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What I wish I had known about International Expansions and Global Mobility

Global Mobility is, in many ways, a great career choice. You have all the benefits of a specialisation whilst being in the unique position of being able to collaborate with many other functions – generalist HR, Comp & Bens, Shared Services, Tax and Legal. However in reality, this can translate into the scenario all too familiar to any global mobility consultant – being held accountable for everything that may go wrong within our sphere of influence, yet struggling to demonstrate value and gain meaningful professional respect for your input.

As GM specialists, we are rarely afforded the opportunity to truly shine in our own right as the subject matter experts that we are, being continually dragged down by the overwhelming administrative aspects of mobility – the operational minefields of moving an assignee, where it seems that “what could go wrong” eternally overshadows the multiple examples of what has gone right. Our subject matter expertise too often gets lost in translation – the awkward immigration rule that the business would rather not hear about, the inconvenient tax legislation which throws into question an entire assignment, not to mention employees’ messy lives and idiosyncrasies which threaten the most simple relocation. There is one scenario however in which a GM specialist can truly shine – expansion of your company into a new host country.

Typically this is a hot potato situation which no one else wants to handle. The business simply wants their people on the ground, now, and they don’t particularly care how this happens. Generalist HR consultants do not have the in depth knowledge to handle the technicalities. Tax, Legal and Compensation functions may be able to advise on their own areas, but will not be in a position to co-ordinate the entire activity. And this is where we come in – this is what we are here for! This situation, if managed well, can not only prove your expertise, but offer you the chance to enhance your knowledge, display leadership and ownership of the project and demonstrate that GM is a function comprised of individuals who rightly deserve to be seen as experts rather than order takers.

So – where do you start when your company enters a new location? There are several areas to be aware of, all of which will offer the chance to collaborate with other teams and grow your own knowledge – a win/win situation. Here’s an overview of the issues you’ll need to work through when entering a new country for the first time.

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Technicalities

  • Contract structure. How will you employ your people in the new country? Key to answering this question is the issue of Permanent Establishment (PE) risk. A PE risk may arise when an employee (and it can be just a single employee) begins work in a country in which the company has no existing presence, thereby giving rise to a corporation tax liability. This can be mitigated through the use of a Employer of Record or company such as Shield GEO, who will employ the person themselves thereby addressing the risk. They are also able to employ locals in the host country in compliance with all local legislation.
  • Contract wording. Your existing assignment contract templates may not be fit for purpose in the new host country. What do your existing templates say regarding applicable law? In the event of a disciplinary or dispute, which country’s employment law will prevail? If you are considering employing locally and you are legally able to do this, what local employment law considerations do you need to take into account when drawing up local contracts?
  • Taxation implications. Other than PE risk, what other taxation issues may affect new assignees entering the country? Are there taxation and social security agreements between the new host country and your existing home countries? How will this affect cost, and what are the knock- on effects for taxation treatment of your assignees? For example – if you are entering a very low tax or no tax jurisdiction and you are considering tax equalising your assignees, how attractive will this make assignments to the new location? Do you need to reconsider your tax policy in the light of this? What is the tax impact of your standard compensation & benefits? (eg. Private pension)
  • HR employment law implications. As mentioned above, when looking at contract wording you will also need to consider whether there are any major employment law issues to be aware of, particularly if you will be utilising local contracts. This can be anything from minimum annual leave entitlements to pension arrangements to notice. Your existing policies regarding these may be overridden by local practice – take advice.
  • Immigration issues. Try to establish as early as possible in the process what the immigration requirements and timeframes are for the new country, because without the correct immigration status, your people won’t be able to commence work within the required timeframe. Some countries’ immigration requirements can be onerous and lengthy, particularly for first time applications for which various company documents pertaining to the new host country office must be provided. Additionally, once decisions are made, businesses typically want to move quickly – if you can pre-empt the need to gather that information you’ll be ahead of the curve and, crucially, providing a proactive rather than a reactive service. If you’re having trouble sourcing reliable immigration assistance in the host, consider using a GEO (see the first point above) to assist you.
  • Payroll and currency transfer considerations. Some countries operate restrictions on how employees are paid (for example, stating that salary must be paid in the host country and in local currency), some operate restrictions on the amount of currency that can be transferred out of the location. This may mean tweaking your existing arrangements for other countries. Flexibility is not an option here; compliance is key. Utilising the services of a GEO (see the first point above) can assist you to address these problems, since in addition to employing your staff and ensuring they are authorised to work in the new location, they are also able to pay your people compliantly and in accordance with local legislation.
  • Practical considerations (housing, schooling, security). It goes without saying that different locations will have different offerings in terms of standards of housing and schooling. But some areas affecting assignees may not have arisen in your programme before depending upon your existing geographic footprint. Is the country you are entering different in terms of standards of security – are expatriate compounds the norm for housing, for example? Do you need to consider assignee security in this location in a way that you don’t in other locations? Is it the norm for assignees to have drivers? Do you need to look at further security options, and, in worse case scenarios, consider arrangements for potential kidnap or ransom?
  • Medical insurance and evacuation issues. As with the practical considerations listed above, a new location may put a new spin on existing arrangements. Is your medical insurance fit for purpose? What does your existing policy say about treatment needed outside of the host location if, for example, the expertise in the host location is not available? What are the evacuation arrangements? Is there a cost implication for updating the plans that the business will need to be aware of? Do you need to consider implementing a pre assignment medical procedure or requirement?

Internal considerations

  • Service delivery. In addition to the technical aspects, in order to provide the best service to the business a truly proactive global mobility team also needs to think about how the new location will be serviced. Where does the new location fit within the existing delivery framework? For example, if you operate a host country service delivery model, with global mobility consultants in the host country or region providing services to incoming assignees, but for this location you have no local or regional staff in place, how will you manage this? Who will be the assignee’s point of contact for HR and other issues, if there is no one in the host location? If you can define this to the assignee, it will go a long way to helping them feel that they are not making this transition to the new unknown location alone. Failing to think about these matters or to fudge solutions can seriously damage the reputation of mobility and HR teams with their ultimate customer – the assignee.
  • Policy considerations – does the new location also require a new policy? This will not always be the case, but again it’s a great chance to be proactive. For example, if the new location represents a move into a new kind of business for your company, does this existing policy framework support this? Do you now have a need for a developmental policy, a commuter policy, a globalist policy? On the more mundane side, do you now need to address local plus type arrangements where previously you had automatically assigned everyone under a traditional home based arrangement?
  • Do existing relationships serve the new country? Do you need to source new vendors? If you have existing arrangements, are your vendors able to serve the new location as effectively as your others? Are new relationships (security services, drivers etc) required which are not required elsewhere?    

Overriding all of these issues there is one further aspect to bear in mind – the length of time it takes to put anything new in place! Global Mobility is typically the last part of the jigsaw to be informed of an upcoming move, but in scenarios where the host location is a new one, it’s especially vital that GM operates as swiftly as possible to find solutions to the issues listed above. Not only will there be a pressing business incentive to put people on the ground as quickly as possible, but in a location where there is no previous presence, the compliance risks are so much the greater. The more GM can think ahead, and drive collaborative interaction with decision makers, the greater the outcome for GM and for the business stakeholders.

In summary, when I was asked to write this article looking at the “what I wish I’d known” of international expansion, as a global mobility practitioner with twenty years’ experience, the answer to that question is not anything technical but rather something all GM teams can benefit from and typically need and want – the chance to shine, the chance to truly act as a partner to the business/HR, and the chance to lead. The bullet points above are a practical guide, but the best advice with this issue is not so much practical as an encouragement to get out there and demonstrate what a great asset a truly proactive, knowledgeable and efficient mobility team can be to an organisation.

When it comes to new host country entry, the fact is that this is a “problem” area no one else will want to deal with or take ownership for. It’s difficult, it’s messy, and it’s hard to get an overview of what exactly is needed to do it right. But entry into a new location is the essence of what global mobility is about. It offers the chance to leverage all of the subject matter expertise applicable to the field and to demonstrate it in a tangible, visible way.

It also offers that most elusive of opportunities for GM practitioners – the chance to fully take ownership. This immediately puts global mobility on a level footing in terms of subject matter expertise with other, more “respected” support functions such as legal and tax. It requires specialist, technical advice that can elevate GM above the typical realm of being a reactive service provider, and for global mobility specialists themselves it offers the chance to gain technical expertise in their field, which is incredibly valuable and currently quite rare in the market. It usually takes many years of GM experience to be able to advise reliably on everything from tax to employment law, to immigration, to policy concerns, to location specific medical and relocation requirements – when you have the chance to work on a new host country entry, you gain all of this in record time.

Overall, the “what I wish I knew” about international expansion is that it’s the best opportunity you’ll have to enhance your knowledge and skill set, collaboration skills, leadership and project management skills, all at the same time. Yes, it’s a minefield in terms of what you don’t know – but the knowledge you gain when filling those gaps is worth its weight in gold.

Caitlin Pyett is a Mobility industry veteran with 20 years’ experience gained in London and Singapore. Currently in Hong Kong due to her husband’s recent relocation, she now finds herself in the unenviable position of “trailing spouse” – a fresh perspective on mobility after 20 years! Caitlin is available for senior in house opportunities in HK, mobility consulting work and freelance writing assignments. She can be contacted on +852 9655 6657 or connect with her on LinkedIn. 

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