ITX Insights - September 2024

In focus: How GECs can enhance the customer experience for assignees and their managers.?

The traditional approach to Global Mobility usually includes the involvement of multiple local HR teams managing employees on international assignments, often leading to fragmented processes and varying levels of support. To address these challenges, many organizations are turning to Global Employment Companies (GECs) as a solution. But do GECs truly offer a better service to international assignees and their managers? Let’s explore the benefits of GECs and how they can enhance the international assignment experience.??

Reducing Fragmentation and Enhancing Clarity?

A key advantage of the GEC model is its centralized structure, which significantly reduces the fragmentation of processes that can occur when multiple local entities are involved during the assignment lifecycle. The centralization inherent to GECs not only streamlines operations but also reduces ambiguity regarding roles and responsibilities. With a single point of accountability, international assignees and their managers know exactly who to turn to for support, which typically reduces the timelines and the number of touchpoints required to resolve issues or answer questions.?

This streamlined approach is particularly beneficial in managing complex cases where multiple departments or stakeholders are involved. In traditional models, case management can become convoluted, with unclear lines of responsibility and prolonged resolution times. However, with a GEC, there is usually a clearer chain of command and accountability, leading to quicker and more efficient handling of cases. The reduced need for assignees and managers to navigate through various teams and departments also contributes to a smoother and more satisfying experience.?

Better Visibility and Proactive Management?

Another significant benefit of the GEC model is the enhanced visibility it provides over every aspect of an international assignment. When processes and data are centralized, mobility teams have a holistic view of all ongoing assignments, enabling them to manage these assignments more proactively. This proactive management can take many forms, from anticipating and addressing potential issues before they arise to ensuring compliance with local labor laws and tax regulations in various countries.?

Continuous Improvement Through Data Analysis?

The centralized nature of the GEC model not only improves operational efficiency and visibility but also facilitates continuous improvement through better data analysis. With all assignment-related data consolidated in one place, organizations can perform comprehensive analyses to identify trends, track key performance indicators, and understand areas needing improvement. For example, by analyzing data on assignment costs, completion rates, and employee satisfaction, companies can identify patterns and areas where the process might be optimized or where additional support might be needed. Such insights are invaluable for refining policies and procedures, ensuring they remain aligned with both business objectives and employee needs.?

A holistic view of mobility programs also enables organizations to take a strategic approach to talent management. By understanding which assignments are most successful and which factors contribute to their success,? companies can tailor future programs to replicate their internal best practices. Additionally, this data-driven approach allows for more accurate forecasting and budgeting, making the GEC model not only more efficient but also more cost-effective.?

Empirical Evidence Supporting the GEC Model?

The theoretical benefits of GECs mentioned above are also supported by empirical evidence. A survey conducted by ITX in 2023 found that 89% of organizations using a GEC model reported that it had helped them achieve or partially achieve a better employee experience. This high level of satisfaction indicates that the GEC model is effective in addressing some of the core challenges associated with managing international assignments.?

The survey results suggest that organizations using GECs experience fewer administrative challenges and a more streamlined process for both employees and managers. The ability to offer consistent, high-quality support across the world appears to be a key factor in this improved experience. Furthermore, the reduction in bureaucracy, less duplication of efforts, and the streamlined communication channels that GECs provide, contribute significantly to the enhanced satisfaction reported by these organizations.?

A word of caution?

While the GEC model offers many advantages, it is important to recognize that the quality of service delivered to international assignees and their managers ultimately depends on several factors related to the design, implementation, and operation of the GEC itself. If any of these factors fail, the service delivered by the GEC will almost certainly be impacted.??

The design of the GEC must be carefully crafted to align with the needs and expectations of the organization it supports. This includes the development of clear processes, policies, an appropriate operating model, and the right staffing and technology systems. A well-designed GEC is essential for ensuring that the centralized model functions effectively and meets the unique challenges of international mobility.?

However, even the best-designed GEC will fail to deliver on its promises without accurate implementation. This means rolling out the GEC model in a way that aligns with its design principles, ensuring that all stakeholders are adequately trained, and that the necessary infrastructure is in place.?

Expert execution during the GEC’s daily operations is equally crucial. The day-to-day management of international assignments requires skilled personnel who understand the complexities of global mobility and can navigate them effectively. Receiving expert guidance and support can significantly reduce risks associated with international assignments and enhance the overall experience for both assignees and managers.?

In summary, organizations with Global Employment Companies (GECs) are generally able to deliver a better service to their international assignees and managers than those relying on more traditional and decentralized models. The centralization inherent to the GEC model reduces fragmentation and ambiguity, leading to clearer accountability and fewer touchpoints for resolving issues. Moreover, the enhanced visibility and data-driven insights provided by GECs enable more proactive management of assignments and continuous improvement of mobility programs.?

The empirical evidence from the ITX survey underscores these advantages, demonstrating a strong correlation between the use of GECs and improved employee experience. However, the effectiveness of a GEC ultimately depends on its design, implementation, and day-to-day operations. By carefully considering these factors and seeking expert guidance, organizations can maximize the benefits of a GEC, ensuring a more efficient, effective, and satisfying experience for both international assignees and their managers.?

If you are evaluating the feasibility or the implementation of a GEC and would like some guidance on how to approach it, please feel free to reach out to an ITX consultant.

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Dispelling the Myth: Outsourcing the operations of a GEC is expensive?

When considering the management of their Global Employment Company (GEC), many organizations are faced with the decision of whether to maintain their operations in-house or outsource them to a third-party provider. A common myth that continues to influence this decision is that outsourcing is more expensive than managing operations internally. However, this assumption often overlooks the hidden and ongoing costs of running a GEC with in-house resources, as well as the many potential benefits that outsourcing can offer in terms of return on investment (ROI), scalability, and business continuity.??

This article will dispel the misconception that outsourcing GEC operations is cost-prohibitive by highlighting the true cost structure of in-house GEC management and comparing it with the value that outsourced solutions can bring.?

The Hidden Costs of In-House GEC Management?

It is easy to underestimate the total cost of managing a GEC with in-house resources. At first glance, keeping operations internal may seem more cost-effective since there is no need to pay a third-party provider. However, this view does not account for the numerous hidden expenses that accumulate over time.? Some of the areas that are often overlooked or underestimated are:?

• Specialist Resources and Compensation: Operating a GEC in-house requires hiring, in the GEC location, specialist personnel who possess the knowledge and skills necessary to manage expatriate assignments, compliance, and tax matters. These professionals often demand high salaries, and the cost of benefits and overhead must also be factored in.?

• Technology and Infrastructure: GEC operations require robust systems for managing payroll, compliance, and employee data. Investing in this technology infrastructure—along with the necessary upgrades, licenses, and maintenance—can be extremely costly for in-house teams. Furthermore, keeping systems up to date with changing regulatory requirements adds additional layers of complexity and expense.?

• Management and Supervision In-house teams require ongoing management, including supervision, performance evaluations, and administrative support. The time and resources spent managing these internal resources, as well as dealing with issues like absenteeism, turnover, and knowledge loss when key personnel leave, all contribute to the high cost of maintaining an internal GEC team.?

These costs are often spread out across various departments and budgets, making it difficult for organizations to see the full financial picture. When these factors are taken into account, the total expense of managing a GEC in-house can be significantly higher than many organizations initially realize.?

The ROI Challenge?

Accurately measuring the total cost of in-house operations is only half of the challenge. Another critical area where in-house GEC management often falls short is in measuring return on investment. Many organizations struggle to track the true performance and efficiency of their in-house teams. Often, these teams are not held accountable to the same key performance indicators (KPIs) or service level agreements (SLAs) that a third-party provider would be. Without clear metrics, it becomes difficult to assess whether the organization is getting a good return on the significant investment it is making in its in-house GEC operations. In contrast, outsourcing partners are contractually obligated to meet specific performance benchmarks, ensuring a consistent level of service and allowing organizations to measure ROI more accurately.?

The Business Case for Outsourcing GEC Operations?

In general, outsourcing GEC operations delivers some advantages that are often difficult to achieve working exclusively with in-house teams, for example:?

• Predictable and Transparent Costs: When working with a third-party provider, the fees are usually pre-defined and agreed upon in advance. This makes it easier to budget for GEC operations and avoids the unexpected costs associated with managing in-house resources, technology, and infrastructure. Additionally, there are no hidden costs, as the provider's fee structure is typically transparent and fixed.?

• Contractually guaranteed Performance: Third-party providers are held to strict performance standards, as outlined in their Service Agreement and KPIs. This ensures that the organization receives a consistent level of service and can measure ROI with greater accuracy. Outsourced providers are also incentivized to maintain high levels of performance since failure to meet their contractual obligations could result in penalties or the loss of their contract.?

• Scalability: The flexibility of outsourcing also allows organizations to scale their GEC operations up or down as needed without the lengthy process of hiring or retraining in-house staff. This is particularly advantageous for organizations with fluctuating expatriate populations, as an outsourced provider can quickly adjust resources to meet demand. In contrast, in-house teams often struggle with scaling, which can lead to inefficiencies and increased costs during times of change.?

• Variable costs instead of fixed costs: If the organization experiences a reduction in the number of assignees (for example as a result of losing a large project, or as seen during the recent pandemic crisis), most of the costs associated with having an in-hose team, including staffing, technology, office space, and other overheads, remain fixed.? By contrast, in an outsourced arrangement these fixed costs are replaced by variable costs (for example a unit fee per assignee), which means that the cost of managing assignees is reduced during difficult times.???

• Business Continuity: Outsourcing providers have systems in place to ensure business continuity, even in the face of unexpected challenges such as staff resignations or long-term absences. By sharing institutional knowledge and maintaining a team of specialists, third-party providers can ensure that there is no disruption to service. In contrast, in-house teams are often vulnerable to the loss of key personnel, which can lead to service disruptions and lost institutional knowledge.?

In summary, the myth that outsourcing GEC operations is expensive is largely unfounded. While the upfront costs of outsourcing may seem higher at first glance, when the hidden costs of in-house GEC management are fully accounted for, outsourcing proves to be a predictable, scalable, and cost-effective solution that is certainly worth considering, subject to a rigorous Business Case.?

It is often the case that these decisions are often also influenced by emotional and psychological factors, for example concerns about the potential impact that outsourcing may have on the jobs and/or career prospects of some of the in-house team members, or a fear of losing control over the GEC’s operations.? In reality, the transition to a GEC has helped many Global Mobility professionals to enhance their career, by moving to high-visibility roles within the GEC, or focusing on more value-added tasks, rather than transactional processes.?

When all factors are considered, outsourcing may turn out to be a financially sound decision, as well as a strategic move that allows organizations to focus on their core operations while leaving the complexities of GEC management in the hands of experts.?

Learning Corner: Which employees should be employed by the GEC??

Global Employment Companies (GECs) have emerged as powerful tools to manage international talent and streamline global mobility processes, and to achieve better control and governance. Nevertheless, there is often some confusion regarding how to decide which employee profiles should be within the scope of the GEC.?

When making such decisions, it is important not to take extreme positions: some organizations assume that by choosing a GEC model they would need to employ all their expatriates through the GEC.? At the opposite end of the spectrum, some organizations set-up GECs to employ only one specific type of assignee.? Both these solutions may make perfect sense in some specific situations but, in the vast majority of cases the best solution is likely to be somewhere in between these two extremes.??

Since a GEC is wholly owned by the parent organization, it can be customized to meet the specific needs of the business. This flexibility extends to the management of different assignee profiles, offering the company a streamlined way to handle a diverse global workforce. A well-structured analysis of the global mobility is the best starting point to assess the potential advantages of including various assignee profiles within the scope of the GEC.?

There is ample evidence that some of the world’s leading organizations include a variety of assignee profiles in their GECs.? In addition, a survey conducted by ITX in 2023 seems to confirm this point, highlighting how GECs are increasingly being used to manage a broad spectrum of assignment types, thus helping organizations achieve economies of scale while maximizing the advantages that come with a GEC structure.??

The survey reveals, amongst other things, that 75% of organizations use their GEC to employ Third Country Nationals (TCNs), while 64% also include Global Nomads, and 61% employ their Senior Executives through the GEC. Just under 40% of organization use the GEC for all their long-term assignees, and some organizations also support International Local Hires, Short-Term Assignees and Remote Employees through their GEC. In addition, 71% of organizations that have Rotators would employ them through their GEC, if they have one in place.?

In conclusion, GECs can be extremely versatile structures, able to accommodate a diversity of assignment types.? Therefore, rather than limiting the use of a GEC to a single type of assignment, companies are encouraged to take a more nuanced approach and assess the feasibility of employing a diverse range of assignees through their GEC. This approach not only maximizes the advantages of a GEC but also positions the company to adapt to the ever-evolving needs of a global workforce.?

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ITX News:??

Do you have a GEC? Join our GEC Network Club virtual session on 3rd October 2024?

On 3rd October 2024 ITX will hosts this year’s second gathering of GEC professionals, who set the meeting agenda and exchange ideas and updates in a confidential and exclusive forum.??

If you work in an organization with a GEC, or if you are in the process of establishing one, you are encouraged to join this unique network to stay up to date with the latest developments.? There are no membership fees.?

Members are also invited to use the private LinkedIn Group to exchange information, ask questions and post updates.???

Join ITX in Washington DC - Global Workforce Symposium in National Harbor, 22nd to 25th October 2024?

Managing continuous and rapid change is the new normal in Global Mobility.? Will your current operating model cope with future demands?? ITX will reveal why many leading multinational organizations decided to establish a GEC, and the many reasons why these decisions have delivered value despite an ever-changing mobility landscape.??

This annual event, hosted by Worldwide ERC, brings together experts from around the world to discuss the latest trends and innovations in the industry, including mobility strategies and practices, immigration, technology and remote work. The symposium offers extensive educational sessions, and interactive workshops, allowing attendees to connect, learn, and collaborate with prominent subject matter experts and speakers.?

Join ITX in London, UK, on 29th and 30th October 2024?

ITX will host a Round Table discussion at the Forum for Expatriate Management (FEM) EMEA Summit, on 29-30 October 2024.? The Forum is an essential gathering for global mobility and HR professionals in Europe, the Middle East, and Africa, offering rich content and networking opportunities. Attendees can participate in workshops, panel discussions, and roundtables, gaining insights into the latest trends and best practices in global mobility. The summit also hosts the prestigious EMEA EMMAs (Expatriate Management & Mobility Awards), recognizing excellence in the field with an elegant awards ceremony. This summit is a key event for professionals looking to advance their knowledge and connect with industry peers.???

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