Boom time

In terms of economic progress, Asia is blazing ahead as compared to the rest of the world. Companies are not only diverting their best talent from elsewhere to this region, they are also shuffling their staff within Asia Pacific to remain competitive. This makes it crucial for HR to look to the relocation industry to ensure that the right people are at the right place as quickly and as comfortably as possible.

Kenneth Kwek, Senior Vice President & General Manager, Cartus Asia, says there are several reasons for increased relocation activity in the region. “A booming Asia market, expansion into new and emerging markets such as Vietnam apart from well-known destinations like China; and a widening gap in available local skills are the primary reasons.”

China, Singapore and India are amongst the top five Asia Pacific destinations over the past three years, according to Cartus’ recent 2010 Global Mobility Policy and Practices Survey: Navigating a Challenging Landscape. China and India have emerged as the economic powerhouses of this decade and are dominating the world stage in terms of business growth. It is not surprising that respondents expect China to be the most popular destination over the next two years.

Avrom Goldberg, Managing Director, Asia Pacific, Middle East for SIRVA Relocation concurs, saying Shanghai and Hong Kong are the most popular destinations into Asia. This trend has been picking up since the turn of the millennium. Since China joined the World Trade Organisation in 2001, it has opened itself to the world, becoming an engine of growth in Asia and beyond. While the Chinese economy has been growing by 8% to 10% consistently since 1979, China just doesn’t have enough skilled talent to maintain this progress and thus, has to rely somewhat on the relocation of new and existing employees from overseas to fill the gap.

The market had anticipated the shortage of leadership candidates as far back as 2005. In its “Addressing China’s Looming Talent Shortage” report, McKinsey Global Institute had predicted that China would be facing a shortage of home-grown talent for multinational companies. Despite a large supply of 3.1 million college graduates in 2005 alone, multinational companies were finding that less than 10% of Chinese job seekers were suitable for work in service operations. McKinsey estimated that given the aspirations of many Chinese companies, over 10 to 15 years, they will need 75,000 leaders who can work effectively in global environments. In 2005, they had only 3,000 to 5,000.

While reforms in the educational system – greater emphasis on practical and language skills – will help the country fill its skilled-labour gap, China is already beginning to develop its talent by sending them abroad to gain experience.

Hence, Goldberg says relocation companies are gearing up for even more movement not only into China from the West or from within the region, but also out of the mainland to countries within Asia and beyond.

Move types

According to PricewaterhouseCooper’s (PwC) Talent Mobility 2020 survey, assignee levels have increased by 25% over the last decade; PwC predicts a further 50% growth in assignments by 2020. There will be more assignees, more business travel, more virtual tools, and especially more quick, short-term and commuter assignments.

Changing composition of the business units in the organisation has also resulted in increased relocation activity. Kwek says, “HR professionals may need to develop a new approach that would be globally consistent and fair, with focus on strategic cost management, mobility planning and policy refinement, improving reporting and total cost capture, as well as attracting, retaining, developing and motivating its expatriates.”

Goldberg also outlines how relocation and mobility has changed over the years. Where once the industry used to be looked at as a logistics provider, it has now become more strategic. “Being able to move your talent around is one of the most significant challenges a global company has now,” he says. “Companies realise that relocation and mobility has to be a subset of their global talent management strategy.”

Driven by budget constraints, employee needs and regional issues, demand for flexibility in relocation policy types is on the rise. Kwek says companies are increasingly looking at ‘going local’ by implementing local-plus, localisation, and permanent transfer programmes in their mobility policies in order to reduce costs. These assignments are less expensive alternatives to supporting employees on traditional assignments and they conform to companies’ changing mobility strategies.

Increased volume in international commuting and extended business travel has increased in proportion to long- and short-term moves. “These policy types offer cost control and flexibility, but demand careful tracking and management to avoid potential tax and compliance risks and exposure,” Kwek explains.

Managing madness

Relocation companies have begun introducing new tactics to manage the changing profile of employees and move types.

In providing short-term assignment solutions, Cartus aims to help clients more effectively track and manage these assignments. “We offer a core group of services adapted to short-term assignments (policy counselling, work permit assistance, orientation, cross-cultural and language training, etc.) and additional services based on assignment length,” Kwek says.

“In the areas of international freight forwarding and temporary housing, our Acadia eProcurement Model helps to deliver cost savings and service quality,” he adds. Enhancements to Acadia will be rolled out early in 2011, including functionality that posts upcoming live moves, which will further increase real-time competitiveness, as well as a calculator that allows the system to factor client per diem tolerance and transit time into the booking decision.

SIRVA Relocation has also been making headway in servicing clients’ regional and local needs better. It prides itself for being one of the world’s largest moving companies with a large number of directly-owned operations within the region, providing all three key relocation services - home search, moving and visa/immigration formalities. For instance, the company has recently acquired a Shanghai-based real estate company so that it can deliver housing-related services directly in China. It was also granted a real estate licence in Hong Kong so it can deal with clients’ housing needs there as well.

Cartus has also recently enhanced its suite of intercultural and language training with online personal culture profiles and reference tools through Country Navigator™, allowing trainers to analyse each assignee’s personal cultural profile in comparison with the destination country, making training more focused and effective.

Relo quirks

Relocation companies try to customise their services to each customer’s requests. However, they do get rather special requests from time to time.

In one case, Cartus was tasked to coordinate the shopping shipment (in one surface shipment) of over 10 VVIP assignees to Bangalore. These assignees have a shopping incentive trip in the US every half year!

In another instance, an expatriate had only agreed to accept his new assignment on condition that the company moved him as well as his three favourite antique motorbikes to the new host location. The company agreed to his request and Cartus arranged the transfer of the motorbikes.

Another assignee wasn’t so lucky. The assignee, who was due to relocate from the US to Australia, mentioned to SIRVA that he needed to move pets as well. His four pets turned out to be racehorses! The financial services company he worked for did not support the notion so he had to move without his horses.

SIRVA’s Goldberg has also come across a European-headquartered manufacturing company with a rather rigid mobility strategy. The company had a 50-page document outlining their policies on staff mobility. However, Goldberg did not find any provisions for spouse support. He was not looking in the right place as the company had actually included a non-descript line under the “Small Appliance Allowance” section saying for a spouse, an employee can buy a computer and claim costs within that allowance. The company has since heeded to counselling and now offers more extensive spouse support policies.