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As Living Costs Shift, Expat Programs Turn to Tech Platforms

Our 21st century economy reflects enormous complexity, but this much is clear: It’s an economy focused on skills, driven by digital disruption and the need for a globally connected workforce. For global organizations, that means deploying mobile employees internationally in a way that maximizes competitive advantage. 

A successful expatriate strategy recognizes numerous personal and organizational advantages for sending employees overseas, from career development to global experience, new skill sets and the reallocation of resources. By offering fair and competitive compensation packages, organizations can facilitate moves that drive business results.

Thus, mobility programs have become a core component of multinational organizations’ global talent strategy. Organizations realize that to thrive, they must embrace change, adapt to new technologies and build emerging skills to attract, motivate and enhance talent. It’s no surprise that 65% of employers across all industries and countries surveyed in Mercer’s 2019 Global Talent Trends study are using mobility programs as a key tool to enhance their workforce strategies. They are also carefully assessing the cost of expatriate packages for their international assignees to ensure return on this investment in talent.

But managing mobility is made more complex by the shifting costs of living in today’s fast-changing global market, as noted by Mercer’s 2019 Cost of Living Ranking. It finds that eight out of the top 10 of the world’s most expensive cities for expatriates are Asian cities, resulting from high costs for expatriate consumer goods and a dynamic housing market. 

Tokyo (2), Singapore (3) and Seoul (4) top the list, while the costliest city in the world for the second consecutive year is Hong Kong (1). Other cities appearing in the top 10 are Zurich (5), Shanghai (6), Ashgabat (7), Beijing (8), New York City (9) and Shenzhen (10). The world’s least expensive cities for expatriates are Tunis (209), Tashkent (208) and Karachi (207). 

Clearly, the cost of living is an important component of a city’s attractiveness for businesses and mobile talent. Decision-makers increasingly acknowledge that globalization is challenging cities to inform, innovate and compete to foster the kind of satisfaction that attracts both highly skilled people and investment — the keys to a city’s future. At the same time, organizations must be up to the challenge of mobility management amidst so much urban innovation and competition. 

Urban Dynamism Drives Cost

The Mercer Cost of Living survey finds that several factors — including currency fluctuations, the cost of inflation for goods and services and volatility in accommodation prices — contribute to the overall cost of expatriate packages for employees on international assignments.

For example, cities in the United States climbed in the ranking due to the strength of the U.S. dollar against other major currencies as well as the significant drop of cities in other regions. New York jumped four places to rank nine, the highest-ranked city in the region. 

Cities in Western Europe, including Milan (45), Paris (47), Oslo (61) and Madrid (82), fell in the ranking as well, by 12, 13, 14 and 18 spots, respectively. Hong Kong remains the most expensive city for expatriates both in Asia and globally as a result of its torrid housing market and currency pegged to the U.S. dollar, driving up the cost of living locally.

These changes put pressure on mobility managers, and their roles are evolving — from traditional relocation management to more integrated talent mobility management, calling for greater involvement in issues relating to the expatriate assignment experience, talent pool oversight, resourcing/recruiting and strategic cost management. In terms of technology and operation processes, mobility management is moving from manual tasks, rigid reports and in-person services to process automation, enhanced employee experience and self-service.

Fortunately, new solutions are emerging to help manage complex mobility programs by bringing together all aspects of an organization’s international and domestic assignments, along with data, in one place. This platform approach provides an interactive, configurable, real-time data and content experience while simplifying workflows, lowering costs, reducing risks and tracking the return on investment.

Today’s talent mobility landscape is complicated by globalization, diversification of the workforce, as well as the growing number of forms of mobility.

Evaluating Mobility Requirements

When adopting these new solutions, a number of factors should be taken into account to evaluate requirements and potential challenges.

For starters, how many assignees and moves are initiated each year? And how many different types of moves (long-term, short-term or even commuters and extended business travelers) should be managed with the system? What about future development? What can be anticipated based on current business expansion plans for the coming years?

Is the mobility function centralized globally, partly decentralized between different hubs/expertise centers or fully managed by the local HR team in each country? To what extent should the system be in-house or outsourced? What are the key functionalities that need to remain in-house? (Often, it’s those linked to policy governance and communication.)

It’s also important to consider how the different stakeholders involved in the mobility process will be integrated. The system will be used by the HR mobility team, but what about other parts of HR, such as talent management, along with line management and the assignees themselves? How will they connect to the system and benefit from it, and what are their expectations? Will the new system facilitate compliance and governance by allowing tracking of assignees, flagging deadlines and tracking important issues?

Crucially, can the new system help assess the real total cost of mobility, including full assignment management costs (budgeted and actual)? Will it help generate process efficiencies and increase employee satisfaction, and can these benefits be quantified? Articulating a clear business case and showing the added value of a new system to management is a prerequisite for success.

Employee Expectations and Team Upskilling

In this networked era of mobile software and online access, employees are increasingly requesting to manage at least part of their relocations themselves, but a full self-service solution isn’t suitable for all employees. Today’s younger generations are not necessarily better equipped than their predecessors to deal with the difficulties and financial issues linked to an international career. Self-service approaches need to be balanced with duty of care and complemented by detailed guidelines, practical support and education. Technology needs to facilitate this balancing act.

Indeed, the best system in the world won’t deliver added value if users aren’t properly trained to use it or if it’s perceived to be too complex to use. The objective is to have autonomous users who can operate without requiring assistance from other teams (like IT) and who can leverage the features of the new system (automating certain processes) to free up time to focus on more-strategic business issues. Adoption of new technology implies upskilling the mobility team — not necessarily to turn mobility professionals into IT experts, but to familiarize them with tools and methodologies, such as analytics and agile management, not previously part of their day-to-day tasks.

Talent Mobility Today

Years ago, mobility management was dominated by the opposition between traditional expatriates sent on long-term assignments and local employees in the host destination. 

The current talent mobility landscape is far more complex due to the globalization and diversification of the workforce as well as the multiple forms of mobility: long-term assignments and short-term moves, locally hired foreigners, commuters, extended business trips, employee-initiated moves or even moving jobs to people as opposed to moving people to jobs. Some future assignees might not even be in-house employees — the rise of the expatriate gig worker will require more agility from talent mobility teams. 

The variables are many. The need to attract mobile talent to today’s cities — their changing profiles, costs and competitive edges — makes them the playing fields for the future of work. Mastering the mobility challenge will determine the winners.

Ilya Bonic

President, Career, and Head of Strategy at Mercer

Ilya Bonic is a senior partner, president of Mercer’s Career business, and head of strategy at Mercer. With 25 years of experience in human resource consulting, Ilya has worked with leading multinational companies to build human capital information resources and tools that allow them to make informed decisions on strategic people issues.

Olivier Meier

Principal in Mercer's Mobility Practice

Olivier Meier is a principal in Mercer’s Mobility practice, based in Munich. He has 20 years of experience in Global Mobility and international talent management. He is currently working on the development of tools and solutions to compensate internationally mobile employees.

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