What to know about deploying your first expat... and beyond

This article is taken from the latest issue of Relocate magazine.– the must read for HR, global managers and relocation professionals.Since the inception of corporate globalisation, companies around the world have sought ways to opportunistically move into new world markets. Globalisation was a paradigm shift, not only in the positioning and market share of a company, but in the management of talent. It has driven the strategic growth of organisations and defined their course.For those that never thought about being global, suddenly they find themselves amid mergers, acquisitions, takeovers and joint ventures, resulting in cross-border interaction. For companies expanding their business globally, particularly those in the earliest stages of growth, they will face deploying their first employee on an international assignment to open a new country. A trusted existing employee who is embedded in the organisation and understands its vision, mission and strategic plan is ideal to facilitate a start-up, rather than a local hire who must be trained into the organisation. With this first deployment, global mobility becomes an essential initiative within the company, with the potential of more to come.

Protecting your investment

Reasons for global expansion vary by company. Globalisation often leads to greater economies of scale, reduced operating and manufacturing costs due to overseas production, brand introduction and market share. Employees assigned to new destinations from the home office are deployed because they have the knowledge and skill sets to ensure these company goals are achieved.With great globalisation rewards come the potential associated risks, with the cost of employee deployment being a huge line item. Financial investment to deploy one employee has five factors for consideration:

• Compliance requirements, from departure to destination, i.e. immigration and tax services
• Costs to relocate employees from home to host countries. These may include destination services, transportation and shipment of household goods
• Recurring costs for tenancy management, property lease, car lease/transportation and management of associated expenses
• Accompanying family costs, i.e. school placement programme and tuition, spouse/partner career assistance and language and cultural training
• The employee must be kept ‘whole’ as defined by a Cost-Of-Living Analysis (COLA), which assesses the cost of living at home vs. the equal cost for the same lifestyle in the destination, based on a specific basket of goods and services.

The cost to deploy one employee may average US$1.5 million for a three-year assignment. Protecting the company’s investment in that employee involves managing talent from afar. Even if the benefits package is generous and the employee’s professional growth is strategically planned, there can still be a risk that results in the loss of the employee. Global human capital management suddenly becomes a critical company initiative for this first deployment.Depending on how the company structures the engagement with and management of the employee while on assignment can be the pivotal element in a successful deployment. When an employee feels untethered to the home office and isolated from the company – and there is no talent management plan in place – the risk of employee loss is significant.If there’s family accompaniment on the assignment, the risks to the company rise exponentially. The cause of most failed assignments is due to family unhappiness and lack of assimilation in the destination, which results in early repatriation of both the family and the employee. Because this is often an unexpected event, the company may not have a role for the employee upon their return, again risking the loss of the employee. This is an all too typical result, costing the company a valuable employee and its million-dollar investment.

Cross-border considerations

In addition to financial considerations, there is a tax compliance element that is triggered by the first move – whether it is a traditional assignment or business travel, with both composing a similar risk pattern. It is a known fact that tax authorities are increasingly focusing on compliance. Companies that don’t have in-house mobility function often get caught off-guard due to failure to meet with stringent and complex regulations associated with cross-border employee movement.To top that, the function of global mobility is seldom defined clearly in growing organisations, making it a hot potato between finance, tax and human resources departments. Regardless of where the responsibility lies, it is important to ensure that:

• Aspects of global mobility are considered during all decisionmaking processes to avoid surprises
• Tax and immigration requirements are met to minimise financial and reputational risks
• Adaptable policies are created to achieve a consistent approach.

With the onset of artificial intelligence, technology offers certain solutions. These can assist with both data collection and analytics, facilitating mobility support. The tools can be personalised to create enhanced experiences for employees, providing real-time data access to employers, which enables organisations to make informed decisions to mitigate the risks posed by cross-border travel.However, digital technology cannot replace an expert’s know-how of the complex regulatory environment. The mobility experience for employees and employers alike is heightened by such human support. Technology eases the burden of data management, but a sound personal-touch support system is essential for the satisfaction of globally active employees. Companies should arm themselves with the knowledge and expertise of specialists to streamline global mobility strategies that align with the company’s business and talent management goals. The result would be a global mobility programme as a strategic asset to the business – one that functions intuitively is simple, cost-effective, consistent and relatively easy to administer.

Immigration Compliance

For companies competing for talent on a global scale to enter new markets, it is important that they get immigration right the first time around, given its highly complex process. It cannot be more apt for fledgeling companies taking their first steps into an overseas territory, that they achieve a satisfactory standard of global immigration compliance.Whether relocating a senior executive or an entire team – on a temporary or permanent basis – the process is extremely time sensitive and must be handled efficiently to minimise the impact on the business and the lives of the people involved. The element of immigration compliance is triggered by the first move, even in cases of short-term business travel.More than ever before, government authorities worldwide are taking a more intensive approach towards immigration compliance, introducing a regime of higher penalties for non-compliance. Consequentially, immigration compliance is a top priority for employers and their foreign national employees, as even unintentional violations are actionable, ranging in scope from monetary penalties to criminal liability. In some countries, repeat offences can bar all future employee transfers.Companies must realise the importance of meeting all aspects of immigration compliance, related laws and regulations to prevent government immigration controversies and should look at:

• Evaluating long-term and short-term assignment programmes
• Establishing internal procedures to maintain immigration compliance in all jurisdictions in which employees have been deployed
• Robust programme administration and policy formulation
• Business Visa compliance. As a rule, business visitors are restricted to attending meetings, conferences, seminars, interviews, speaking at a conference on a one-off basis, and negotiating and signing deals and contracts. They must not be paid in the host country.

When a company decides to reach out into a foreign jurisdiction and deploys an employee from its home location, a variety of important immigration factors must be reviewed, analysed and documented:

• Appropriate work and residence permits may be required prior to the assignee legally assuming their role; the criteria for such applications may vary by location depending upon the duration of the assignment, the employee’s nationality and a host of other factors
• In most cases, the company is required to have a legal entity or physical presence in the host location to facilitate work permits.

 Expert guidance

Meeting the needs on an ongoing basis for a globally mobile workforce can be complex. The requirement for global mobility is irrespective of the size of the organisation, as it stands as the go-to strategy to address talent scarcity and business growth in this global competitive landscape.Since basic aspects of relocation, immigration and tax compliance are triggered with the first employee deployment and, given the associated risks of non-compliance, engaging the appropriate external resources to provide legal and compliance expertise establishes base guidelines for moving forward.As organisations grow from their 1st to 50th move, they can shift gears and focus on tax and relocation policy to achieve consistency, outsourcing of immigration handling for economies of scale and family assimilation programmes to increase employee integration and retention. With the first move, however, proceed with caution and expert guidance.Nupur Rishi, Director, Global Mobility Tax, Crowe MacKay LLP, CanadaGail Rabasca, Executive Vice President, Chamness WorldWideRahul Batra, Managing Partner, Hudson McKenzieDinesh Jangra, Partner, Head of Global Mobility Services, Crowe, UK LLP

ABOUT CHAMNESS WORLDWIDE

Chamness WorldWide has been delivering high-quality global relocation services for more than 30 years and specialises in destination services inbound, outbound and country to country across the Americas, EMEA and Asia Pacific. The company offers worldwide educational consulting coverage supported by next-generation technology.  Subscribe to Relocate Extra, our monthly newsletter, to get all the latest international assignments and global mobility news.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory

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