While challenges associated with mobility are nothing new to global companies, respondents to Cartus Corporation’s 2018 Trends in Global Relocation: Biggest Challenges Survey Report pointed to one issue that’s new to the top three.
While cost control continues to reign as the most frequently cited challenge reported by survey participants and tax compliance holds a place not far behind, immigration has emerged as a growing concern for relocation managers as they design and implement their global relocation programmes.
Cartus’ 2018 Trends in Global Relocation: Biggest Challenges survey - the sixth in its series of Biggest Challenges surveys - elicited responses from 205 mobility managers around the world. This study is a continuation of the company’s investigation into the challenges facing global mobility managers, what they are doing to address those challenges, and hot topics including flexible policy, talent management, diversity and inclusion. All major industry groups are included, and the respondents are multinational companies representing more than nine million employees worldwide.
The Top Three Relocation Challenges
Cost control continues to hold at the top spot as the most frequently cited challenge by survey participants, although only 44% of respondents say it’s a bigger concern than in previous years. Ultimately, cost savings concerns aren’t new, they’re just a fact of life for relocation managers when it comes to managing mobility. However, two new types of concerns about cost control have also surfaced: new demands from employees ranked third and the use of costlier move types when a less costly approach could be used ranked fifth among respondents.
Commentary from respondents sheds additional light on cost control challenges, citing that hiring managers who do not understand where relocation dollars are best spent often contribute to cost control issues. Regarding what steps companies are taking to address the management of cost control, 72% of respondents said they have focussed on educating decision makers about costs.
The steps companies have taken to address cost control concerns include educating decision-makers about costs, the use of flexible policies, the use of data analytics to identify opportunities for cost savings and educating employees about the costs associated with relocation.
Immigration has emerged as a top challenge this year, with 70% of respondents stating that it’s a greater concern for their organisations than last year. There may be several reasons for this, such as: more companies, new to international mobility, may not have the resources in place to support immigration or do not yet realise the complexity of it; more companies are sending employees to new regions and countries where immigration considerations are very different from what they’re used to; and these companies may be developing a greater awareness of the consequences of non-compliance.
What’s contributing to the challenges with immigration? There are two primary categories. Externally, visa complexity and political influences such as Brexit and US travel bans and policies are high on the list. Internally, factors related to improving awareness of external conditions and what to do about them can be a challenge.
While the external factors remain consistent with 2015 findings, the internal company factors have changed significantly over the past two years. This may be because the growth in the involvement of business managers in the relocation/assignment process has addressed challenges, but has also led to new ones. Business managers may not be aware of the obstacles presented by a host location’s approach to immigration and could be making decisions that are costly, time consuming or unable to be implemented. Almost one in three respondents in the survey (31%) found that a lack of knowledge within mobility can be a contributor to this challenge.
It’s not surprising then, that the top three ways respondents say they are addressing immigration issues is to provide more information to those who need it: 76% stated they are engaging in better communication with managers, 56% are focussing on providing more information to employees and 32% are adding expertise to their teams, either through internal staff or an external partner.
Of all respondents, 42% stated that tax compliance has become a larger concern for their organisations. While there may not be a majority of survey participants who see this as a growing issue, clearly it’s still a significant challenge for many companies.
In Cartus’ 2018 survey, the key issue appears to be coming from business managers who are surprised by the cost that tax adds to an assignment and business managers who do not consider tax costs when establishing move needs. Additionally, mobility leaders acknowledged that it’s difficult for mobility to advise on or oversee tax compliance because of their lack of knowledge of host location requirements.
Challenges with tax compliance seem to emerge from an issue that was raised by respondents regarding immigration: business managers make decisions that impact the company from both cost and compliance standpoints, at least in part because they do not know what they need to do differently and those they rely on for that knowledge don’t necessarily have access to the information they need.
The good news is, 64% of respondent companies noted that they’re addressing tax compliance issues through better communication and 58% of survey participants said that they’re requiring the use of a company-designated tax return preparation service to combat the problem.
The top three challenges above suggest that the importance of informing and educating relocation decision makers is extremely important. A lack of this influence causes cost increases and decreases efficiency. When managers are given the information they need regarding how relocation dollars can be best spent, how host locations and taxes can impact cost and how the overall complexities of a host country can impact immigration, tax compliance and the myriad of other challenges associated with relocation, surprises can be avoided and challenges minimised.