2013 EMEA EXPATRIATE MANAGEMENT CONFERENCE APRIL 2013

Transcription

1 2013 EMEA EXPATRIATE MANAGEMENT CONFERENCE APRIL 2013

2 HOW EMERGING MARKETS ARE CHANGING EXPATRIATE POLICIES 12 APRIL 2013 Olivier Meier Munich Christa Zihlmann Geneva

3 How emerging markets are changing expatriate policies What we will cover today Defining emerging markets Developing a new mobility mindset Exploring the complexities of pay practices in emerging markets Revisiting the components of the expatriate package Beyond the expatriate package: reinventing the mobility function?

4 Defining Emerging Markets The engine of global economic growth 8% 7% 5% 4% 3% 2% Vast economic growth: GDP expansion in growth markets will dramatically outpace the rest of the world Asia Africa ME Latam US Europe Rapid population growth: almost all population growth (92%) to come from growth markets in the next 5 years Demographic advantage: By 2040, 80%+ of global working-age population will be in emerging markets, while the workforce in the rest of the world will be in decline 60% of global growth in next 5 years to come from Emerging Markets But think beyond the BRICS! Source: Citi Report 2011, Global Growth Generators Note: Developing Asia is Asia excluding Japan

5 DEVELOPING A NEW MOBILITY MINDSET

6 Developing a new mobility mindset Dispelling mobility myths Myth #1: Traditional expatriates are disappearing Numbers still going up Many different types of packages offered, but incentives still needed Highly skilled workers from emerging markets can be high-cost expats, too! Myth #2: New generations are more mobile Not a myth, but companies are losing control over employees mobility More skilled employees are willing to market themselves globally Locations, organisations not equally attractive; employers must consider their talent brand and site attractiveness Myth #3: Local professionals and returnees will replace expatriates Global talent landscape much more complex than many anticipate

7 Developing a new mobility mindset Rethinking mobility patterns Moving East and South is major strategy for more and more multinational companies Managing Lateral Moves (from developing countries to other developing countries) is becoming essential

8 Average % Developing a new mobility mindset Demographics: what is your current long-term assignee population by age band? 80% 70% 60% 56% 69% 65% 67% Latin America Eastern Europe Asia 50% 40% 30% 24% 30% 39% Africa / Middle East 20% 17% 15% 10% 7% 5% 5% 0% < 35 years old 35 to < 55 years old 55 + Source: 2012 Worldwide Survey of International Assignment Policies and Practices

9 International assignment drivers and barriers Companies topmost concerns regarding their mobility program Europe Latin America Eastern Europe Asia Africa / Middle East 1. Finding suitable candidates for assignments 1. Finding suitable candidates for assignments 1. Finding suitable candidates for assignments 1. Finding suitable candidates for assignments 1. Finding suitable candidates for assignments 2. Current conditions are too costly 2. Performance level of employees on assignment 2. Performance level of employees on assignment 2. Performance level of employees on assignment 2. Performance level of employees on assignment 3. Performance level of employees on assignment 3. Inability to use gained experience upon repatriation 3. Current conditions may not be attractive enough 3. Current conditions may not be attractive enough 3. Current conditions may not be attractive enough

10 % of respondents Developing a new mobility mindset Do you have one policy covering all your assignments or different policies? 80% Europe 70% 60% 50% 40% 36% 67% 55% 62% 64% 50% 50% 46% 39% 33% Latin America Eastern Europe Asia Africa / Middle 30% 20% 10% 0% We have one policy (same terms and conditions) for all assignments We have multiple policies (with different terms and conditions) for different assignment types Source: 2012 Worldwide Survey of International Assignment Policies and Practices

11 DEVELOPMENTAL VALUE Developing a new mobility mindset Going beyond traditional segmentation? Emerging/High- Potential Talent Int l learning/ development to grow next generation of leaders Global? Transfers/ Volunteers Int l experience to fulfill personal objectives (opportunistic, employee-driven moves) Strategic Business Leaders Fill mission-critical roles and deliver specific, strategic business results Global Seasoned Technical Experts Providing specialist skill/expertise to fill local gap or to complete a specific project/task INTRA-REGIONAL MOVES VS. GLOBAL MOVES Is your company globalizing or regionalizing? Should the policy be driven by regional/global considerations? How to integrate the regional and the global dimensions? ONE-TIME MOVERS VS. HIGHLY MOBILE EMPLOYEES Should the employees be considered as globally mobile when moving just once? One-time? Global or Regional? BUSINESS VALUE

12 Developing a new mobility mindset Introducing the new players Chinese companies and the Angola model Indian companies Family-owned companies Cash-rich companies from the Gulf and their talent acquisition strategy the Russian way Turkish philosophy African practices

13 UNDERSTANDING THE COMPLEXITIES OF PAY PRACTICES IN EMERGING MARKETS

14 The complexities of pay practices in emerging markets Keeping pace with a fast changing remuneration landscape Annual Total Cash, 2002 to 2012 Senior Management (PC 60) (in USD) 300, , , , ,000 50,000 0 Germany Poland Mexico China (Shanghai) UAE * Turkey India Brazil Vietnam ,429 66,634 84,253 92, ,511 82,931 31,401 95,653 37, , , , , , ,530 79, , ,746 % difference 65% 97% 99% 106% 113% 125% 152% 186% 293% Source:2002 and 2012 Total Remuneration Surveys

15 The complexities of pay practices in emerging markets The myth of low-paying emerging countries versus highcost mature markets 800,000 PC 65= General Director/President (Comp 5) Gross, Net and COL-adjusted, married + 1 (EUR) 600, , ,000 0 Brazil Russia India China Germany Gross Net COL-adjusted Source: all data Global HR Monitor September 2011

16 Annual Total Guaranteed Cash (in EUR) The complexities of pay practices in emerging markets Visualising the compensation challenges in emerging markets 800, , , , , , , ,000 Blue collar Professional Specialist Manager Director VP IPE Position Class Switzerland Germany France Russia India Brazil China (Beijing) United States

17 Pay practices: exploring alternatives to traditional approaches The search for the elusive perfect local plus solution Expatriate allowances / benefits China Dubai Brazil Cost-of-living allowance Mobility / foreign service premium Hardship allowance Housing Education Usually cash, typically a reduction from full expatriate housing amount Senior managers only Home leave Social security / pension Social Insurance plus supplement End of service benefits Social Insurance plus supplement Medical Enhanced or Int l Plan Enhanced or Int l Plan Enhanced or Int l Plan Common Less common / limited Never or rarely provided April 12,

18 Net compensation BRL Pay practices: exploring alternatives to traditional approaches Example 1 Brazil local and local + vs. typical French expatriate package Professional level IPE PC 52; married + 2; transfer Paris Sao Paulo 300, ,162 Education 200, ,766 35,904 35,904 10,783 18,868 Mobility Hardship 100,000 88,784 89, ,348 9,895 Housing COLA Net base salary 88,784 88,784 86,364 0 Local Local + French expatriate Source: Mercer Global HRMonitor 2011

19 Net compensation BRL Pay practices: exploring alternative to traditional approaches Example 2 Brazil local and local + vs. typical French expatriate package Executive level IPE PC 64; married + 2; transfer Paris Sao Paulo 700, , , , , ,606 35, , ,581 35,904 32,315 56,550 Education Mobility Hardship Housing 300, ,924 COLA 200, , ,363 20,498 Net base salary 100, ,390 0 Local Local + French expatriate Source: Mercer Global HRMonito 2011r

20 Net Salary Pay practices: exploring alternative to traditional approaches Example 3 PC 55 (Engineer) to Lagos (Nigeria) 160' ' ' '000 80'000 60'000 40'000 20'000 Mobility Hardship Housing COLA Net base salary 0 + Nigeria Local Nigeria Local Egypt Dutch Multiplier Expat

21 Pay practices: exploring alternative to traditional approaches An increasing diversity of approaches The growing diversity is a response to new types of assignments The boundaries between local and expatriates approaches are increasingly blurred Practices from emerging market companies: multipliers etc. 70% 60% 63% Home balance approach 50% 43% 40% 30% 33% 29% 33% 20% 10% 0% Europe Latin America Eastern Europe Asia Africa / Middle East

22 REVISITING THE COMPONENTS OF THE EXPATRIATE PACKAGES

23 Revisiting the components of the expatriate packages Completion bonus Paid by 30% of companies who have a guideline and/or policy, an estimated 60% of emerging countries however pay a completion bonus on a ad hoc basis Amount varies between 10 and 200% Mainly paid for hardship and remote locations, as well as for project assignements

24 Revisiting the components of the expatriate packages Curiosity Benefits just odd or is there something to learn from them? Regional Allowance Seniority Allowance Burn-in Allowance Skill Allowance Conveyance Allowance Dearness Allowance Experience Allowance Bicycle Allowance Festivity Allowance Leave Allowance Newspaper Allowance Capital Asset Allowance Uniform Allowance

25 Revisiting the components of the expatriate packages Family support and cultural issues Definition of family varies in emerging countries policies Support for education critical, mainly paid as lump sum Rotational assignments vary according to culture

26 BEYOND THE EXPATRIATE PACKAGE RE-INVENTING THE MOBILITY FUNCTION?

27 Beyond the expatriate package. Re-inventing the mobility function as Sales team? Case study #1: selling mobility to Tanzania

28 Beyond the expatriate package Re-inventing the mobility function as Facilitators? Case study #2: from managing global policies to fixing issues in small worlds Financial advisors? Case study #3: providing financial advice to expatriates from emerging markets

29 Beyond the expatriate package Re-inventing the mobility function as Techno Geeks? Case study #4: developing mobile app to provide a relocation check list Tour Guides? Case study #5: Trips to learn to be an expatriate

30 Managing mobility in emerging markets: conclusion Tips to stay ahead of the game Learn to navigate the grey areas between expatriate and local compensation Mobility is not just an admin function: it s both about managing talent globally strategically and address the tactical issues reflecting the employees unique personal experiences Innovate and find your own idea/solution that will complement and give a special touch to your mobility policy Rather than having pay, benefits and various cultural trainings as isolated boxes, bring the different elements together and define overarching themes/principles

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