Latest trends in international relocation unpacked

Brookfield has released its 2010 annual survey, revealing the latest developments in international mobility. Sue Shortland highlights the top ten issues raised by the survey`s 120 respondents, and suggests how these key factors may impact on relocation management. These will form the basis of a series of features in future editions of Re:locate, which will explore each in depth and analyse implications for the profession.

Brookfield has released its 2010 annual survey, revealing the latest developments in international mobility. Sue Shortland highlights the top ten issues raised by the survey`s 120 respondents, and suggests how these key factors may impact on relocation management. These will form the basis of a series of features in future editions of Re:locate, which will explore each in depth and analyse implications for the profession.

1. The impact of the economy on international mobility

The economic climate has had a major impact on the scale of international relocation over the past year, with almost half (46 per cent) of the survey participants reporting a fall in their expatriate populations. The drop in expatriate numbers may, in part, be the result of cuts in new-hire international mobility, with only 8 per cent of expatriates being new recruits one of the lowest percentages recorded, as, historically, recruits comprise 12 per cent, on average.

Yet over a quarter (27 per cent) of the respondents reported an increase in expatriate numbers, so the picture is not as gloomy as it might first appear. Respondents were cautiously optimistic about future growth in expatriation, particularly in terms of destinations such as Brazil, Russia, India and China.

A fall in expatriate volume clearly has an impact on the relocation services industry and those within HR departments.

However, the nature of the expatriate destinations where growth is envisaged will put added pressures on relocation professionals to ensure high service standards, given the developing nature and difficulties associated with operating in the BRIC growth regions. 2. The centralisation of strategic decision- making

There has been a major shift towards centralisation of decision-making, with relocation decisions being made centrally at HQ by 96 per cent of the respondents the highest percentage ever in the history of the 15-year series of surveys. Regional decision-making fell from 7 per cent in 2009 to 2 per cent in 2010. There has been a decline in the use of expatriate assignments for launching new operations. Filling skills gaps and transferring management expertise are the key reasons for using expatriates in 2010.

Centralisation of strategic decision-making is a key issue for relocation professionals, as it indicates that there is significant emphasis on central and top-down governance.

Relocation and supporting policy decisions have retrenched to the centre, to ensure tight control of process. This will mean greater standardisation of policies, with a tighter focus on cost control and exception management. The change in the rationales for using expatriates is also likely to have some knock-on implications for relocation policy.

3. The changing nature of expatriate demographics

A particularly interesting finding concerns the changing demographic profile of assignees: the survey records an ageing expatriate population and, linked to this, a decline in the proportion of accompanying children. Under half (47 per cent) of expatriates now have accompanying children the lowest proportion in the history of the survey, which has a historical average of 56 per cent. There has been an increase in the proportion of married male expatriates at 63 per cent, this is the highest figure since 1999. Yet the proportion of expatriates accompanied by their spouse has fallen it now stands at 79 per cent (the historical average is 85 per cent). Women`s participation as expatriates has fallen to 17 per cent, the lowest since 2001, when it was 16 per cent.

Demographic change has a significant effect on policy provision, and thus policies should be kept under review. With a fall in accompanied mobility, there is clearly an implication for cost savings, but potentially there is pressure on individuals to cope alone, without family support. The fall in the percentage of female expatriates has clear implications for diversity and equality policies.

4. The changing nature of assignment types: the rise in commuting 

Linked to the findings above, the survey also reports on the changing nature of assignment types. There has been an increase in the use of commuter assignments some 35 per cent of respondents reported using this type of assignment, compared with 29 per cent in 2009. The development of commuter policies is increasing to reflect this as well with 36 per cent considering using a commuter policy in 2010, compared with 30 per cent in 2009.

Clearly, there is a significant issue for relocation professionals here, in the need not only to develop a commuter policy but also to consider the nature of support given to combat the stress and fatigue that accompanies such patterns of international mobility. While international commuting can be linked to maintaining dual careers and children`s education at home, it is also known to create family stress and work disruption.

5. The changing length of assignments: the rise in long-term assignments

This was a particularly surprising finding of this year`s survey. While the percentage of respondents using short-term assignments did not change, the percentage of long-term assignments increased from 61 per cent in 2009 to 64 per cent in 2010.

Given cost constraints, it might have been expected that short-term mobility would have increased but it appears that employers are instead seeing that the productivity gains that come with settled and culturally adapted employees outweigh the costs of new expatriates who have to adapt. It is also possible that, given the loss of posts at home during the recession, extension of a long-tem assignment helps to contain redundancy or redeployment costs if no suitable position is available on repatriation.

6. Increasing use of localisation

The extension and use of longer-term assignments is linked to an increasing use of localisation: the survey finds the percentage of firms with localisation policies has risen from 52 per cent in 2009 to 58 per cent in 2010. There has also been an increase in the use of local hires rising from 37 per cent to 38 per cent over the past year.

There are implications here in relation to policy design and communication for expatriates. Consideration needs to be given to the phasing out of expatriate benefits potentially, this will be speeded up, given cost considerations. Yet the implications for reducing motivation and productivity must be set against this. In relation to the increased use of local nationals, consideration must be given to training policies.

7. Performance management and repatriation

Some 18 per cent of survey respondents reported that they did not know how expatriate performance was measured up by 6 per cent on last year. Yet some 33 per cent thought that expatriates received promotions more quickly, while 28 per cent linked expatriate experience with gaining company posts or changing employers more often. There was increasing evidence that employers saw repatriation as integral to the assignment cycle, with 74 per cent having written repatriation policies, up by 4 per cent from last year. Although 92 per cent said they held repatriation discussions with returning expatriates, these were generally held within six months of returning home.

Once again, there are significant implications for relocation professionals in these findings. Given the emphasis on cost control, it is critical that an understanding is developed in relation to managing and measuring performance. There also need to be clear links to the talent management process.

Repatriation discussions need to be in place around a year before return if suitable roles and career development are to be identified and put into action. These steps are important to ensure reduction in turnover and, as a consequence, effective deployment of capabilities and cost control.

8. Cultural training

red fansWhile 80 per cent of the survey respondents provided cross-cultural training, the percentage applying it to all assignments has declined from 35 per cent in 2009 to 27 per cent in 2010. The decision to provide such training is linked  to the host country, although mandatory training is declining. As alternatives to face-to-face training, web- or media-based alternatives are gaining in popularity.

Given the importance of cultural competence to maintaining productivity, the apparent reduction in provision is worrying and presents significant dilemmas to relocation professionals. Cost-cutting is important, but not at the expense of capable, efficient and effective employees.

Attention needs to be paid to this issue via cost-benefit analyses, to ensure that expatriates are suitably prepared for their sojourns abroad.

9. Reduced opportunities for spousal employment

The survey finds that only 9 per cent of spouses were employed both before and during the assignments; in contrast, 50 per cent of spouses were employed before, but not during, the assignment (up from the historical average of 48 per cent). The recession has brought with it job losses and a very difficult labour market. This is likely to have a major impact on spousal employment opportunities especially when combined with a growth in non-traditional expatriate destinations, where language and culture are also likely to create difficulties in obtaining work opportunities. Clampdowns on visa regimes are a common response to unemployment issues, as hostcountry governments strive to protect local labour markets.

This may have a major impact on the need to keep up lobbying pressure and to review spousal-support policies in the future.

10. Cost control

Cost control has been a feature of all the findings in the Brookfield survey, but there is also increasing evidence of efforts to track and predict assignment costs. Some 75 per cent of respondents in 2010 required a statement of clear assignment objectives before funding assignments was agreed (historically, this average was 65 per cent). Some 46 per cent of respondents required a cost-benefit analysis to justify the assignment (up from 39 per cent last year). Some 64 per cent tracked costs during the assignment (surprisingly, down from 68 per cent last year and the historical average of 70 per cent).

Brookfield suggests that the decline in cost tracking might be due to the complexity of the assignment locations or the decline in headcount in the mobility function. In addition, the stagnation in the use of outsourcing might also account for this figure. Clearly, the pressure on the mobility function continues to grow as headcounts reduce. This is of clear significance, as relocation departments will have to find ways to do more with less.

In summary

Relocation professionals face a very demanding future as the traditional expatriate landscape changes with the addition of a greater range of destinations and a wider set of challenges for those being relocated to them. Given the economic backdrop and consequent emphasis on return on investment, care must be taken not to pursue cost-cutting at the expense of productivity and talent management. Careful review of policy and practice is required to ensure alignment with strategic objectives while ensuring that organisations have the human resources in place who have the capability to take them forward when the upturn finally arrives.

Global Relocation Trends Survey 2010, Brookfield Global Relocation Services, www.brookfieldgrs.com

Don`t miss our repatriation feature and Sue Shortland`s exploration of the changing nature of assignees and assignment types.