating A Seamless Global Mobility Experience

As an advisor, I am always on the lookout for things, which can help me, simplify complexity to enable clear thinking and effective decisions. Where does the journey begin, does it start with a benchmarking exercise, borrowing some template policies, tax advice or phone a friend.

For organizations that are new to global mobility, the process might begin with an analysis of the “Three Ps” policy, process, and people. It can help you too when it comes to thinking about how you put in place the internal infrastructure and support required to manage global mobility, without getting side-tracked or bogged down in the detail too early on.

Policy

The first “P” is for Policy. Why is a policy necessary? Without a policy or adequate policy, you will be forced to come-up with assignment terms ‘on the hoof’ (i.e. without having the time for proper consideration, to iron out any cost related issues), you are unlikely to have the time to get the buy-in of all the relevant stakeholders as to the assignment terms and you will be prone to ending-up treating each individual assignment in a different way (guaranteeing a future stream of exceptions, queries, and issues).

An international mobility policy sets out the terms of assignments, from the duration of the assignment, through to the relocation package, assignment allowances and tax support that the organization will provide. The team may develop different policies for separate categories of the assignee (e.g. permanent transfers or short-term assignments) and also for specific tax arrangements (e.g. tax equalization).

Contemplation about Policies

1. Assess the priorities of the Organization

There are lots of template policies available from various sources. However, I would exercise some caution before simply copying and pasting a template policy (as tempting as this may be!) or, without some initial planning, taking a template policy and adapting. Why? Developing an effective policy means getting the right fit for your organization. In my experience, the best way of doing this is by firstly assessing your own priorities (cost, compliance, competitiveness, talent management, tax risk, assignee retention, ease of administration etc.), ordering these and then devising a skeleton/outline policy in terms for each assignment type. Challenge the drafts, In order to support what is needed for each type of the assignment?

2. Consult Widely

Consult widely on your proposed outline policy terms with all key stakeholders (which may include finance, others in HR, payroll, senior executives and employees/assignees) to get their views. In my experience, this element is sometimes rushed and/or not all relevant stakeholders are consulted. You may be missing some vital input or alienating people whom the policy affects. It will pay dividends to get people behind your thoughts before you get too far into the detail. After consulting, reviewing and refinements, the output of this is normally an agreed matrix, which includes the different assignment categories and outlines with the assignment terms for each category. Refer back to your priorities – do your proposals satisfy these? At this point, after developing your own thoughts, you may also want to think about benchmarking your policy via an external agency.

If you jump in too early with an ‘off the shelf’ template policy, this can both cloud your thinking and mean you become bogged down in detail too soon before you have really worked out what you need. Once you are happy with your matrix and it has been ‘signed-off’ by the relevant people, this is the time to then search out standard policy terms (if you must) which you can then adapt to suit and/or have specific terms drafted (if possible).

If you only have a small number of Assignees, a policy is still very useful for the purposes of consistency, identifying issues up-front and driving a smooth process. Your policy does not necessarily need to be lengthy. Policies are scalable and, as above, the key point is to produce something, which is fit for purpose, given your specific circumstances. 

3. Building a Policy Cost

By running cost estimates, the team is able to take into account the elements of estimated average cost per assignment type and the volume of assignments that are expected. The true cost of assignments is often underestimated and can sometimes come as a shock.

“An international mobility policy sets out the terms of assignments, from the duration of the assignment, through to the relocation package, assignment allowances and tax support that the organization will provide. The team may develop different policies for separate categories of the assignee (e.g. permanent transfers or short-term assignments) and also for specific tax arrangements (e.g. tax equalization).”

Process

Once you have a policy (or at least an agreed skeleton policy), you can turn your attention to the second P – Process. This means thinking about all the elements required to get your assignee from their home country to the host country, to support them whilst they are on assignment and, of course, to get them back again.

This is likely to involve immigration, drafting assignment agreements, sign-off of assignment package, cost projections, set-up on the payroll, initiating tax briefings, arranging home leave trips and much more. Making time to think about this up-front and devising a plan is invaluable and can help prevent unnecessary problems further down the line.

Contemplation of the Process

Where possible, I think it is generally a good idea to think through and then document the relevant processes in advance of initiating any assignments under the policy. A simple process map can be developed, taking into account all the key elements. The manifold benefits of a documented process map are

  • Any issues can be ironed out up-front
  • Relevant stakeholders (e.g. immigration lawyers, payroll etc.) can give inputs to make sure the process is robust; and
  • Identifying and addressing the cause of any future issues (i.e. because you can more easily see which part of the process did not work).

As part of developing a fit for purpose process, I think it is important to clearly set out the roles and responsibilities of each of the stakeholders involved in the process. For example, this may mean setting out exactly what payroll will do and what HR will do. Most issues and problems occur in assignments because individuals or departments were not aware that a certain action was their responsibility and/or assumed that someone else was taking care of it. The same principle can also apply to any external advisors that you use. That is, clearly set out and communicate your advisors’ responsibilities and agree with these in advance.

Once you have established and documented your basic processes, you can more easily identify areas of further improvement such as automation. (e.g. assignment management software).

With regard to technology and process, I would suggest that you establish your policy and processes first and then figure out which technology may best support you. Much like policy templates, you may not end up with the right result if you look for technology solutions first, not least, as it will be more difficult to discern what is right for you and what you need and you may become unwittingly ‘railroaded’.

“As part of developing a fit for purpose process, I think it is important to clearly set out the roles and responsibilities of each of the stakeholders involved in the process.”

People

Okay, so now you have a great policy and have fine-tuned and documented your processes! Ready to go? Not quite. We need to think about the last P – People.

For me, the ‘people’ bit is the most overlooked. By ‘People’, I mean considering all the people involved in the management of your assignments (HR, payroll, finance, overseas HR, advisors etc.) and assessing whether they have the right skills and experience to do what they are required to do as part of the process.

For example, does your payroll team understand how to run gross-up calculations for your tax-equalized expatriates? Does your HR team know how to set-up an inbound expatriate employee? Does your finance director understand the cost projections you are producing?

Contemplation of the People

There will often be knowledge and experience gaps in organizations when it comes to mobility, especially in those organizations who may be new to mobility. Dealing with this can be via a number of means, including training, outsourcing elements that you are unable to do internally or recruiting people with the rights skills.

The assessment of your people should also include advisors. This means assessing whether your advisor is a good fit for you. Do they have the right expertise? Does the advisor have the capability to deliver what you need in the UK and overseas? Is your advisor the right size for you (i.e. too large to provide you with an attentive service or too small to deliver what you need)?

So, there we go. The Three Ps! All of this is scalable, whether you have one Assignee or many. Hope this helps you to think about the needs of your organization, enabling you to remain focused on your priorities and the big picture.

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Lee Hamilton is a recognized expert in the field of expatriate tax he also has a wide breadth of knowledge, including employment tax and reward. He is a published writer for Tiley & Collison's Annual UK Tax Guide (2013/14 and 2014/15) and has presented on technical matters at numerous seminars in the UK and overseas. Lee is also a member of HMRC Expatriate Tax Forum. Lee has nearly 20 years' experience of delivering expatriate tax, employment tax and international social security advice to a diverse range of clients from small businesses and non-profit organizations, through to large multi-national corporations.

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