Managing the risks of modern mobility Rani Sakaya Johns Global Mobility Partner PwC Singapore Jod Gill Global Mobility Senior Manager PwC Singapore www.pwc.com
Managing the risks of modern mobility
Rani Sakaya JohnsGlobal Mobility PartnerPwC Singapore
Jod GillGlobal Mobility Senior Manager PwC Singapore
www.pwc.com
PwC
Discussion outline
1. What is Modern Mobility?
2. What issues does this create?
3. How do you manage these issues?
4. An integrated approach
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More people are moving… In new and different ways
89% of organisations plan to increase the number of internationally mobile workers in the next two years – not just formal assignments but more fluid mobility types (e.g. commuters and regional/ global roles).
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The war for talent New mobility types are coming into play
Companies are also starting to move people more purposefully. Using mobility to attract, develop and retain talent is becoming more common.
Talent swaps and developmental moves are expected to increase by
49% and 42% of organisations respectively over the next two years.
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Spotlight on business travellersThe most challenging mobility type to manage
There is a risk that the focus of mobility policies and customer support remains too narrow, directed towards traditional international assignees only.
For example, business travellers are the biggest group of mobile employees set to grow (a net increase of
57% in the next 2 years) after short-term moves, but
only 17% of organisations currently have robust policies, processes and controls in place to track business travellers.Global Tax Symposium – Asia 2015
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What is the key mobility priority for your business?
• Manage compliance effectively
• Manage costs
• Align mobility and talent
• Other
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Top mobility priorities for businesses — your views
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Choose the right approach to policy – your views
Do you have specific talent based or business visitor policies?
• Only a talent based policy
• Only a business visitor policy
• Neither
• Both
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• Increased public interest in companies paying ‘fair’ amount of tax in right places
• Companies need to be seen to be doing this by customers, to maintain a strong and trusted brand
Changing social climate
Top mobility priorities for businesses
7%
10%
16%
18%
18%
18%
23%
23%
35%
36%
44%
51%
Increase diversity in the mobileworkforce
Improve vendor management
Use mobility data and analytics, e.g.to track return on investment
Redesign our approach to managingmobility
Manage new mobility types
Improve the assignee experience
Improve governance of mobility
Move people with a purpose -differentiate the assignment 'deal'…
Design or enhance mobility policies
Align mobility and talent
Manage costs
Manage compliance effectively
Q. Which three of the following are the key mobility priorities for your organisation over the next two years? Base size: all respondents (193).
• The global tax and regulatory framework was designed for a less interconnected world, yet expectations of compliance are increasing
• Authorities becoming more sophisticated and aggressive in pursuit
• How do you manage this?
The challenge
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Feeling the strain Cost and value is not measured
Only 8% companies can accurately quantify the cost of their mobility programme today.
In two years’ time, over 50% will still be unable to accurately quantify the cost of their mobility programme.
Mobility functions that are unable to articulate the cost and value of their mobility programme will struggle to survive in the current climate.
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Key mobility trends
The new normal
• Fluid mobility types – commuters/regional-global roles• Using mobility to attract, retain and develop talent• Mobility functions playing a more strategic role • Authorities collaborating on immigration/tax compliance issues• Increased co-operation with authorities to ensure compliance • Pressure on mobility budgets and headcounts
Becoming outdated
• Mobility function being seen as a cost• Business acceptance of tax/immigration/social security failures• Traditional long term assignments and operating models• Inability to report on cost and ROI • Technology not being a prerequisite
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Modern mobilityImmigration issues
Issues
• Business urgency circumventing processes
• Tracking assignees• Complex and unclear rules• Local authorities working
together• Politicisation of
immigration Challenges
• Lack of ownership of STBVs
• Understanding specific business duties
• Local contracts/Quotas • Bureaucratic and lengthy
processes• Modern family scenarios
Risks
• Reputational damage • Reduced license, penalties, fines, deportation,
imprisonment• Business disruption• Deemed residence impacting personal tax filings
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Modern mobilityTax issues
Issues
• Business urgency circumventing process
• Tracking assignees • Senior Execs driving
taxable presence• Requirements in new
territories
Risks
• Reputational damage• PE creation• Corporate tax issues driving personal tax
exposures• Penalties/fines/expatriate audits
Challenges
• Compliance administration
• Maximising treaty coverage and short term exemptions
• Technical v practical local reporting
• BEPS• Recharging costs
effectively
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Modern mobilitySocial security and payroll
Issues
• Focus on cost savings• Capturing global payments,
benefits, trailing liabilities and gross ups
• Assignee sensitivity to change
Risks
• Reputational damage • Penalties/fines• Wider audits of local population/specific
assignment types• Assignees demanding local benefit rights
Challenges
• Lack of regional totalisation agreements and optimisation
• Technical v practical requirements
• Operating local or shadow payroll
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How do you manage these issues?A holistic approach
Ownership
Structure
ProcessTechnology
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Structure – reducing complexityChoose the right operating model
Function review
Processes to manage risks and exceptions
Centralised/Regional function
Outsourcing
Regional/Global employment structures
Tax withholdingCorporate tax/PE risk
Employment lawImmigration
International payrollTalent
Cost/Ease of implementationTeam disruption
Considerations
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Structure – reducing complexityChoose the right approach to policy
Coverage
• Agree the process for
exceptions to be tracked and reported back to the business
Exceptions
AdministrationBusiness
and stakeholderneeds
Ownership for STBVs
Are existing policies
fit for purpose
Policy
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Process Doing the simple things right
Preassignment
• Costing
• Business approval
• Immigration
• Assignment letter
• Home tax clearance ?
• Cease payroll withholding/social security?
• Pre departure consultation
During assignment
• Costing review
• ROI calculation
• Performance management
• Home and host Tax/payroll/social security compliance
• Extension impact
• Maintain travel records
Post assignment
• Notification to home authorities
• Recommence home payroll/social security
• Home and host Tax/payroll/social security compliance
• Trailing liabilities
• Reintegration into home business
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Process Measuring cost
1 2 3
• Update costing annually based on actual costs
• Business should reevaluate assignment decision
• Final assignment cost determined and provided to business
• Updated for trailing liabilities
Pre assignment
During assignment
Post assignment
• Comprehensive cost estimate including all costs/years
• Factor in treaty/totalisation agreement
• Business sign off critical
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Process Measuring cost – costing example
• Update costing annually based on actual costs
• Business should reevaluate assignment decision
• Final assignment cost determined and provided to business
• Updated for trailing liabilities
• Comprehensive cost estimate including all costs/years
• Factor in treaty/totalisation agreement
• Business sign off critical
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TechnologyMake smart use of systems and data
Leading organisations are looking at how they can best use technology – and data – to improve the customer experience and report on mobility outcomes to key stakeholders.
Example mobility metrics:• Assignee demographics and
diversity • Mobility costs• Assignee volumes vs. function
FTE• Assignee performance and
retention• Use of mobility in strategic
workforce planning
What are your mobility programme’s metrics on these measures today? Do you have a baseline to move forward from?
Assignee promotion rate
Talent in your assignee population?
Market benchmark
Key talent
Not key talent
Not key talent
Key talent
Assignee retention rate Key talent
100%
Market benchmark
Year following repatriation
Market benchmark
Market benchmark
0% 20% 40% 60% 80%
On assignment
Year of repatriation
Improve Same Decline
Assignee performance
Year of repatriation
Year following repatriation
2 years following repatriation
Year of repatriation
Year following repatriation
2 years following
repatriation
You?
Market
You?
Market
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TechnologyMake smart use of systems and data
• Track all travellers with alerts to identify ‘at risk’ population
• Assess compliance risks
Reporting and analytics
Compliance actions• Immigration• Tax vendor initiation• Corporate Tax• Security/’Black swan’
events• Payroll• Cost projection• Compensation data
allocation
OutputsTraveller
• GPS tracking via mobile
• Known travellersinput data via electronic calendar
Corporate data sources• Expense data• Travel vendor• Access cards• Payroll• HRIS systems
Inputs Global data repository
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OwnershipUnderstand what stakeholders want and need
Voice of the Customer and Voice of the Assignee surveys sought the views of the users of mobility – business and mobile employees
Key mobility stakeholder interviews – To understand what is needed from the mobility programme, and HR
Business buy-in and agreed ownership allowed mobility to be viewed more as a business investment rather than simply a cost to be contained.
Defining the scope and KPIs of mobility services the business wants and needs was crucial to managing and meeting expectations.
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Thank you.
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The materials contained in this presentation were assembled in May 2015 and were based on the law enforceable and information available at that time.
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