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Calendar

MOBILITY • Vol. 32 No. 3 • March 2011

MARCH 2011

EXECUTIVE COMMITTEE

Worldwide ERC® Learning Zone™ Speedsession™ Webinar Blind Spots—How U.S. and Canada Mobility Programs Converge and Diverge February 1 2:00 p.m. to 3:00 p.m. EST Sponsored by Crown Relocations Cost: Free Worldwide ERC® Learning Zone™ Speedsession™ Webinar Working on Global Virtual Teams: The Intercultural Challenges of Making Teams Work Across Cultures March 15 2:00 p.m. to 3:00 p.m. EST Sponsored by TRC Global Solutions, Inc. Cost: Free ™

Global Mobility Specialist (GMS ) Designation Program March 4, 5, and 7 Shanghai, China Global Workforce Summit: Focus on Asia-Pacific March 8-9 Shanghai, China

President SUSAN SCHNEIDER, SCRP, GMS, Plus Relocation Services, Inc., Minneapolis, MN Vice President PAMELA (PAM) J. O’CONNOR, SCRP, Leading Real Estate Companies of the World®, Chicago, IL Secretary/Treasurer C. MATTHEW (MATT) SPINOLO, SCRP, SGMS, CARTUS, Memphis, TN Chairman, Board of Directors MICHAEL (MIKE) C. WASHBOURN, SCRP, SGMS, Pfizer Inc, Peapack, NJ

BOARD OF DIRECTORS CORI L. BEAUDET, SCRP, SGMS, SC Johnson—A Family Company, Racine, WI ANITA BLANCHETT, BP, Sunbury-on-Thames, Middlesex, UNITED KINGDOM LISA CARAVELLA, CRP, Bank of America Home Loans, Plano, TX MARIO FERRARO, Deloitte Consulting Pty Ltd., SINGAPORE DAVID GAGE, SCRP, Federal Government, Baltimore, MD WILLIAM (BILL) GRAEBEL, SGMS, Graebel Relocation Services Worldwide, Denver, CO LARS LYKKE IVERSEN, Santa Fe Relocation Services, Wanchai, Hong Kong, CHINA CHRISTOPHER (CHRIS) JAMES, Bechtel Corporation, Phoenix, AZ KAY KUTT, SCRP, SGMS, Asian Tigers Mobility Ltd, Hong Kong, CHINA EARL LEE, Prudential Real Estate and Relocation, Scottsdale, AZ JOY MORRISON, SCRP, SGMS, PepsiCo, Inc., Purchase, NY

APRIL 2011

STEVEN A. NORD, Bainbridge, WA

Global Mobility Specialist (GMS™) Designation Program April 12, 13, and 14 Hong Kong, China

GAIL H. PLUMMER, SCRP, GMS, Altair Global Relocation, Plano, TX

JOHN PFEIFFER, GMS, Mustang Engineering, L.P., Houston, TX

Worldwide ERC® Learning Zone™ Speedsession™ Webinar Is Tokyo Still An Attractive Destination for Expats? April 19 2:00 p.m. to 3:00 p.m. EST Sponsored by Relo Japan Cost: Free

PANDRA RICHIE, SCRP, SGMS, Long & Foster Companies, Chantilly, VA PAT SPARKS, Sprint Nextel Corporation, Lenexa, KS

EX-OFFICIO Chairman, U.S. Advisory Council AL BLUMENBERG, SCRP, NEI Global Relocation, Cedar Hill, MO Chairman, Foundation for Workforce Mobility KEVIN E. RUSSELL, SCRP, PHH Mortgage, Mt. Laurel, NJ Chairman, Government Relations Council C. MATTHEW (MATT) SPINOLO, SCRP, SGMS, CARTUS, Memphis, TN

MAY 2011

Chairman, Global Advisory Council

National Relocation Conference May 18-20 Las Vegas, NV

CHRISTOPHER (CHRIS) JAMES, Bechtel Corporation, Phoenix, AZ

CHIEF EXECUTIVE OFFICER

Global Mobility Specialist (GMS ) Designation Program May 16, 17, and 18 Las Vegas, NV

PEGGY SMITH, SCRP, SGMS, Worldwide ERC®, Arlington, VA

JUNE 2011

MOBILITY (ISSN 0195-8194) is published monthly by Worldwide ERC®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203-4195, +1 703 842 3400. MOBILITY examines key issues affecting the global mobility workforce for the benefit of employers and firms or individuals providing specific services to relocated employees and their families. The opinions expressed in MOBILITY are those of the authors and do not necessarily reflect the opinions of Worldwide ERC®. MOBILITY is printed in the United States of America. Periodical postage paid at Arlington, VA, and additional mailing offices. Worldwide ERC® members receive one annual subscription with their membership dues. Subscriptions are available to both members and non-members at $48 each per year. Copyright © by Worldwide ERC®. All rights reserved. Neither all nor part of the contents published herein may be reproduced in any form without written permission of Worldwide ERC®.

Global Mobility Specialist (GMS™) Designation Program June 21-22 Amsterdam, The Netherlands Global Workforce Summit: Focus on Europe, Middle East & Africa June 23-24 Amsterdam, The Netherlands 2 MOBILITY/MARCH 2011

POSTMASTER: send address changes to M OBILITY , Worldwide ERC ®, 4401 Wilson Boulevard, Suite 510, Arlington, VA 22203-4195


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Perceptions

Mobility and Recruiting: Think Outside the Task

A

recent Fortune magazine article noted that “in eight of the past 10 months, more workers have voluntarily quit than have been laid off. The trend is likely to accelerate as the recovery (slowly) picks up steam. Somewhere between 30 percent and 80 percent of all employees—depending on which poll you believe—

are itching to work elsewhere, as soon as they get a better offer.” That is sobering news to those of us whose organizations have been working lean for a few years. Many organizations are at the point where they have downsized to cover key functions, and the loss of any personnel could put the company at a disadvantage. It is time to transition away from recession thinking and prepare for one… two… five years down the road. And that means turning a strong focus on recruiting perspectives. Recruiting has long been considered just a cousin to employee mobility in a company, often housed, strategized, and executed separately. But with many companies already in acquisition mode after the recession, and thousands more to follow in coming months, it is time to recognize that two of the players under the talent management umbrella— recruitment and mobility—are more than distant relatives. Companies who have this lens today already have the upper hand in attracting talent. And for those companies who step up and commit to being in acquisition mode, such thinking needs to extend to mobility policies. For example, why are we not front-loading policy with the elements that a new hire would value and find appealing in a prospective employer? Being proactive and setting benefits in line with strategic recruiting, hiring, mobility, and retention goals makes good sense. This is a ground-breaking moment in time for mobility professionals. For years, we have seen talent management as something that 4 MOBILITY/MARCH 2011

often happened after the fact—after recruiting and mobility professionals had executed their separate roles. This is an opportunity for all of us in the workforce mobility industry to think outside the task, to consider how we are educating the recruiters that are in our workplace and professional communities, and to parse our policies to ensure that they are meeting the needs of this marketplace. It is important to read between the labor statistics for the real percentages that affect our various industries. There is still a deficit that exists within key talent areas. So although the global, European, or national U.S. unemployment figures might be high overall, what are the labor stats for your industry? What is the unemployment rate for a specific skill set? Like most markets, even if the overall numbers are down in most areas, they are likely to be up in others, and an aggregate look does not tell the whole story. There is another recruiting and talent management issue that has been hovering before us for years—a dichotomy that we need to put to rest with our younger generations in the workplace. We know that incoming young workers are wired for work-life integration, flexibility, professional development, and a certain amount of instant gratification. On

the flip side, we also know not to expect the loyalty to an organization that their parents’ generations exhibited; in fact, a current report by the Bureau of Labor Statistics reveals that workers under the age of 35 change jobs once every 18 months. So here is the dilemma: where do we meet the emotional and personal needs of the incoming employee, when it takes a standard workweek and a distinct threshold of traditional work practices for our businesses to be profitable? Must organizations provide for and satisfy all the needs of a younger worker, or can we gently educate them to find some of their needs in the workplace and some of them on their own? The positions and questions I raise underscore a theme that continues to emerge with great clarity for all of us in the mobility arena: with the right outlook, skills, financial acumen, and business analysis, the HR professional has a serious seat at the strategic planning table in his or her company. And whether you are the person in that seat, or are providing support, guidance, and knowledge from the service side, we grow as a community—as long we all keep thinking outside the task. —Susan Schneider, SCRP, GMS 2011 President, Worldwide ERC®


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TOC_mar11_khan.qxd 2/2/11 7:13 PM Page 1

MOBILITY Magazine of Worldwide ERC®

30

Features

22

How Mobility Fits in the Talent Management Puzzle By Jody Walstrom

30

By Jenny Castelino

40

Linking Expatriate Assessment and Selection with Talent Management Strategies

Culture Clash China: a Corporate Conundrum

By Brenda Bellon and Jennifer Rowe

46 54 62 67 70 78 84 92

Export Control Certification—Challenges, Tips, and Key Considerations

22 46

40

By Steven Brotherton

54

Coaching—an Insurance Policy for Global Mobility By Sarah DeHayes

62

Extended Business Travelers: Immigration Risk Management

70

Sophy King and Lavinia Pascariu

The Secret Workforce: Hidden Talent, Hidden Savings By Jill Heineck, CRP

67

Destination Profile: Shanghai, China By Alexandra Wassenhoven

The Accidental Landlord By Valerie A. Fortier, CRP

78

84

Furniture Rental’s Increasing Role and Benefits in Global Relocations By Kenneth S. Barron, GMS

Leadership Across Cultures By Michele Bar-Pereg and Ann Houston Kelley

92 MOBILITY/MARCH 2011 7


TOC_mar11.qxd_khan.qxd 2/2/11 6:30 PM Page 2

MOBILITY Magazine of Worldwide ERC®

DEPARTMENTS

2 CALENDAR 4 PERCEPTIONS Mobility and Recruiting: Think Outside the Task By Susan Schneider, SCRP, GMS

10 AROUND THE WORLDWIDE ERC®

MOBILITY STAFF

Vice President & Publisher Jerry Holloman

jholloman@WorldwideERC.org Managing Editor Frank Mauck

fmauck@WorldwideERC.org EDITORIAL ADVISORY COMMITTEE

12 EXECUTIVE SPOTLIGHT

Chairman

15 INDUSTRY SPOTLIGHT

Alex Alpert, Wheaton World Wide Moving, Tucson, AZ

Jo Lay, SCRP, SGMS, Coldwell Banker Central Region Relocation, Northbrook, IL

Michele Bar-Pereg, Bar-Pereg Group, Amsterdam, THE NETHERLANDS

15 WORLDWIDE ERC® TRENDSPOTTING 18 QUICK TAKES 20 TAX AND LEGAL UPDATE

Tamara Bianchi, CRP, Capital Relocation Services, Denver, CO Robert F. Burch, SCRP, Alexander’s Mobility Services, Baltimore, MD Christopher R. Chalk, CRP, GMS, Dependable Auto Shippers, Inc., Smyrna, GA Alex Chua, Newport Real Estate Limited, Shanghai, CHINA Brenda Darrow-Fuhs, Bank of America, Longmont, CO

96 SPECIAL ADVERTISING SECTION

Terry Baxter Davis, SCRP, SGMS, Ernst & Young LLP, Cleveland, OH Anne Dean, GMS, Living Abroad, LLC, Norwalk, CT

112 RAC REPORT

Tim Denney, Stirling Henry Global Migration, Sydney, AUSTRALIA Marge A. Dillon, CRP, GMS, Little Elm, TX Sean Dubberke, RW3 LLC, New York, NY Deborah A. Dull, CRP, GMS, Crown Relocations, Houston, TX Kari Hamilton, ABODA, Inc., Redmond, WA Nancy F. Harmann, CRP, GMS, Latter & Blum, Inc., Realtors, New Orleans, LA Gustavo Higuera, CRP, GMS, Prudential Real Estate and Relocation Services, Scottsdale, AZ Christine E. Holland, GMS, Massachusetts Institute of Technology, Cambridge, MA Ronald Huiskamp, GMS, Dwellworks, LLC, Kirkland, WA Rob Johnson, SCRP, SGMS, Altair Global Relocation, Plano, TX Jeff Knapton, SIRVA Relocation, Westmont, IL Anne-Claude Lambelet, SGMS, ACL Consulting, Geneva, SWITZERLAND Tacita Lewars, GMS, Globaforce Incorporated, Calgery, Alberta, CANADA Cindy Madden, CRP, Cartus, Danbury, CT Tim McCarney, GMS, Weichert Relocation Resources Inc., Norwell, MA Nino Nelissen, SGMS, Executive Mobility Group, Schlipol Airport, THE NETHERLANDS Constance Pegushin, Berry Appleman & Leiden LLP, San Francisco, CA

Design/Production: Ideas, Communicated, LLC, Vienna, VA www.ideascommunicated.com Printing: CADMUS Specialty Publications, Richmond, VA Reprints: Katina Moaney, CADMUS Reprint Services ercreprints@cadmus.com +1 866 487 5625 ext. 3736 Advertising Sales: Glen Cox, National Sales Manager, The Townsend Group, Bethesda, MD +1 410 321 4723 gcox@townsend-group.com

Elizabeth Perelstein, School Choice International, White Plains, NY Patricia Pollard, CRP, GMS, Coldwell Banker United Realtors, Houston, TX Maureen Bridget Rabotin, GMS, Effective Global Leadership, Paris, FRANCE Michelle Sandlin, CRP, John Daugherty Realtors, Inc., Houston, TX Stefanie R. Schreck, CRP, GMS, American International Group, New York, NY Scott T. Sullivan, Brookfield Global Relocation Services, Woodridge, IL Mara Terrace, Siemens Corporation, Global Shared Services NA, Orlando, FL Sherrie Tessier, CVS, Woonsocket, RI Jody Walstrom, Plus Relocation Services Inc., Minneapolis, MN Allie Williamson, CRP, OneWorld Relocation Services, Naples, FL Nick Woodhams, SGMS, Woodhams Relocation Centre, Sydney, AUSTRALIA

8 MOBILITY/MARCH 2011


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Relocating can be a stressful time for transferees and their families—not to mention their employers. Prudential Relocation is committed to making the experience a positive one for all involved. Our team of relocation experts works closely with top-quality supply-chain partners who are just as dedicated to providing the best care and service in the business. Which is why we’re confident we can deliver on the trust you place in us. And why we’re proud to be the #1 choice of relocated employees and relocation managers alike.

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Prep 213 W (973


around_erc_globility.qxd 2/1/11 5:19 PM Page 2

Around the Worldwide ERC®

Chip Heath Practices ‘Switchcraft!’

P

eople hate change, and change is hard. Sounds simple enough, but from these statements a provocative book emerged. The Heath brothers, Chip and Dan, who first made their name from the book “Made to Stick: Why Some Ideas Survive and Others Die,” produced another runaway success shortly after: “Switch: How to Change Things When Change is Hard,” which

debuted at #1 on the New York Times and Wall Street Journal bestseller lists. Chip Heath, professor of organizational behavior in the Graduate School of Business at Stanford University, graces the stage as the keynote speaker for the 2011 National Relocation Conference, taking place May 18 through 20 in Las Vegas, NV. In “Switch,” the Heaths argue that successful changes share a common pattern, and to change someone’s behavior, it is essential to change that person’s situation. Because here is one of the surprises about change in an organization: what appears to be disinterest and lethargy is often exhaustion, or uncertainty about the path ahead. Say the Heaths: “If you want people to change… you must provide crystal-clear direction, because what looks like resistance is often a lack of clarity.” Their analysis of why it is so

hard to make lasting changes in our companies, in our communities, and in our own lives, demonstrates the primary obstacle: a conflict in our minds that is ruled by two different systems—the rational mind and the emotional mind—as they compete for control. “The rational system is a thoughtful, logical planner,” say the Heaths. “The emotional system is impulsive and instinctual. When these two systems are in alignment, change can come quickly and easily… but when they’re not, change can be grueling.” These days, change is the only constant. Heath will deliver insight during the National Relocation Conference to help you align rational and emotional mindsets, build business goals, refine the goals, set action triggers with clarity and direction… and jump-start essential change in your company.

China’s on the Move

O

n Thursday, January 20, China announced an expected 10.3 percent growth in its year-end gross domestic product. With this positioning, China is set to surpass Japan as the secondlargest economy in the world—a title Japan has held since 1968. The rapid growth of business in China during the past 10 years has affected mobility dramatically within the Chinese workforce. Movement of Chinese nationals into Tier Two and Tier Three cities presents new and different challenges, which, until now, have not been addressed widely in the global mobility industry.

I

®

f you are interested in learning more, you can take the Worldwide ERC one-hour online course, “Mobility Issues for China Today,” which identifies ways in which Chinese national culture influences relocation attitudes and responses about mobility; relates dimensions of culture to attitudes, perceptions, and perspectives of Chinese nationals; and identifies strategies for fostering positive relocation decisions for Chinese nationals in the workforce. For more information about this and other online courses that focus on timely topics in global mobility, visit www.WorldwideERC.org/pages/globalcourses.aspx.

10 MOBILITY/MARCH 2011


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Adding the human touch to global guidance. At Cartus, we foster leadership in every level of our organization, because our focus is on guiding and caring for your relocating employees—everywhere and every day. We understand that business solutions are built on human relationships, and that the ultimate value of our global reach and experience is measured one satisfied transferee at a time. From policy design to daily needs, everyone on your dedicated Cartus team provides timely, effective, hands-on service. And our online support tools are designed to reduce anxiety and streamline communication. To experience our passionate commitment to your success, call on Cartus at trustedguidance@cartus.com.

www.cartus.com Primacy Relocation is now a part of Cartus. ©2011 Cartus Corporation. All rights reserved.

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new_mar_exec.qxd_khan.qxd 2/2/11 5:50 PM Page 2

Executive Spotlight

T

he Relocation Directors Council, Inc.®, Chicago, IL, has named their 2011 executive officers, board of directors, corporate advisory council, and relocation management council. They include Judy Gray, CRP, Cam Taylor Company, Columbus, OH, who will serve as the Worldwide ERC® U.S. Advisory Council representative; Sue Carey, SCRP, SGMS, CENTURY 21 Kreuser & Seiler, Ltd, Libertyville, IL, who will serve as chairperson and RDC advisory board liaison; Joan Harpootlian Thomas, SCRP, Allen Tate, Charlotte, NC, who will serve as president; Beth Archibald, SCRP, SGMS, Archibald Relocation, Portland, OR, who will serve as vice president; and Maureen Campbell, CRP, GMS, Pearce Plus Relocation & Senior Services, New Haven, CT, who will serve as secretary and treasurer.The 2011 board of directors is comprised of John D’Ambrogio, CRP, Baird & Warner, Chicago, IL; Annie Hamilton, CRP, CENTURY 21 Scheetz, Carmel, IN; Joan Erni, CRP, GMS, Michael Saunders & Company, Sarasota, FL; Tonya Hamilton, CRP, GMS, Prudential Woodmont Realty, Nashville, TN; Tommy Steel, CRP, Coldwell Banker Pacesetter Steel Realtors, Corpus Christi, TX; and Carol Kelly, SCRP, SGMS, the Corcoran Group, New York, NY. RDC also announced its 2011 corporate advisory board. Jan LeQuier, CRP, Home Depot, Atlanta, GA; Cori Beaudet, SCRP, SGMS, SC Johnson—A Family Company, Racine, WI; Johnny Haines, SCRP, SGMS, Deloitte LLP, Hermitage, TX; and Larry Gersch, SCRP, Kraft Foods, Global, Inc., Northfield, IL. Serving on the 2011 relocation management companies advisory council are Diane Canali, CRP, GMS, Cartus, Lisle, IL; Tracey Gatlin, CRP, SIRVA Global Supply Chain, Plymouth, MN; Florence M. Baird, CRP, GMS, Prudential Real Estate and Relocation Services, Scottsdale, 12 MOBILITY/MARCH 2011

AZ; Janet Schaefer, CRP, GMS, Altair Global Relocation, Minnetonka, MN. Pro-Link GLOBAL, Bradenton, FL, has named Katharine Salem, J.D., GMS, as practice manager. Latchi Delcheva, GMS, has been promoted to manager, global cases. Beata Firosz has been promoted to manager, global cases. Jacqueline Reyes has been named senior immigration specialist. Maude BullenSmith has been promoted to senior immigration specialist. Daisy Feng has been named manager, client services for the firm’s Shanghai, China, office. Fragomen, Del Rey, Bernsen & Loewy, LLP, New York, NY, has named Alexandra LaCombe partner in the firm’s Troy, MI, practice. Priscilla Muhlenkamp has been named partner in the firm’s Washington, DC, practice. Jenny Nieves has been named partner in the firm’s New York practice. Fragomen Global LLP has announced the promotion of Chris Spentzaris to partner in the firm’s Melbourne, Australia, office. Fragomen Global Immigration Services, LLC (FGIS) and Fragomen Immigration Services India Pvt. Ltd. has named Saju James a member of FGIS. Fragomen LLP has promoted William Foster to partner in the firm’s London, United Kingdom. Leading Real Estate Companies of the World®, Chicago, IL, has named Chris Meyers, managing principal of Houlihan Lawrence, New York, NY, to its board of directors. Leading Real Estate Companies of the World®’s board includes Chairman Harold Crye, Crye-Leike, Inc., Nashville, TN; Vice Chairman William Watson, Jr., Watson Realty Corp., Jacksonville, FL; Secretary Stephen Baird, Baird & Warner, Chicago, IL; Treasurer Robert Sibcy, Sibcy-Cline Realtors, Cincinnati, OH; Jeffrey Detwiler, Long & Foster, Chantilly, VA; Dan Elsea, Real Estate One, Inc., Southfield, MI; Joe Horning,

Shorewest Realtors, Milwaukee, WI; Ronald Peltier, HomeServices of America, Inc., Minneapolis, MN; Patrick C. Riley, Allen Tate Company, NC; Michael T. Robinson, CRP, Weichert Realtors, Morris Plains, NJ; and Michael Saunders, Michael Saunders & Company, Sarasota, FL. Mike Kranisky, president of UniGroup Worldwide, St. Louis, MO, is retiring April 1. Vice President Brian Iles has been named president. Berry Appleman & Leiden LLP, San Francisco, CA, has named Kristen Riley regional manager for EMEA in London, United Kingdom. Carter Bovard was named regional manager for APAC in Sydney, Australia. Bekins Van Lines, Hillside, IL, has promoted Bob Dalaskey to senior vice president of business development..

Join Us Online for Announcements Executive Spotlight highlights the job changes and achievements of employee mobility professionals. E-mail your hiring and promotion announcements, as well as your regional group communications, to mobility@WorldwideERC.org. Not only will the releases appear in Executive Spotlight, but also will show up in Names in the News on the Worldwide ERC® website, www.WorldwideERC.org. Please visit: http://www.worldwideerc.org/ Pages/NIN-MOBILITY.aspx for regular updates on mobility industry professionals. Does Worldwide ERC® have your most up-to-date contact information? If not, let us know at www.WorldwideERC.org/pages/ update.aspx.


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industry_mar11.qxd_khan.qxd 2/2/11 4:05 PM Page 1

Industry Spotlight

Study Finds High Global Unemployment not Leading to a Talent Surplus

D

espite persistently high unemployment rates in the United States and abroad, the anticipated surplus of talent has not yet manifested, according to the results of a recent survey of senior executives and talent managers. The “Talent Edge 2020” survey, conducted by Deloitte and Forbes Insights, queried 334 senior executives and talent managers at large companies worldwide across a spectrum of industries. The survey found that 41 percent of the corporate executives and talent managers surveyed identified their leading concern as the search for talent in global and emerging markets. Broken down, 48 percent of companies in Europe, the Middle East, and Africa cited this concern, while 35 percent of organizations in the Americas and 41 percent of AsiaPacific firms said the same. Further, the survey found that 72 percent of executives predict either moderate or severe talent shortages in research and development (R&D), while 56 percent of those same executives said they anticipate a similar magnitude of shortages among executive leadership. These perceived shortages occur with great frequency among industries where product innovation is deemed critical. Among technology, media, and telecommunication companies, 40 percent predict a severe shortage of R&D talent, while 39 percent of consumer/industrial companies and 37 percent of life sciences and health care companies foresee R&D shortages, according to the release. “What we are seeing is an unexpected talent paradox—even though unemployment rates remain relatively high in the U.S.—companies are struggling to find the skilled workers they need to fill critical jobs world-

wide,” said Jeff Schwartz, a principal in the human capital practice of Deloitte Consulting LLP, and global co-leader and U.S. leader for talent services. “During the recession, most executives were churning their business and talent strategies into survival mode, not success mode—this has to change or corporate growth and innovation will be severly challenged,” he said. In addition, 56 percent of respondents predict shortages in executive leadership, and 63 percent of executives surveyed are either highly or very highly concerned about employee retention during the next year.

“This is where the talent paradox poses the biggest threat—not only are companies struggling to find the right skill sets to fill critical jobs, but they are worried about their ability to keep the talented workers they have,” said Schwartz. “And, these are concerns worldwide—not just in a company’s backyard. So, if companies are not thinking about talent and workforce issues in a global way, they are not thinking about them in the right way.” There were some bright spots in the survey, including an indication that most organizations are thinking on a global level. Sixty-five percent of respondents said they expect their

MOBILITY/MARCH 2011 15


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Industry Spotlight

companies will increase their focus on global diversity management, and 64 percent predict an increased focus on global mobility during the next 12 months. According to the release, most survey respondents are aware that changes are needed. While only 20 percent of executives rate their talent programs as “world-class,” approximately 80 percent indicated that their talent programs need improvement. According to analysis of the data from Deloitte, the firms calling themselves “worldclass” have a different set of priorities and a stronger focus on long-term talent investments than other com-

panies. As an example, when compared to companies whose talent programs need improvement, “world-class” companies are more likely to make investments in creating career paths and challenging opportunities for employees—46 percent for “world-class” firms versus 36 percent for all others, according to Deloitte. In addition, 48 percent of “world-class” organizations engage in developing leaders and succession planning, compared to 36 percent for all other organizations, and 42 percent of “world-class” firms recruit hard-to-find skill sets, compared to 29 percent of the other companies.

FYI Gavan James, a veteran of the temporary housing industry, has announced the launch of Nomad Temporary Housing, San Diego, CA, serving the United States, Canada, and the United Kingdom and offering 42,000 apartments in 2,200 locations . Plus Relocation Services, Minneapolis, MN, has announced the opening of an office in London, United Kingdom. Crown Relocation’s Manila Branch, Manila, Philippines, in partnership with the Philippines Department of Education, has announced the adoption, through the Adopt-a-School Program, of Sampaloc Site II Elementary School, which has approximately 2,400 students. SIRVA Inc., Chicago, IL, has announced the acquisition of NewPort Real Estate Limited, Shanghai, China. The Suddath Companies, Jacksonville, FL, has announced the acquisition of Barrett Moving & Storage Company, Minneapolis, MN. mLINQS, LLC, has announced that the company’s moveLINQ® federal relocation expense management system has been updated to meet the new employee Social Security tax withholding rate for 2011, which was reduced from 6.2 percent to 4.2 percent by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The employer contribution remains at 6.2 percent. Berry Appleman & Leiden, San Francisco, CA, has announced the opening of offices in Sydney, Australia, and London, United Kingdom. Pro-Link GLOBAL, Bradenton, FL, has announced the opening of a new office in Shanghai, China, in the Putuo district. Richmond Advisory Services, Markham, ON, Canada, has announced the launch of its new property management software system. Mobility Services International (MSI), Newburyport, MA, is celebrating its 30th year of operations. The company also announced the expansion of its Western U.S. Regional Operations Center in Denver, CO. Ineo Relocation Technologies, Centennial, CO, has announced a merger with Relocation Taxes, LLC, Wilton, CT. Prudential California Realty, San Ramon, CA, has announced a merger with Coldwell Banker Coon & McCreary, REALTORS®, with offices in Pleasant Hill and Antioch. Both offices will operate as Prudential California Realty under the terms of the merger agreement. ICM Gerson, Hertfordshire, England, is celebrating its 50th anniversary.

16 MOBILITY/MARCH 2011


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quicktakes_mar11.qxd_khan.qxd 2/2/11 4:04 PM Page 1

Quick Takes

Attendance at Metro Relocation Summit Surpasses Expectations

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early 300 relocation professionals attended the inaugural Metro Relocation Summit held on Wednesday, November 17, 2010, at the Westin Princeton at Forrestal Village in Princeton, NJ. The Summit was a combined meeting of the Delaware Valley Relocation Council (DVRC), the New Jersey Relocation Council (NJRC) and the New York City Organization of Relocation Professionals (NYCORP). “The number of attendees at this meeting far surpassed our expectations,” said Anne Cowburn, CRP, chair of the Steering Committee for the event. “The Program Steering Committee was also overwhelmed at the number of sponsors for the event. It was truly a collaborative event combining the brain trust of three robust regional relocation groups.” The theme of the meeting, “Of the People, By the People, For the People,” emphasized the importance of working effectively with the people in the relocation

industry to facilitate employee mobility worldwide. Keynote speaker, Peggy Smith, SCRP, SGMS, CEO of Worldwide ERC®, Arlington, VA, talked to the audience about the increasing trend to incorporate global mobility into corporate talent management strategies. She pointed out how those in the audience play a key role in the success of bridging the gap between the two through education. When asked if the meeting would be repeated next year, Cowburn replied, “Absolutely!” Survey results from the event indicated that the large majority of attendees would like to see the event repeated. Respondents to the survey also provided high marks for program content, venue, and networking opportunities.” Capital sponsors for the Metro Relocation Summit were Coldwell Banker Preferred and DE Capital Mortgage, LLC, in the New York, New Jersey and Connecticut regional area.

Communities

R

ight now Worldwide ERC® members are exchanging questions, answers, and ideas online in our discussion forums. Recent posts include:

In the U.S. Domestic Relocation All Member Forum: “Are you seeing more corporations recommending that transferees rent in the new location due to the housing market and/or are more transferees renting in the new location simply because they don’t have the equity to buy? How are corporations addressing these issues?”” In the Global eDiscussions Forum: Policy and Program Benchmarking for Corporate HR Members: “Currently, Global Mobility is housed in HR... part is in the compensation area and part is in the global shared services area. Where is Global Mobility/Relocation housed in your company? How many internal employees are part of this function? Can you share titles and reporting structure?” In the U.S. Relocation eDiscussions Forum: “Would be interested in what other companies are offering for relocation and housing for their summer interns. We currently are only paying to have them set up in corporate temporary housing for 12 weeks.” Read the answers solicited by these questions and add your comments and questions today. To get there, visit www.WorldwideERC.org/pages/web2.0.aspx or click on the white “Communities” hyperlink at the top of every page of www.WorldwideERC.org. Access to the forums is an exclusive benefit of Worldwide ERC® membership.

18 MOBILITY/MARCH 2011


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Tax and Legal Update

Tax Issues Must Be Considered by Employees Who Choose to Rent Out Their Old Home

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mployees often elect to rent their homes rather than sell them while on temporary domestic or international assignment. In the poor housing market that has existed in recent years, employees who are permanently relocated also increasingly are renting out their old home, either waiting for the market to improve or because they have negative equity or otherwise cannot afford to sell. There are a number of tax implications, which should be considered by companies when recruiting or relocating an employee who may choose to rent out the old home. If the company pays fix-up costs so that the house can be rented, these must be included in gross income of the employee. Because the costs are not administratively difficult to account for, they do not qualify as de minimis fringes under Code §132 even if the fix-up costs are small amounts. The costs are subject to withholding and payroll taxes, and includable on the W-2. The same is true of property management services, if paid for by the employer. Ordinarily, subject to the discussion below, the employee treats the house as a rental property and deducts associated expenses, such as interest, taxes, maintenance, upkeep, and depreciation. Rental income is taxable, and offset by the expenses. The employee files IRS Schedule E with the tax return. However, some companies will pay rental “make-up” payments to the employee for periods the home is not rented. Such payments are not rent, but are treated as additional wages for tax purposes. The employee will have to determine whether any fix-up expenses are ordinary maintenance deductible as repairs, on whether those fix-up costs are in the nature of a capital expenditure—a new roof, for exam-

20 MOBILITY/MARCH 2011

ple-which would be treated as adding significantly to the useful life of the property and not currently deductible. Normally, costs treated as capital improvements would be deductible only over time through depreciation or cost recovery deductions. Deductibility of rental property expenses by the employee also may be subject to the section 469 limitation on the deductibility of ‘‘passive activity losses.’’ Because any rental activity is deemed to be a passive activity, if the aggregate annual deductions from all passive activities exceed the aggregate income, the resulting loss (created by the deductions) may be disallowed. An exception is provided for $25,000 of losses from rental real estate activities in which the taxpayer was an active participant. This exception phases out, however, for taxpayers with adjusted gross income (AGI) between $100,000 and $150,000 and is eliminated if AGI exceeds $150,000. Generally, taxpayers who employ a rental management company will not be considered “active participants.” In the Small Business Jobs Act of 2010 (H.R. 5297) Congress added section 6041(h), under which individuals who rent out their property are considered to be engaged in a trade or business for purposes of information reporting, and starting in 2011 must provide Forms 1099 to individuals who provide services to them aggregating over $600 during the year in connection with the rental. Beginning in 2012, Forms 1099 also must be provided to corporations, and for receipt of goods for which payments aggregate over $600. Consequently, employees renting out their home may be responsible for providing Forms 1099 to persons who perform main

tenance, property management, repairs, and the like. However, the provision does not apply to individuals who are temporarily renting out their principal residence (within the meaning of section 121), and the Treasury also is given authority to establish a minimal amount of rental income that may be received without triggering the reporting requirement, and to exempt individuals for whom the requirement would be a hardship. Worldwide ERC® has filed comments with Treasury and IRS asking them to exempt rentals by employees of their principal residence while they are on an assignment from which they intend to return to the home, or during any period after their relocation during which they could still exclude gain if the home were sold. When the employee does eventually sell the residence, the applicability of the homesale capital gains exclusion of section 121 also will have to be considered. Fortunately, rental has no immediate effect on the availability of the full homesale capital gains exclusion. Section 121(a) requires only that the home have been owned and used as the principal residence for periods aggregating two years during the five years preceding sale. Consequently, if an employee owns and uses a home for two years as the principal residence, and then decides to rent it out after a relocation, the employee will still be entitled to the full $250,000 exclusion ($500,000 married filing


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jointly) if the home is sold during the first three years of rental. The fact that the home has been turned into a rental property is not relevant. See section 1.121-1(c)(4), Example 1, of the regulations. The only impact of rental is that any depreciation claimed during the rental period will reduce the excludable capital gain, and will be subject to tax. Even if the employee has not already met the two year ownership and use rule at the time rental begins, the employee still may be entitled to a partial exclusion. For example, suppose an employee bought a house in June 2008, lived in it until June 2009, was then relocated and decided to rent out the old residence. Section 121(c)(2) allows a partial exclusion if failure to meet the two-year ownership and use rule is by reason of a change in place of employment, health, or unforeseen circumstances. The regulations expand on this requirement. Section 1.121-3(b) says that the “primary reason” for the sale or exchange must be one of the enumerated circumstances, and that the issue is one of facts and circumstances unless one of the “safe harbors” set forth in the regulations is met. Section 1.121-3(c)(2) provides a “distance safe harbor” under which the primary reason for the sale is considered to be by reason of a change in place of employment if the change in place of employment occurs while the taxpayer owns and uses the property as the principal residence and the new place of employment meets the moving expense deduction 50-mile rule. Under this test, the fact that the sale of the home occurs some time after the change in place of employment does not appear to be relevant. That is, if the taxpayer leaves the principal residence as a result of an employment-related move that meets the section 217 distance requirement, under the safe harbor the eventual sale is apparently deemed to be primarily as a result of the move even if the sale takes place later.

The same reasoning would appear to apply in the case of an employee who meets the two-year ownership and use rule at the time of the move, but then rents out the home for more than three years before sale. The employee will at most qualify for a partial exclusion, and only if the employee meets the “change in place of employment rules” discussed above. The change in place of employment “safe harbor” would literally apply (the employee was using the home as the principal residence at the time of the move, and the move met the 50-mile rule), so there is a good case for a partial exclusion. Nevertheless, it is not clear whether IRS would agree that a sale after some four years of rental following a permanent move is automatically considered to be due “primarily” to the move, particularly if an employee has purchased a new home in the new location and has no obvious intention ever to re-occupy the original home. For example, section 1.121-3(b)(1) of the regulations recites the proximity in time of the sale or exchange and the circumstances giving rise to it as a factor in determining whether the circumstances were the primary reason for sale. It could be argued that although the cessation of use of the home as the principal residence was due to the move, the sale itself was motivated by factors that arose subsequently. Consequently, employees who choose to rent out their home following a permanent move should be careful to document the reasons they did not sell it at the time of the move, and why long-term rental was an appropriate or necessary alternative for the period during which the home was rented. As the period of rental lengthens, the argument for the capital gain exclusion may grow more difficult unless the employee still satisfies the two-year ownership and use rule. Finally, any employee who received a homebuyer credit when the home was purchased will have to pay it back with their first tax return after the

home becomes a rental property. Section 36(f) of the Code requires that the entire credit, which may be as much as $8,000, must be repaid under certain circumstances. These circumstances include the taxpayer ceasing to use the home as the taxpayer’s principal residence at any time within three years of its purchase. See section 36(f)(4)(D)(ii). When the home is rented out, it is no longer the employee’s principal residence, and the homebuyer credit must be repaid. This article deals only with the tax issues faced by those who choose to rent. There are also non-tax considerations that would need to be addressed. For example, homeowner insurance usually does not cover a home that is used as a rental property, and generally will need to be changed to cover rental. This will add expense. In addition, some mortgages specify that the property must be owner-occupied. In such cases, the employee will have to deal with the lender to seek a modification or other accommodation. And of course there are policy issues that must be addressed, including the extent to which the company is willing to subsidize the rental activity, whether a homesale benefit eventually will be offered, and whether the employee is one who will deal effectively with the distraction of having a home that constantly requires attention in the old location. In summary, there are a host of tax and other considerations that come into play when a transferee or recruit decides to rent out the old home instead of selling. Companies would be well advised to make sure that such employees receive appropriate advice before deciding to become landlords. Peter K. Scott is tax counsel for Worldwide ERC®, Arlington, VA. He can be reached at +1 703 893 8566 or e-mail pscott@worldwideerc.org. Richard Mansfield is general counsel for Worldwide ERC®, Arlington, VA. He can be reached at +1 703 842 3428 or e-mail rmansfield@worldwideerc.org. MOBILITY/MARCH 2011 21


final_walstrom.qxd_MOBILITY 2/2/11 7:21 PM Page 2

How Mobility Fits in the

Talent Management Puzzle BY JODY WALSTROM

Mobility is an essential piece of successful talent management, and an organization’s program and benefits should fit with its business strategies. Walstrom traces the development of viewing talent management through a strategic lens, and illustrates how an organization’s mobility program should align with its greater talent goals, whether they are focused on acquisition, development, or retention.

22 MOBILITY/MARCH 2011


final_walstrom.qxd_MOBILITY 2/2/11 7:21 PM Page 3

Ahhhh,

the early days of relocation. Much like longing for the simple days of childhood where we could play for hours with a few wooden blocks, our industry fondly remembers the days in which relocation policies were as simple as “renter” or “homeowner.” We reflect on the effortless process of determining benefits, as a renter was most likely an entry-level employee and anyone labeled a homeowner usually had a manager or executive title behind his or her name. Transferees fit almost identical demographic molds: age 45, married, a few children, and long tenures with the organization. Cost modeling was straightforward, with the greatest variable resting on the value of the departure home. Expenses were charged to a single line item labeled “relocation.” Well, as rock legend Bob Dylan sang… “the times they are a changin’.” Today it takes an engineering degree to get your child’s toy out of the packaging, and dissecting a relocation program has become much like brain surgery.

Turning Points The most significant shift occurred in the early 1990s, when companies decided that rather than charging all relocation-related expenses to a single line item, they would begin allocating the expenses directly to the department that was requesting the move. This was an eye-opening experience, as the full effect of what relocation “really” cost became relevant on the departmental level. With a stronger understanding of costs came a stronger eye on spend. Companies were forced to create more flexible policy models, including the “cafeteria” model, the “capped” expense model, and as many “tiers” as they could handle. And, as we approached the new millennium, the labor market tightened, relocation opportunities increased internationally, and companies found themselves with a binder full of policies—all of which were set aside at the request of transferees who had become skilled at negotiating through the loopholes. At least until 2007…

MOBILITY/MARCH 2011 23


walstrom_MOBILITY 1/31/11 4:30 PM Page 4

HR continues its move up the value chain toward strategic partnership

Chart courtesy of Michael Piker, Mercer

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Today, our industry is at another turning point. For the first time in decades, mobility has the attention of most people in the “C-Suite.” We are challenged by programs that, at times, feel like trying to get a square peg through a round hole. The real estate market is fragile, the mortgage landscape is changing, and companies are trying to balance the need to cut costs while at the same time acquire, develop, and retain “key” talent. And while it has it challenges, this new economic environment may just be the answer for many HR professionals: the chance to continue to move up the value chain and get a “seat” at the decision-making table; the chance to create a program that does not just accommodate whether someone lives in an apartment or a home, but aligns with the strategic needs of the organization—in other words, the opportunity to develop a program that allows mobility to successfully co-exist with their corporate global talent management strategy.


walstrom_MOBILITY 1/31/11 4:31 PM Page 5

New Global Talent Deployment Strategy

Chart courtesy of Michael Piker, Mercer

Addressing the Gap The concept of talent management is not necessarily new, although the term itself is beginning to shape a more concrete definition within the corporate environment. In its purest form, the concept of talent management illustrates how organizations acquire, develop, and retain their talent. At the forefront of most organizations’ priorities, companies recognize the need for strategic talent management as they acknowledge they are nothing without their people. Why is it then that there has been (and in some cases still exists) a gap between talent management and mobility? If a large component of attracting and keeping employees rests not only in the details of the job function, but also in the benefits that complete the overall satisfaction of the employee, it is only natural to believe that mobility is essential to building the foundation of a success-

ful talent management program. While we could spend an abundance of time on the futile exercise of trying to comprehend the logic of what has been in the past, it is much more important to turn that energy toward the future and pave the way to aligning your mobility program with the greater talent goals. The issue then is… where do we start?

The Beginning The first question that needs to be addressed is, of the three simplistic components of talent management— acquisition, development, and retention—where does the company’s primary focus exist at this time? Note the emphasis on the words “primary” and “at this time,” because while some may claim that all three elements are equally important at all times, the reality is that given the current strategic direction of the company, one of these components will rise to the top.

Say a company recently has launched a new product that has been well received in the marketplace. This company likely will recognize that with the anticipated growth, they also will need key talent to keep the momentum going. Therefore, their current talent management strategy would be in “acquisition” mode. Or, perhaps a competitor is encroaching on their market space and quietly recruiting their employees. They will need to develop strategic incentives to encourage their employees to stay, thus putting a greater emphasis on employee “retention.” In a third scenario, a company may be assessing their employee base and concentrating on strategic workforce planning. In this assessment, they may realize that a significant percentage of their employees are nearing retirement, therefore, “development” opportunities for up-and-coming leaders are critical. The key in each of these sceMOBILITY/MARCH 2011 25


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narios is to remain flexible and nimble as you create and modify your mobility program to align with your current strategy. As we all know, a company’s strategic focus can change quickly based on external economic forces—the past three years are a good example. On settling on a strategic objective, it is imperative to review every com-

ponent of your mobility program to ensure it aligns with your overall corporate goals. For example, if it was determined that the company is clearly in “acquisition” mode, it would be natural to assume that a policy might be, for lack of a better term, “frontloaded”—meaning that the greatest and most competitive benefits occur at the beginning of the move.

A Closer Look at ‘Talent Edge 2020’

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n October 2010, Forbes Insights, on behalf of Deloitte, conducted the survey, “Talent Edge 2020: Blueprints for the new normal.” Participants included 334 senior executives and talent managers at large companies, across a range of major industries worldwide. The survey explores talent concerns, priorities, and strategies of national and global companies. It is interesting to note some specifics of the findings as they relate to mobility. According to the survey, 20 percent of executives describe their talent management programs as “world-class” across the board, while 11 percent said that their program is significantly under-performing or just getting by. With regard to acquisition, 41 percent of executives rate competing for talent globally as one of their most pressing talent concerns, and 27 percent of participants rank acquiring and developing leaders and talent as a key strategic priority. Concerning employee development, developing leaders and succession planning is both a top concern and a top talent priority, according to the survey. In fact, 71 percent of executives expect to increase their focus on developing high-potential employees and emerging leaders and 38 percent listed developing leaders and succession planning as a top concern during the next three years. Where it concerns employee retention, the survey found that 63 percent of executives are either highly or very highly concerned about employee retention during the next 12 months. Forty-nine percent said their companies have an updated retention plan in place; 69 percent of companies with a retention plan will increase compensation, while 76 percent will expand benefits. Regarding employee demographics, 72 percent of survey respondents said they expect voluntary turnover among Gen Y (under age 30) to increase during the next 12 months, and 60 percent expect higher turnover among Gen X (ages 30-44) employees. Turnover figures for Baby Boomers (ages 45-64) and Veterans (over 65) fall to 46 percent and 42 percent, respectively. Most striking, according to the survey, are the 56 percent of executives and talent managers who forecast leadership shortages (Twenty eight percent of EMEA executives indicated a severe talent shortage, while only 11 percent of APAC executives said the same.).


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Examples of this could be fully-paid or reimbursed area tours for not just the employee, but for the entire family. This is not a hefty cost, but shows a desire to acclimate the family into their new surroundings. Of course, a homesale program still is highly competitive and does offer significant monetary and tax benefits to an employee. Other benefit items might include complete pack and load services or reimbursing for the hiring of someone to assist in home “decluttering,” a fairly new service that has proven to save significant costs on the household goods shipment. Whatever the benefit may be, the key is to continue to ask the question, “does this help us to acquire talent?” The same guiding principle of tying the benefits back to the tal-

28 MOBILITY/MARCH 2011

ent management strategy can be applied whether you are in an employee retention or employee development mode.

Looking Through a Strategic Lens It is easy to get trapped in the mindset that what works for one company in a similar industry will be successfully transferable to your organization. Benchmarking against the competition does create a rational foundation and baseline for policy development. However, it may create future problems if it is not serving the greater need of talent management. Even if talent management goals are not clearly defined within your organization, the opportunity still exists to take a step back and look at the

program from a strategic level by asking these questions: “What is the overall purpose of our program?” “What are the intended or anticipated results?” “How will we know it is successful?” When these questions are asked and answered, selecting and defining the benefits will become simpler, costs associated with the move will align with the intended return on investment, and managers as well as employees will have clearer expectations and ultimately greater satisfaction. Jody Walstrom is team leader, business development support for Plus Relocation, Minneapolis, MN, and a member of the MOBILITY Editorial Advisory Committee. She can be reached at +1 1 952 512 5523 or e-mail jwalstrom@plusrelocation.com.


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What is your organization doing to secure its future in China? Effective corporate business development strategies for China are comparable to optimal talent management strategies. The acquisition, development, and retention of an effective workforce capable of successfully executing the company’s strategy locally increasingly has become a significant business imperative. Therein is the corporate conundrum: despite China boasting one of the largest populations in the world, there

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30 MOBILITY/MARCH 2011


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E

conomies worldwide continue to reel from the impact of one of the worst recessions of the past century—one that has not only incapacitated some of the biggest, most reputable corporate entities but also has sent various global economies staggering. As countless people around the world try to recover from a new reality in which terms such as “over-leveraged lending” and “double-dip recession” are used in casual conversation, the question that many are asking is, “who will lead us from the darkness into the light?” For many economists and business leaders alike, the prospective “knight in shining armor” continues to be China. Although China is not totally immune to the wrath of the recession, economists nevertheless anticipate that it will see a GDP growth of between 8 and 10 percent—an enviable figure by current standards. In 2010, China’s economy catapulted past Japan’s to become second only to that of the United States. With a prospective market of more than a billion eager consumers, infrastructure projects and urbanization continue unabated. In a December 2010 pulse survey, “Destination: China,” conducted by Cartus, 49 percent of respondents indicated that their regional headquarters office is now in China. It is not surprising, therefore, that multinational corporations (MNCs) have continued to court “the Dragon” with a view to acquiring a foothold in such a promising economy.

An effective corporate strategy for business development in China has become synonymous with an optimal talent management strategy. Acquiring, developing, and retaining an effective workforce that can successfully execute the company’s strategy locally has become even more of a business imperative. In this era of protracted economic uncertainty, however, the corporate mantra of “doing more with less” is growing louder than ever, with MNCs’ senior leadership being tasked to view ineffectual or nonessential costs through a magnifying glass and then remove them. An effective corporate strategy for business development in China has become synonymous with an optimal talent management strategy. Acquiring, developing, and retaining an effective workforce that can successfully execute the company’s strategy locally has become even more of a business imperative. Therein lies the corporate conundrum: despite China boasting one of the largest populations in the world, numerous surveys point to a huge shortage of staff with the skill sets and experience required to work effectively in an MNC environment. The issue is not one of academics; China annually produces one of the largest populations of highly educated graduates in the world—a staggering 6 million in 2010. Rather, the talent shortage is associated with a disconnect between a Chinese educational system that historically has focused on technical mastery rather than the entrepreneurial business acumen demanded by MNCs. Many Chinese have continued to graduate with impressive engineering or mathematics qualifications, rather than the business management skills urgently being sought by both global and local MNCs. Many Chinese also have continued to focus on science-based qualifications rather than master the MOBILITY/MARCH 2011 31


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WESTERN EXPAT PERSPECTIVE

LOCAL CHINESE PERSPECTIVE

BUSINESS IMPACT

Focus on immediate top-line growth in order to achieve aggressive financial targets set by HQ.

Business growth is a long-term proposition that cannot be hurried if it is to be successful.

Expatriates struggle to achieve the targeted financial growth during their assignment period.

Successful business agreements are based on the closure of comprehensive, watertight contracts. “Ambiguity” is perceived as a negative state because it is likely to result in a lack of clarity by all parties.

Successful business agreements are based on the development of long-term relationships.

Expatriates’ perception is that Chinese partners “cannot be trusted” because they frequently refuse to adhere to agreed contractual obligations and frequently attempt to renegotiate contractual terms after contract has been signed.

Contracts are purely indicative of the intent to do business and are, therefore, subject to change. Some ambiguity perceived as a positive state that enables flexibility for all parties.

Focus on traditional Western values and behaviors, including empowerment, individual responsibility, thinking creatively, and self-reliance.

business management skills that are in tremendous demand by both global and local MNCs. The talent shortage is further compounded by the lack of local senior management staff with seasoned track records in modern, effective business management skills. A legacy of the Chinese Cultural Revolution, during which many educational institutions were closed, is the so-called “lost generation” of now middleaged citizens who did not have the opportunity to study or develop their management skills. As a result, many middle and senior managers in China are substantially younger and, hence, 32 MOBILITY/MARCH 2011

Focus on traditional Chinese values and behaviors, including teamwork, long-term relationships, hierarchy, face, and the development of intricate relationships based on mutual obligations (guanxi).

less experienced than their Western counterparts. With a backdrop of increasing consumerism and affluence, corporations continue to fight for the best human resources available to help them stake a piece of the pie. Nor is this battleground limited to Western multinationals; Chinese companies now have entered the fray and are offering lucrative opportunities to top candidates. As the war for talent proceeds unrelentingly, companies are being forced to make definitive choices. To what extent should they use foreign talent to drive China’s growth?

The Chinese perception is that the Western preoccupation with contracts is, in turn, an indication of a lack of trust between the parties.

Western expatriates are frustrated by the perceived lack of selfmotivation and empowerment demonstrated by their Chinese staff. Local staff are frustrated that the expatriate boss does not appear to have the skills to clearly define expectations, responsibilities, and exact methodology for executing tasks.

Selecting the Right Talent Pool Historically, many Western MNCs elected to send their brightest and best on assignment to China. These expatriates had proven track records in other locations and were seasoned business veterans who were tasked with growing the business and inculcating the China office with the headquarters’ values and behaviors. The perceived advantage of this approach was that these assignees had solid company experience, understood fully what headquarters expected of them in terms of business performance, and could make a difference immediately. This


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approach came at a huge direct cost though, because China was considered a “hardship” posting that required substantial employee benefits in terms of compensation, including housing, drivers, schooling, and club memberships. Some of these assignees were at least moderately successful, whereas most fell by the wayside—victims of the second major challenge facing corporations and their expatriates: the enormous cultural divide that separates Western business practices from those of the Chinese. See the chart at left for examples. These contradictory values, combined with a huge linguistic gulf, resulted in many disillusioned Westerners and their families leaving China and vowing “never again.” Faced with this experience, along with increasing financial pressures, most MNCs now are looking to alternate assignee demographics and policy types to supplement the traditional long-term expatriation of Western assignees. Intra-regional Asian moves are becoming increasingly popular, a trend illustrated in Cartus’ “Destination: China” survey, which indicated that foreign nationals from APAC were the most common category of employees relocated into China, equal to the United States as a source. When asked to project activity in intra-regional moves, 46 percent of respondents expect volume to increase in the next two years (compared to 35 percent who saw an increase during the past two years). Respondents were eager to harness intra-regional talent not only because they anticipate cost savings but also because they perceive that these assignees will face fewer cultural and language adaptation challenges. As a result, many of the

On the Web For further information on Talent Management in China, visit www.WorldwideERC.org Talent Management Strategy Discussions in Asia  www.WorldwideERC.org/Resources/Mobilityarticles/Pages/1010-Wilson.aspx Global HR Thought Leaders—Mark Giorgini, GMS, on the Future of Human Resources in China  www.WorldwideERC.org/Resources/Mobilityarticles/Pages/0309global-hr.aspx Planning for China’s Talent Needs www.WorldwideERC.org/Resources/Mobilityarticles/Pages/0607fender.aspx

intra-regional assignees are selected from places such as Hong Kong, Singapore, and Taiwan, where Mandarin skills are more commonplace. Moreover, employees from these regions are equally eager to develop their careers by gaining work experience in China. The past several years have seen the emergence of the era of the Chinese returnees. These are educated Western Chinese nationals, often second- or third-generation emigrants who have substantial educational and work experience in the Western world. Viewed by many companies as the answer to the MNCs’ talent woes, corporate HR fought for this demographic because they looked Chinese and spoke the language but also had experience working in a Western environment. Some of these individuals have bridged the cultural divide effectively, but others have fallen at the first fence. The Chinese are a fiercely patriotic nation, and many have little respect for Chinese nationals who appear to have fled the motherland to feather their own nests. Second- and third-generation Chinese returnees often are perceived to have lost their Chinese heritage and cultural identity and may be perceived by local Chinese as out of touch with the “real” China.

In fact, returnees often experience even more resistance than their Western counterparts. Most organizations historically have focused primarily on the development of cross-cultural sensitivity in their expatriate employees in China, because employers recognize this as a key competency that drives assignment success. Increasingly, however, many global and local MNCs have begun to realize that cultural sensitivity is a two-way street. Businesssavvy organizations now recognize that local Chinese employees also require key cultural knowledge and skills to enable them to operate effectively within an HQ business culture and to connect with the cultural style of incoming senior executives.

Best Practices in Talent Management and Development Given this formidable cultural confusion, what can organizations do to improve the chances of their initiatives’ succeeding in China? The following recommendations, while by no means exhaustive, provide companies with a few simple best practices in terms of talent management and staff development in China. The Western expatriate. There may be times when sending a WestMOBILITY/MARCH 2011 33


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ern expatriate to China is the right thing to do. This may be for strategic reasons, global career progression for the individual, or even purely because they have the necessary technical/ managerial skills required. In such a case, the company should be mindful of the following suggestions:

• Consider doing a cultural assessment on the prospective candidate and spouse. A thorough external assessment should focus on the personal and professional circumstances of the candidate and his or her family in an effort to obtain crucial feedback on their suitability for, and attitude

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34 MOBILITY/MARCH 2011

toward, the assignment. Though the applicant may have all the technical qualifications, their cultural adaptability and perceptions/motivation about the relocation are key indicators of future success. A comprehensive assessment will help the company ascertain whether this relocation is likely to be of high, medium, or low risk in terms of success markers. • A key success indicator that many organizations underestimate is the candidate’s willingness and ability to work with uncertainty. Business success in a home environment where there are no language barriers and where infrastructure is predictably dependable (e.g., phones, Internet access, transportation) is very different in a Chinese environment where processes may be more fluid and language barriers prevail. • Look for cultural competency at HQ level. It is important that senior leadership at the corporate level understands the business dynamics and cultural frameworks that operate in China. This information can be used to refine corporate expectations of what can be achieved in China, the associated timeframes that are likely, and the best way to move forward as an organization. • When relocating an individual to China, do not change his or her function, designation, or level at the same time. Each of these changes brings its own complexities and risks; allow the assignee to adjust to the change in location first, and then implement the other changes later on a staggered schedule. • Cultural training is essential. A two-year relocation can cost an organization anywhere between US$500,000 and $1 million, yet some companies are still reluctant to make the small, incremental invest-


obyrne_MOBILITY 1/31/11 2:03 PM Page 7

ment in cultural training to ensure that the candidate and family have the maximum chance for assignment success. Comprehensive training should be customized to the assignee and family members. It should address the cultural differences from both a professional and a personal perspective. Effective training will substantially reduce the transition time for the whole family while also equipping the assignee with the cultural competencies required to communicate effectively and conduct business in the Chinese context. This training also allows the entire family not only to recognize the cultural and daily living adjustments that they will face, but also provides them with practical assistance and advice on how to address these changes. A lack of appropriate training can result in feelings of isolation and frustration that may affect assignment success. • Language barriers must be addressed. One-to-one Chinese lessons for the assignee and spouse are key requirements in determining success. English is not commonly spoken, even in the large cities, so basic, conversational Mandarin classes will increase the sense of independence in terms of basic greetings and conversational communication in shops, with household helpers, taxi drivers, and the like. • Make succession planning part of the assignment success criteria. Though most MNCs state that senior Western assignees are expected to develop local management talent, most do not formalize this as part of the expected performance criteria for the assignment. Each assignee should be measured on his or her actions in developing a local succession plan and then also developing the relevant skills locally to allow the organization to

execute it. The assignee should allocate a specific amount of time each week to mentor and develop local talent, who in turn should also be allowed to assess the individuals’ success in this regard. • Extend assignment duration to three years. Relationships in China

drive business success. This, however, requires a substantial time commitment from the assignee. A traditional two-year assignment does not typically allow an individual the time to obtain trust and loyalty from both clients and staff; it may take one or two years to develop deep relation-

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ships, by which time most assignees are moving on, leaving a successor with the task of starting afresh. The Chinese returnee. This group may have definite advantages in terms of language and cultural competency, but in some cases they may be considered by local staff to have become “too Westernized” and, as a result, may command less respect than their Western counterparts. To maximize the chances of success for this group, companies should consider: • Sending the prospective employee on project work to China long before the final relocation decision is made and observing their success in establishing networks and relationships with local staff. • Conducting cultural training. If the assignee has been out of China for a long time, he or she will need to adjust to the cultural and behavioral expectations of local nationals. Comprehensive training will focus on the cultural gaps that they are likely to face and how to effectively address these. The local Chinese workforce. Ultimately, multinationals need to ensure that their staff embodies the values of the organization and that their behavior is in keeping with the organization’s expectations. Achieving this requires a proactive approach that may include: • Specific interview questions that ascertain how the candidate would react in potential situations. The scenarios painted could relate to the core values of the organization; e.g., do the candidate’s responses demonstrate an ability to work autonomously, make decisions, think creatively, provide feedback, and the like? • Local workforce skill development. Behavioral changes happen only when adequate training and support are provided. Cross-cultural

training that develops the skill sets of the local staff is key in this scenario. The training needs to go beyond the standard website definitions of key organizational values. The big questions that need to be addressed during training include: What are the key cultural values of the organization as a global entity? What are the related behavioral expectations that the organization has for each of its employees? How do these behaviors differ from those that the audience may be used to? How does one demonstrate these values? Can these behaviors be introduced successfully into the Chinese work environment, and what is the best way to achieve this? • Provide advanced English language training for staff who can speak English at a conversational level but who struggle to express themselves effectively in the work environment. Language capability confidence can boost participation in a significant way. A successful program of local workforce training in China would build on existing Chinese values to achieve cultural synergy, which combines the best of traditional Chinese values with the core expectations of the MNC. Ultimately, the best solution for any multinational company probably will incorporate and blend a number of the approaches identified above, but ultimately, there is no alternative to staff training. A comprehensive coaching approach that incorporates practical, situation-specific advice leads to increased leadership performance. The opportunities for astute organizations in China are immense: what is your organization doing to secure its future in China? Jenny Castelino is director, intercultural and language solutions, Asia Pacific, for Cartus in Singapore. She can be reached via e-mail at jenny.castelino@cartus.com.


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Linking Expatriate Assessment and Selection with Talent Management Strategies BY BRENDA BELLON AND JENNIFER ROWE

S

electing the right candidates for international moves is more critical than ever as companies continue to face increasing costs, the need for selected expatriates to succeed, and improving ROI. Many companies are struggling with two key aspects of selecting their assignees— implementing best practices for selecting the best candidates and tying the selection process into talent management strategies. A critical barrier is that few companies are using well-rounded assessment processes. Implementing more effective assessment tools and programs would provide companies with a better capacity to select people who are more likely to be successful in their overseas assignments. Historically, selection was based on factors such as an employee’s technical competency and job experience. Companies are now recognizing the need for broader candidate assessment and incorporating factors such as cultural adaptability into assessment. Tools that assess cultural adaptability can be used by organizations to determine not only suitability for an international assignment but also can be linked to an employee’s development before, during, and after the assignment. Only 30 percent of companies are using such tools, according to the 2010 “Global Mobility Policy and Practices Survey” published by Cartus and the National Foreign Trade Council (NFTC). Incorporating these assessment tools would be a big step toward improving selection. Perhaps more important, incorporating effective assessment tools also can act as a bridge between selection and talent management. Companies are starting to realize that selection is not just a relocation issue—it is becoming an important part of a larger talent management strategy. Companies are beginning to focus on integrating selection and assessment into the employee’s overall development and recognizing that the personal development aspect also should be tied to overall talent management practices. Says Peter Rienzi, vice president of expatriate services, Prudential Financial, Newark, NJ, in the article, “Happy Returns,” featured in the March 2010 issue of HR Magazine, expatriate assignments must be “included as part of the organization’s overarching talent management strategy.” 40 MOBILITY/MARCH 2011


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Identifying assessment tools and integrating them into an expatriate’s development process can aid organizations seeking to improve their candidate selection, as well as successfully link mobility practices to talent management. Bellon and Rowe identify ways in which cultural assessment tools can be incorporated into an organization’s talent management initiatives.

MOBILITY/MARCH 2011 41


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Assessing Cultural Adaptability here are various tools available to assess cultural adaptability. When looking for an assessment tool, a number of questions should be considered: • Does the tool have a strong foundation in research, and has it been statistically validated? • As part of cultural adaptability, does the tool look at distinct attributes crucial for successful adaptation to another culture, as well as factors surrounding assignments that can either support or distract expatriates from having a successful assignment? • Is it easy to use, easily accessible, and does it provide feedback—such as reports and results—in a timely manner? • Does the tool meet the organization’s needs and can it be easily integrated into existing candidate assessment and talent management programs? • Does the company providing the tool offer consultation and support in how to use and integrate the instrument into talent management strategies?

T

Linking Mobility and Talent Management Although companies are focusing increasingly on improving the link between mobility and talent management, in many cases they are just getting started. According to Cartus’ 2009 “Talent Management Survey,” centralizing the management of global mobility and better linking to the talent management process are current challenges faced by responding organizations. The greater need for integration is echoed in the realignment of where the relocation function is housed within some organizations. Mobility is no longer sitting exclusively under the compensation and benefits umbrella, but rather can be found sitting with talent management, people, or human capital teams. However, some leading-edge companies are driving the integration from the opposite direction, using talent management strategies to drive selection. Traditionally, employees were assessed and selected for a particular assignment opening. Now, some companies are beginning to use leadership development strategies to drive relocation practices for high potentials. According to PwC’s “12th Annual Global CEO Survey,” 97 percent of 42 MOBILITY/MARCH 2011

CEOs state that access to and retention of key talent is critical. During the next three years, organizations will increase their talent management emphasis on leadership, succession planning, and career pathing. The Towers Watson “Global Talent Management and Rewards” survey found that 60 percent of responding companies stated that increasing the investment in building their talent pipeline is a priority. As a result, some companies are aligning talent management and assignment pre-selection into their annual review processes and overall career management paths.

Cultural Assessment and Talent Management As companies struggle with how to effectively link mobility with talent

management, it can be difficult to know where to begin. One area where companies can begin to focus more easily is improving their assessment processes and more clearly linking them with employee development. Following are some ways cultural assessment tools can be incorporated into an organization’s talent management process: • Creating a candidate pool. Cultural assessment tools can be used in the creation of candidate pools when assessing high-potential new hires. For example, an international power systems company wanted a tool that would give them a snapshot of an employee’s cultural adaptability, as their goal was to develop a pool of culturally-competent international managers. Using a cultural adaptability tool allowed this company to create a pool of potential candidates for future overseas assignments and identify specific skills to be developed for each of their highpotential new hires. • Self-selection. Some organizations use cultural assessment tools so their employees can self-select for an international assignment. If potentially interested in relocating, employees taking a self-assessment tool would raise awareness of their strengths and areas of potential challenges when adapting to life and

On the Web For more information concerning expatriate assessment and selection, please visit www.WorldwideERC.org Selection and Global Talent Management  www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0509-kozloff.aspx More Art Than Science—Selection and Preparation for the Global Assignment  www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0508stuart.aspx Who to Choose? The Importance of Expatriate Selection www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0807callahan.aspx


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work in a new country. This can help employees decide if an international assignment might be a good fit for them and use the information to help create their personal development plans and to opt-in to potential candidate pools. • Integration with training and development. Companies also can use cultural assessment tools to identify and develop employees who have tactical knowledge for a particular assignment, but who need additional training to help them gain the awareness, knowledge, and skills to address potential culturally-based challenges. Tools can be integrated into the training employees receive prior to their assignment and into coaching they receive while on assignment. • Supporting short-term assignments. Short-term assignments are increasingly developmental in nature, and the use of assessment tools can give further depth to the employee’s development. An aerospace company integrated the use of a cultural assessment tool when sending employees on six-month international assign-

ments to share technology and provide cross-training on aviation equipment. For these employees, the cultural assessment instrument was used as an extra tool in their cross-cultural training program. They received guidance on their strengths and challenges within the context of the host country culture, and they identified specific cultural skills that they could use and develop while on their shortterm assignment. • Leadership development. For organizations with strong succession planning programs and expectations for their senior leaders to have international experience, using a cultural assessment tool will help identify high potentials. The instrument will provide employees with feedback on strengths and weaknesses that they can begin to integrate into their development plan to be ready for the next available international assignment. • Implementing a formal selection process. For companies who do not have a mature talent management practice in place, developing a

more formal assignment selection process will help with assignee development and improve the likelihood of success. Using a cultural assessment tool can complement other selection tools such as personality assessment, identification of job competencies, and other company-specific criteria, to create a comprehensive selection process that also can tie to future career planning and development. By identifying an appropriate assessment tool and integrating it into an organization’s expatriate selection and development processes, companies not only can improve their candidate selection, but also take some key steps along the path to successfully linking their mobility practices with talent management. Brenda V. Bellon is vice president, intercultural for Prudential Relocation, Atlanta, GA. She can be reached at +1 678 867 6962 or e-mail brenda.bellon@prudential.com. Jennifer Rowe is intercultural business development specialist for Prudential Relocation, Shelton, CT. She can be reached at +1 440 778 7820 or e-mail jennifer.rowe@prudential.com.

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Understanding the guidelines surrounding the export of technical data to foreign nationals, whether through e-mail, conversations, database access or other means, is of key consequence for global mobility and HR professionals. Brotherton provides an overview of deemed export requirements and discusses key items to consider when making the certification.

T

he global movement of people and technology is critical to the success of today’s companies. In fact, both small and large organizations are likely to engage in exports on a routine basis—whether by physically exporting products or releasing technical data to foreign national employees. For purposes of U.S. export control regulations, a foreign national is any individual who is not a U.S. citizen or national, Lawful Permanent Resident (green card holder), person granted asylee or refugee status, or Special Agricultural Worker (SAW) granted amnesty. This latter concept—“exporting” by releasing technical data to foreign nationals—often is one that brings a number of questions for HR professionals. The most common question is, “how can we export if we are not sending technical data outside of the United States?” The answer to that question pertains to a concept referred to as a “deemed export.” That is, the U.S. government “deems” the release of technology or technical data to a foreign national in the United States as an export to the individual’s home country. The most common example is releasing blueprints, schematics, drawings, source code, or other technical data to a foreign national employee—whether through conversations, e-mails, access to databases, or any other means. In some cases, depending on the nature of the technology and home country of the foreign national, a U.S. government export license is required. Penalties can be stiff, ranging from $250,000 in civil cases up to $1,000,000 and 20 years imprisonment for criminal violations. The rules pertaining to deemed exports have been in place for a number of years. However, as

of February 20, 2011, employers filing certain H, L, or O visa petitions must certify that the organization has reviewed certain export control regulations and thereafter indicate that an export license is/is not required to release technology to the foreign national worker. The certification brings challenges as a large number of organizations that are not involved in traditional exports (IT, finance, banking, consulting, and similar industries) may not be familiar with deemed export requirements. Further, even those with robust compliance programs may need to develop new processes to ensure the certification is accurately completed.

Brief History The origins of the new certification trace back to a 2002 Government Accounting Office (GAO) study, “Department of Commerce Controls over Transfers of Technology to Foreign Nationals Need Improvement.” During the study, Congress asked GAO to assess the U.S. Department of Commerce’s efforts to ensure that organizations obtained deemed export licenses, when required. The GAO found that, “because Commerce does not review all relevant visa and immigration data, it may overlook foreign nationals potentially subject to deemed export license requirements.” GAO recommended that Commerce work with U.S. Citizenship and Immigration Services (USCIS) to, “use all existing U.S. government data in its efforts to identify all foreign nationals potentially subject to deemed export licensing requirements.” Commerce responded by proposing a revision to Form I-129 Petition for Nonimmigrant Worker, which is used to petiMOBILITY/MARCH 2011 47


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tion, amend, or renew various visas. More specifically, Commerce recommended that the form include an export control certification related to deemed exports. On November 23, 2010, USCIS released a new version of Form I-129 that includes, among other changes, the new export control certification. The new form is mandatory as of December 23, 2010. However, given the complexities with an export control analysis, USCIS postponed until February 20, 2011, the requirement to complete the export control certification.

The New Certification The Form I-129 export control certification requires two representations. First, the organization must certify that it has reviewed the Export Administration Regulation (EAR), which is administered by the U.S. Department of Commerce, Bureau of Industry and Security (BIS), and the International Traffic in Arms Regulations (ITAR), which is administered by the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”). The EAR covers items that are purely commercial or “dual use”—meaning items that have both commercial and military or proliferation applications. The ITAR, on the other hand, covers items that are specifically designed, developed, configured, or modified for military or certain space applications. The second part of the certification requires that the organization select one of the following: 1. an export license is not required to release or otherwise provide access to controlled technology or technical data to the subject foreign national worker; or 48 MOBILITY/MARCH 2011

2. an export license is required and controlled technology will not be released until an export license is obtained. Following is a look at a typical approach to answer the second part of the certification.

Is an Export License Required? The key question—especially for those HR and corporate counsel professionals not traditionally involved with export control—is where to begin. Many organizations have a trade or export compliance function that is responsible for administering compliance with export control regulations, including those pertaining to deemed exports. In a best-case scenario, this function may have conducted a deemed export assessment and can advise how to respond to the certification. At that point, it is simply a matter of adjusting processes to ensure the certification is properly completed for each future I-129 petition. Even in this case, it is important to document how the organization arrived at its conclusion so the organization is in a position to provide support documentation in the event of a USCIS, BIS, or DDTC audit. For organizations without a trade or export compliance function (or perhaps even those that do), the focus turns to reviewing the organization’s workplace technologies to determine which foreign national home countries require an export license (Another option is to conduct a more limited review of the technologies that will be released to the foreign national in question. While this is an option for an interim solution, it is not a best practice as the foreign national’s access to technologies may change during the course of

his or her employment.). Given the technical nature of this review, this exercise can prove difficult and may be performed best by or with the assistance of an outside expert. In practice, we term this exercise a “technology assessment.” The technology assessment involves understanding the organization’s workplace technologies, including those related to the development or production of products, manufacturing equipment, software (including encryption), and technical services, among other areas. From there, the next step is to review those technologies against the EAR’s Commerce Control List and ITAR’s U.S. Munitions List to determine applicability. Ultimately, an organization’s technology assessment will determine which workplace technologies require an export license prior to release to foreign national worker. Not all technologies are similarly controlled and it could be the case that some technologies only require an export license for foreign nationals with a home country of Cuba, Iran, North Korea, Sudan, or Syria (or in some cases, none at all), while other technologies require an export license prior to release to a more expansive list of home countries (or even any foreign national). There are a couple of tips along this line. Under the ITAR, an export license generally is required prior to transfer of any ITAR-controlled technical data to a foreign national. There are, however, some exemptions, particularly in an academic setting. Another tip is that under the EAR, “home country” is the foreign national’s last-in-time citizenship or permanent residency. For example, an individual born in Iran who sub-


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sequently moves to Canada and obtains permanent residency status is considered “Canadian” for purposes of a deemed export license analysis. Further, certain license exceptions are available under the EAR to transfer otherwise controlled technologies to foreign national employees. Once the technology assessment is complete, it is important to establish triggers so that new technologies are evaluated in the future. Further, the EAR and ITAR should be monitored as regulatory changes may affect deemed export license requirements.

Proactive Process Once the initial technology assessment is complete, the organization will be in a position to proactively evaluate deemed export license requirements going forward. HR professionals—especially recruiters and immigration specialists—play a key role in this process. Generally, a Deemed Export Compliance Program involves the following key elements: 1. a technology assessment program to continually identify controlled workplace technologies; 2. a screening program to identify foreign nationals that may require an export license; 3. a physical and IT security program to secure controlled technologies; 4. an employee training and education program; and 5. a self review and audit program. These elements must work in tandem to ensure that the organization not only identifies the controls on workplace technologies, but also to ensure that an export license is obtained prior to the release of controlled technologies to a foreign 50 MOBILITY/MARCH 2011

national having a home country that requires such a license. One benefit, of course, is that organizations with a Deemed Export Compliance Program will be in a position to accurately respond to the Form I-129 export control certification. As a best practice, many companies combine these elements into a documented procedure termed a “technology control plan,” which includes organizational responsibilities and workflows.

Tips for Completing the New Certification As you move forward in completing the new Form I-129 export control certification, there are several key tips that will help address commonly asked questions, covered below. Is an export license required? When completing the certification, consider the facts known at the time you are making the certification. At the time the petition is prepared, if the organization’s review determined that an export license is not required to release technology to the foreign national, check box 1, “No export license is required.” License exceptions or exemptions. If using an EAR License Exception or ITAR exemption (e.g., for certain university employees) to release otherwise controlled technology to a foreign national worker, organizations should check box 1, “No export license is required,” when completing the Form I-129 export control certification. Third-party employers. Many employers place foreign national employees at customer sites or other third-party locations. In this case, the third-party generally is the party “releasing” technology or technical data to the foreign national employee.

Many organizations also have asked whether, in making the export control certification, they must determine whether the third-party is providing controlled technology to the subject foreign national employee. The Commerce Department recently clarified that the new Part 6 only requires a certification regarding technologies that the “petitioner will release...” to the foreign national. To this end, where a foreign national is exposed to another company’s controlled technologies when completing a work assignment at that company’s premises, the petitioner will check box 1 (no export license is required) as the petitioner is not releasing controlled technologies. That said, there may be instances where the petitioner releases controlled technology to foreign nationals—whether its own technology or perhaps technology that was originally provided by a third-party. Employers should assess the likelihood of such circumstance when completing the certification.

Additional Considerations Addressing the challenges for completing the Form I-129 takes time; likely more time and resources than were previously required. Those organizations that have proactively addressed the deemed export certification will be in the best position to file the new Form I-129, thereby ensuring that there are no unnecessary deemed export related delays when obtaining a key foreign national worker’s employment authorization. Steven Brotherton is the managing partner of the Fragomen, Del Rey, Bernsen & Loewy, LLP’s Export Controls Practice Group, San Francisco, CA. He can be reached at +1 415 263 8442 or e-mail sbrotherton@fragomen.com. Melissa Wiens, an associate in the Export Controls Practice Group, also contributed to this article.


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COACHING— AN INSURANCE POLICY FOR GLOBAL MOBILITY BY SARAH DEHAYES

54 MOBILITY/MARCH 2011


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Coaching is an emerging form of support within global mobility. DeHayes writes that because coaching accelerates expatriate destination acclimation for a minimal investment, it serves as an “insurance policy” for mobility programs by shortening the adjustment cycle and producing positive, replicable results, as well as boosting assignment ROI.

N

irvana in the mobility industry is having the right person with the right skill set deployed to the right location. Why can this feel so elusive, despite the effort and expertise of so many mobility professionals in a global organization focused on this outcome? The stakes are high and the risks costly. More scrutiny than ever is focused on mobility and relocation programs. Employee engagement and success within a new context bring a vulnerability to business as usual—but also the greatest of opportunities. How can global mobility find an insurance policy? How can the return on such a considerable investment— both on behalf of the employer and employee and family—be realized? Perhaps by turning to a powerful modality often used in leadership development and training programs: coaching.

Success Criteria Coaching in a cross-cultural context brings together the chief indicators of success of working and living

abroad—acculturation and professional effectiveness. Components of acculturation can include personal satisfaction, the development of selfawareness and adaptability, building intercultural communication skills, style-switching, resilience, and managing stress and ambiguity, among others. Professional effectiveness can translate into critical thinking and analytical skills, empathy, productivity, interpersonal communication, alignment with company values, accountability, strategic thought leadership, delivering feedback, achievement of expressed business goals, and the like.

What Is the Buzz About? Coaching finds itself as a term du jour, which can sometimes mean it is misapplied. Coaching is a distinct modality to training (development of a technical or behavioral skill through exercises), consulting (experts in a specified field bring their own “agenda” and possible answers or solutions to formulate an action plan), mentoring (when a role model who has “been there done

that” shares personal experiences as a model for success for the mentee) and therapy (the analysis and healing of emotional wounds in the past). In the global mobility arena, it can be combined classically with crosscultural training given the synergy of skills required of a trainer and coach, though the two solutions differ. Carolyn Feuille, president of Esprit Global Learning, Nevada City, CA, expresses the distinction well when explaining that, “in [cross-cultural] training, the trainer usually has the role of expert and imparts knowledge to the group. In coaching, the coach helps clients find their own solutions, inspiration, motivation, etc. It’s a very different process of learning with the coach as a catalyst.” The coaching partnership is unique in its goal-oriented approach. Its largest worldwide association, the International Coach Federation, defines coaching as, “partnering with clients in a thought-provoking and creative process that inspires them to maximize their personal and professional potential.” The coaching process unearths root causes or blockMOBILITY/MARCH 2011 55


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ages resulting in stagnation and works to break down the thoughts impeding progress to accelerate sustainable results. The momentum of the coaching relationship empowers the coachee with tools to apply in life and work for maximum benefit. Sarah Fraser, Founder of Happiness Express in the Netherlands, cites “a greater sense of belonging, better work/life balance, increased confidence and [a] broadened mindset” as some of her expatriate coachee results. The union of coaching and intercultural models and theories forge the bridge across the identity of the coachee both as valued employee and his or her role at home.

Brass Tacks Logistically, the coach and coachee work face-to-face or virtually. The time commitment can vary depending on what best serves the coachee as well as goal attainment. Specific events (such as key meetings, negotiations, strategizing a business plan, re-engineering processes, and the like) can be fertile ground for coaching. The coachee may prefer continual maintenance via weekly/bi-weekly sessions. In a November 2010 survey, “Expat Coaching and Global Mobility,” conducted by the Expat Coach Association, typical coaching spend averages less than one percent of total assignment costs. Client confidentiality and advocacy, trust, and a safe environment in which to share, confront, and celebrate best support a fruitful coaching collaboration. Individual and group coaching are possible formats. The coach is tasked with objectivity, an unbiased lens, and is not affected by the coachee’s decisions. The coaching solution thus allows for strategic

and tactical problem-solving, authentic self-reflection, and fearless performance.

Talent Management Paradigms Talent management paradigms have emerged because of various factors, including leaner organizational structures, the need for global leaders with leadership skills who can span country and cultural borders smoothly as well as internal functions, the seismic demographic trends in the global workforce, and the war on talent for valuable human capital. Talent management models can be expressed in four key phases—attraction, development, retention, and separation. In the attraction phase, support tools can consist of: selection criteria, assessment, on-boarding activities, and training. In the development phase, leadership development curriculum is implemented and coaching functions as an integral component of the program. In the retention phase, performance assessment, career path management, and succession planning constitute a valuable maintenance plan. In the separation phase, organizations seek to retain the knowledge of its resources while allowing career transition services to bring closure to a successful shift onward. Excluding an organization’s globally mobile workforce from these talent management models while on assignment impedes the organization’s ability to take full advantage of lessons learned and expertise gained through the cross-border experience when (re)integrating the employee. Transferring accountability and oversight of an employee’s career during expatriation and on repatriation (if


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applicable) can result in discontentment for the employee. Not validating in meaningful ways the importance of the employee’s contributions to the organization, risk-taking efforts, personal hardship, and newly acquired cross-cultural skills can spiral into failure of the talent management process—sudden severance and embitterment. The vulnerability and self-inquiry inherent in expatriation make it an incredibly ripe moment for an individual to reconnect with his or her goals, passions, identity, and humanity. These easily link to the professional framework for an employee.

ROI The marriage of the talent management and global mobility functions within an organization can be selfstrengthening and provide end-toend and consistent tracking of key performance indicators and career planning. Defining a comprehensive and holistic talent management model to track success and calculate return on investment (ROI) can be daunting and should be customized to each organization. Qualitative and quantitative measures are borne from an organization’s values and competency models. Factors attributing to the ROI model can include metrics

such as employee satisfaction, employee attrition and post-repatriation attrition, cost of mobility package components, performance appraisal ratings, acculturation success, role acceptance rate, volunteering to mentor others, inclination to accept a subsequent assignment/transfer, completion and “value” of defined and specific business goals and objectives, team satisfaction, and so forth. Linking coaching to ROI has been researched with stunning results. In the November 2002 issue of Psychology Today, the article “Coaching the Coaches” by Kaja Perina reports that “both coaches and

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the companies that snap them up are fueled by the bottom line. Employees at Nortel Networks estimate that coaching earned the company a 529 percent ‘return on investment and significant intangible benefits to the business,’ according to calculations prepared by Merrill C. Anderson, a professor of clinical education at Drake University.”

An Emerging Form of Support Coaching is an emerging form of support in the global mobility arena. It has proven success and relevance in professional and leadership development programs in organizations as part of a holistic, integrated talent management model. It can be used in remedial situations as well as for young talent, high-potentials, and executive development. Coaching is a distinct modality to other forms of intervention and support such as

60 MOBILITY/MARCH 2011

training, consulting, mentoring, and therapy. Coaching has powerful applications to accelerate performance effectiveness, work/life balance, cultural acculturation, and employee engagement for a minimal monetary investment. This can equate to meaningful and sustainable methods to shift the expatriate from surviving to thriving. Whether a temporary or permanent stint abroad, coaching shortens the adjustment cycle and brings about positive, replicable results. As global mobility and talent management join forces, the two functions can drive toward end-to-end management of an organization’s human capital resources. In its workforce’s development, a robust platform of employee assistance can meld existing mobility support services such as candidate assessment, cross-cultural training, mentor/buddy system,

online communities, on-the-ground subject matter experts, linkages to the employee’s career manager, and the like, with activities to enhance leadership skills including effective communication, the ability to motivate and inspire, strategic planning, managing conflict, delivering feedback, acknowledgment, improving teamwork, and producing results. This process propels an organization to success in the areas of: revenue, quality, productivity, customer service, cost, market maximization, and so on. Coaching bridges the two worlds together to realize tremendous, replicable outcomes—a small insurance premium to manifest significant value. Now if only other insurance plans could guarantee such results! Sarah DeHayes is a project manager, consulting services at Crown Relocations in Brookfield, CT. She can be reached at +1 203 482 6271 or e-mail sdehayes@crownrelo.com.


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BY SOPHY KING AND LAVINIA PASCARIU

Extended Business Travelers Immigration Risk Management With the rise of short-term assignments, and increased focus on stealth expatriates, an organization intending to protect itself from the consequences of immigration penalties must be aware of the rules and regulations that apply to business travelers. King and Pascariu examine some common assumptions about extended business travelers, provide country-specific examples for reference, and offer a detailed case study on a group of financial auditors who were being assigned to multiple international locations for three weeks at a time.

E

xtended business travelers”—three little words that cost a great deal of companies a great deal of trouble. Immigration non-compliance for employees on extended business trips, or short-term assignments, is rife. The term “stealth expatriate” was first coined by the Economist in April 2005 in the article, “In search of stealth; Today’s global businesses have created a new kind of expat,” to describe this growing phenomenon. The article gives the following definition: “stealth expats come in two main varieties: one is the cross-border commuter, a growing phenomenon particularly in the European Union (EU), where the relaxation of border controls and spread of low-cost airlines have made weekly commuting between cities such as Brussels, London, and Paris almost commonplace. The other is the accidental expat—someone who goes on so many business trips or temporary assignments that he inadvertently incurs new fiscal liabilities or overstays his welcome as a foreign worker.” Since that article was written governments worldwide have awakened to the problem. In many countries, immigration enforcement agencies and bureaus are using sophisticated technology to track travelers—and are coming down hard on non-compliant employers. The issue is not straightforward. Not all extended business travelers need immigration approval—but then again, some do. In addition, tax regulations around short-term assignments throw many employers off track—it is important to note that just because an employee may be legally tax exempt in a location does not mean that he or she also will be exempt from immigration requirements. MOBILITY/MARCH 2011 63


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Case Study

F

ollowing is a specific case study in detail, looking at a group of internal financial auditors being sent to several subsidiaries abroad. Internal auditors, who visit a location for a limited time and do not necessarily get involved in the day-to-day operations of the host location, are an excellent example of the grey line between “work” and “business.” Our client’s auditors, all U.S. nationals, were being assigned to various locations for up to three weeks at a time to conduct financial, operational, and compliance audits, to identify and clearly define audit issues and root causes, to recommend improved internal controls and business processes, and to evaluate adequacy and effectiveness of internal controls, and compliance with corporate policies and procedures. We provided them with the following information: AUDITING—IMMIGRATION CASE STUDY BRAZIL • In general, auditing activity will require a work visa in Brazil. For instance, if the foreign national undertakes specialized work in the audit area, assisting in a project that includes technical work assistance with inspection or audit control, that would be considered work and a work visa could be obtained for a period of one year or 90 days, depending on the case. • However, foreign nationals simply attending an audit meeting with the Brazilian company, and who will not be working directly with the company’s financial system, may do so on business visitor status. INDIA • Auditing activities that include reviewing, overlooking, or managing an audit as part of a work assignment will trigger the need for an employment visa. CHINA • Duration of stay and location of employment contract is more relevant in this case than activity to be performed. As noted in this article, a foreign national holding a signed employment contract with a corporation outside China, who is paid from outside China and will be present in China for less than three months, will be considered a business visitor. SWITZERLAND • Auditing is viewed as work and does not fall under the category of a business visa. It does not matter what type or level of audit is involved. • However, if the auditing is limited to a period of up to eight days in a calendar year, then a work permit is not required. • However, foreign nationals simply attending an audit meeting with the Swiss company, and who will not be working directly with the company’s financial system, may do so on business visitor status. RUSSIA • It is very hard to give a 100 percent definite answer on what type of visa would be suitable for an audit activity, but for an auditing activity that takes no longer than two weeks, a business visa is recommended most frequently. It would be advisable to limit the duration of the audit to two weeks if possible. 64 MOBILITY/MARCH 2011

Common Risk Areas for Extended Business Travelers Staying on home payroll is the most common area of risk for business travelers. Staying on home payroll is no indication that immigration approval will not be required. In many countries, payroll location affects the immigration process, but it is extremely rare for home payroll to mean that no work permit is required. Another area of risk is that of assignments lasting fewer than 90 days. Many assignments of less than 90 days are tax exempt. This does not mean that they are immigration exempt. In many countries, working for even one day in the host location office will trigger the need for work approval and an immigration application. A third area of concern is that of client site visits only. Client site visits will complicate the immigration process but they will not mean that you do not need to apply for immigration approval. Your employees working at a client site are still working, and may still need immigration work approval. Pre-assignment “look see” trips are another cause for concern. It is common for international assignees to visit a host location before they move there. Families want to look at houses; parents want to investigate schools. Often, these trips can be extended, as the employee makes a series of visits to the office—and can stretch out into, essentially, a period of employment in the host location. Then there is the “meetings only” type of travel. Business trips often are defined as “meetings only”—but what does this really mean? In today’s world, many people have fulltime jobs that are simply a series of meetings, telephone calls, and fol-


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low-up e-mails. It often is very hard to draw a line between a business meeting that comes within the definition of a business trip, and a business meeting that is part of a series of meetings, which together can be considered as employment—or work—in the host location. Another area of risk is that of training. “Training” is a pretty broad description, covering receiving training, giving training, classroom training, hands-on training, installation and training on equipment provided by a supplier, and so on. The type of training to be done—the actual activities carried out—will determine the need, or not, for work authorization. Many times, training cannot be carried out under business visitor status. What about business travelers who do not require entry visas? A “visa waiver” is the term often used to describe an exemption from the requirement to obtain an entry visa. For example, U.S. nationals do not need to obtain an entry visa to visit the UK—by simply presenting their passport to the immigration officer at the port of entry (i.e., the airport),

they can be granted 180 days leave to enter as a visitor. The key word here is visitor—visa waiver rules typically apply to short-term visits for tourism or business; not for employment. A “visa waiver” national will be as guilty of non-compliance as a “visa national” if he or she is found working without the necessary immigration approval. Finally, there is the effect of mixing and matching legislation. There is no hard and fast rule for what is considered “business” and what is considered “work.” Each country has its own legislation and its own interpretation. Much of the time written legislation is unavailable, and immigration attorneys and consultants must use their own experience and discretion to guide their clients. It is not possible to use one country’s rules to guess another country’s risks—if something is permitted in the United States, that is not to say it will be acceptable in Russia.

Country-specific Examples Following are examples of different practices from several countries to

illustrate how widely immigration policies in this area vary. India. Until October 2009, it was common practice for companies to apply for business visas for short-term assignees or project workers. Indian embassies and consulates around the world often issued business visas for this type of activity without question. In October 2009, the Ministry of Home Affairs decided to put a stop to this, and took the unusual step of issuing a “Frequently Asked Questions” (FAQ) sheet (http://mha.nic.in/ pdfs/work_visa_faq.pdf), which clearly listed acceptable activities under a business visa, plus activities that trigger the need for an employment visa. Project/contract work, even if for short duration and regardless of payroll location, was placed firmly in the “employment visa” camp. Since the issuance of the first “FAQ” sheet in October 2009, several new versions have been published, with changes and tweaks made each time to the lists of acceptable activities under a business visa or employment visa. The most recent change, in December 2010, was the introduction of project

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ON THE WEB For more information regarding short-term business travelers, please visit www.WorldwideERC.org. Reality in the Workplace: Long-distance Commuting www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1210-Barlow.aspx Split-screen Life: an Intimate Look at International Short-term Assignments and Extended Business Travel www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/0308copeland.aspx The Rise of Alternative Assignments  www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1110-Cadden.aspx

visas, specifically for employers in the power and steel sectors to bring in foreign nationals to execute shortterm projects or contracts. Indian immigration rules are still changing and the authors advise companies to seek professional guidance when applying for Indian visas. China. China’s Notice on Certain Matters Regarding the Implementation of Regulations on the Management of Employment of Foreigners in China, issued by the General Office of the Labor Department on April 19, 1996, states that all foreigners with employment contracts with People’s Republic of China (PRC) entities are required to obtain work permits regardless of length of stay or activity in China. However, the same notice states that foreigners whose employment contracts are with an entity outside China and sent on short-term assignment (less than three months) are not required to obtain work permits and may enter on business visas alone. Mexico. On May 1, 2010, Mexico introduced a new Visa Manual, which had a significant impact on immigration management for short-term assignments. The Visa Manual made allowance for foreigners remaining on home payroll and contract, and who are from “non-restricted” (i.e., visa waiver) countries to perform shortterm work activities for up to 180 66 MOBILITY/MARCH 2011

days without the need to obtain a visa or a work permit. United Kingdom. The UK Border Agency provides a list of permissible activities for business visitors and states that, depending on activities, “some business visitors may need to qualify under the employment rules.” It also lists certain definite criteria for business visitors— that they should be based abroad and not intend to transfer their base to the UK, even temporarily; and • receive their salary from abroad, although it is acceptable for them to receive reasonable travel and subsistence expenses while in the UK; • not be involved in selling goods or services direct to members of the public; • not be replacing someone in the UK, including for temporary leave periods; and • not be coming to the UK do work placements or internships. Poland. Poland has a work permit waiver in place for short-term assignments. For short-term, intra-company transfer (In Poland, the definition of an “intra-company transfer,” or “ICT” assignment is a transfer of an employee overseas where the home [sending] and host [receiving] entity are linked by common ownership.) assignments of less than 30 days in a 12-month period, the requirement to have a work permit is waived. “Visa

waiver” nationals (i.e., nationals who do not need visas to enter Poland or the rest of the Schengen area for business or tourism purposes) may enter Poland for work for up to 30 days in a 12-month period as an intra-company transferee without making any application at all; “visa nationals” are required to obtain a visa in advance of travel. In addition, nationals of some countries to the immediate east of Poland (Ukraine, Russia, Belarus, Georgia, Moldova) are exempt from the work permit for six months within one year but still require a certificate of exemption, a work visa, and a residence permit.

Managing Immigration Managing immigration for extended business travelers, or short-term assignees, is no picnic if the company has locations in several jurisdictions. Immigration legislation varies widely from country to country, and activities that are considered work permitexempt in one jurisdiction may trigger the need for time-consuming and administrative immigration applications in another country. Too many companies make assumptions about visas or permits for short-term assignments, or simply overlook immigration requirements, and thereby place themselves and their employees at risk. We advise that companies sending employees to a foreign country for any activity over and above plain, simple business meetings should seek expert guidance. Sophy King is director, knowledge management, Pro-Link GLOBAL, London, United Kingdom. She can be reached at +44 (0) 203 004 9438 or e-mail sophy.king@pro-linkglobal.com. Lavinia Pascariu is an attorney specializing in global immigration for Pro-Link GLOBAL, St. Louis, MO. She can be reached at +1 941 462 2732 or e-mail lavinia.pascariu@pro-linkglobal.com.


Heineck new_MOBILITY 2/1/11 12:36 PM Page 1

The Secret Workforce Hidden Talent, Hidden Savings As the economy recovers, employers are looking for ways to remain fiscally responsible while remaining competitive in the talent marketplace. One way to cover both bases, says Heineck, is to tap into “The Secret Workforce.”

BY JILL HEINECK, CRP

I

t is really not a secret, but you would think that it is. When was the last time you heard your clients or colleagues talking about the last hire they made being an armed services veteran? Few HR practitioners and mobility professionals are aware of the cost savings and transferable skills associated with hiring transitioning military personnel. Recently, I have begun to hear more and more about employers tapping into the widely uncharted territory of hiring military veterans. I am unsure why it has taken employers this long to embrace this opportunity, but let’s face it: where else can you find welltrained, highly skilled, team-oriented talent who already possess a strong work ethic and a healthy respect for authority?

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Last summer, I had the opportunity to attend an event in Atlanta, GA, designed to enlighten senior level talent acquisition and management teams of large Atlanta-based corporations about this “secret” sector of super-skilled talent. Presenting at this event was Chad Sowash, vice president of business development for Direct Employers, a nonprofit HR consortium of leading global employers, based in Indianapolis, IN, that was formed to improve labor market efficiency through the sharing of best practices. “What is eye-opening for our member companies,” said Sowash, “is that we push their job openings to hundreds of corporate job sites and job boards, including state and local agencies.” Sowash, himself a veteran with four years in the Army and 16 years in the Army Reserve, said companies are consulting with Direct Employers, especially when looking to diversify their workforce, and to understand the limitations when doing so. “A member company [recently] hired 100 vets, but could not hire more than that due to the possibility of them being deployed,” said Sowash, “otherwise a good chunk of their workforce would be gone at one time.” This is one way Sowash and his company helps organizations. There is another great reason to consider hiring vets. Targeting veterans terminating active duty military service may result in serious cost savings to your organization. According to Lisa Rosser, founder of The Value of A Veteran, a consulting firm based in Herndon, VA, that advises and trains organizations on the value and hidden benefits of hiring veterans, service members separating from active military duty (because of retire68 MOBILITY/MARCH 2011

ment or end of their contracted service commitment) receive a one-time, government-paid relocation to anywhere in the United States. “Over 165,000 service members separate from active military duty [i.e., not National Guard or Reserve duty] each year, and it’s a little known fact that each and every one of them is entitled to a free move.” Rosser adds, “this means you can interview a service member at a military job fair in San Diego, CA, and offer him a position based in Pittsburgh, PA. The government is going to pay to move him (and his family) to Pittsburgh. In this scenario, the company gets skilled labor in a location where it is needed and saves on relocation costs, and the veteran gets a civilian job and a free move on Uncle Sam.” It is important to note that the veteran has up to one year from the date of separation to take advantage of this benefit. With this in mind, Rosser suggests building a pipeline of military candidates with the right skill sets. If a job is a good fit and at a great pay rate, they might be willing to use their final move benefit to relocate to the job location. This involves planning at least one to two years out, at minimum, and the understanding that if all the pieces fit together (the candidate is indeed the right person for the job) it still is up to the veteran to use his or her mobility benefits provided by the government. “Roughly half of the over 165,000 veterans separating annually from military service are coming off of active duty tours,” said Rosser, so it is an incredible source of talent that can be mobilized anywhere in the United States. Rosser shared another veteran hiring secret. A good percentage of active duty service members sta-


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. . . service members separate from active military duty (i.e., not National Guard or Reserve duty) each year, and it's a little known fact that each and every one of them is entitled to a free move.” tioned in Europe, Asia, the Middle East, South America and Africa, are within one year of separating from the military and are planning their transition from active duty into civilian jobs. “This overseas-stationed sub-population within the military gets ignored, mostly because companies and recruiters either haven’t figured out they exist, and/or how to reach them.” Rosser herself is a great example of veteran skill sets transferring to corporate America. Her military career includes 10 years of active Army duty and 11 years of service with the Army Reserve, including two and a half years of mobilization after the events of 9-11. During her active duty, she participated in three major engagements (Gulf War, Somalia, and Bosnia). Her Army Reserve career focused on operations and performance management, recruiting, placement, training, and skills development. Rosser's civilian career capitalized on her HR and training military experiences into an eight-year career at Accenture, Atlanta, GA, and Reston, VA. From a mobility perspective, hiring veterans who have not yet used their relocation benefits from Uncle Sam could be a huge win/win for both the company and the talent, especially if the company has limited relocation benefits. In this scenario, the company can combine the veteran’s government benefits with the company-paid relocation resources to round out a complete relocation package.

Veterans can exercise their relocation benefit any time within one year after the date of separation. Many military members begin their job search well in advance of their last day of service. Rosser encourages companies to look at the skills and competencies fully, not just their job titles and/or organization. “These aren’t just infantry folks—among them are computer programmers, highly-skilled engineers, nurses, and health care professionals,” she said. So take a good look at your workforce. Review your talent acquisition plan. Where can your organization benefit by employing a veteran, maximizing his or her talents, all while giving him or her the opportunity to transition back into corporate America? Wouldn’t you agree that is our duty to consider all talent qualified for open positions? Be all you can be, and give our military veterans a fighting chance. Jill Heineck, CRP, is the founder and chief [relocation] officer of Focus Relocation LLC, Atlanta, GA. She can be reached at +1 877 550 7356 or e-mail jill@focusrelocation.com. MOBILITY/MARCH 2011 69


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D E S T I N A T I O N

P R O F I L E :

Shanghai, China BY ALEXANDRA WASSENHOVEN Once a fishing and textiles town on the mouth of the Yangtze River, Shanghai, People’s Republic of China, now is the largest cargo port in the world and a city of significant influence in international business. Wassenhoven offers an overview of relocating to Shanghai, characterizing its history and culture and discussing its entry process, housing considerations, and personal and professional concerns.

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hina is indisputably one of the world’s top economic superpowers, home to 1.5 billion people inhabiting nearly 10 million square kilometers. Its economy is vast and expanding rapidly, and out of all its vibrant, vigorous cities, Shanghai is the most competitive— seemingly driven to establish itself as the financial center of the new Chinese economic empire. While Beijing has remained the seat of administrative authority and the focus of international attention, Shanghai is the true industrial capital and also is rapidly becoming the chief financial hub. Nearly half a million expatriates now call Shanghai home, a city that has proven willing to embrace the latest innovations in business technology and actively

court international businesses to settle in its expanding financial districts. In 2010, the city spent $45 billion on hosting the World Expo and upgrading its already world-class transport and data infrastructure, placing it right on the cutting edge of modern business environments.

History and Culture “Shanghai” literally translates as “on the sea” and most of the city is only a few meters above the (thankfully calm) East China Sea, situated right at the mouth of the Yangtze Delta. It is the second-most populous city in all of China, with 19 million inhabitants within the municipality, but has only been a major metropolis for a few decades, meaning that there is not a great deal of historical heritage around, even in the older parts

of town. Shanghai almost seems to run on an obsession with everything being newer, shinier, and faster on a day-by-day basis, and while there are some excellent museums, temples, and gardens, the focus is undoubtedly on progress and vibrant modernity. Shanghai had started to establish itself as being more than just a gateway into the Chinese interior by the end of the 1920s, earning a reputation as “The Paris of the East.” The outbreak of World War II and the subsequent rise of early Communism curtailed its progress until the mid1990s, when a new wave of development and construction followed the emergence of the “tiger economies.”

Getting a Visa Visa procedures vary from city to city in China, but thankfully the forMOBILITY/MARCH 2011 71


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months. The employee and a representative of the employer will have to visit the local police station within 24 hours to register confirmation of accommodation, as well as a certificate of a medical checkup at an authorized facility, without which a Temporary Residence Permit will not be issued. The Permit will be made valid for the duration of the employee’s contract, which typically is 12 months. Make sure documents are current and stored somewhere handy, as the Public Security Bureau makes frequent checks in residential areas.

Accommodations and Living

malities for entry via Shanghai are straightforward because of the system being geared toward handling large volumes of foreigners. In other parts of China, the entry process can be a nightmare of unreachable officials, obscure documentation, and staff that verge on the openly hostile. Although the visa process for Shanghai still is quite rigorous, it is comparatively clear-cut with a high degree of procedural transparency. The documentation requirements to enter China on a work visa are significant, but companies based in Shanghai have special dispensation to conduct a great deal of the paperwork on your behalf. Your employer will put together a fairly comprehensive bundle of documents for you, which, for certain types of visa such 72 MOBILITY/MARCH 20114 MOBILITY/MARCH 2011

as a “legal representative of a foreign company,” includes everything down to your résumé, the company’s shareholder list, and even its articles of incorporation. At your end, you will have to ensure you have a certificate proving that you have a job waiting for you in Shanghai, including a section attesting that you have skills that the company could not reasonably be expected to find locally, and start the application process in person at a Chinese embassy in your home country, as applications by mail are not permissible. Visas for spouses and dependents can be made at the same time and will require additional documents such as marriage certificates, birth certificates, and the like. Your initial access will be under a single-entry Z visa, valid for three

As Shanghai modernized and spread, it created many attractive suburban areas that have proven popular with the growing expatriate community. Although some commentators have criticized the new suburban regions for no longer retaining a Chinese identity, it has provided an ideal environment for international workers to set up family homes and establish groups and communities. While the pace and vibrancy of the city remains typically Chinese, the local culture has become so cosmopolitan that expatriates are able to integrate with far less effort than in other slightly more daunting urban environments. Beijing has on average more affordable housing; Shanghai has such a diverse range of accommodation grades that expatriates are likely to be able to find a price point that suits them. Many of the inbound expatriates have living allowances provided by their employers, but increasingly are relocating without such benefits. Housing that frequently exceeds modern Western standards is being constructed or renovated in nearly


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rience of many expatriates that speaking even a little Chinese around Shanghai will add greatly to your experience of local life and the convenience of getting around.

Living Locally

every section of the city. Pudong is a rising area with some of the best deals by price and by standard, particularly the compound villas, proving itself popular among expatriate families with children. Singles and young couples often prefer to live downtown on the Puxi side in the French Concession, Luwan, and Jingan districts. Expatriates looking for a property definitely will need to retain the services of a local agent unless their Mandarin is particularly good. Official documentation, including employment and accommodation contracts, must, by law, be in Chinese.

by your employer, working out to be around 7 percent of the employee’s monthly salary, matched by a 20 percent contribution by the employer. Two of the most important elements of the local tax system for expatriates are the 183- and 90-day rules. If you spend more than 183 days in China in any calendar year, then you will be liable to pay individual income tax on all income you make that year from activities in China. Should you stay in China for more than five years without a cumulative absence of 90 days each year, then you will become liable for tax on all worldwide income without limitation as to its source.

Tax and Earning

Language

Tax throughout China is paid progressively after an initial exemption of CNY4,800—around $720 at a 0.15 exchange rate. Income tax rates start at 5 percent on earnings above the exemption allowance, rising in small increments up to 45 percent for monthly salaries in excess of $15,000. Most capital gains tax will be charged a flat 20 percent rate. Employers in Shanghai are obligated to submit monthly reports on their employees’ wages, complete with photocopies of passports and records of tax deducted at source. Social Security also will be deducted

Aside from some issues regarding state-mandated documentation, expatriates typically do not encounter significant language barrier problems. While English is spoken by less than 1 percent of the population overall, business and store-owners in the main expatriate and financial areas of the city often will speak enough English (or be familiar enough with what expatriates want) for you to get by. Shanghai has its own particular dialect of Mandarin (Shang hai hua), and learning just a few words will go a long way to generating goodwill with the locals. It has been the expe-

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Shanghai has reached a point of cosmopolitan development that expatriates often will be able to choose how much local flavor enters their day-to-day living. It is entirely possible within the expatriate enclaves to eat Western food, watch Western TV, hang out in brand-name coffee shops, and listen to Anglophone radio throughout the day without experiencing much in the way of Chinese culture. However, anyone thinking of making the move is encouraged to engage with local customs and activities, even if it is to no greater extent than partaking of the excellent local food. Although it is not unheard of for shop vendors and café owners to add a little bit to the bill when dealing with expatriates, it is rarely extortionate, and the general cost of restaurants and of groceries is significantly below that of Western European norms. A visible and vigilant police force in the urban areas also means that expatriates feel comfortable in exploring a much larger area of the city than can be the case in less-policed metropolises.

Home Comforts Many items to bring or leave behind may be obvious when relocating. Do not bother bringing all your electronic goods, as they often are cheaper to buy locally. There are some less apparent categories, such as clothes; if you are of a larger body type by Western standards, then expect finding clothes that fit to be a tricky proposition. Anyone pushing 6


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On the Web For further information about relocating to Shanghai, please visit www.WorldwideERC.org An Overview of Expatriate Housing in China  www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/ 1010-Chua.aspx Immigration Spotlight: Shanghai, China www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/ 0308elliot.aspx Pajamas, Foot Massages, and Dogs in Handbags: the Lighter Side of Shanghai  www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/ 1108crockett.aspx

feet tall will definitely want to stock up on clothes before traveling. Cheap furniture is readily available, and assignees should consider only bringing large household items if they are of particular sentimental or practical value. While accommodation and shopping opportunities exist to suit nearly every budget, the cost of labor is cheap, so some previously prohibitively expensive luxuries now are within reach. Many expatriate households employ a nanny, driver, or a maid (called an ayi) and more are able to afford cleaning or laundry services.

Health Shanghai has a reputation for having the best medical facilities in all mainland China. Western-style clinics have been set up especially to serve the ever-expanding expatriate community. Although Chinese law does not permit Western clinics to offer the entire range of medical care and treatments, all Western clinics are networked with reputable alternative public hospitals. Expatriates are advised to ensure that their insurance covers treatment in the clinic of their choice.

Education Thanks to the size of the expatriate community in Shanghai, there is a 76 MOBILITY/MARCH 2011

wide selection of international schools in the metropolitan area. Schools are available teaching the International Baccalaureate programs, the American curriculum, and the English National curriculum. In keeping with the attitude of the rest of the city, these schools have some of the most advanced teaching facilities and technologies anywhere in the world. As part of the push to make the city ever more attractive to expatriates, Chinese authorities have opened up some of the local Chinese schools to expatriate children, making Shanghai a great destination for assignees with families but without educational allowances. Not only are public schools significantly cheaper options, they also provide an opportunity to completely immerse children in the local culture and language for families who are considering a longer-term relocation.

Bringing Your Pets to Shanghai In general, only cats and dogs are allowed into China, and additional restrictions can be imposed by the local city authority. In Shanghai, a license will be required to keep a dog and will cost you about $150 annually. While Shanghai is a friendly city for well-behaved pets and pet owners, you should allow a full month to

make sure all the requisite paperwork clears before transportation. Large dogs are not allowed in central Shanghai, and patrols will impound animals that exceed acceptable size limits. Please check the eligibility of your dog before transportation.

Items of Note The major cities of China can be crowded by the standards of even the largest Western metropolis. The pace of life and street traffic, combined with Shanghai’s population density, can be overwhelming, so a visit is strongly recommended as a trial experience. Air pollution also is mentioned frequently by expatriates. The title of the 2010 Expo was “Better City, Better Life,” which has become the butt of several jokes because of the significant spike in air pollution that occurred during its creation. It is common to see commuters wearing surgical and filtration masks while traveling to work. If air quality is a concern, avoid accommodation close to the elevated freeways, such as the Yan An Xi Road, Xintiandi, and the Nanjing West Road. The widespread construction work across the city results in airborne dust, and expatriates looking to escape the worst of it are advised to look for already established neighborhoods, apartments on higher floors, and investing in air conditioners with filtration systems. While infrastructure improvement is ongoing, generally received wisdom advises not to drink tap water. It is, however, considered fine for bathing, utilities, brushing teeth, and even for cooking. Alexandra Wassenhoven is relocations manager—Asia, for Move One, Shanghai, China. She can be reached at+86 21 5212 3989 ext. 109 or e-mail alexandra.wassenhoven@moveoneinc.com.


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Landlord THE ACCIDENTAL

BY VALERIE A. FORTIER, CRP Fortier offers an overview of a fledgling scenario in the real estate market—that of the “Accidental Landlord”—and describes how it is affecting the market for assignees moving out of the Atlanta, GA, marketplace.

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he current real estate market has created a new category of homeowner transferee: the “Accidental Landlord.” Most homeowners have not considered renting or leasing their properties. They simply expect to sell one home and move directly into another, occasionally facing short-term storage of household goods. However, today the BMA report and the appraisal bring home a hard truth—many homeowners simply cannot afford to sell their homes at all. Although this may be a “temporary” situation, it presents challenges to the transferred homeowner and is very real to all of us in the relocation industry. How does the rental of a transferee’s home affect their move to the new location? Factors for the relocation counselors and real estate professionals to consider may vary widely from one location to another, but here are a few points to consider: • When a homeowner leases out his or her property, the home is no longer the primary residence. It is now considered an investor-owned property. • Homeowner insurance policy expenses will be higher for an investor-owned property. 78 MOBILITY/MARCH 2011


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• Securing a mortgage on a new residence and/or refinancing the old residence may present additional complications. Transferees may need to consider if they will be able to purchase a home in the new location while they own another home. • Homeowner association restrictions may prevent or limit the lease or rental of the transferee’s current residence. Typically, the income from the rental or lease will help—but not cover—the entire cost of the principal, interest, title insurance, PITI, and maintenance of the home. However, if the transferee is renting in the new city, the costs there may be lower than homeownership in the destination city. The combined effect of the received rent and lowered costs for the new residence may even out the transferee’s cash flow. But now we have two residences in a rental mode—the transferee will not be a buyer. These homes are now part of the “shadow inventory.”

The Corporate Role As there are many sources of information readily available, transferees often research their upcoming moves using such sources as Trulia, Zillow, Realtor.Com, and community chambers of commerce for cost-of-living comparisons. By doing so, homeowners can identify the need to lease their homes early on in the process. Jan LeQuier, CRP, director of relocation services for The Home Depot, Atlanta, GA, remarks that many transferees are now requesting assistance to rent out their current homes. “It is difficult to find such assistance for homeowners, as most real estate brokers are not set up to provide this type of service.” 80 MOBILITY/MARCH 2011


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Predetermining a transferee’s financial position to sell his or her home is critical. To facilitate a smooth transition from origin city to destination requires that all parties work together to prevent wasted time, relieve anxiety, and allow the transferee to make a well-informed decision about the move. The best approach to ensuring a satisfactory move for both the employer and the transferee requires a new mindset. “I don’t think anything makes relocating during this market ‘easy,’ however, having this type of information allows the associate to make an informed decision,” LeQuier said. According to The Home Depot’s recent experiences with its transferees, approximately 19 percent of the relocating associates have chosen not to sell their homes in the origin city. Sixteen percent have decided to rent the homes instead. In the destination city, approximately 44 percent of the transferred associates who are homeowners at origin have decided not to purchase immediately in the new location.

The Real Estate Broker When the BMA and general market trends do not support a realistic sales price for a transferee, it is time for all parties to think “outside the box.” Astute, well-trained listing agents recognize that a rented home does not generate a sales commission. Yet this same home can represent “deferred” income from the sale when the market improves. Monitoring the market changes, advising the transferee with periodic reports, and keeping in touch will provide a sense of confidence and keep the relationship alive. With no real estate sales, commissions are not earned. Payment for the

BMA on the origin side and rental assistance fees paid to the agent on the destination side can help to compensate the real estate professionals for their efforts. When a real estate agent finds a tenant for the transferee’s current home, there is often a small fee paid. The overall impact to brokers and the relocation departments is diminished income. Dana Eskridge, CRP, vice president of relocation & corporate service at Better Homes and Gardens Real Estate Metro Brokers in Atlanta, stresses that “maintaining an ongoing relationship with the transferee throughout the lease period may result in listing the property for sale when the market improves. This is crucial to provide for future income from these sales. It also creates a more comfortable mindset for the transferee and family, allowing them to make a transition to the new city.” Eskridge adds, “although there is a great need for property management, most traditional real estate companies in the Atlanta marketplace do not offer this on a large scale. With the exception of our corporate inventory listings, we refer the homeowners in need to a fullservice property management company that has dedicated staff and capital to this purpose.”

The Property Manager Rental assistance in the destination city always has been available; however, managing the home left behind is a need that was created by the housing bubble. The transferee must weigh the cost and benefits of a property management company versus independently renting out the home. MOBILITY/MARCH 2011 81


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In the Greater Atlanta area, several property management firms are in operation. Scott Jacques, the marketing director for Crown Realty and Management, describes the process. “A full-service property management company offers many programs that may include advertising the property for lease, screening and tenant placement, collection of security deposits, maintenance of escrow accounts, rent collection, recordkeeping, and maintenance and repairs to the property.” Depending on the level of service the homeowner requires, assistance is available should a tenant not pay and the eviction process will be handled. Local ordinances may vary on issues such as the notice to vacate, both from the tenant to the landlord and

likewise from the landlord to the tenant. Another important service to the landlord is the financial accounting for the property’s cash flow. This will be very valuable at tax time or when an owner chooses to sell or refinance the home. When this home is offered for sale, having a record of the potential rental income may help to attract an investor buyer. A property management company will offer this service. Without the services of a property management company, the “Accidental Landlord” must consider how to obtain a credit check and screen potential tenants. The lease terms will need to be worked out, addressing who pays for cable, utilities, and maintenance. Typically,

escrow accounts must be established for the security deposit. Collection of the rent must be arranged. When a landlord is local to the property, it is easier to manage on one’s own. A long-distance landlord faces more challenges. According to Jacques, in the Atlanta area during the past three years, there has been a great increase in the number of homeowners who are now leasing out their homes. Recent trends show that more than 80 percent of the homeowners who are currently leasing out their homes are doing so because their homes do not sell. This is in contrast to the years prior to 2006, where only 25 to 30 percent of the leased homes were homeowners rather than investors. Once the market improves, most of the “non-investor” owners will market their homes for sale. A small number of people may choose to continue to lease the home as a secondary source of income.

Financial and Tax Concerns When a homeowner becomes a landlord, new tax reporting requirements may apply. The landlord must account for rental income and for the property expenses that are used to offset that income. A tax preparer may need to be consulted. Judy Jones, vice president of Metro Home Mortgage, an affiliate of Wells Fargo Mortgage, in Atlanta, remarks that most lenders and loan programs will not allow the current mortgage payment to be offset by rent for qualifying purposes until there is at least one year of continuous rental history for that property. This affects the transferee who has secured a lease recently on his or her current home and is trying to qualify 82 MOBILITY/MARCH 2011


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for a mortgage in the new location. Jones adds, “for the buyer to qualify for a mortgage with the new house payment and the old house payment, it will be very, very difficult to do.” Typically, when a borrower has an existing mortgage on another property, the documentation required for a mortgage application on a new home includes the “usual” normal paperwork, plus a copy of a two-year lease on the current home, a 12month history of rent receipts, and tax returns that include this rental income. On occasion, a lender may accept a one-year lease with the history of rental payments received, along with a review of the credit history of the tenant. Refinancing also is a challenge, as the lender now will consider the home to be an investment property. To refinance, a minimum of 25 percent equity will be required. Modifying the loan to reduce the payment may not be allowed by the lender, as the home no longer is considered to be a primary residence. A home that is leased out also means that the homeowner obtains property insurance as an investor owner. There are higher liability limits and increased costs because of the increased risk of claims.

the “Accidental Landlord,” the transition still can be a smooth one. Risk versus benefit is a concern for any transferee considering a job in a new location. With the prospects of becoming an “Accidental Landlord,” this becomes a very difficult decision. Our industry needs to consider what

support we can give and what information is available to allow the transferee to move forward. The move then will be a success. Valerie A. Fortier, CRP, is director, corporate listings, for Better Homes & Gardens Real Estate Metro Brokers, Atlanta, GA. She can be reached at +1 404 843 2500 or e-mail valerie.fortier@metrobrokers.com.

Conclusion The current market has put a few new “roadblocks” in the way of reaching the goal to provide a smooth transition for the origin city to the destination city. When a transferee cannot sell his or her current home there is no finite break between old and new locations. This “interim” status will prolong the stress and distraction for the whole family. When the needs are met to assist MOBILITY/MARCH 2011 83


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Furniture Rental’s Increasing Role and Benefits in Global Relocations

BY KENNETH S. BARRON, GMS With an increase in international employee transfers, many organizations and their employees are renting apartments and homes as a cost-effective and convenient alternative, especially in today’s challenging economy. Barron writes that an increasing number of employers are incorporating

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furniture and home accessory rental into their corporate mobility policies as a core service offering. mployers seizing new business opportunities in the global marketplace rely on rapid recruitment and deployment of employees and project teams. In today’s global economic environment, the stakes are high. Failed deployments are costly, and few experiences can be more stressful for an employee and family than relocating to a new country. Arriving to a home already arranged with rental furnishings, appliances, housewares, televisions, and other equipment eases the transition, ensuring employees are

productive with work from the first day on the job. If household goods are to be shipped, companies also are turning to furniture rental in the origin location to begin the shipping process as quickly as possible and stage the home for sale, if required. The number of international relocations continues to rise with the expansion of the global enterprise, growing international business relationships, and a mobile, multicultural workforce. Yet, finding and retaining the best employees is more challenging today than ever before, and relocating employees vastly increases the costs and challenges. In addition, the duration of a typical international assignment is decreasing, which influences the MOBILITY/MARCH 2011 85


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support employees expect from companies. In previous decades, when employees took an international assignment for three years or more, they routinely sought permanent housing. Today, in many cases employees on international assign-

ment and extended business travel are not abroad long enough to have the same housing requirements. Economic instability and societal changes also are driving employee preference to rent rather than purchase a home. The continuing instability in the housing market makes

many employees reluctant or unable to relocate as they struggle to sell their homes or secure employment for spouses and partners in new locations. The high cost of housing makes purchasing a house impractical for many young employees. In addition, homeownership inhibits the mobile lifestyle many young employees prefer. For assignments ranging from six months to two years, unfurnished apartments or rental houses offer employees the ability to select a neighborhood that suits their lifestyle and creates a “home away from home� that suits their individual needs and tastes as well as their pocketbooks. Unfurnished apartments or houses also are more cost effective than hotels and, in many cases, corporate housing or serviced apartments. In addition, employees have greater privacy, independence, and overall convenience, including an often-cited benefit of employees being able to cook their meals. Furniture rental often eases the relocation stress for employees and families in transition, while also providing an alternative to the high cost of shipping furniture to support temporary assignments. It can eliminate the hassle of temporary living arrangements for the employee and the cost to the company for duplicate housing such as hotels in both the departure or destination locations. The strategy aids in cost containment for employers and accelerates the transition into a new home and location for employees.

Policy Considerations The design of relocation policies is as critical to effective relocation as services and administration. International assignments have many vari86 MOBILITY/MARCH 2011


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ables, requiring that policies be creative and flexible in each of their components. Variable factors that affect policy at every level include: family profile, departure location, destination country and its culture and language, corporate budgets, the next likely location of the employee, and the length of the assignment. Assignment length is a prime example of a variable factor affecting international policy design, especially regarding furniture and household goods decisions. For example, an employee on a short-term assignment (one year or less) would not ship household goods from Los Angeles, CA, to Tokyo, Japan. Unfurnished housing is usually available in the new destination, but the living space likely will

be smaller, making it impractical and cost-prohibitive to use furniture from the Los Angeles home. In addition to evaluating the costs of shipping household goods or renting furniture, decisions on household goods must take into account personal, cultural, functional, and practical factors. Intangible costs, such as making the transition as smooth as possible for employees and families, are considered primary corporate objectives to ensure a successful relocation. Furniture rental can help to alleviate some of these additional considerations including: Housing size. Living spaces vary significantly by country and city. Locations with high population density typically have smaller living spaces.

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• Is the furniture being shipped functional in the new space? • Is there going to be too much furniture or not enough furniture? • Should only personal effects be moved? • Should all or a portion of the furniture be shipped with the remainder stored in the origin location? • Should all goods be shipped and a portion used in the new home and the remainder stored in the destination location? Culture. Assimilation into the culture and experiencing the lifestyle of the new location is important to the success of the employee and family’s relocation experience. • Would the family be better served with furniture reflecting the local culture?

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• Should personal items be airshipped (for example, 1,000 pounds) or enough to satisfy personal “comfort” needs? Temporary lodging. Renting furniture can eliminate the high cost of temporary accommodations. • Would the employee and family have an easier transition without temporary living? For example, if the new home is selected and is available for immediately occupancy, can it be furnished to avoid incurring duplicate housing costs while waiting for shipped furnishings?

Cost Analysis Each assignment requires a cost analysis incorporating all alternatives and cost components, including shipping, storage, rental furniture, hous-


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ing options, and the impact on other costs, such as temporary living. The cost of shipping household goods to and from global locations is expensive. Considering all the variables, renting furniture in the new location can generate significant savings. The break-even point for furniture rental in the new location and storing furniture in the originating location is typically achieved between the 30th and 36th month of assignment.

Relocation Policy Recommendations Relocation and rental experts can help in the cost calculations and provide services to assist companies in determining the best fit for corporate budgets and the well-being of employees and families during the assignment. In summary:

• Cost is only one factor in the household decision. • To meet cost and service objectives, additional factors must be considered, including: new location housing options and culture, employee satisfaction, and the possible need for temporary living. • International relocation policies should be redesigned to incorporate, in one section, all components affecting “the household” and to provide choices based on individual needs and requirements. • “The household” section should include all housing (both temporary and assignment) and household furnishings options. • The assignment and family details should then be incorporated and a “household solution” designed.

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• The “household solution” will, therefore, be an integrated and customized plan, maximizing the cost and service value of each housing and household furnishings alternative. A significant number of variables affect household and furnishings for international assignments. No one simple formula based on the weight of household goods and the length of the assignment can be an effective cost or service solution. These individual policy components and service options should be brought together into one integrated “household” policy section. This would recognize the effects temporary housing, shipment, storage, and rental furniture have on each other when attempting to meet corporate and employee cost and service objectives.

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As part of the design of “the household” solution, cost estimators should integrate all related cost factors and service options. Rental furniture has multiple applications as a core relocation policy service. It should be considered as an option to meet cost requirements or family needs and be included as part of each household planning and decision process. If it is integrated properly into “the household” policy service offerings and considered during the move planning process, it can potentially create significant savings and improve the service experience. Kenneth S. Barron, GMS, is managing director of global relocation and client services for CORT, a Berkshire Hathaway company, headquartered in Fairfax, VA. He can be reached at +1 617 212 0559 or e-mail ken.barron@cort.com.


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charismatic adaptable LEADERSHIP ACROSS CULTURES BY MICHELE BAR-PEREG AND ANN HOUSTON KELLEY

inspirational culturally sensitive 92 MOBILITY/MARCH 2011


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al

Bar-Pereg and Kelley examine the leadership criteria organizations maintain with regard to senior managers on international assignment, and offer advice on how organizations can use these leadership qualities to ensure both the success of the assignment as well as the organization’s long-term prosperity. eter F. Drucker, the “father of modern management,” said, “management is doing things right; leadership is doing the right things.” What criteria do companies examine when offering the role of a senior manager or top manager taking on an international assignment? The communication that occurs during the management of an expatriate workforce requires a strong awareness of other peoples’ cultural identities, offering resolutions to business-related challenges in an international environment. Leadership qualities often dovetail with the organizational culture of the company. When international leadership positions are considered, it is quite possible that one person cannot provide the necessary leadership requirements within company headquarters when operating in a multitude of locations. Managing leadership skills in a new international environment requires a certain optimism, curiosity about the new place, and an understanding of the countries’ history, politics, and position in the larger society. Initially, most companies look for leaders who will share their own ideals and philosophy and, therefore, more easily fit into these leadership posi-

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tions because they fit well into that particular culture. This comfortable, home-grown philosophy then gets thrown into jeopardy when an international assignment is offered. We assume there are some generic characteristics that will be important for an international senior manager to have. Notably empathy, openness, adaptability, independence, and charisma, which will not always work effectively in all cultures, so those attributes that may have helped the managers reach the top in their own headquarters have to be adapted. From talking with international HR managers, it is usually assumed that leaders who have lived in more than one location are automatically suitable for international leadership positions. This is not so. Simply selecting these managers on the basis of having lived abroad before is not a good predictor of future success. Life-changing experiences, whether in family or work, having a family, experiencing the death of a close relative, or simply reassessing what is important in their lives certainly will change the performance and attitude of an executive. Time also is needed to develop into new roles, especially those in leadership. Very few international companies offer their senior executives cross-cultural training or a supportive post-arrival relocation policy.

Often seen as “soft issues,” these important factors for gaining social competence and local adaptation are pushed aside. However, once such issues are tackled—which indeed do take a certain amount of time—the effectiveness of the new position will be improved.

Leading Across Cultures Samuel Johnson, a British author, once said, “integrity without knowledge is weak and useless, and knowledge without integrity is dangerous and dreadful.” “Noelle,” a newly arrived French general manager of an international American pharmaceutical company was at first very disappointed with a new position in the Netherlands. As a French woman, her culture had offered her seniority and equality that was not as common to Dutch women. She was thrown into the top job with seven local male senior executives and one Swedish female on the next rung below her. She was offered a short, two-day training on “Living with the Dutch,” which only tackled local customs and etiquette, and later she had to demand a personal coach to help her understand the behavior and often disruptive meetings she attended with her team. She looked to the Swedish woman as her only ally, which was not particularly what she MOBILITY/MARCH 2011 93


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On the Web For further resources on global leadership, please visit www.WorldwideERC.org Requirements for Global Leadership Success www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/3010-solomon.aspx Leadership in the Global Economy www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1107hall.aspx Raising the Bar: Leading Global, Virtual Teams www.WorldwideERC.org/Resources/MOBILITYarticles/Pages/1108cvitkovich.aspx

wanted to do, and she had to constantly be working out what the male team was thinking in order to define and agree on ongoing support for decisions and meeting of expectations. However, she had felt that she had a strong sense of her company’s world position, the products, what the company stood for, and where it was heading, which helped her enormously to find the balance between the activities that needed to be completed and the cultural differences of tackling daily activities. “Steven,” a senior manager in an American insurance group, moved from Boston, MA, to Frankfurt, Germany. What was missing for him in the beginning was a job support system. His safety net had been pulled away. He knew how to be a strong and effective leader back home in his branch office in his own city where he had lived almost all his life. Although the departing manager did meet Steven a few times and try to guide him through the local politics of the position, he was soon gone to a new job thousands of miles away and Steven felt that he had a limited window of time in which to ask questions. It is generally accepted that in the beginning of any relocation assignment, you do not even know the questions you need to ask. Leading teams across cultures is one of the biggest challenges in an effective assignment. Overseas experience teaches potential leaders patience and perseverance. Several 94 MOBILITY/MARCH 2011

common themes have emerged from working with senior managers filling leadership roles in Europe. As one senior executive from an international coffee company said, “it’s often not being able to see or even understand ideas coming from the local perspective.” Another American manager said that, “I am supposed to be culturally sensitive and adaptable but assume that I have to complete the assignment with my technical skills and knowledge, but honestly, I often feel out my depth in my new environment.”

Charisma Warren Bennis, a pioneer in leadership studies, and Burt Nanus, an expert on leadership, said, “charisma is the result of effective leadership, not the other way around.” As a leader, you will have to have an element that will inspire and motivate, this is sometimes called “charisma.” Charisma can manifest itself in an almost spiritual power or personal quality that gives an individual influence or authority over large numbers of people. Most people agree that it is about believing in one’s self and to project that onto others for either personal or non-personal gain. Charisma is a quality associated with leadership. Yet, in some societies, charisma will be viewed as arrogant and showing-off and is not the path to motivating or inspiring employees.

As well as having this quality called charisma, leaders also are being asked to be “inspirational” in today’s challenging economic times. “Inspirational leaders,” according to Rob Goffee and Gareth Jones in “Why Would Anyone Be Led By You?” selectively show their weaknesses; use their intuition to decide what to do when; show tough empathy; and reveal their unique differences. The weaknesses that they show should not be critical to the success of their jobs.

Nature Versus Nurture Joop Hartog, an economics professor at the University of Amsterdam, wrote eloquently on the subject of leadership. “Every job imposes certain requirements, you have to know what you do and how and when to do it, you can be taught the technical side by other people and build on this but you cannot learn true expertise from other people or experiences.” So obviously loving the job creates the focus and enthusiasm that gives you mastery over your peers. This passion should be seen, even in a new and foreign environment. So what about the age-old question of leadership nature versus nurture? During the short history of the science of leadership, the pendulum has swung back and forth between the beliefs that “leaders are born” versus “leaders can be grown.” Another important question is whether there is one best style of leadership. In trying to address the issues, look at what followers want from their leaders these days. According to Goffee and Jones, they want community, significance, excitement, authenticity, and to be part of a well-led team. According to The Conference


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Board’s executive summary of “Developing Business Leaders for 2010,” younger workers have a strong desire for challenging, meaningful work. They are less trustful of organizations and less willing to subordinate their interests to the interests of the firm. They are more concerned about work-life balance and they are less accepting of traditional hierarchy. There is a real search for authentic leadership. People are experiencing a significant loss of reality, a loss of meaning, a loss of community, and a loss of trust in society and its institutions. Authenticity is a quality that others must attribute to you. According to “Managing Authenticity: the Paradox of Great Leadership,” from Goffee and Jones, Leaders are being urged to get to know themselves better; get to know their colleagues better; and connect to know the organizational context more. To illustrate authenticity, just think back to the end of the Apartheid era in South Africa, when Nelson Mandela posed with P.W. Botha for a very important photograph that was symbolic of the deep need that the nation had to heal its differences. Inspirational leaders hold their people to high standards in a caring way. And finally, they reveal their unique differences. Think of the unique settings and clothing that Richard Branson has used to promote various parts of his business empire. So, let us look at our questions about leadership once again. Are leaders born or can they be grown? In practice, you may be born with some of the abilities to be a leader and then, through experience you

can develop and refine those abilities. Should leaders make use of one best style? The best leadership is situational. Successful leaders are able to use a range of leadership styles.

Striking a Balance One Dutch HR manager of an international furniture store said she believed that her leadership meant balancing positive business results by balancing peoples’ and a company’s needs for a better quality everyday life. “My leadership success is finally due to my co-workers,” she said. For her, leading her team was nothing without management and yet management skills mean nothing without leadership skills. In our relocation business, one always adapts to the behavior, bud-

gets, and style of our company clients. Sometimes we fit in so well with our company clients they want to recruit us away from our jobs, or they feel they are a good match with our working ways and we assist them to step over from HR into relocation. As business becomes more global, international leaders finally can be producing a new creative culture with an increased capability to be operational and successful in complex marketplaces. Michele Bar-Pereg is managing director of the Bar-Pereg Group, Amsterdam, the Netherlands, and a member of the MOBILITY Editorial Advisory Committe. She can be reached at 206722657 or e-mail michele@bar-pereg.com. Ann Houston Kelley is director of Nomadic Executive Development, Voorschoten, the Netherlands. She can be reached +31715618936 e-mail ann@annhoustonkelley.com.

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s an original pioneer of pre-decision involvement, Global Mobility Solutions knows putting in the extra effort early in the relocation process delivers quantifiable results for productivity and cost reduction. We have seen time and time again companies who utilize this program place employees that start work faster, stay longer, and fit the corporate culture better. Whether it is for a domestic move or a global assignment, implementing a pre-decision program into your current relocation package can help with recruiting efforts, reduce company costs, and place an employee faster. Our systems and processes—including high-touch customer service, policy expertise, benchmarking, and flexible reporting options—allow you to manage your employee relocation program with ease and efficiency. Your Transferee/Assignee enjoys: • Personal support and attention from global relocation industry professionals • Thorough orientation tours for their families, including school assistance, standard housing, recreation and cultural overviews • Expert counsel and assistance regarding all aspects and impacts of relocation before the relocation decision is determined • A dedicated consultant available to discuss any concerns they may have For over 23 years we have assisted clients with implementing cost-effective and competitive employee mobility programs.

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he “PLUS Experience” has been the focus of several industry discussions and articles. People wonder “…what is it about this global mobility company that makes them resonate so well with their clients and partners? How do they exceed expectations so frequently? And how do they go about preparing their exceptional employees for service?”

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RAC Report

Regional Market Summary: Greater Orlando, FL, Area (Orange and Seminole Counties)

I

n the Greater Orlando, FL, area, consisting of Orange and Seminole counties, we continue to see persistent high unemployment levels above 11 percent and continuing lowinterest rates in the 5 percent range. In January 2008, there was a 31month supply of inventory. For the past year and a half, we have seen more normal market levels with the current figure being in the six-month range. An inventory of six months’ supply is generally considered a more balanced market. Inventory levels are subject to change at any time primarily because of the number of unreleased distressed properties (shadow inventory) held by the banks. At the present time, we continue to have approximately two-thirds of sales in the short sale and bankowned categories. According to some experts, normal markets generally have less than 10 percent of all sales in the distressed category. This high percentage of distressed sales is putting downward pressure on prices. It goes without saying a key ingredient to this local market’s recovery will be a reduction in the bankowned and short sale inventory that we are presently struggling with.

112 MOBILITY/MARCH 2011

STATISTICAL SNAPSHOT TIME PERIOD

Unemployment Months of Supply Annualized Sales Volume Annualized Avg. Sale Price Average DOM

TODAY (2010)

1 YEAR AGO (2009)

CHANGE

11.9 6.3 28,602 $143,853 88

11.7 6.45 23,921 $161,018 97

+1.71% -2.33% +19.57% -10.66% -9.28%

The extended tax credits for both first-time and repeat buyers in the first part of 2010 was helpful to many buyers and sellers. There does not appear to be either a significant increase or decrease in prices due to these incentives, which remained stable for 2010 as a whole. They may have helped with the increased volume of sales we had overall for 2010, however. As shown in the statistical snapshot, the annualized average price for all types of sales (normal and distressed) for 2010 was $143,853. This figure was down 10 percent from the year before ($161,018), but did show a 20 percent increase in volume of sales for 2010 (28,602 homes versus 23,921). Tourism, hospitality, and entertainment remain base industries here. Major employers in the Greater Orlando Area include Walt Disney World, Universal Orlando, Sea World, the two hospital systems of Orlando Health and Florida Hospitals, and so forth. Medical city in southeast Orlando is in the early stages of development. It includes the new University of Central Florida’s College of Medicine, the Nemours Children’s Hospital, the M. D. Anderson Cancer Center, the Sanford

MARKET AT A GLANCE Economic Climate Medium New Construction Low REO Activity High Supply Medium Demand Low Market Direction Down Slightly Market Mood Average

Burnham Medical Research Institute, the Orlando VA Medical Center now under construction, and more. This Medical City in the Southeast quadrant will provide a stimulus to the Orlando economy. It is expected to create jobs and provide money for the local economy during the coming decade. Either or both the local light rail commuter train system for Orlando and/or the high speed train from Orlando to Tampa could materialize and develop during the next few years and provide further stimulus to the local economy. We all are waiting in anticipation for an improvement in real estate market conditions in the Greater Orlando area. The housing industry’s recovery here will depend on an economic recovery on both a national and local level. Ben M. Cole III, SRA, CRP, is with Ben M. Cole III, Inc., Maitland, FL. He can be reached at +1 407 628 2501 or e-mail bencole@rac.net. Sally A. Kuhn is with the Appraisal Office of Sally A. Kuhn, Inc., Orlando, FL. She can be reached at +1 407 948 2490 or e-mail SallyKuhn@RAC.net.


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