Recent research shows that organizations need to align their relocation incentives with employee desires to fill key skills gaps.
By Donna Chamberlain
Globalization has integrated industries and markets internationally, and demand for skilled employees in both developing economies and the traditional powerhouses continues to grow. Even with an increasingly complex international landscape, 18 percent of employees across the globe are eager to accept a job offer abroad, according to BDO and Ipsos’ latest Global Employee Mobility Report. However, this marks a seven percent decline from 2012, indicating that motivating employees to accept international assignments is becoming increasingly challenging.
With this in mind, organizations should work to understand the motivations of globally mobile employees in order to develop effective programs that minimize talent acquisition costs while maximizing employees’ professional growth and strengthening their company’s bottom line. Financial incentives are becoming less effective for enticing employees to work abroad, underlining the need for companies to include alternatives in their relocation programs.
Global Volatility Gives Pause to Workers
An increasingly complicated political, social, and economic international environment may be responsible for the global shift in attitude toward relocation. The survey found that young adults under the age of 35, senior executives, business owners, and unmarried adults remain likely to consider relocation. Employees in the mid-career stage are less frequently choosing to relocate compared to their peers. Often, family or financial responsibilities hinder relocation for these employees, making them more likely to travel for work rather than relocate on a fulltime basis. As a result, there has been a recent upsurge in positions that involve more business trips.
Organizations hoping to encourage employees to accept international assignments should consider individuals’ personal and professional situations from a holistic perspective. Perhaps it’s more efficient to spend the time engaging a young, career-driven employee with fewer personal responsibilities than a more seasoned worker who would require more resources and support for themselves and their family. Since today’s talent now demands more than just an increase in pay to move abroad, companies must consider the total cost and support associated with moving not just an individual employee, but with their family in tow. Companies’ financial and tax strategies would benefit from a thoughtful, comprehensive approach to evaluating which employee’s relocation would be most economically-viable.
America Loses Ground for Attracting Talent
Geography, common language, culture, business practices, and the strength of the economy all influence an employee’s preference for relocation. Out of the 51 countries provided to respondents, 30 percent of workers across the world would most likely choose to relocate to the United States. But this is a four percent decrease compared to results from 2012. The desire to relocate to the U.S. also fell throughout all regions, underlining the gradual shift in attitudes about the U.S. as a desirable destination.
Perhaps less surprisingly, professionals currently based in North America show little willingness to consider relocating to non-Anglophone countries. Common language was a concern shared by employees across the world, as 36 percent of all global employees surveyed report that paid language training, when necessary, would make them much more likely to accept a job offer abroad.
U.S.-based companies can take comfort in the fact that America still leads in the race to attract talent worldwide, but taking note of what employees specifically desire from relocation programs could help organizations combat international employees’ slowly dwindling interest in relocating to the states. As a result of the December 22, 2017 enactment of the 2017 Tax Cuts and Jobs Act (the Act), the U.S. tax system has seen the first major overhaul in 30 years. Organizations looking to either attract international professionals or send their workers abroad must ensure that their tax and financial plans also benefit these mobile employees, as there are provisions in the Act that impact both domestic and international assignments. For example, the Act suspends the exclusion from gross income for qualified moving expense reimbursements and generally suspends the deduction for moving expenses for tax years beginning after December 31, 2017, and before January 1, 2026.
Employees Focus on Job Security, Family, and Lifestyle
Beyond financial compensation, job security and family concerns continue to rank as the top international relocation incentives for employees. Two perks tied as the top incentives for employees looking to move abroad: thirty-six percent of employees would need a guarantee that they could move back to their current role with further relocation assistance, and the same rate of employees desire paid language training.
Potential transferees also want perks that lessen the impact of uprooting their families. Thirty-five percent of employees desire immigration assistance for their spouse and airfare for their immediate family to visit home, while 32 percent want organizations to pay for their children’s school tuition abroad.
Other concerns encompass housing considerations, with 27 percent of employees wanting a relocation consultant to help with their home and school search, and 22 percent wanting temporary housing for up to four weeks. With fewer employees willing to move abroad compared to five years ago, companies should focus on offering their workers a full range of relocation resources.
Bridging Cultural Divides
Although policy issues largely lie outside of companies’ control, HR can advance their relocation programs by considering country-specific political situations. Employees contemplating relocation pay close attention to countries with favorable economic and social policies. Healthcare, social security, support for immigrants, quality public education, low taxes, and the current economy are the main factors that determine where employees prefer to relocate.
How can organizations help? They can ensure their relocation process maintains transparency around these issues. When employees are better informed about a foreign country’s economic and social policies, organizations reduce the risk of encountering challenges with employees once they do decide to relocate. Understanding an employee and their family’s personal and financial situations will allow companies to relocate their workers to countries whose policies best align with that employee’s situation. For example, if an employee needs to live in a country with a strong public healthcare system to help care for their special-needs child, a company can make sure this is taken into account when considering international assignments. Organizations also need to maintain accurate and updated processes to ensure an employee’s income taxation is handled appropriately during their time abroad and mitigate the risk of noncompliance for both the employee and the organizations itself.
Demand for an internationally-mobile workforce is stronger today than ever before. Facing a slight decline in employee’s appetite for relocation, organizations will have to provide incentives aligned with employee desires to fill key skill gaps.
Donna Chamberlain is managing principal of BDO’s expatriate tax services.