Global mobility policies, processes and systems being pushed to the limit
Monday, 29 October 2012 — Despite the influx of people being sent to work in emerging growth and emerging markets, 68% of surveyed companies in Ernst & Young’s Global Mobility Effectiveness Survey 2012 – Driving business success do not have adequate frameworks to manage payroll, tax and social security risks.
Five hundred and twenty global companies were interviewed about their global mobility assignments and nearly half intend to increase the number of staff sent to growth markets, such as Africa and China, over the next year.
Ernst & Young Human Capital Partner Kathy McCombie says despite current economic uncertainty companies are directing new investment and talent to growth and emerging markets.
“This signifies a shift compared to the last financial downturn where we saw companies stopping overseas assignments. We are now seeing companies taking a longer term view and continuing to invest to try and strike the balance to maintain margin and revenue in mature regions with an experienced workforce and more focused strategies.
Ms McCombie says there is a real disconnect between global mobility department’s aspirations and day-to-day operations with the number of assignees increasing significantly.
“The lack of control frameworks for managing payroll, tax and social security compliance, together with the increased level and complexity of its workload, could result in exposing the business to significant risks, through strategic oversights and operational lapses.
“Australian companies have also been challenged by uncertainty around the legislation for living away from home allowance, fly in fly out provisions and changes to immigration legislation both here and overseas which has impacted on their ability to be up to date with their operations,” Ms McCombie said.
The top-ranked global mobility challenges, according to the survey respondents are:
- tax compliance (19%)
- immigration (18%)
- compensation and benefits (16%)
- housing and schooling (13%)
- policy management (13%)
- payroll (5%)
Governments have also increased enforcement and pushed more compliance demands onto employers. Financial and reputational losses from inadvertently breaching regulations remain a real threat and increase risk profiles of companies.
Ms McCombie says overall companies want to be more strategic and better connect their mobility and talent programs but face operational challenges.
“Many companies are a long way away from putting in place the proper global control and compliance frameworks that can allow them be more effective in cost and risk control.”
Companies indicated that the top four compliance risks to the global mobility process include income tax reporting and withholding (39%), short-term business travelers (21%), immigration (11%) and social security reporting and withholding (5%). Almost two-thirds (65%) of all surveyed organisations do not have a formal tracking process for cross-border travelers, despite the survey noting it as the second highest compliance risk.
During the first two years after repatriation/localisation in 2011, 46% of assignees within the respondents’ companies returned to another position within the company, 27% returned to their previous positions, 20% accepted another assignment and 11% resigned. Within the global mean figures for failed assignments, there are clear regional trends.
Regionally, African companies lose 26% of returning assignees within two years of repatriation, compared with Asia-Pacific companies, which lose 10%. North American corporations manage 72% of their returning assignees into new positions or assignments but still lose 12% to resignations. European organisations, with 64% and 11%, respectively, and South American businesses, at 60% and 10%, respectively, are some ways behind.
Ms McCombie says it is essential to ensure talent management and global mobility are integrated to make sure that expertise and experience is utilised.
“Interestingly, 60% of respondents say less than a quarter of their senior management have been on an assignment, a fact that challenges how advanced global companies are in their approach and ability to be successful on the international stage.
“Growth is the primary goal for many organisations and it is essential to use your best talent to stay ahead of the pack,” Ms McCombie said.
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