International employee mobility increases despite slowdown fears
An Aon Hewitt study reveals international employee mobility continues to
increase even in a global economy gripped by slowdown.
A head hunter had an unexpected success landing a hire for a senior position recently. He was able to persuade a high-flying executive to quit his job, even as this person was about to leave for Britain on a posting. "The man had doubts about whether the assignment would really add to his profile in any way," the head hunter said, asking not to be named. "The compensation was barely covering him for the shift. In fact, India offered better opportunities and standards of living."
The executive carefully weighed his options and decided to stay back - making what would have been an unusual decision a few years ago when Indians would grab almost any opportunity to be posted abroad. The incident exemplifies the shift that is marking talent mobility across borders - the savvy attitudes of employees when it comes to international assignments. Today, just as companies weigh the real worth of sending a talent on an international assignment, so too do employees.
They want to know how the move will pan out for them. Given this backdrop, and also that India is racing ahead on growth indicators while many parts of the developed world are still coping with slowdown, a recent Aon Hewitt study, International Assignee Policies and Practices, on employee mobility reveals interesting trends.
The good news, the study says, is that despite the world being hit by the recession, international mobility has stayed resilient. Aon Hewitt mapped 56 leading organisations, surveyed in January and February 2011. Of these, 52 - 21 Indian companies and 31 multinationals, or MNCs - participated in an outbound study, while 36 - seven Indian companies and 29 MNCs - took part in the inbound study. At around 90 per cent of Indian organisations, the number of employees being sent overseas on assignments has been increasing for three years; the same was true for about 70 per cent of MNCs.
The economic downturn has had limited impact on inbound movement, too. Around 37 per cent of organisations surveyed said they had witnessed an increase in the number of international assignments to India in the last three years. The inflow remained the same for another 40 per cent, while the remaining 23 per cent reported a decrease.
When it comes to bringing in talent, Indian companies were seen to be a little more reticent compared to the MNCs as a fewer participated in the inbound study (only seven compared to 29 MNCs). "This suggests that either the number of international assignees in Indian organisations are not substantial, or that they do not have the data readily available as decisions regarding inbound international assignees are not formalised and documented," says Sandeep Chaudhary, who runs the compensation consulting practice for Asia Pacific at Aon Hewitt. Also, another fact is that many Indian organisations are concentrating on expanding into other countries, including regions such as West Asia and Africa, and need more talent outside the country than within.
For instance, senior executives from phone firm Bharti Airtel now run its operations in Bangladesh, Africa and Sri Lanka. They are posted with a clear time-bound mandate. "We send out senior people with the agenda of developing local talent and leadership in these places," says Krish Shankar, Executive Director, Human Resources. "In some cases, we send people out on lateral shifts for short six month projects, as this offers them a challenge to prove their worth."
In contrast, MNCs, apart from continuing to send Indians overseas for career development, international exposure, projectbased requirements and training, and so forth, are also maintaining the focus on India as an important destination for investment. PepsiCo India stands out in this context. The company has not brought in talent at all, but has sent people out. "It is just that India has such a good talent pool, that its requirement has been felt in other parts of our operations," says Samik Basu. Basu himself was abroad for six years and returned to join as Chief People Officer, PepsiCo India, in March this year.
Obviously, different business requirements drive decisions behind the foreign assignments. "One, people go for a fixed tenure and come back. In some cases senior talent that has no further opportunities to learn in India is sent on assignment that can add new challenges," says Basu, adding that some others go without any return plan in place.
"They can move according to opportunity available in any region." Of course, there are also the migrations where a country head moves to take up a bigger international responsibility.
In contrast, Suzlon Energy has been bringing in talent. The company has been expanding its operations into foreign territories, even as it establishes its stake in the evolving wind energy space on domestic turf.
"We are a young company and we have had to bring in highly specialised talent for our space from outside, as there is not much of it available here," says Saurabh Kholkute, Head, Strategic Talent Acquisition. "We have not sent too many people out of the country." Companies like Suzlon have also had to recruit professionals overseas for their knowledge of the local laws and regulations.
Some MNCs, in fact, tend to bring in a "shadow manager" for every Indian hired as a project head. "We notice this particularly in the case of Japanese, Korean and German companies. They tend to bring in their own people, as they perhaps need to ensure a certain international protocol, or they need back-up skills for certain assignments," observes K. Sudarshan, Managing Partner at headhunting firm EMA Partners, India. There is the cost factor as well. "Today companies are very cautious about bringing in talent as 'expatriates'. They are very expensive and a pampered set. Besides, local teams resist such moves," says Sudarshan.
It is interesting to note the levels at which such career moves happen for foreign assignments. "The percentage of companies sending employees at the senior and middle management level abroad is higher," says Kartik Rishi, Solutions Leader, Expatriate Compensation, Aon Hewitt. "But in absolute numbers, more people in the junior and middle level bracket get sent." This is because information technology companies tend to send out large numbers of people at the junior level which skews the numbers in their favour.
When it comes to compensation, most companies tend to follow what they call a 'Balance Sheet Approach' - providing the employee sent out the same salary he would have earned at his level in the home country. For the employee this provides a base for pensions and other home-country benefits, and also serves as a reference salary for comparison with home country peers, as well as when he returns home and is reintegrated in the home company.
The Balance Sheet approach allows for the fact that when the employee is moving from a country with lower salary levels and standard of living to one which has higher salary levels and is more expensive, the company compensates for the cost of living. However, when the opposite is the case, companies provide the employee with a hardship allowance.
"However, most companies do not compensate employees for any fluctuations in foreign exchange rates," says Aon Hewitt's Rishi. Adding to the complexity is also that employees tend to take into account the loss in a spouse's income in case of an international shift.
"Earlier, when you offered a foreign assignment to someone they would readily move with families; today, they often move alone and are very particular about the terms and tenure of the contract," says Sarada Jagan, Executive Director - HR, The Sanmar Group.
Still, the bottom line is that most companies, according to the Aon Hewitt study, expect to increase crossover of talent both into and out of the country for the next three years.
The executive carefully weighed his options and decided to stay back - making what would have been an unusual decision a few years ago when Indians would grab almost any opportunity to be posted abroad. The incident exemplifies the shift that is marking talent mobility across borders - the savvy attitudes of employees when it comes to international assignments. Today, just as companies weigh the real worth of sending a talent on an international assignment, so too do employees.
They want to know how the move will pan out for them. Given this backdrop, and also that India is racing ahead on growth indicators while many parts of the developed world are still coping with slowdown, a recent Aon Hewitt study, International Assignee Policies and Practices, on employee mobility reveals interesting trends.
The good news, the study says, is that despite the world being hit by the recession, international mobility has stayed resilient. Aon Hewitt mapped 56 leading organisations, surveyed in January and February 2011. Of these, 52 - 21 Indian companies and 31 multinationals, or MNCs - participated in an outbound study, while 36 - seven Indian companies and 29 MNCs - took part in the inbound study. At around 90 per cent of Indian organisations, the number of employees being sent overseas on assignments has been increasing for three years; the same was true for about 70 per cent of MNCs.
The economic downturn has had limited impact on inbound movement, too. Around 37 per cent of organisations surveyed said they had witnessed an increase in the number of international assignments to India in the last three years. The inflow remained the same for another 40 per cent, while the remaining 23 per cent reported a decrease.
When it comes to bringing in talent, Indian companies were seen to be a little more reticent compared to the MNCs as a fewer participated in the inbound study (only seven compared to 29 MNCs). "This suggests that either the number of international assignees in Indian organisations are not substantial, or that they do not have the data readily available as decisions regarding inbound international assignees are not formalised and documented," says Sandeep Chaudhary, who runs the compensation consulting practice for Asia Pacific at Aon Hewitt. Also, another fact is that many Indian organisations are concentrating on expanding into other countries, including regions such as West Asia and Africa, and need more talent outside the country than within.
For instance, senior executives from phone firm Bharti Airtel now run its operations in Bangladesh, Africa and Sri Lanka. They are posted with a clear time-bound mandate. "We send out senior people with the agenda of developing local talent and leadership in these places," says Krish Shankar, Executive Director, Human Resources. "In some cases, we send people out on lateral shifts for short six month projects, as this offers them a challenge to prove their worth."
In contrast, MNCs, apart from continuing to send Indians overseas for career development, international exposure, projectbased requirements and training, and so forth, are also maintaining the focus on India as an important destination for investment. PepsiCo India stands out in this context. The company has not brought in talent at all, but has sent people out. "It is just that India has such a good talent pool, that its requirement has been felt in other parts of our operations," says Samik Basu. Basu himself was abroad for six years and returned to join as Chief People Officer, PepsiCo India, in March this year.
Obviously, different business requirements drive decisions behind the foreign assignments. "One, people go for a fixed tenure and come back. In some cases senior talent that has no further opportunities to learn in India is sent on assignment that can add new challenges," says Basu, adding that some others go without any return plan in place.
"They can move according to opportunity available in any region." Of course, there are also the migrations where a country head moves to take up a bigger international responsibility.
In contrast, Suzlon Energy has been bringing in talent. The company has been expanding its operations into foreign territories, even as it establishes its stake in the evolving wind energy space on domestic turf.
"We are a young company and we have had to bring in highly specialised talent for our space from outside, as there is not much of it available here," says Saurabh Kholkute, Head, Strategic Talent Acquisition. "We have not sent too many people out of the country." Companies like Suzlon have also had to recruit professionals overseas for their knowledge of the local laws and regulations.
Some MNCs, in fact, tend to bring in a "shadow manager" for every Indian hired as a project head. "We notice this particularly in the case of Japanese, Korean and German companies. They tend to bring in their own people, as they perhaps need to ensure a certain international protocol, or they need back-up skills for certain assignments," observes K. Sudarshan, Managing Partner at headhunting firm EMA Partners, India. There is the cost factor as well. "Today companies are very cautious about bringing in talent as 'expatriates'. They are very expensive and a pampered set. Besides, local teams resist such moves," says Sudarshan.
It is interesting to note the levels at which such career moves happen for foreign assignments. "The percentage of companies sending employees at the senior and middle management level abroad is higher," says Kartik Rishi, Solutions Leader, Expatriate Compensation, Aon Hewitt. "But in absolute numbers, more people in the junior and middle level bracket get sent." This is because information technology companies tend to send out large numbers of people at the junior level which skews the numbers in their favour.
The Balance Sheet approach allows for the fact that when the employee is moving from a country with lower salary levels and standard of living to one which has higher salary levels and is more expensive, the company compensates for the cost of living. However, when the opposite is the case, companies provide the employee with a hardship allowance.
"However, most companies do not compensate employees for any fluctuations in foreign exchange rates," says Aon Hewitt's Rishi. Adding to the complexity is also that employees tend to take into account the loss in a spouse's income in case of an international shift.
"Earlier, when you offered a foreign assignment to someone they would readily move with families; today, they often move alone and are very particular about the terms and tenure of the contract," says Sarada Jagan, Executive Director - HR, The Sanmar Group.
Still, the bottom line is that most companies, according to the Aon Hewitt study, expect to increase crossover of talent both into and out of the country for the next three years.
