Majority of MNCs in Hong Kong to Expect Increase in Use of Short-Term Assignments in 2016

December 11, 20154:03 pm1311 views

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The majority of multinational corporations in Hong Kong (56%) will expect an increase in the use of short-term assignments in 2015-16, according to a report on expatriate policies and practices by Mercer – a global consulting leader in advancing health, wealth and careers.

The research highlighted an ongoing diversification in the type of assignments used by companies. Notably, over the next year or so, around half of companies anticipate an increase in the use of permanent transfers (54%), developmental and training assignments (50%) and locally hired foreigners (47%).

A smaller proportion of respondents (44%) expect to see an increase in more traditional long-term assignments. “Companies are using a more varied range of assignments in order to respond to evolving business needs and changing patterns in the global workforce,” said Anne Rossier-Renaud, Principal in Mercer’s global mobility business.

“The increased diversification of assignment types adds complexity which can result in potential compliance and policy challenges for HR and mobility directors. However, it also creates opportunities to positively impact the overall business strategy by mobilising key resources in more flexible and cost effective ways.”

Commenting specifically on the Asia Pacific implications of the research, Mario Ferraro, Regional Global Mobility Leader for Asia, Middle East and Africa for Mercer said:  “Many organizations continue to face the challenge of moving talent to pursue strategic expansion, whilst managing the cost of international assignments in an increasingly uncertain economic environment.”

“A significant 57.1% of companies reported an increase in number of assignments requiring specific technical skills and just over half of respondents (50.3%) are sending more people overseas to fill vacancies requiring specific managerial skills.”

“In Asia Pacific, most organizations are constrained in terms of the attractiveness of the compensation package offered to their cross-border talent.  30% of organizations reported that “poor package attractiveness” is a large obstacle to mobility. It is evident that mobility professionals have a difficult equation to balance and need to find creative ways to offer more attractive terms and conditions without increasing the cost. These research results suggest that dual career families pose a significant obstacle to employee mobility, with 33.5% reporting this as a mobility inhibitor,” said Ferraro.

“It is interesting to note that 54.5% of Asia Pacific respondents opted for short-term assignments in the past two years, whereas 50% reported an increase in the number of “commuter” assignments. Short-term and commuter assignments are usually undertaken on an unaccompanied basis, circumventing the dual-career family issues, although they imply spending more time away from the family and hence are not without implications,” Ferraro added.

 

Mercer’s Worldwide Survey of International Assignment Policies and Practices report covers 831 multinational companies with approximately 29 million employees combined. It found that over half of companies increased their use of short term (51%) and permanent (50%) assignments over the past two years – whereas only 43% increased the use of long-term assignments.

Globally, 85% of companies have a policy or policies in place for international assignments (up from 81% in 2012). The report also noted a marked increase in companies with multiple policies (64%, up from 57%), a consequence of the diversifying trend in assignments.

“One policy is unlikely to fit all, and such an approach can lead to inadequate compensation that again can make it difficult to attract and retain talent. Implementing fit-for-purpose policies, to suit both different assignees and assignments, can be a highly efficient cost-saving initiative for most global mobility functions,” added Rossier-Renaud.

Assignment Drivers, Obstacles and Demographics

The top five drivers behind international assignments are: to ‘provide specific technical skills not available locally’ (47%), to ensure ‘know-how transfer’ (43%), to provide ‘specific managerial skills’ (41%), to facilitate ‘career management and leadership development’ (41%) and fulfil ‘specific project needs’ (40%).

In the future, 57% of companies expect the number of key or strategic assignments to increase, 51% expect to deploy a higher number of younger assignees and 41% anticipate more assignments to remote locations. Companies reported the highest expected increase in assignments to be deployed to US, China, UK, Singapore and Brazil.

‘Dual career’, i.e. the challenge of effectively helping to manage the career aspirations of the spouse, and ‘family issues’ are cited as the main barriers to employee mobility, with 37% of respondents citing these issues combined as a large or very large obstacle.

The ‘cost of current condition’ ranks as the second highest obstacle (35%), followed by ‘hardship considerations’ (25%) and ‘career management’ (23%). Notably, all obstacles scored as significantly less important as in the previous survey (Chart 1), suggesting companies are implementing proactive measures to overcome these issues.

“With the increased use of alternative assignment types such as commuters and short term assignments, companies are by-passing some of the major obstacles to mobility,” said Rossier-Renaud.

”Employees on these assignments are less likely to bring the family along, allowing the spouse to continue working in the home country and saving the company the cost of relocation. However, these assignment types can come with significant compliance challenges, and it is imperative that companies monitor these assignees carefully for tax, social security and immigration purposes. Failure to do so can expose both the company and employee to serious legal and financial penalties.”

The proportion of female expatriates has increased somewhat, with the worldwide average participation standing at 15%, up from 12% in 2013 and 9 % in 2010. Age-wise the majority of long-term assignees (66%) are between 35-55 years old, whereas short-term assignees are increasingly younger, under 35 years old (48%, up from 45% in 2013).

With an average of 10% and 7% representation in long and short term assignments respectively, the over 55s remain much underrepresented in a mobility context. Looming skill shortages as a result of an ageing population is likely to change this picture over time.

Kate Fitzpatrick, Senior Mobility Consultant and Mercer, said: “The statistics on female assignee representation are clearly not representative of the workforce at large. Companies would do well to review their candidate identification and selection procedures, as well as the benefits provided under international assignment policies, to ensure there is nothing overt nor implied which is restricting the deployment of female talent.”

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