Talent mobility 2020 and beyond www.pwc.com/people The future of mobility in a

www.pwc.com/people
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
36
years
10%
Lowest median age
5%
Yemen
1950
2050
2000
Source: UN report World Population Ageing 1950–2050
2050
Niger
(15 years)
(20 years)
Japan
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
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.
‘Blue World’, where corporations are king
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
21
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%
28%
Would like to work for a
Western multinational
Would like to work for a
Chinese employer
Source http://www.executiveboard.com
23
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
[email protected]
Eileen Mullaney
US Global Mobility Consulting Leader
+1 973 236 4212
[email protected]
Carol Stubbings
UK International Assignment Services Leader
+44 207 804 9859
[email protected]
31
Talent mobility – 2020 and beyond
32
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