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5 posts from June 2016

30 June 2016

Brexit and Global Mobility: keeping abreast of the changes

With the dust still far from settling after the UK's decision to leave the European Union and a prevailing sense of uncertainty among both employers and employees, what actions should Global Mobility professionals be considering as businesses begin to focus on dealing with the realities the UK’s vote to leave the EU?

Communications and employee engagement

Employers will recognise the fractured state of opinion on this highly emotive issue.  People have entirely differing perceptions of the pros, cons and implications of Brexit - for themselves, their business, the economy and society more generally. Reduced workforce confidence and productivity will be a significant factor during such uncertainty - with people 'sitting tight' until there is clarity.  Could some key UK talent be considering opportunities overseas, during this uncertain period?

Action: Developing a strong communications and engagement strategy will be vital, both to sensitively set the tone for a respectful debate focussed on the future and to maintain employee confidence and engagement.  The Global Mobility function’s proximity to employees working across EU borders gives it a key role in shaping and delivering the appropriate messages and maintaining engagement with those most immediately affected.

Assessing the implications for business strategy

A full assessment won’t be possible until the terms of the UK’s new trading relationship with the EU are known. Some organisations affected by current market turbulence will need to take decisive action now, notwithstanding the uncertainties about the future. Business leaders will be looking to get their hands on facts, data and certainty during this period of ambiguity.

Global Mobility is well placed to obtain the citizenship and demographic data necessary to determine the business’ reliance upon overseas talent and UK nationals working within EU operations. It will be able to lead the debate on talent - who is working where, where is  our key talent, what roles are they in, what competencies do they have?  Data on areas such as these will help inform employers' discussions with industry bodies and government representatives negotiating the UK’s future trading arrangements with the EU.

Action: Global Mobility should obtain relevant data to help business leaders focus their impact assessments on these higher risk areas of the business.

Understanding the cost drivers of the globally mobile population, as well as the return on that investment, will enable Global Mobility to help business leaders make the right long-term strategic decisions.

Action: Global Mobility should consider scenario-planning to provide a rapid assessment of how particular workforces, employment structures, projects or business areas are affected by potential changes in immigration requirements, labour laws, social security costs and exchange rates.  Should there be a need to relocate groups of employees, planning is needed to consider the best and most appropriate approaches and policies for these moves - with the aim of creating a win-win situation for the business and the people it needs to move.

Operational readiness

EU citizens who rely upon the EU’s freedom of movement will be concerned about their future.

Action: Global Mobility should be prepared to answer the inevitable, practical questions about what action employees need to take to secure their ability to continue to work in the UK or within the EU.

Some employers may consider redeployments of talent out of the UK if their review of the business environment indicates a positive outcome from doing so. These undertakings are complex and require significant planning.

Action: GM will need to engage early with multiple parties, both internally and externally, to ensure a realistic and executable plan is developed. 

Experience from the financial crisis of 2008/9 shows us that significant market volatility often causes businesses to react by focussing on cost reduction.  The same era saw enormous growth in short term business travel, as those in front office, sales, marketing and client-facing roles continued to develop market opportunities through any means possible.  In contrast with expat assignments, short term business travel was widely perceived to be less costly and more flexible.  In reality, this is not always the case.  The OECD’s Base Erosion and Profit Shifting (BEPS) will increase the business risks associated with ungoverned business travel.  And if the UK’s post-Brexit EU trading arrangements do not include free movement of labour, the risks will increase further.

Action: Many Global Mobility functions are under significant pressure to take responsibility for short term mobility governance.  Brexit is only likely to further increase the pressure.  Therefore, engaging with leadership now to put forward the business case for a governance and risk mitigation framework in this space will pay dividends in the longer term.

Summary

Proactive and early engagement with business leaders will enable Global Mobility to demonstrate that it is a strategic enabler during times of such unprecedented volatility and change. Bringing data and insights on areas such as the demographics of mobile workers, immigration status and cost scenario planning can bring much-needed clarity to inform and shape the debate.

View Ben Wilkins’s profile on LinkedIn

24 June 2016

Steering through uncertainty: Brexit and reward

Like millions of people across the country, I woke up a little stunned this morning, and am still grappling with the full enormity of what’s been decided.  

These are completely uncharted waters. A variety of post-Brexit trading scenarios, ranging from the Norwegian model to a series of bilateral agreements, could all be on the table. But it will be at least two years before anything is finalised.  

In the meantime, businesses have to deal with the repercussions and all the uncertainty that go with them. And reward is one of the areas that could see significant upheaval.  

Economic impact

Performance targets and bonus pools will be affected by volatility in the economy or movements in exchange rates. Ironically, a weaker pound could increase earnings growth in sterling terms for international UK companies, which could prove controversial if it led to higher bonuses at year end.

Regulation

In terms of regulation, there will be no change until the eventual Brexit agreement is signed.  

In the longer term, there will be some rule changes, particularly within the highly regulated financial services sector. Possible options include the abandonment of bonus caps and less prescriptive controls in areas such as the definition and regulation of ‘material risk takers’. There’ll be no bonfire of remuneration regulation as most of it stems from UK rather than EU legislation. But one of the possible upsides from Brexit is the move to remuneration regulation that it is entirely fit for purpose for the UK financial industry, without some of the less applicable features of EU regulation.   

Political fallout

Yet in many ways the biggest upheaval is likely to stem from the volatile political climate. Political developments could put the level and perceived fairness of executive pay under an even harsher spotlight. Constitutional changes within the UK would have complicated ramifications for payroll, systems, pensions and currency management.

There’s no getting away from these issues. Reward has to be a key consideration within Brexit strategies.

Ready for change

So how should your business respond? Based on our ongoing analysis, we’ve identified four key priorities for steering through uncertainty and change.  

1/ Carry out a full impact analysis to judge what the different post-Brexit trading scenarios mean for your business, how it’s structured and how it accesses key talent.  

2/ Make sure HR is fully involved in strategic planning, project and restructuring decisions from the outset to ensure that the reward and wider people issues are assessed and addressed.

3/ Be clear on any areas where you would like to influence the terms of the settlement the Government seeks and establish a strategy for representing those views.

4/ Reassure employees by explaining what the different Brexit scenarios and your strategies for addressing them could mean for where they’re based and how they’re rewarded. Failure to communicate will create a vacuum of uncertainty, which could spur key talent to seek out opportunities elsewhere.

With these foundations in place, it will not only be possible to manage the impact of Brexit in a more informed and proactive way, there’ll also be opportunities to simplify and streamline the management of compensation. Further benefits include using the coming changes as a catalyst for aligning reward more closely with strategic management.

View Tom Gosling’s profile on LinkedIn

Is the UK leaving the EU just another market disruptor?

The votes are in and the UK has decided that it’s time to leave the EU. There will undoubtedly be uncertainty ahead. But will that bring opportunity, decline or, if we want to play in the EU garden, will we still have to abide by their rules?

There are now many important questions to be addressed and we don’t yet know what the referendum result means for our people, our security or our place in the global market. But we do know that businesses, both big and small, don’t just come to the UK for access to the EU market. This isn’t just a London thing: In the past 4 years, Manchester has attracted over 120 foreign companies; Birmingham saw 40% growth in foreign direct investment; and Reading has been ranked in the top 10 foreign direct investment cities of the future.

2015 saw a fifth of all European projects heading to the UK and over 170% increase in investors locating their headquarters in the UK. In the years I have been supporting businesses, and their people, move to or expand in the UK, the reasons for choosing the UK is multifaceted: Infrastructure, skilled workforce, innovation incentives, holding and financing incentives, attractive tax regime, double taxation treaty networks, business and social environment… the list goes on. In all honesty, membership of the EU is rarely cited but maybe that it is because it’s taken as a given.

There’s work to be done to ensure a smooth exit. We need continued access to the single market and how we promote the UK, outside of the EU, being an even better place to do business and site your headquarters will be crucial.

Global business is changing at a pace and that’s only going to get faster. Businesses need to be agile, global and innovative. The presence of market disruptors has become the norm. Is the UK leaving the EU just another market disruptor?

In the global business village, aren’t trading communities based upon geography a bit old hat? The biggest threat to future proofing many businesses is the lack of skilled talent. Continued access to the pool of skilled talent post Brexit, and that talent doesn’t just sit in the EU, is critical to the success of the UK.

As we move forward over the next few months: Access to markets, the cutting of red tape, certainty over regulation and tax regimes, continuing to develop our own talent and attracting the best talent from overseas, will all play their part in the next phase of success for UK business.

Watching Robert De Niro and Anne Hathaway in The Intern on a recent flight, a particular quote struck a cord with me, “you’re never wrong to do the right thing”. Now that a decision has been made, and whatever our thoughts are on that, we now need to buckle in, own the change and do the right thing for the UK and our position in the global business arena.

Jo-Anne Allen Bray
Director - Tax
Office: +44 (0)23 8083 5335
Email: [email protected]

 

View Jo-Anne Allen Bray’s profile on LinkedIn

23 June 2016

Pride: Celebration of progress or fight for change?

I’ll be marching in London Pride on Saturday with over 80 Partners and staff from [email protected] Throughout June we have displayed videos and posters in our offices and our colleagues will be marching in Leeds Pride too. Pride can look just like a big party; taking over towns and cities with great noise, colour and celebration – and whilst I think this side of pride is something we should cherish, it’s important to remember where pride comes from and why we still have them.

Pride can be traced back to LGBT campaigns in 1960’s America. A major spark for global LGBT campaigners came in 1969, when lesbian, gay, bisexual and trans patrons of the Stonewall Inn, New York, rioted in response to police raids. The following year, the first gay pride in the US was held in New York to commemorate Stonewall and continue the campaign for change. London wasn’t far behind, with the first annual London Pride in 1972.

Since the 1960s the achievements of LGBT campaigners have been astonishing. In Britain we’ve seen homophobic laws repealed one by one, with legal protections fought for and won at the same time. Equal marriage, adoption rights, fertility rights, the list goes on… For the Trans community changes have included; legal gender recognition and both public and private provision for gender reassignment - including as part of PwC’s staff healthcare plan – but there remains far more to do fighting Trans discrimination and to ensure Trans individuals have access to healthcare services. With these achievements, can we still call pride a political action, a fight for change? I think we can, here’s why:

  1. In the face of discrimination and oppression, a mass display of LGBT people being themselves, being visible and being heard is a campaigning and political act by its very nature
  2. Whilst many legal reforms have been achieved in the UK, there is still much to do in terms of social change and fighting for the rights of the Trans community and those in Northern Ireland (who don’t enjoy the same rights as the rest of the UK)
  3. We’re privileged in the UK to enjoy the rights and freedoms that we do, but others around the world face oppression on a daily basis. A strong, visible, LGBT presence in the UK sends a message of hope to those campaigning, and shows leadership to other countries

That said, we also shouldn’t shy away from calling pride a celebration of how far we’ve come. I’m proud of what has been achieved and do I want to celebrate this, but I’m not done campaigning for further change both at home and abroad.

Hopefully this blog has added a little colour (as if pride needed any more colour) to what could just seem like a big party. Pride is a safe space for many LGBT people to openly celebrate being themselves. In the wake of the Orlando tragedy, it’s especially important that we remember the campaigning, political nature of LGBT activities, be that a big pride event or [email protected] events, socials and poster campaigns, and remind ourselves of both how far we’ve come – but also how far there is still to go.

Nick Pringle

Email:[email protected]

 

 

View Nick Pringle profile on LinkedIn

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02 June 2016

Why global compensation isn’t like a herd of wildebeest...

Like many people I enjoy watching natural history documentaries and am often amazed by the complexity to be found in nature. Some natural events, like the Serengeti wildebeest migration almost defy belief. Perhaps strangely, while watching a programme about this migration, I started to think about global compensation management. Awe at the beauty of nature was displaced by thoughts of data sources, compensation items, taxability treatment and payroll delivery.

I considered the characteristics that needed to be in place for the migration to be successful. The starting point seemed to be the shared knowledge and experience of the herd. The ability to act collectively, to understand instinctively what to do. I realised that this also applies to global compensation management. There is no denying that assignee compensation can be complex. It typically includes multiple data sources, varying methods of delivery including split pay, and the application of specific expatriate rules and positions. This requires a high level of understanding and expertise not only at the centre but locally with the payroll delivery. When you have such a complex, ever changing but constantly moving process then instinctive judgement becomes important. Knowing what to do and making it happen quickly is critical when payroll cut offs and deadlines are involved. It made me realise that in many cases this instinctive intelligence is lacking within organisations. Global compensation and expatriate payroll has been too niche within organisation to facilitate the development of deep expertise and grasp from the local payrolls back into the centre. The herd mentality just isn’t there yet and this is why companies may look outside of the organisation for that know-how and competence.

The next comparison I made related to communication. Even the shared insight and experience within the herd did not negate the need for interaction. The constant noise, the constant braying seemed to be evidence intense communication. Making sure that individual animals remained in touch with the herd, keeping on track, keeping moving. By comparison, my experience with global compensation again suffered and made me think that typically those involved in the process just don’t talk enough. Global compensation typically requires the effective management of multiple data sources and a myriad of data points. Gathering all of the necessary data together and then facilitating its dissemination to the right people at the right time is difficult. Coordinating this needs constant communication and ongoing dialogue. This is especially the case as in many cases, too many processes rely on manual steps and human intervention, all of which carry risk. The solution has to be more communication but crucially more automation. Reduce the need for human intervention, reduce the risk.

Another point linked to this is that local payrolls aren't set up to process assignees and aren't always open to developing this skill. This is intensified where mobility teams lack sufficient understanding of payroll and are reluctant to talk about it. We need to be talking more about global compensation and payroll.

My final comparison relates to timing. For the wildebeest, the timing of the migration is crucial. Start at the wrong time of year and they will fail, start early and they will fail, start late and they will fail. Timing is everything. This concept is relevant to global compensation and payroll. Mobility teams often struggle to have the time or resources to manage this area well. Combining the ad hoc and dynamic demands of global mobility with fixed monthly processes and deadlines often isn’t feasible. There are no shades of grey if a payroll cut-off is missed and this means that many organisations are looking for support to manage this process. It is much better to invest in the right backing up front rather than spend time unravelling mistakes and resolving issues.

While my comparison between a herd of wildebeest and global compensation sounds unusual, it did make me consider the challenges of global compensation and payroll from a different perspective. This approach is something we bring to our clients and I’d like to think that we are always open minded and thoughtful when considering the right solutions for them. In this area and so many others in the changing world of global mobility, one size does not fit all and individual requirements trump those of the herd.

View Andrew Williams’s profile on LinkedIn