Published on March 7, 2014
www.pwc.com/hrs Talent mobility 2020 and beyond The future of mobility in a globally connected world
Background Our globally connected world and your business The year 2020, which once seemed so distant, is approaching rapidly. The future promises to look very different, particularly in the way the global workforce is sourced, organised and managed; an explosion of activity and business growth potential in emerging markets has already contributed to a significant increase in the need for companies to move people and source talent from around the world. Talent mobility is in the grip of radical change and in this report we investigate the emerging trends, what they mean for talent, mobility and resourcing strategies, and the urgent need for alignment with wider business growth plans and strategy. We’ve drawn from several sources in producing this report: • Information from our database representing 900 companies that have been surveyed on assignment trends over the past 20 years. • Findings from scenario planning studies for our Managing tomorrow’s people series, which explored the future of work to 2020.1 • Results from PwC’s annual global CEO survey.2 • Findings from PwC’s 2011 survey of millennials, which resulted in more than 4,300 responses.3 • Interviews with PwC talent mobility specialists supported by the views of several global organisations from around the world. Our conclusions paint a business world that’s far removed from that of today. Talent and mobility strategies will need to progress significantly to keep pace with this change and the further increases in mobile employee numbers we expect to see. We’re not yet consigning existing models for international assignments to the history books, but the changes underway surely call for a radical rethink. “The demographic changes that we see occurring in many of the regions where we operate – shrinking populations, an ageing workforce and diversifying demographics – compound the challenges we face and intensify the war for talent.” Dr Rüdiger Grube Chairman and CEO, Deutsche Bahn AG, Germany 1 Managing tomorrow’s people: The future of work to 2020, PwC 2 PwC’s 15th Annual Global CEO Survey, 2012 3 Millennials at work: Reshaping the workplace, PwC, 2011
Contents Executive summary 1 A changing world – the next decade 5 Populations change and shift Urban populations on the rise Future view: New cities The nature of work in 2020 6 7 9 10 Modern mobility 11 Mobility, but not as we know it 11 Future view: Mobility without moves 13 Mobility in financial services 14 Managing modern mobility 15 Talent on the agenda 16 Retaining the best 16 Growing talent from within 17 Adapt and survive 17 Managing millennials 19 Future view: Choice and flexibility 22 The risks of modern mobility 23 Western employers lose their appeal 23 Pressure on pay 24 Focus on Africa 24 The politicisation of immigration 25 Pressure on HR 25 Creating a ‘modern mobility’ strategy 27 28 Future view: Delivering the experience Conclusion 29
Executive summary The world in 2020 and beyond The business world is changing rapidly and this has transformed the way the global workforce is sourced, organised and managed. Knowledge, trade, technology, capital and goods are more globally connected than ever before. Explosive growth in emerging markets is creating a huge increase in the number of employees working outside their home location and critical shortages in talent in specific markets and disciplines have pushed mobility up the boardroom agenda. “We’re deploying our assets and operations in a more flexible manner so that we can control costs not only with regard to predictable business cycles, but also to cope with unpredictable macro-economic events.” Jouko Karvinen, CEO, Stora Enso Oyj 1 But this isn’t mobility as it’s been understood in the past; this is modern mobility and it brings its own unique set of challenges: • More mobility – but not as we know it. Assignee levels have increased by 25% over the past decade; we predict a further 50% growth in mobile employees by 2020. But the era where assignments meant a three or four-year relocation followed by a return home is coming to an end. New forms of global mobility have developed in response to business demands and employee preferences, many of which don’t involve relocation at all. • New talent, new destinations. The growing importance of emerging markets has created a significant shift in mobility patterns. Skilled employees from emerging markets are increasingly in demand at home and abroad. Domestic multinationals are increasingly attractive to local talent. delivery of the mobility experience and the underpinning career promise (or ‘deal’) will become more critical in the future as new, unfamiliar and often less desirable locations come into play. • Giving people what they want. Mobility opportunities are now recognised as a key element in attracting, retaining, developing and engaging talent. This is particularly true of the millennial generation; 71% say they want and expect an overseas assignment during their career. But as the workforce becomes more diverse this inevitably affects global mobility strategies. The number of female assignees, for example, has doubled in the past 10 years from 10% to 20%. The preferences and expectations of mobile employees will have to be carefully managed in the next decade.
• Bringing down the political barriers. Businesses need to move and deploy people quickly, but tax, social security and immigration requirements often stand in their way. Politics and political unrest are constantly shifting the barriers to mobility and any global mobility strategy needs to be nimble enough to react quickly to changes. By 2020, governments and regulators will need to accept the economic benefits of talent mobility to stimulate economic growth. This acceptance smooths the way to greater collaboration between governments and businesses to remove some of the barriers to mobility around the world. • More sophisticated programmes. As we look forward, mobility strategies will need to be more sophisticated to deal with growing deployment demands, while simultaneously managing the very different needs and expectations of three generations of workers. The best mobility strategies will be agile, adaptable and constantly evolving to meet the specific requirements of the business and different groups of employees. • Powered by technology. Technology will play a key role in global working arrangements and help to support compliance obligations; however, technology will not erode the need to have people deployed ‘on the ground’. • Mobility functions rising to the challenge. The pressure on HR to provide evidence and insight to support mobility decisions and to manage programme costs will only increase in the future, and this means developing a predictive way of thinking – and embracing the analytical techniques that support it. How will your business operate in this new environment? What talent will you need, to compete, and how will you safeguard your talent pipeline for the long term? And how will you align your Mobility, Global Resourcing and Talent Management strategies with wider business strategy? The winners of 2020 and beyond will be those companies that adjust their strategies now. The mobile population in large organisations is increasing 50% 200 Average number of mobile employees1 growth 25% growth 100 0 1998 2009 200 300 400 500 2020 1. 2020 projection: As the business model of an organisation evolves from multinational to international to global, the mix shifts accordingly (from 80% of mobile employees from HQ to 60% from HQ to 40% from HQ). Numbers continue to increase and the definitions of mobility have broadened – even with increasing numbers, costs may be flat due to changes in package design and focus on lower cost alternatives. Mobile employee type mix has evolved from 50% executive to 10% executive. Source: PwC international mobility database – sample 900 companies Companies are hosting mobile employees in more countries than ever before The average number of host locations supported by a global organisation continues to rise 1998 50% 13 2009 growth 22 2020 33 0 5 10 15 20 25 30 35 Average number of host locations per organisation Source: PwC international mobility database – sample 900 companies Talent mobility – 2020 and beyond 2
Three eras of international assignments 1970–1990 International assignments are mostly driven by large multinationals based in the US and Europe. These organisations send talent from the HQ country out into the field to manage operations in other parts of the world. Many assignments are from the US into Europe, but oil and gas, mining and other industries dependent on natural resources regularly send staff to more far‑flung destinations. Assignees are usually sent off for a two to five-year period and are incentivised with attractive expatriate packages. 1990–2010 Demand for global mobility of talent increases as new markets emerge for companies to sell their products and services to, and also manufacture their goods at lower cost. Offshoring gathers pace. A new breed of mobile worker emerges alongside the expatriate and meets the globalisation demand through commuter, rotational, and technology-enabled virtual assignments. The flow of talent is still predominantly from West to East, or intracontinental, but companies begin to tap into rich talent pools in emerging markets, particularly India and China. 3
Future view 2020 Global mobility continues to grow in volume. Within the context of closely aligned international regulatory frameworks, the growth of cross-border acquisitions by sovereign wealth funds, lingering public investments in private business concerns, greater security cooperation between nations, and information technology that can identify and connect talent in an instant, global mobility becomes part of the new normal. Mobility of talent is fluid. For example, a Chinese company may engage a European team to manage an investment in Africa. “We try to avoid overseas assignments just to fill a gap, but sometimes you just can’t avoid it.” Marijn Dekkers, Chairman, Bayer AG Talent mobility – 2020 and beyond 4
A changing world – the next decade The global marketplace is a constantly shifting landscape and in recent years the primary development has been a steady but relentless migration of economic power from West to East. Over the coming decades, demographic changes and economic forces will combine to transform the business landscape still further. New centres of growth will emerge; Western multinationals are already struggling to compete with new and dynamic multinationals from emerging economies in the fiercely competitive battlegrounds of Africa and Latin America. The next decade promises to be even more testing. 5
Populations change and shift A combination of population changes and an ageing workforce in many countries, and the evolution of country-based multinationals into truly global entities has created a fundamental change in how and where business is carried out. A sharp growth in international mobility is a clear consequence of this, as organisations work hard to make sure that they have the people they need, where they need them. These demographic shifts are intensifying. The ageing workforce and impending retirement of the baby-boomer generation will pose serious challenges for most developed countries and even some emerging markets such as China. By 2015, one‑third of China’s population will be over the age of 50 and annual workforce growth will be less than 5%. In India, by contrast, over half of the population is under the age of 30. Proportion of the world population aged 60 years or more Median age 2011 25% 21% 20% World 15% 8% 10% 26 years 2050 36 years 10% Lowest median age 5% Yemen Niger (15 years) Japan 1950 2000 Source: UN report World Population Ageing 1950–2050 2050 (20 years) Spain Highest median age (41 years) (55 years) Investment in education in Asia and Africa is creating a steady stream of talented youngsters who will increasingly be in demand at home and abroad. At the same time, the population of Europe is in steady decline. These are serious challenges that multinational organisations must face if they are to succeed in the future. Talent mobility – 2020 and beyond 6
whose population is projected to increase from 2.7 billion in 2011 to 5.1 billion in 2050. Over the same period, the rural population of the less developed regions is expected to decline from 3.1 billion to 2.9 billion. In the more developed regions, the urban population is projected to increase modestly, from 1 billion in 2011 to 1.1 billion in 2050. World urban population Urban and rural population trends 1950–2050 6,000 5,000 Population (millions) Urban populations on the rise The world urban population is expected to increase by 72% by 2050, from 3.6 billion in 2011 to 6.3 billion in 2050. By mid-century the world urban population will likely be the same size as the world’s total population was in 2002. Virtually all of the expected growth in the world population will be concentrated in the urban areas of the less developed regions, 4,000 3,000 2,000 1,000 0 1950 1960 1970 1980 1990 2000 More developed regions – Urban population More developed regions – Rural population Less developed regions – Urban population Less developed regions – Rural population 72% Increase The world urban population is expected to increase by 72% by 2050 Source: World Urbanization Prospects: 2011 Revision, produced by the UN Department of Economic and Social Affairs 7 2010 2020 2030 2040 2050
Population of urban centres with 10 million inhabitants or more Rank – 2011 Rank – 2025 Population 1. Tokyo, Japan 37.2 2. Delhi, India 3. Ciudad de México (Mexico City), Mexico 4. New York, USA 5. Shanghai, China 6. São Paulo, Brazil 7. Mumbai, India 8. Beijing, China 9. Dhaka, Bangladesh 10. Kolkata, India 11. Karachi, Pakistan 12. Buenos Aires, Argentina 13. Los Angeles, USA 14. Rio de Janeiro, Brazil 15. Manila, Philippines 16. Moskva (Moscow), Russian Federation 17. Osaka-Kobe, Japan 18. Istanbul, Turkey 19. Lagos, Nigeria 20. Al-Qahirah (Cairo), Egypt 21. Guangzhou, China 22. Shenzhen, China 23. Paris, France 22.7 20.4 20.4 20.2 19.9 19.7 15.6 15.4 14.4 13.9 13.5 13.4 12.0 11.9 11.6 11.5 11.3 11.2 11.2 10.8 10.6 10.6 “37 cities will have 10million or more citizens by 2025. The number with more than 20million citizens will double.” Source:United Nations, Department of Economic and Social Affairs, World Urbanization Prospects, The 2011 Revision Population 1. Tokyo, Japan 2. Delhi, India 3. Shanghai, China 4. Mumbai, India 5. Ciudad de México (Mexico City), Mexico 6. New York, USA 7. São Paulo, Brazil 8. Dhaka, Bangladesh 9. Beijing, China 10. Karachi, Pakistan 11. Lagos, Nigeria 12. Kolkata, India 13. Manila, Philippines 38.7 32.9 28.4 26.6 24.6 23.6 23.2 22.9 22.6 20.2 18.9 18.7 16.3 14. Los Angeles, USA 15. Shenzhen, China 16. Buenos Aires, Argentina 17. Guangzhou, China 18. Istanbul, Turkey 19. Al-Qahirah (Cairo), Egypt 15.7 15.5 15.5 15.5 14.9 14.7 20. Kinshasa, Democratic Rep. of the Congo New 21. Chongqing, China New 22. Rio de Janeiro, Brazil 23. Bangalore, India New 24. Jakarta, Indonesia New 25. Chennai, India New 26. Wuhan, China New 27. Moskva (Moscow), Russian Federation 28. Paris, France 14.5 13.6 13.6 13.2 12.8 12.8 12.7 12.6 12.2 29. Osaka-Kobe, Japan 30. Tianjin, China New 31. Hyderabad, India New 12.0 11.9 11.6 32. Lima, Peru New 33. Chicago, USA New 34. Bogotá, Colombia New 11.5 11.4 11.4 35. Krung Thep (Bangkok), Thailand New 36. Lahore, Pakistan New 37. London, United Kingdom New 11.2 11.2 10.3 Talent mobility – 2020 and beyond 8
Future view New cities Population shifts will have a strong influence on where organisations will do business over the coming decades. Much of the population growth over the next 30 years will be concentrated around urban areas in emerging economies as these countries begin to mirror developed economies. Today, for example, in developed countries 75% of the population live in urban areas and this will rise to 84% by 2030; in less developed regions only 40% live in urban areas today, but this will increase to 56% by 2030. China’s growth means that new urban centres are constantly evolving. New cities are initially selected by the government, which through tax incentives and grants creates a fertile site for companies. Housing, schools and hospitals soon follow and a new thriving city, ripe for multinationals, is born. One of the newest is Wuhan, 750 miles inland from Shanghai, with a population of 9 10 million. It’s estimated that Wuhan’s economy is growing at an annual rate of over 12% and that GDP will double within five years. China is not alone – a similar pattern is emerging in Brazil, India and Mexico, albeit at a slower rate. The emergence of new commercial centres away from capital cities will create a new demand for domestic mobility in the next decade as well as difficult challenges for HR – such as whether ambitious employees will see assignments to newer cities in their home economy as a step backward.
The nature of work in 2020 In the longer term, economic, social and demographic forces are steadily leading towards a fundamental change in the way we work, and in the way corporations organise their workforce. We’ve predicted that modern trends will help to create a future where tensions exist between fragmentation and consolidation and between collectivism and individualism. We speculated that three possible business approaches coexist,4 each impacting on a company’s strategy for dealing with talent issues. 2020: three worlds Fragmentation ‘Orange World’, where businesses are fragmented and companies are small and nimble, relying on an extensive network of suppliers. Companies have multiple clients and contracts and they routinely supplement their workforce with a globally diverse network of ‘team workers’ – technologically savvy, networked employees who are contracted on a supply and demand basis, anywhere in the world. Collectivism Each of these scenarios calls for a unique approach to talent management and to global mobility, which will place specific demands on HR and business. Individualism ‘Green World’, where companies have ‘Blue World’, where corporations are king developed a powerful social conscience that’s closely tied to their brand. Their focus is on sustainable and ethical business practice and they attract employees with values that reflect their own. Their success is largely driven by a high degree of employee engagement. This impacts business decisions about mobility and the way employees work. and individual preferences override belief in collective social responsibility. These companies have invested heavily in the talent pipeline and believe in developing people as assets and take a paternal approach to their workforce. While the work is pressurised and fast-paced, employees are committed, well trained and more likely to remain with a single employer long-term. Integration 4 Managing Tomorrow’s People: How the downturn will change the future of work Talent mobility – 2020 and beyond 10
Modern mobility Mobility is evolving from a straightforward transfer of skills to a far more complex concept, designed to address a diverse set of business needs: • The need to develop well-rounded leaders of the future, with a truly international perspective. • The need to offer exciting career opportunities to the best talent as competition to attract and retain the best intensifies. • The recognition that an organisation can benefit from a two-way transfer of knowledge, skills and experience – every market is a fertile ground for new ideas. • The recognition that in an increasingly international world where key roles often have a regional perspective and travel is relatively painless, the idea of a ‘home’ country is becoming less relevant. 11 Organisations are innovating in their approach to global mobility, partly through necessity as they adapt to the requirements of the changing business world and partly to adapt to the preferences of different generations of employees. Mobility, but not as we know it The critical need for companies to shore up skills in particular disciplines, regions and projects is creating a sea-change in international assignments. Where assignments were typically ‘duration based’ e.g. for three to five years, followed by a return to headquarters or home location, short-term ‘purposebased’ assignments are becoming increasingly popular. The main priority for organisations is that they have the right skills in the right place at the right time. How that’s done is set to become a more fluid concept, driven by strategic need but also by the desire to optimise the investment in a mobility programme. Many more mobility solutions are developing, designed for tomorrow’s business realities:
Short-term assignments, often lasting a year or less have become more popular; 20% of assignments now last less than 12 months, compared with 10% in 2002.5 Short-term assignments are generally more appealing to younger workers who want to broaden their experience than to those with families, as disruption is minimised. The (generally) lower costs simultaneously make short-term assignments appealing to employers. Project-based assignments. Organisations are bringing selected employees from different parts of the organisation together for a specific project, requiring some to relocate temporarily, or travel frequently while the work is carried out. Commuting and extended business travel allows assignees to work in a specific location without relocating and has become a viable alternative to relocation for employees with family commitments, and in roles that require extensive travel by their nature. Global nomads. Regional leaders often find that their role requires extensive business travel and as a result they are constantly on the move. Similarly, some specialists move from project to project to the extent that they effectively have no ‘home’ country. Intra-country mobility is on the rise as organisations look to maximise their investment in mobility. It may be easier and more effective, for example, for a company to transfer skilled workers from Shenzen to Huangshan or from Mumbai to Ahmadabad, than to move workers from the US or other mature markets. One-way relocation, as organisations move their regional or global headquarters in order to be closer to business interests and the fastest-growing markets, meaning the permanent relocation of key managers and their families. Rotational employee programmes, often used in the development of high‑potential employees and in specific industries, are becoming increasingly internationalised. Virtual mobility is the final piece in the jigsaw. Technological innovation has allowed employers to bring the best people, wherever they may be, to work and train together. Mobility is evolving, but this greatly increases the complexity of managing a global mobility programme that may involve a diverse selection of approaches and in an environment where organisations need to move talent quickly, as well as monitoring the risk and compliance, costs and return on investment. Contingent labour is increasingly being used by organisations to meet short-term and specialist demand. Reverse transfers, where top performers from emerging markets are moved into developed markets, usually on a short-term assignment, to gain valuable experience and skills. 5 PwC Global Mobility Effectiveness Survey 2012 Talent mobility – 2020 and beyond 12
Future view Mobility without moves Many of the new approaches to global mobility have an element in common – the lack of relocation. Organisations are questioning whether, in this connected society, there’s a pressing need for a worker to physically relocate for their work: Does the employee need to be in a particular location all the time? Or just when they need to be? The best candidates for overseas assignments may not be ready or willing to relocate, so alternatives to traditional mobility such as virtual meetings and commuting are an efficient way of making sure that the best skills are made available. Extended business travel and short-term, as-needed visits are an effective way of moving skills where they need to be and often make the most sense for roles that require extensive travel anyway. Overall, assignees (in the traditional sense) represent 1% of the global workforce, but our latest figures suggest that mobile workers, encompassing these new forms of non-traditional movement, account for between 7% and 8% of the working population.6 Long-distance commuting, on a weekly or monthly basis, is no longer seen as unusual and potentially, has no limits – it’s not strange, for instance, for key employees to fly regularly between California and China. Increasingly, employers are leaving the choice of where to live to the individual worker, but this leaves significant challenges for the HR function, which must make sure that immigration and tax compliance requirements and duty of care obligations to the employee - for example healthcare and security - are met. The main impetus for mobility without moves is not necessarily cost control, as short-term assignments and commuting are often expensive once per diem rates, accommodation and travel are taken into account. And there are other risks to manage such as the perception that a commuting worker is not fully committed to either location, and the challenge of keeping a travelling employee engaged. 6 PwC Global Mobility Effectiveness Survey, September 2012 13
Mobility in financial services The fast-emerging markets of South America, Asia, Africa and the Middle East are widely seen as more important than developed markets to the future of the financial services industry as these markets continue to expand. It’s estimated that China’s banking sector will overtake the US by 2023, and that India will become the third largest domestic banking sector, behind China, by 2050. By the same year, the leading emerging economies of China, India, Russia, Brazil, Turkey, Mexico and Indonesia will have banking assets and profits that exceed that of the G7. We already see a more systematic and centralised approach to assignment management emerging including a new emphasis on shorter, more targeted, purpose‑based assignments. And looking forward to the future, organisations are making extensive use of talent mapping, forecasting and analytics to improve their talent management strategy and align it more closely with the wider business plan. Financial services firms may have ambitious growth targets, but a shortage of talent in key areas and regions could hold them back. Talent mobility – 2020 and beyond 14
Managing modern mobility As the best companies work to align their global mobility programmes more closely with business planning and talent management, the goal is to react with greater agility as the world’s economic growth engines continue to shift, the population ages and a new generation of employees takes over. In practice, this means looking beyond the traditional concerns of logistics, compensation and tax issues, and aligning global mobility more closely to talent, succession planning and global resourcing. As well as serving to meet skills demands in different regions, international assignments are seen as critical in the development of well‑rounded talent, in the retention of key workers and development of talent pipelines for the next decade. Global mobility functions and HR professionals have always held responsibility for addressing the regulatory, compensation and tax issues associated with global mobility, and for developing the relevant policies and streamlined processes needed for assignees and the organisation itself. But as talent management becomes strategically critical, their role will take on a new level of importance. Talent constraints are imposing tangible costs on global companies Q: Have talent constraints impacted your company’s growth and profitability over the past 12 months in the following ways? Direct costs Opportunity costs 43% Our talent-rated expenses rose more than expected We weren’t able to innnovate effectively 31% We were unable to pursue a market opportunity 29% 24% We cancelled or delayed a key strategic initiative 24% We couldn’t achieve growth forecasts in overseas markets 24% We couldn’t achieve growth forecasts in the country where we were based 21% Our quality standards fell 0% 15 This will be particularly important for employers in emerging markets, most notably in parts of Asia, who are relatively new to the management of global mobility and who perhaps lack the sophisticated global mobility functions of their competitors in developed economies. Base: All respondents 2012 (1,258). Source: PwC 15th Annual Global CEO Survey 2012. 50%
Talent on the agenda Talent management has become a headache for CEOs, with only 30% saying that they have the talent they need to fulfil their future growth ambitions.7 Business leaders face a dual challenge: the short-term problem of acute skills’ shortages in specific markets and disciplines, and the longer term concern of finding and developing the talent the business will need in the future. It’s hardly surprising, then, that talent management is right at the top of CEOs’ agendas. Two‑thirds say that they plan to devote more attention to developing the talent pipeline and the future leaders of their organisation, and 78% said they expected to see changes in the way their company manages talent in the near future. In their efforts to address the talent challenge, CEOs are increasingly choosing to integrate HR, talent and succession planning, and global mobility programmes in particular, with business planning at the highest level. Retaining the best With attrition rates in many regions very high, retaining talent has become a priority; retention is a particular concern in Asia, where hiring levels and resignation rates are almost twice that in the West, and the churn rate of high-performance employees is also significantly higher. “Our starting point is to have a human capital strategy that, as much as possible, pre-empts and mirrors our business strategy and business plan. And that’s a challenge in itself.” Rohana Rozhan, CEO, ASTRO Malaysia Holdings, Malaysia 7 PwC 15th Annual CEO Survey 78% CEOs – making changes to their strategy for managing talent Resignation rate by region 6% LATAM 7% Western Europe 8% US 9% UK 10% CEE 15% Asia-Paciﬁc 0% 20% Talent mobility – 2020 and beyond 16
CEOs have a new focus on retaining the best: two‑thirds say that it’s more likely that talent in their organisation will come from internal promotions in the future. Mobility is increasingly being recognised as playing an important role in attracting, retaining and engaging talent. The challenge HR faces is in convincing organisations to look beyond the quantitative costs of international assignments and to take a longer term view of investment in talent mobility. 17 Growing talent from within There is a growing recognition that the best future leaders of today’s organisations must reflect the world in which they operate. International experience is an essential part of their development; despite the prevalence of technology that brings us all closer together, there’ll never be a substitute for experience gained on the ground. The demand for home-grown future leaders is particular strong in Asia and, as a result, many organisations are accelerating the progress of high-potential employees into leadership positions as they look to the future. The importance of mobility in building up the experience of future leaders is recognised by governments in Asia as well as businesses; the Singaporean government, for example, is encouraging local talent to gain international experience in the hope that this will create a new generation of Singaporeans who will cement the country’s reputation as an international business and financial hub in the next decade. Adapt and survive The changing composition of the workforce inevitably has consequences for assignment strategy, as does the fluid concept of family. Employees may have ailing parents to care for, and working parents form an increasing proportion of the workforce; the proportion of female assignees has doubled over the past 10 years, from 10% to 20%. Our projections see this rising to 27% by 2020. The emergence of a new approach to mobility is a clear indication that organisations understand that one size doesn’t fit all when it comes to assignments. The preference of the individual employee will become a major factor in mobility decisions, with employers flexing their strategy accordingly. The best mobility strategies will be agile, adaptable and constantly evolving to meet the specific requirements of each generation and each group of employees, and the business as a whole.
“The evolution of senior leadership teams is going to continue. I think people will have to be more global in their perspective. They will have to understand the interconnectedness around the world. That’s going to be a very important element.” F William McNabb III, Chairman, President and CEO, The Vanguard Group Inc Talent mobility – 2020 and beyond 18
Managing millennials The millennial generation, which will form the majority of the workforce by 2020, has particular characteristics that employers can’t afford to ignore. They expect to burn through a number of employers during their career and they’re looking for job satisfaction, fulfilment and fast career progression. Their focus is on interest and opportunity rather than on monetary awards. 1 How many employers do you expect to have in your career? This trait is particularly pronounced in Asia, where job-hopping is fast becoming the norm. The resignation rate in Asia currently stands at 15%, compared with 6% in Latin America.8 This could deteriorate further in the future. Many millennials have made compromises to get themselves into the marketplace over the past few years, which means that the chances of them moving on once better times arrive is higher than normal. 38% of millennials said they’re on the lookout for new opportunities, while a further 43% said they were not actively looking, but would be open to offers. 43% 38% I am always actively on the lookout for other opportunities and keep an eye on the job market I am not actively looking for another job, but would be open to offers 18% I plan to stay in my current job long‑term I would like to work outside my home country in my career 4% 1 54% 2-5 16% 6-9 9% 10+ 3% None – I expect to work myself 14% Don’t know 0% Millennials keep one eye on the job market North America and The Carribean Central and Eastern Europe 69% 72% Western Europe 70% Asia Middle East 69% 74% Africa 60% Base: All graduates South and Central America 93% 81% Australasia and Paciﬁc Islands 76% 8 Key Trends in Human Capital, 2012 19 Graduate respondents by current location
Where outside your home country would you most want to work (Top 20) 58% US UK 48% Australia 39% 33% Canada 32% Germany 31% France 28% Switzerland 23% Japan 23% Italy 23% New Zealand 22% Hong Kong Singapore 21% Spain 20% 19% Sweden 16% Netherlands 16% Brazil 16% Denmark 14% Finland 13% Norway 13% Belgium 0% The opportunity to travel and gather new skills and experience is a strong incentive for this generation and one many employers are harnessing in their efforts to attract and retain the best. Millennials have a strong appetite for working abroad; 71% of those questioned at the end of 2011 said they wanted, and expected, an overseas assignment during their career. While this is excellent news for employers, the reality is a little more complex. When asked where they would most like to work, millennials placed the US, the UK and Australia firmly at the top of their wish list. And while over half said they would be willing to work in a less developed country to further their career, only 11% were willing to work in India and 2% in mainland China – the same proportion that are willing to work in Iran. “Let’s face it. There are 80 million Baby Boomers who are going to retire over the next five to seven years, and they’re going to be replaced by 40 million Generation Xers. That’s two to one, so you’d better be developing your next generation now if you’re going to be ready for that transition.” Michael White, Chairman, President and CEO, The Directv Group Inc 70% Base: Those who like to work outside their home country Talent mobility – 2020 and beyond 20
Future view I would be willing to work in a less developed country in order to gain experience and further my career 7% 18% 34% Strongly disagree Disagree Strongly agree 19% Neither Agree 22% Base: All graduates “I expect to travel and my career will be more about enjoying the experience than earning money.” Female graduate employee, Republic of Ireland Choice and flexibility Employee choice will become a critical element in mobility strategy in the future, as employers recognise that different groups of workers have different needs and preferences. By adapting to the preferences and needs of different generations and groups of employees, organisations are likely to bring about a fundamental change in the assignment duration, package type and value. Also, allowing flexibility for employees within a global framework, so that the individual can select the assignment benefits of most value to them, the sense of employee ownership of the assignment increases, as well as recognition of the investment the organisation is making. The millennial generation is leading the way and many employers have already modified their global talent mobility strategy specifically to appeal to this growing section of the workforce. Some organisations are offering international experience to new recruits straight out of college, and one company PwC is working with has tailored its international assignment strategy to millennials by making overseas’ assignments available earlier, before they have family ties, and for shorter periods. Employee-driven assignments are by no means unusual, particularly when an organisation is keen to retain key talent. This is beginning to go beyond a straight choice of assignment location, though to a more extreme lifestyle or circumstance-driven decision. If a valuable worker wants to live in a particular country, modern technology makes it possible, even if the work is elsewhere. And if an employer wants to keep them, they’ll make it happen. It’s become increasingly clear that one size doesn’t fit all when it comes to employees and that’s also true of mobility. Allowing assignees the flexibility to choose from a range of benefits that best meet their needs and preferences and those of their family (however they may define it – and the definition is changing every year) increases the likelihood of a candidate accepting an assignment, of retaining the employee at the end of the posting and maximising the investment made by the employer. Talent mobility – 2020 and beyond 22
The risks of modern mobility Western employers lose their appeal Workers from emerging economies have historically placed a high value on education, experience and skills earned in the West. But not for much longer – by 2020, domestic multinationals in China, India and other emerging markets will match and even exceed Western multinationals in terms of remuneration and career development. This means that skilled workers from emerging economies will return home to exploit their new-found skills in the lucrative domestic markets. Local workers with international experience are often far more attractive to domestic employers than foreign workers in the same market; we’ve already seen Brazilian organisations, for example, that are more than willing to search for the best Brazilian workers overseas and tempt them home. These returning locals can typically command better pay than their local counterparts, and an entirely new compensation structure is developing. HR professionals need to be prepared to manage the career and remuneration expectations of these East–West–East pioneers. Highly skilled Chinese workers start to favour domestic employers 2007 41% 9% Would like to work for a Western multinational Would like to work for a Chinese employer 2010 44% Would like to work for a Western multinational Source http://www.executiveboard.com 23 28% Would like to work for a Chinese employer
Pressure on pay Economies, living standards and compensation levels are beginning to harmonise across the globe, although the transition won’t be easy. Pay scales in emerging markets are relatively low up to a certain level, but salaries are beginning to reflect the boom and the local salary structures for executives may be higher than in mature markets. Higher pay, sometimes combined with lower tax rates creates local anomalies that have the potential to sabotage a multinational’s assignment compensation strategy, making the ‘local-plus’ pay approach more attractive. Separate remuneration policies for distant geographical locations will be a distant memory by 2020. Instead, the standard will become an overarching global policy system that’s aligned to the talent mobility strategy. Some organisations have already adopted ‘destination pay’ and ‘local plus’ remuneration methodologies across many of their locations, allowing employees to be more quickly and easily deployed in a cost-effective way. The definition of ‘plus’, though, will be flexible enough to allow employers to be responsive to local market conditions rather than a global mandate. Focus on: Africa Africa has become one of the major battlegrounds for large multinationals. Natural resources have long been the focus for organisations entering the African arena, but increasingly, investors are attracted to the fast‑growing infrastructure and consumer markets. Sectors on the rise include telecoms, financial services, retail and pharmaceuticals. Traditionally, Africa’s major business partners have been the US and Europe, but in recent years investors from emerging markets – most notably India and China – have moved into the market, sometimes with more immediate success than their Western counterparts. Organisations that were built in emerging economies have been able to exploit the complex, uncertain and challenging African environment by applying the many lessons they have learned at home. The strong growth in Africa has inevitably exacerbated a skills’ shortage, and managerial and specialist workers are in very short supply. While the region is rich in human capital – 40% of the population are under the age of 15 – there is a critical need for better education and training. A three-tiered compensation structure is already evolving in some African countries, particularly across central Africa. This has previously been seen in parts of Asia, most notably China, and that reflects the three emerging groups of employees: Local employees: Generally, local nationals, these permanent employees receive a local compensation and benefits package in line with local market practices. ‘Local plus’ employees: A relatively new group of employees are these returning nationals, who were often educated and/or gained work experience in the West. This group can command a premium local salary and other benefits such as a housing subsidy and educational benefits for their children. Global assignees: These designated assignees of any nationality receive full allowances for the cost of living, home leave, relocation benefits and tax equalisation. Talent mobility – 2020 and beyond 24
The politicisation of immigration The acceleration of global mobility is happening, it seems, in spite of governments in many regions, rather than aided by it. We’ve long argued that those countries that facilitate the free movement of labour are more likely to become the most economically competitive. Those countries that recognise that their ageing workforce will soon create a pressing need for imported talent have already taken the first steps towards lowering their immigration barriers, and we predict that more countries will adopt less restrictive immigration in the future. But it won’t be easy, as recent history has illustrated. 25 The economic turmoil of recent years, combined with political instability and unrest in many parts of the world, has pushed immigration up the political agenda. Borders have tightened in many regions, as some governments attempt to restrict immigration in their response to low employment, while others bow to concerns over national security. In a business world where organisations will have to move people faster and more often, this increased politicisation of immigration is a problem. The political awareness to anticipate immigration changes will become an essential skill. We expect immigration issues to be one of the major contributors to the increase in short-term assignments and business travellers by 2020, as businesses navigate immigration requirements. In the longer term, though, the clear economic benefits that talent mobility brings will encourage greater collaboration between businesses and governments to remove some of the barriers. Pressure on HR The nature of global mobility has moved well beyond its traditional form and the mobility function is no longer restricted to delivering services to assignees and other stakeholders; it will become a vital strategic tool that requires a predictive rather than reactive mindset. Modern mobility has widened the demands placed on the global mobility function, which must now: • manage compliance and risk • deliver a good, or preferably excellent, assignee experience so the worker can concentrate on their new role • understand, report on and manage costs • make sure that the organisation gets the best value for money and report on the return on investment in a mobility programme • contribute to developing a sustainable talent supply • promote the rapid deployment of key skills and talent • develop meaningful management information to aid business strategy and decisions • partner with the business, understand the wider business strategy and then develop effective communications, policies and processes to deliver the talent mobility strategy. And at the coalface, the workforce will become increasingly diverse as mobility increases. This puts enormous pressure on HR and global mobility functions, skills and policies, which may struggle to keep up with the pace of change.
“I believe organisations have to find their own solutions. We run a talent factory of 700 to 800 people here in India and we are working on creating a global talent pool of about 100 people – 60 of them from India and 40 from other countries – so that we can send them anywhere across our operations. We hope to have this talent pool ready within the next three years.” Baba Kalyani Chairman and Managing Director, Bharat Forge Ltd, India Talent mobility – 2020 and beyond 26
Creating a ‘modern mobility’ strategy As organisations align their global mobility programmes more closely with talent management and overall business strategy, a ‘new normal’ for mobility will emerge. Mobility will encompass a broad range of experiences, short and long term, project-based and assignee-led. It will encompass virtual mobility and long-range commuting, and play a vital role in the development of future leaders and the retention of valued staff. A closer eye on compliance The line between international assignments and business travel is becoming more blurred as time moves on. This raises the question of whether it still makes sense to separate the management of business travel and global mobility. In some organisations, business travel is managed by business units without oversight from HR, and this represents an increasing compliance risk. A borderless workforce If companies are to become nimble enough to respond to unexpected changes, they should see their workforce as essentially borderless. That could mean developing talent where the jobs are, relocating talent to the jobs, or moving jobs closer to sources of talent, within the constantly shifting constraints of international immigration law. Predicting trends Talent mobility will become an important strategic tool. The pressure on HR to provide evidence and insight to support mobility decisions will only increase in the future, and this means developing a predictive way of thinking – and embracing the technical data techniques that support it. Cultural and language differences can be a significant hurdle when expanding into new markets; the challenge for employers will lie in attracting and developing workers who are able to adapt and fit to an unfamiliar workplace. 27 The use of predictive analytics in HR is still in its relative infancy, but an increasing number of organisations are beginning to embrace the concept. The data is available, but more sophisticated analysis would provide valuable trend information and the potential to identify risks. Predictive analysis is already commonly used in other business functions such as sales and marketing, but our research suggests that 95% of organisations have only an ad hoc approach to analytics in HR,9 if any at all. This has to change. Personalising mobility As organisations in many regions struggle to source the talent they need, business leaders are focusing on specific groups of the workforce and personalising their recruitment and retention strategies to suit them. Younger workers, older and experienced employees and women are all seen as valuable sources of talent, provided employers can deliver the flexibility they need. 9 Key Trends in Human Capital 2012
Future view A single mobility programme won’t fit all and mobility strategy needs to be as flexible and tailored to the individual as well as the business as any other area of talent management. For instance, the pensions crisis in many countries suggests that many from the Baby Boomer generation will most likely seek to continue working after retirement age, and their motivation in accepting an assignment will be based on the financial package and term. Millennials, on the other hand, will more likely favour short‑term and project-based assignments. Employees with families, or those caring for parents may turn down relocation, but embrace occasional commuting or virtual mobility techniques. Measure and monitor With talent management firmly on the strategic agenda, the appetite to measure the value and return on investment of assignments will increase exponentially. The cost of international deployment remains a primary concern, as does the retention rate among returning assignees in many countries. Of course, there’s pressure from stakeholders to demonstrate a positive financial return on the investment in assignments and the effectiveness of a mobility strategy. But the longer term need to develop future talent, and provide the international perspective and experience that they need, is more difficult to measure. If employers are to maximise their investment in global assignments, they must establish clear expectations and performance measures. Regular feedback, support and mentoring will not only help to disseminate the international knowledge gained by the assignee, but reduce the chance of the mobile worker resigning, once their assignment ends. Delivering the experience It’s clear that organisations need to adapt their mobility programmes for specific groups of employees, and that a more personalised approach to mobility is developing. A natural progression of this is that organisations will concentrate more closely on making the mobility experience – whatever form it takes – as positive as possible for the assignee. We expect to see a rise in business-tobusiness collaboration in 2020 and beyond, as companies think about how to provides the infrastructure that allows their employees to maintain an acceptable standard of living while also providing for long-term financial security. We’ll see organisations strike up innovative relationships with other companies to develop schooling, medical facilities, shopping and lifestyle amenities in hotspot locations, creating expatriate communities with the services people need. Some businesses are already partnering with the educational sector in a bid to improve the supply of specific skills that they need. The focus on the individual will encourage innovation in the delivery of assignments, such as concierge services to ease the transition and living arrangements of assignees, to better out-of-office communications that provides 24-hour support. Led by the millennial generation, the boundaries between work and home will blur. A top-class function in control The changes already underway in global mobility place ever-increasing demands on the functions that must manage the programmes. The best organisations know that a strong global mobility strategy that has buy-in from the board and CEO, which supports the wider growth objectives and business strategy and which is closely tied to the management and development of talent has become essential. Such an important task requires specific skills and knowledge, and investment and development in the global mobility function itself should be a priority. Talent mobility – 2020 and beyond 28
Conclusion The business world is in the midst of fundamental change and in 2020 and beyond, the ability of organisations to manage their global talent efficiently will mark the difference between success and failure. We’re facing a world where the best and brightest talent are prepared to follow their own agenda and opportunities, wherever they may be and irrespective of who is offering them. It’s a world where the strongest and most sustainable supply of talent is in the East, rather than the West, and a world where technology has changed the very way we work. “We really do need to staff up local businesses with people from those countries. It doesn’t make sense to have large numbers of expats working all round the world as it’s just very expensive, so we have to train, we have to develop and we have to attract the right local talent. For the most part these locations are in pretty wild places. And now most professionals want to be in urban locations, particularly if they have families. So it’s an increasing challenge to induce people to work in those difficult locations.” Tom Albanese, Chief Executive, Rio Tinto UK 29 Economic transformation and demographic changes have already had an impact on talent supply and demand. The emergence of a new generation of workers presents an entirely new set of challenges. Talent management will become a key strategic tool, which places great responsibility on the shoulders of HR. Are you up to the challenge? How do these trends affect your organisation? • Have you mapped and tracked your mobility needs to determine what skills you will need and when and where you need them? • Do you have the right insight and data to determine where changes and/or investments may be necessary? • Have you aligned your talent management strategy with the wider business strategy? • Have you built strong links between the functions within the organisation, which are responsible for mobility, talent development, succession planning and global resourcing? • Do senior stakeholders and the global mobility function have a common understanding of the main priorities? • How do you plan to manage the millennial generation? Can you use their eagerness to travel to your advantage? • What reward and incentive model is appropriate to meet the various needs across generations in your organisation? • Are your mobility policies and processes forward looking, or mainly reactive? • What strategies do you have, to retain the employees you’ve invested in? • Is your HR function equipped to deal with the challenges ahead?
Talent mobility – 2020 and beyond 30
Contacts For more information please contact: Peter Clarke Global Leader, International Assignment Services +1 203 539 3826 firstname.lastname@example.org Eileen Mullaney US Global Mobility Consulting Leader +1 973 236 4212 email@example.com Carol Stubbings UK International Assignment Services Leader +44 207 804 9859 firstname.lastname@example.org 31
Talent mobility – 2020 and beyond 32
www.pwc.com/hrs PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication, or for any decision based on it. © 2012 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. 120816-094937-JB-OS (10/12).
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