Magazine article HRMagazine

Be a Global Risk Manager

Magazine article HRMagazine

Be a Global Risk Manager

Article excerpt

Don't just physically move employees. Weigh the threats they face worldwide.

Early in 2011, officials in China announced that expatriates working in the country would be subject to a new tax, effective July 1. By December, guess how much guidance global mobility professionals had received from China regarding how to comply with the law?

Not much.

"We were just left waiting and wondering," reports United Technologies Corp.'s Director of Global Mobility Tom O'Connor, GPHR.

Welcome to the confusing and risk-laden era of organizational mobility.

"Mobility is much more challenging today," O'Connor explains. You have to "anticipate what might happen next and be prepared." For example, 10 years ago mobility professionals were not nearly as concerned about pandemics, evacuations from unstable regions, bankrupt economies, socioeconomic unrest, housing market collapses, organizational cost-cutting, natural disasters, complex tax and immigration legislation, and cross-generational family dynamics.

The more mobility professionals discuss the nature of their role, the more the mobility function sounds like an exercise in risk management across multiple realms, including compliance, employee relations, talent management and more.

To manage new and familiar risks, mobility professionals should recognize the nature of these challenges and address them with a strong network of external expertise, creative policies, careful tracking of expatriates and frequent business travelers, and an understanding of employees' changing personal and family issues.

Mobility managers must provide solutions by "acting as internal management consultants specializing in global mobility for line management, human resources and the C-suite," says Ed Hannibal, leader of Mercer's global mobility business for North America.

In crafting those solutions, mobility professionals must address risks in the following areas.

Security and Logistics

During the past five to 10 years, many organizations assigned employees to the emerging economies of Brazil, Russia, India and China.

Today, "U.S. companies are placing employees throughout Africa, the Middle East and Eastern Europe. In South America, it's not just Brazil or Argentina, but also Chile and Colombia," says Stewart McCardle, vice president of global financial services for Weichert Relocation Resources Inc. in Norwell, Mass.

Such locations present challenges. "In Africa and South America, you have new security risks," McCardle points out. "Many less developed economies come with logistical challenges. Household shipments, banking and almost everything else is more troublesome," he adds.

Laws and Regulations

The nature of tax and immigration issues has become more complex.

First, more companies of all sizes conduct business in, and send employees to, more countries. Hence, mobility managers need to learn the regulations for each new market or find outside experts familiar with country-specific laws.

Second, officials in developing countries are quickly adopting tax and immigration approaches, practices and rules that exist in higher-income economies. Many organizations do not have the policies, processes, systems and personnel to sufficiently manage and monitor frequent business travelers in compliance with such regulations.

Rich Zook, a partner with the international assignment services practice of Pricewaterhouse- Coopers U.S., ticks off risks that corporate leaders court due to the above deficiencies. These include:

* Visa and immigration violations.

* Visits-individual or cumulative-to individual countries that trigger tax return filing obligations.

* Visits that create corporate tax withholding obligations in some specific countries.

* Indirect tax obligations for the company.

* Taxation of corporate earnings based on the countries' permanent establishment rules.

Due to the global economic crisis, "Revenue-hungry taxing authorities from countries with enormous fiscal gaps are looking for income in every area," McCardle explains. …

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