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Today’s Agenda World Economic Forum and Mercer

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0 MOBILITY 2020 GLOBAL MOBILITY TRANSFORMATION
11 March 2013 Ed Hannibal Partner

1 Today’s Agenda World Economic Forum and Mercer
Talent Mobility Research Findings Impact of Mobility Global Mobility Trends Governance April 13, 2017

2 Mobility The Historic View
April 13, 2017

3 Global Mobility is in the Midst of MORE Change than EVER …
People are connected Over 900,000,000 Facebook members Over 175,000,000 LinkedIn members in over 200 countries/territories There are over 5.6 billion cell phones worldwide (80% of population of 7,040,000,000 as of September 2012) Average of 190,100 passengers arriving and departing daily from Heathrow 69.4 million passengers in 2011 According to the UK Border Agency, each year over 100 million people arrive at the UK border and 3.5 million apply to visit, live, work and study there. April 13, 2017

4 Where are clients sourcing talent? Current demand for expatriates
New Home-Country Expatriate Moves * From internal Mercer data requests April 13, 2017 4

5 Where are employers sourcing talent? Top 15 host locations
4) Bangkok Shanghai 2) Singapore 3) Hong Kong 6) Beijing 5) London 10) Dubai 7) Tokyo 8) Paris 9) Seoul 11) Jakarta 12) Taipei 13) São Paulo 14) Kuala Lumpur 15) Brussels April 13, 2017 5

6 WORLD ECONOMIC FORUM AND MERCER TALENT MOBILITY RESEARCH FINDINGS

7 World Economic Forum (WEF) collaboration Human capital risk, employability and mobility were critical issues at the WEF’s 2012 annual meeting in Davos “The world is moving from capitalism to talentism” ~Klaus Schwab, Founder & Executive Chairman of World Economic Forum Klaus Schwab, the Founder and Executive Chairman of the WEF said: “The success of any national or business model for competitiveness in the future will be placed less on capital and much more on talent. We could say that the world is moving from capitalism to ‘talentism’.” He said this at the World Economic Forum Special Meeting on Economic Growth and Job Creation in the Arab World, Dead Sea, Jordan, 21 October 2011. This observation explains the recent WEF focus on issues related to human capital risk, employability and mobility, and set the stage for the 2012 annual meeting. April 13, 2017 7

8 World Economic Forum collaboration Why this issue? Why NOW?
Talent Employers Talent & Skills Gap 13.3 million unemployed in US 3.3 million job vacancies in US There is a clear mismatch between What’s IN DEMAND and What’s AVAILABLE in the global talent pool 205 million unemployed globally Globally 34% of employers can’t fill available jobs Talent imbalances are pervasive and daunting with many countries and regions struggling with high unemployment and untapped labor pools, while at the same time many industry sectors and employers face talent shortages and skills gaps. As a result, companies that are/should be interested in this research include: -- Organizations that have experienced talent shortages and skill gaps that threaten their economic growth or, worse yet, organizations without the ability to forecast or predict such -- Multinational organizations or national organizations with highly skilled labor (e.g., hospitals) in both mature and emerging economies -- Governments, academic institutions, non-government entities To what extent does labor volatility -- issues having to do with the supply of talent -- affect your business? Source: U.S. Department of Labor – Bureau of Labor Statistics; 2011 Gallup Employment Survey; Manpower Group’s 2011 Talent Shortage Survey April 13, 2017 8

9 Highlights of talent mobility research findings Participating organizations with selected good practices 3M Western Europe 47 European Ministers of Higher Education ABB Ltd Abbott Laboratories Adecco Group American Airlines Atlas Corps British Columbia Hydro & Power Authority Chub Group of Insurance Companies Cisco COM DEV International Education for Employment Emma L. Bowen Foundation European Commission, Department of Employment, Social Affairs & Inclusion Federal Migration Service (Russia) General Electric Company George Washington University German Trade Union for Building, Forestry and the Environment, Polish Trade Union of Agricultural Workers GLOBIS Corporation Gouvernement du Quebec Government of Taiwan HCL Technologies Ltd ICT Association of Jordon Infosys Ltd INSEAD International Labour Organization INTTRA JA Worldwide Japan International Cooperation Agency LVMH Moet Hennessy – Louis Vuitton ManpowerGroup Marriott International Inc. Marsh Inc. Mercer National Skill Development Corporation Oliver Wyman Organisation for Economic Co-operation and Development Philippines Government Polish Confederation of Private Employers Lewiatan PwC Standard Chartered Taylor Bennett The Boston Consulting Group The United Nations Development Programme United Kingdom Border Agency U.S. Department of Labor University of the West of England Wipro Technologies Yum! Brands Conducted survey among 4,000 organizations worldwide in 2011 (Mercer contacts and WEF contacts) 500 responses from 45 countries Current challenges and practices regarding talent mobility Examples of effective talent mobility practices Case studies Through additional interviews, created five in-depth case studies based on identified good practices 50 more good practices used to create mini-case studies 30 of the 55 case studies are Mercer clients April 13, 2017 9

10 Highlights of talent mobility research findings Definition must expand to fit the new age of talent mobility Talent Mobility: tal·ənt mō·bil·ətē The movement of workers between organizations or among locations of an international organization Talent mobility means more than international assignments (although that is an important part of an organization’s talent mobility strategy). Talent mobility includes moving people across business units and job families, across organizations, within industries and regions, and across occupations and skill sets. It can also involve moving jobs to people through external labor market analysis and site selection. What types of talent mobility does your talent strategy address explicitly? -- Moving people within your organization -- Moving people across your organizations or business units -- Moving people between countries -- Moving people to different jobs or skill sets -- Moving jobs to where there is a reasonable supply of skilled talent to perform those jobs -- Virtual mobility (I think we should define what we mean by virtual mobility) April 13, 2017 10

11 How companies define talent mobility today 2012 survey results from 700 American/EMEA companies
Describe your working definition of talent mobility, as reflected in existing HR programs and policies April 13, 2017

12 Highlights of talent mobility research findings Four primary barriers to talent mobility
Widespread unemployability Critical skills gap Our research examined hundreds of private and public sector practices worldwide and included conversations with more than 100 business, government and academic entities. A distillation of this diverse source material revealed that these mobility good practices directly address one or more of the following four key impediments. think we need to explain what these mean…they aren’t all intuitive: Widespread unemployability exists because of the lack of basic employment skills, particularly among people in underprivileged communities. This has negative consequences for the individuals shut out of the labour market, the societies in which large groups of people lack economic opportunities, and the businesses that need skilled people to drive growth. 2. Critical skills gaps exist between what employees possess and what businesses need. Because of these gaps, businesses cannot find the talent they need where they need it and individuals may find themselves ill-equipped for the jobs of the future. 3. Information gaps make it difficult for labour markets to match workers to jobs effectively. Workers lack information about current job openings or future skill needs, while employers seeking talent cannot perfectly observe the actual capabilities of prospective employees. 4. Public and private constraints on mobility impede the ability of markets to balance supply and demand by adjusting wages or the number of workers. These include common government interventions, such as imposing minimum wage laws and visa restrictions, and private ones, such as imposing union rules or professional credentialing restrictions. Information gaps Public & private constraints Source: Mercer Analysis April 13, 2017 12

13 Highlights of talent mobility research findings Examples of successful multi-stakeholder collaboration Partners with local governments, educa-tional institutions and NGOs Develops talent in India, Brazil, China and Argentina to support its global growth strategy Drives improved local prosperity and global economic growth Collaborates with governments and educational institu-tions to create inter-national IT/BPO skill standards Results in easier movement of people across geographies, occupations and organizations Member nations collaborate to assess workforce competitiveness Results being used to plan regional labor market integration Goal is to become more attractive to global employers and thereby drive prosperity A collaboration among multiple stakeholders for growing/developing local financial services talent and driving sector growth Aim is to enhance competitiveness of Toronto region as an international finance center Relies on high job mobility to develop talent and future leaders Places talent in other allied organ-izations to gain “outside” experi-ence and enhance critical skills to strengthen their team The good practices highlighted in the report provide evidence of how different stakeholders employ talent mobility practices to grow their businesses, their industries and their economies. They are among the most progressive and innovative approaches to meeting diverse talent challenges and we’re successful because they were collaborative efforts. April 13, 2017 13

14 Highlights of talent mobility research findings Develop a collaborative mindset
Think broadly about the greater good, rather than focusing only on your own objectives Engage “hearts and minds” of workforce Be comfortable with complexity Think outside the box to drive innovation Be sensitive and adaptable to different cultures Be open to continuous learning and new opportunities Be able to handle ambiguity and uncertainty Be good at systems thinking Take a long-term perspective, but have a sense of urgency TFSA is a great example of this next slide. They were successful, in part, because of their collaborative mindset. Collaborative efforts are still relatively rare because collaboration itself is extremely complex and difficult to implement. In examining the practices of those who achieved impressive results through collaboration, we have identified two key requirements: a collaborative mindset and strong collaboration “muscles.” This collaborative mindset is a precondition for any entity seeking to create collaborative solutions to intractable talent market challenges. April 13, 2017

15 Driving talent mobility excellence Leading companies optimize their global workforce
Build a comprehensive talent planning process and decision framework to support growth strategy Identify workforce and capability gaps Engage and create sense of urgency with senior management We found striking similarities in how leading companies in talent mobility have gone about implementing processes to optimize their global workforce… Has your organization taken any of these steps? What was the result? Far too often, investments in HR programs are made in an uncoordinated manner by siloed HR groups. This leads to inefficiencies and, in some cases, conflicting investments and unclear messages to employees. Is this a challenge for your organization? Analyze hard data to track dynamics Create lines of sight among talent management, acquisition, learning & development, and global mobility functions April 13, 2017 15

16 Intra-company collaboration Also key to successful talent mobility
Learning and development Leadership development Compensation and benefits Talent management Collaboration is not just important across entities and partner organizations. It also is critical within an organization. Far too often, investments in HR programs are made in an uncoordinated manner by siloed HR groups This leads to inefficiencies and, in some cases, conflicting investments and unclear messages to employees. Employee communi-cations Global mobility April 13, 2017 16 16

17 Driving talent mobility excellence People strategy must remain aligned with business strategy
Defines the performance goals the organization seeks to achieve and sets parameters for the decisions and investments it will make to support those goals A unique set of prioritized choices about people investments that enables the organization to achieve its business strategy and performance goals Here’s where you can turn the conversation to focus in on their organization. For our clients, you likely know what the business structure is and how “global” the company currently is but we may not know what the 3-5 year business strategy is. Are they looking for more revenue growth outside the home country? Are they a domestic company that has global aspirations? Which of the types of talent mobility and good practices have they implemented? What is their most pressing talent mobility need? April 13, 2017

18 Aligning talent mobility good practices with business objectives The discussion each organization needs to have Domestic Operating and generating revenue within the borders of one country Multi-local Most revenue in home country, disparate business units Fully global Significant presence in a large number of countries, revenue outside HQ equals or exceeds home-country revenue Rapidly increasing revenue outside home country, geographic market expansion Going global This slide represents the discussion that needs to be taking place within each organization – where are you now on this talent mobility spectrum – and where do you want to be in five years. There is no one-size-fits-all for designing your talent mobility strategy. It is important to know where you expect to be on your business structure spectrum – “journey” - in three to five years to align your talent mobility strategy effectively with your business strategy. Where is your organization today? Where will you be in five years? April 13, 2017

19 Optimizing talent mobility Focus on critical talent and roles
High Emerging, high-potential talent Strategic business leadership Critical talent and roles Development value Career- building volunteers Seasoned technical experts Business value Low High April 13, 2017 19

20 Process, Policy, HR service delivery, Outsourcing
Building an integrated approach to talent mobility strategy Successful outcomes through clearly linked programs TALENT TOTAL REWARDS The right PEOPLE… Talent segmentation Talent identification Candidate profiles Selection criteria Selection process in the right PLACES and ROLES… Identification of need and locations Critical roles Key skill requirements PLANNING at the right COST… Contract type Remuneration, benefits, allowances and support Funding arrangements Management of other related costs for the right length of TIME and RESULT… Assignment purpose Type and length of assignment Assignment lifecycle management Transition management INVESTMENT Executed through Administration, Communication, Functional Excellence, Measurement Process, Policy, HR service delivery, Outsourcing April 13, 2017

21 IMPACT OF MOBILITY LOOKING INSIDE

22 ILM analysis® for this financial services firm showed that location changes were destabilizing in the short term; on the other hand, moves across business lines have more positive influences Promotion Turnover: Voluntary Turnover: Retirement Rating Pay Level Pay Growth Total Pay Change work location No Influence 15.5% NA No Influence -2.5% -.1% -2.9% Ever change work location No Influence 2.6% No Influence Changed Business line 18% 6% 5% .1% 5.2% Transfer across OpCO 7.5% Ever Transfer Across OpCo -35% 4% 1% 8% Note: The models on which these results are based control for individual attributes, organizational factors, and external influences. April 13, 2017

23 ILM analysis® allowed this large energy company to assess the impact of developmental and education experiences, so as to improve the return on their considerable investments in human capital Promotion Turnover: Voluntary Turnover: Retirement Rating Pay Level Pay Growth Total Pay Masters Vs. Bachelors 11% No Influence 3% 5% 2% Doctorate Vs Bachelors 55% No Influence -83% No Influence 10% Ever did Overseas Assignment 49% 41% Not Applicable 6% -4% 0.1% 28% Ever did Prog. X (Certification Program) 47% -89% -0.1% Ever did Prog. Y (Degree Program) 65% -13% -0.2% Here, overseas assignments were a ticket out the door, even though it was also a ticket to advancement Note: The models on which these results are based control for individual attributes, organizational factors, and external influences. April 13, 2017 April 13, 2017 23 23 23

24 GLOBAL MOBILITY TRENDS

25 Global mobility trends Traditional mobility
April 13, 2017 25

26 Global mobility Next gen mobility
April 13, 2017 26 26 26

27 Global mobility Program reporting and organization
To which department does the global mobility function report? April 13, 2017 27

28 Global mobility and talent management
How integrated is your global mobility program and your talent management? How integrated does your management want them to be? April 13, 2017 28

29 Global mobility Company profile – cross border programs
How do you expect the number of assignments in the following categories to change in the next two years (2012–2013)? Assignment Types Increase Short-term assignments 71% Typical long-term assignments 57% Developmental/training assignments 48% Permanent transfers 47% Locally hired foreigners 45% Employees on rotational assignments 34% Commuters Contract employees 16% Global nomads/Career expatriates 14% April 13, 2017 29

30 Increasing use of talent-tier policies
Emerging trends Increasing use of talent-tier policies By assignment type By organizational level By business unit By region April 13, 2017

31 Segmented best practices
Establish criteria Identify benefits to be eliminated or reduced Compensation philosophy Early career Developmental vs. business need Position/level – typically manager or below Employee accommodation Analysis of intent of benefit Cost analysis to capture cost savings Modified Balance Sheet Local Plus April 13, 2017

32 Employee profile 2010 2012 35 or Younger 28% 22% 36 or Older 72% 78%
What percentage of your company’s expatriate population fall into these age bands? 2010 2012 35 or Younger 28% 22% 36 or Older 72% 78% April 13, 2017 32

33 International compensation philosophies Multiple approaches
Pure Home Salary HQ Salary Structure International Salary Structure Regional Salary Structure Pure Host Salary Equalization to Home Integration to Host Balance Sheet Home Plus Net to Net Net to Gross Higher of Home or Host Host Plus April 13, 2017

34 The rise in global tax equalization programs Increasing scrutiny of the compensation package
April 13, 2017

35 GOVERNANCE FUTURE RISK MANAGEMENT RESPONSIBILITES

36 Program administration Tracking
Tax authorities are increasing their scrutiny of business travelers and short-term assignees Concerns around shorter-term mobile employees creating “permanent establishment” issues for the corporation Need to know employee whereabouts from a security, safety and corporate duty of care perspective April 13, 2017 36 36

37 Program administration Compliance and governance concerns
One potential control point is combining the per diem data and a calendar tool for short-term assignments, commuters and business travelers Mercer is working with clients and major mobility software providers to incorporate per diem information into their tools Employers are looking to use calendar tools to pay per diems only if and when employees fill out their time in country See the sample Equus Solution April 13, 2017 37 37

38 April 13, 2017 38

39 Looking to the future Planning for 2020
Regardless of the reporting structure, make your place at the table Evaluate your Internal Labor Market Prepare to be the internal mobility management consultant Will international “roles” dictate your organization’s mobility approach? Audit, evaluate and evolve your Mobility Tax policy Implement Global Mobility Risk Management programs April 13, 2017

40 QUESTIONS ED HANNIBAL |

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