When it comes to deployment of talent globally, three main staffing strategies exist:
- the home-country national strategy where the employees from the home country are sent to live and work in the new location and are called expatriates.
- the host-country national strategy, where the company employs people born in the host country.
- the third-country national strategy employs people from an entirely different country than the home and host country.
All of these strategies involve moving people to the job.
With costs of deployment rising and the increase of globalisation demanding more relocations, how can companies manage their budgets while meeting their targets, deploying the necessary talent to the right location so as to realize their full potential?
In this article, a fourth strategy for international staffing is examined. We will take a look at how this strategy is already in use and some of its benefits as well as setbacks.
Companies have traditionally moved their people to the jobs. Now it may be time for Business and HR Leaders to take a new look at global mobility and consider moving jobs to the people.
Challenges of Mobility
Global relocation has been instrumental in the growth of MNCs in spite of its costs and limitations. The challenges, investment and risks involved in moving people around the world present barriers that organisations continue to strive to overcome. These barriers include:
Assignment Costs– Cost of physically setting up operations half way around the world is high. The relocation of top personnel and families add to the risk especially when the chance of the relocation failing can be as high as 50%. Companies consider alternatives to a long-term assignment for their executives, such as shorter types of moves or extended business trips. They also use different approaches to compensation – lump sum, streamlined packages or simple cost cutting. But with a global relocation costing on average $371,000 per move and almost half of them ending in failure, organisations are realising they may need to rethink global mobility altogether.
Hardship locations– It seems the more potential a host location presents, the greater the risks of doing business there. Many countries that offer great labour sources, lower costs of operation and living present safety hazards and geo-political instability plus other hardship factors; all of which are significant risks to the assignee and the family, the organisation and stakeholders in general.
As the talent pool demographic changes, other hardships may present themselves in light of gender, ethnicity, religious affiliation or sexual orientation. The trendy or popular destination attractive to Millennials may not always line up with the goals of the organisation. So, the move that is essential for the company for the company to achieve its global goals may not attract the millennial talent pool. And, with the millennial mindset, the perception of hardship may not make them the suitable candidate for a new location assignment.
Career, Family and Compliance Issues – A main reason for an employee rejecting an overseas assignment, is the spouse’s inability to continue their career path. Companies have sought to alleviate this set back by providing spousal support, career re-training and coaching or offsetting education costs and even job-search assistance. However, the loss of the dual income and career opportunity for the spouse is not easily be compensated.
Moving the entire family half way around the world involves sacrifices for everyone, whether it is a nuclear family with young children or an extended family with aging parents. Schooling at a crucial time is a priority and weighing options and opportunities force parents to have to make tough decisions with long-lasting consequences and at possibly large costs to the company. Chronic health requirements of aging parents in the host nation or home-assisted living in the home country can complicate the choice of whether to relocate.
Though globalisation is rapidly increasing and companies and people are as mobile as ever, it seems that nations are not as open to the possible arrangements of foreigners working within their borders. With COVID, embassies running on skeleton staff or closed, immigration facilitation has become even more of a challenge. Compliance continues to be a big hurdle for companies. Costs and national quota restrictions present limits to work permissions and travel frequency.
Making the case for Third Country Assignment
As we mentioned, the three ready options for filling a position overseas are the expatriate, the host-country national and the third country national. What about the fourth option – the “third-country assignment” where the assignees relocate to a country that is not the country where the job is to be performed but to a different country entirely.
What would this look like in terms of logistics? Instead of relocating the employee from country A (where he lives) to country B (where the job is required), he is moved to country C, a location of his choosing, where he can perform his tasks. Essentially, this is moving the job to the employee. The methods at his disposal for this fourth option: frequent and extended stays in host country, virtual connectivity, regular travel or commuting through the weekend so he is back home on weekends, or simply working remotely.
Pluses to the Third Country Assignment
Matching millennial expectation is a big plus and will go far in attracting and retaining that demographic. Giving the millennial a say in his choice of destination is key in negotiation of prospective assignments. It would also position the employer at an advantage if this offer coincides with a spousal opportunity increasing the success of the candidates and leading towards the longevity of the arrangement. In other words, should the candidate’s spouse be allowed a similar choice and suitable arrangement, then this would be win-win for all involved.
This fourth option suddenly opens up the talent pool considerably since, candidates who were qualified but not interested in moving to the host country, could be inclined to accept an offer if given the chance to choose locations. Also, Country C, could open up an ocean of new talent never before considered now that they do not have to relocate specifically to a host country. Given the specifics of the organisation and the job requirements, having the right skill set may be more valuable than having a man on the ground.
Saving costs of expatriation could be achieved in this fourth option, since the candidate would be keen to accept the position in the location of his choosing and hence more likely be open to a slimmed down relocation package. Given the location of Country C in relation to the host country, costs of commuting or extended business trips could prove to be less strain on the budget than setting up a family for three years in the host country. And certainly, remote working would be more economical than a full on assignment. Also, compliance costs could be reduced depending on the nations involved and the paperwork required.
Overall, moving individual jobs to people is about “developing synergies between employees’ aspirations and business needs: achieving lower mobility costs and higher satisfaction”. It is also about acknowledging the fact that working arrangements are changing fast in response to technology and generation changes. And leaders need to have a flexible mindset in order recognise opportunities, even if they are disguised.
Third Country Assignment: Options Outlined
It is worthwhile to look at each of the possible arrangements that can be included in this new option of assignment, some of which may overlap.
Third country assignment. This assignment allows the employee to relocate to a country, different to the home and host countries, usually a destination of the candidate’s preference. It may not be a traditional destination and can be worked out on an individual basis
Employee-requested move. This category comes into play when the assignment location is not critical but retaining the employee is. This arrangement would probably be reserved for few cases at first and could be leveraged to not only retain the candidate but also negotiate a very limited relocation package. This arrangement, once proven successful could become important to foster talent and motivate employees
Virtual mobility. The assignee is not physically relocating to the host location and captures the advantages of modern technology to perform tasks from the home country or from a third country, usually one of his preference. The strength of this scenario has come into the fore in 2020 and still proves invaluable as the dynamics of the pandemic play out and in light of possible future global events. Costs are drastically reduced in this situation however, HR and Management need to confident of their methods of determining the overall effectiveness and resultant productivity, to be able to measure the success of this arrangement.
Frequent flyers. Frequent trips, from the home country or a third country, and extended business trips, are invaluable to the global mobility program of an organisation, even if they are not always tracked as such. Costs should be recorded for comparison purposes as well as the effectiveness of this arrangement to see if it is a productive option. Compliance in this arrangement is also worth noting, as frequent trips may trigger red flags with local authorities.
Commuters. Commuters are present in the host location during the week or for a few days per weeks while still living in the country of their choice.
Moving Jobs to People: the pros
Before 2020, businesses may have been able to get away with, “business as usual” as the end would justify the means. Now leaders have to re-evaluate business as usual and this hopefully will lead to surprising results. Moving jobs to people may be one of the strategies that needs evaluating. There are quite a few reasons why now would be a good time to consider implementing this strategy:
Gen Z and Millennials are the largest demographic on the planet with 64% of the world’s population being born after 1981. This impacts all aspects of business due to their world views and expectations being so different. Living on their terms seems to be a core philosophy, thus, having a say in their job location will play a role in attracting them to the table.
Along these lines, working models will shift as we witness the rise in WFH, GIG and free lancers. Flexibility is a strong suit and corporations will need to find ways to incorporate this into their policies. Of course, technology is enabling this shift and will continue to do so, opening more options for the assignee while removing limitations. Mobility platforms and policies may have a tough time keeping up with the rapid rates of change, but barriers will continue to fall as the playing fields are levelled.
Moving Jobs to People – the challenges
Of course, many job profiles cannot be filled from a third country. However, as companies evaluate the option, the main goals would be for their compensation policies and HR processes to begin to mirror this new working possibility so that the most beneficial arrangements can be established for all concerned.
It may take a while for compliance, taxation and immigration to catch up with this model but in the meantime, due diligence is essential on the part of the employer, to avoid triggering unforeseen tax liability or immigration non-compliance. Ultimately it is the employee’s responsibility to make sure he is tax and immigration compliant but it bodes well for the organisation to fully support the employee in making sure this is the case. Personal data protection regulation may also be warrant examination in order to prevent data transfer across borders which can sometimes be underestimated by companies.
Just as being in a new country and working with a team of a different culture and mother tongue has its own set of challenges, not being physically present in the host country is also challenging and that will need to be addressed. Prolonging the adjustment phase, delaying team cohesion and end goals may be part of the issue and should be taken into consideration when evaluating the success of this option.
And finally, cost savings may not be recognised right away and may not be obvious. Factors like cost of living in third country, size of compensation package and relocation allowance all need to be considered carefully prior to making the option viable. Ultimately, if it is not saving the company costs, reducing risks and lessening opportunity for failure of assignment, then the question needs to asked, if it is worth it.
Moving jobs to people is not going to fully replace traditional mobility, but it is can be one more tool in the arsenal that companies need to deploy to manage employee mobility and to hold on to valuable talent. Companies need an answer to balancing the cost, risk and changing demographic of available talent as they plan their upward growth. How they utilize this fourth strategy, the third country assignment, will be based on their own specific philosophy and business requirements and ability to be flexible in planning and policy making.
The above article has been researched using the following materials:
Dilemma 2: Job Mobility Versus Employee Mobility | Mercer
THIRD-COUNTRY NATIONAL (TCN) (state.gov)
14.2 Staffing Internationally – Human Resource Management (umn.edu)
What are the differences among a local national, an expatriate, a third-country national, and an inpatriate? (shrm.org)