Developing Your Cross-Border Strategy
20 February 2009 Stephen Asher
In an exclusive extract from The Corporate Guide to Expatriate Employment, edited by Jonathan Reuvid, Stephen Asher of Frank Hirth discusses the need for developing employment strategies and gaining greater understanding of the national cultures of countries in which your organisation operates.
Despite the investment in human capital strategies – including global talent management theories, benchmarking of best practice and performance management tools – in reality there is no ‘one size fits all’ solution. Instead managers have to address the operational implications of business needs, international diversity, differences between countries in terms of culture, regulations and administration, and the complexity of the resultant environment.
In addition, the largest multinational enterprises represent only a small percentage of the total number of organisations sending people to work in foreign locations. This is best illustrated by the results of a number of surveys that have consistently shown that a much larger number of companies, including small ones, are now competing in the international marketplace.
Furthermore, whereas large companies have tended to dominate the global business scene, today many small companies operate from greater varieties of business sectors and headquarter locations. Indeed, from available data it can be seen that over 90% of the expatriate populations of international organisations comprise between one and 500 individuals. The very largest expatriate populations of over 500 assignees represent less than 10% of the market.
This growth in the small-to-medium-sized end of the expatriate market is also supported by a number of emerging trends. Not least of these is the need to understand the impact of the emergence of mini-multinationals alongside multinationals from emerging countries. In this market, over two-thirds of all assignments are in response to a business demand and not as part of an international career development plan. Often these individuals are working at client premises or temporary project locations with little or no local support.
In response to these complexities, traditional international relocation assignments are giving way to more short-term and localised assignments, as well as cross-border commuting and global team configurations. The challenges of how to address the management of commuters, frequent flyers, localisation, project teams and sales teams, with frequent changes of intention, can stretch even the more experienced manager without some ability to anticipate the risks and costs of this emerging landscape.
Any manager responsible for expatriate employees will need to balance such things as the use of technology in tracking, monitoring and storing data, against a backdrop of increasing cyber-crime and the need to understand data protection laws for websites and intranets.
Perhaps inevitably, given greater diversity in cross-border working, the complexity of the legal issues surrounding the movement of personnel can be daunting. It is critical to have an understanding of the latest local practices for immigration work authorisation, including work permits and visas.
Salary and benefits will continue to be the primary cost relating to international assignments, and in particular the effect on personal tax and social security needs to be considered. Governments and tax authorities are focusing on ways to improve their tax administration in order to address what they see as a significant and growing problem of international non-compliance with national tax requirements.
Not surprisingly in this ever changing climate, being able to respond to real-time business demands in a world of increasing differences is critical, although knowing how to reduce risks or keep costs down remains a key challenge, as is the need to understand how to evaluate the success of or return on an investment in expatriate assignments.
In order to develop an effective cross-border employment strategy, you will need an understanding of the national cultures of the countries in which your organisation operates or those locations in which the firm is proposing to set up business.
Before you can evaluate your organisation’s ability to execute its strategic objectives or, indeed, develop best practices relevant to your organisation’s circumstances, you will need to be aware of the differences in approach and interpretation in the context of a number of vital subjects at local, regional, national and international levels.
The ability to interact with and manage people of different cultures will allow you to recognise different ways of doing things and yet see the practical connections and understand the interconnectedness of your organisational resources. This international perspective will help your resources nurture an international mindset.
The Corporate Guide to Expatriate Employment, Published by Kogan Page. Hardback. 336 Pages, £50. www.koganpage.com