KPMG warns of short-term assignment compliance risk

KPMG’s latest Global Assignment Policies and Practices (GAPP) Survey highlights the growing shift to shorter term assignments and business travel.

Ruth Holmes

30 January 2020

The global network of independent professional services firm’s study of 275 international companies finds companies are opting for business travel and short-term assignments to deploy their workforce globally.It also identifies an increased diversity of mobile work arrangements and international assignment types.

Long-term assignments down

KPMG’s analysis shows organisations believe their overall number of staff members working overseas will remain largely unchanged over the next five years.Three-quarters of companies (75%) surveyed expect to rely on short-term placements. Just over half (56%) will continue to roll out extended business trips to deploy staff to overseas locations. These trends add to the increasing diversity of mobility benefits policies and packages and the growth in service areas like mobile apps and serviced apartments.KPMG’s GAPP survey also finds half (51%) of businesses plan to reduce the use of traditional long-term assignments over the medium term.

Talent mobility trends and global mobility

These shifts reflect the impact of demographic and social change and the importance of talent management on the global mobility agenda.With some long-term assignments proving costly to a business and the people and families relocating – evidenced by high assignment failure and post-assignment attrition rates – global mobility and HR expertise are focusing much more on employee support and wellbeing.By contrast, shorter term assignments (defined for the study’s purposes by KPMG as “a temporary transfer overseas usually lasting between three to 12 months”) allow organisations more flexibility to move talent globally.

AI and talent mobility

The report also asked respondents about the role of tech in global talent management. Respondents are exploring how innovations and people analytics can support a global workforce and changing environment.There is increased focus on predictive workforce analytics to support programme success and measure assignee experience, employee experience and satisfaction. This includes assignment costs and volume (67%), employee satisfaction (39%) and vendor performance (24%).

Short-term assignments and compliance

However, these trends come at a potential cost to tax and immigration compliance, says KPMG.It warns that while long-term assignments are well-supported from a well-established tax, payroll and immigration compliance standpoint, companies are not fully addressing these for shorter term assignments.Global mobility leaders cite income tax (31%) and immigration (26%) as the two main risks for relocating personnel. These shorter moves types often create a higher risk of non-compliance with tax and immigration laws, especially when these move types are not managed by the global mobility function.

Reputational risks of short-term assignment non-compliance

Belinda Wright, Partner and National Leader of Immigration Services, KPMG Australia, commented: “For large businesses violating immigration and tax policies on a larger scale generates the potential for catastrophic reputational risk, yet risks are still not being managed appropriately.“The global immigration landscape has changed, and businesses must take a more holistic approach, examining the reputational damage of their mobility actions with as much gravitas as traditional risk functions.“Until there’s a change in the attitude about global mobility, these risk factors will continue to be an unforeseen threat to management teams.”

Health, wellbeing, safety and the short-term and business travel population

Business and short-term assignees face further risks from political instability in host countries. Employers have a duty of care to all their employees to safeguard their wellbeing and security in the workplace. Health risks may also slip under the radar of organisations with a business traveller and short-term assignee population, not least around mental health, local and global epidemics. All should be on the agenda of people managing an internationally mobile workforce.

Global Mobility programmes’ role in retaining and developing staff

Rounding out the latest GAPP survey findings, KPMG links the uptake in a standalone global mobility function as recognition that “companies are taking a more purposeful approach to mobilising talent globally.” Further, that they are developing stronger integration between talent management and the global mobility function.Over a third (38%) of organisations have a dedicated functional global mobility team, with 45% of those managing global mobility reporting into the broader Human Resources and Compensation and Benefits functions, finds the report.For those that have aligned their global mobility program to their organisation’s talent management framework, nearly half (47%) agree that global assignments are a formal part of their organisation’s talent development, succession and retention initiatives.Achim Mossmann, Principal, Global Mobility Services, KPMG in the US concluded: “We are increasingly seeing global mobility programmes becoming part of recruitment and retention initiatives for talent teams.“Organisations who embed global opportunities into employees’ careers and manage mobility as part of their talent management lifecycle generally generate a higher return on investment on their global moves. In basic terms, this means losing less intelligence and investment to competitors.”