The Changing Global Job Market - Relocation Implications June 2007 David Reynolds Executive General Manager Chandler Macleod Consulting Agenda Current trends in the global job market New global markets The new global people value chain Case study – India Current relocation trends Implications for inter-country people mobility The impact of the changing psychological contract Recent Chandler Macleod employer/employee research Strategies to increase relocation success Some Current Trends in the Global Job Market Huge growth in demand and competition for people between countries Corporate intangible assets (people/brains) has risen from 20% of the value of companies in 1980 to 70% today (factories to brains) Talent shortages in China and India China’s one child policy will impact over next 50 years Continued massive manufacturing migration – outsourcing to China Western Europe, Japan and North America have similar demographic changes to Australia Creation of New Global Workplaces China, Russia, India – characterised by: Low wages Motivation to succeed Growing infrastructure Youth and population High risk/high returns Educated Indians Educated Russians The Old People Value Chain PRODUCTION CUSTOMERS PROCESSES PEOPLE The New People Value Chain PRODUCTION CUSTOMERS PEOPLE PROCESSES Global Competition for Jobs/Work CEO PRODUCTION PEOPLE PEOPLE PROCESSES PEOPLE Current Trends – Globalisation cont. Cheap brain power R&D going global (e.g. digital displays in South Korea) Research, Accounting- Philippines Microsoft, Samsung and Siemens have set up R&D labs in China – 24/7 product development Current Trends – Cheap Brain Power THE JUST-IN-TIME WORKFORCE Brickwork is your gateway to the Best of India. We have access to world class MBA, CPA, CFA, PhD, Social Science graduates and more. We select the best resources for you based on your requirements. Current Trends - India A 50 hour working week is considered PT! Produces 2.5 million graduates each year (inc. 400k engineers and 200k IT professionals) The great job migration – IT outsourcing (from the West to India) will increase from $US193 billion to $US260 billion in 2009 GE Capital India has the following sign on its building ‘Trespassers will be recruited’ What Does This Mean? The change in what is value in our economy from inanimate assets to intangible assets (from factories to brains) The changing demographics of first world OECD countries The opening up of the labour market – allowing people to cross borders, study abroad, immigrate etc. Changing employer-employee psychological contract Current Global Relocation Trends Total revenue generated from outside a company’s headquartered country = 41% More than 69% of multinationals reported increase in the number of international assignments 65% of companies predicted they would send more employees on assignment in 2007 than 2006 Primary purpose of international assignments to build management expertise - GMAC Global Relocation Trends Survey 2006 Current Global Relocation Trends 40% of returnees from overseas postings leave within 1st year back However if business can retain returnee for >18months employee remains loyal 1/3rd returnees promoted on return; 58% stayed at same level; 9% demoted 81% companies promised “best endeavour” to find a job on return 58% promised physical relocation only; 27% employment 15% guaranteed role at same level - PWC/Cranfield University survey 2007 Current Global Relocation Trends cont. Employees are increasingly turning down international assignments: 1. Family concerns 2. Spouse/partner’s career 3. Career aspirations Family Concerns Include children’s education, family adjustment, partner resistance, challenging location, cultural adjustment These concerns can be overcome by cross-cultural training, and a successful cultural transition Only 21% of companies require cross-cultural training for their assignees (even though most companies consider this to be critical to success) Partner’s Career 82% of employees tend to be accompanied by spouse/partner – most put their own career on hold This trend likely to increase financial and relationship pressures (during and after the assignment) Research by Cendant indicated that 50% of relocations fail because of partner’s career needs not being met Career Aspirations Career advancement not being perceived as a benefit This is despite HR and management reporting that international assignments lead to quicker promotion and stronger employability Other Relocation Trends Expatriates change employers more often than their locally based colleagues More women are accepting assignments overseas (20% in 2006) 24% of expats leave their company during an assignment China, India and Russia are the primary emerging OS destinations – also the most challenging (housing and living costs, immigration challenges, payroll, employment) Observations Success of employee repatriation after return depends on how much they feel valued on return It is the responsibility of the employer and employee to actively plan for repatriation The cost of getting it wrong is significant More sophisticated assessment processes requited to determine suitability to overseas posting Variables Influencing Employee Retention, Intentions & Behaviour Professional- Organisation Job Rewards Development Opportunities Professional & personal support Colleagues Manager Personal- Demographics Personality Motivation Stress Tolerance Job satisfaction Commitment to organisation Source- Jennifer Thompson 2007 More Robust Assessment A number of aspects can impact on ascertaining whether an employee will be successful in overseas postings Antecedents*-personality & demographic variables Agitators# - Job & organisation variables Moderators# - stress, job satisfaction & organisation commitment * Organisation cannot influence # Organisation can influence Source- Jennifer Thompson 2007 The Right Fit Good Retention = Positive Fit between Professional & Personal Variables Poor Fit between person and Environment negative outcomes including stress, dissatisfaction, poor performance & turnover Leavers- have higher levels of need for achievement, independence & aggression Stayers- greater assertiveness & emotional intensity; ability to cope with new environments; striving & impatience Source- Jennifer Thompson 2007 The Changing Psychological Contract A significant aspect in the global war for talent Definition = the perceptions (promises and expectations) of the employee and employer of what their mutual obligations are towards each other. It is based on the concepts of trust and fairness The Changing Psychological Contract cont. To compete effectively in the war for talent, organisations need to have a clear idea of what employees need from their work to stay motivated and productive and what is reasonable for them to do so Expectations differ across demographic groups (e.g. Gen X and Gen Y) The Psychological Contract is Still Critical! Research shows that employees: Still need security Are still prepared to demonstrate loyalty (although more likely to the team rather than the organisation) Even more important in the global workplace – more competition, more variables, more employee choice (e.g. rate of unsuccessful overseas assignments) Recent Chandler Macleod Research Attractive salary and performance bonuses important, but not as important as other benefits Employers undervalue the benefits of a positive work environment, and work life balance Employees want tangible training and development opportunities A fun, positive and vibrant work environment is highly valued Career development and progression is very important Recent Chandler Macleod Research 25% of new staff decide whether to stay within the first week, and 58% within the first month Employers overestimate the time employees take to decide An effective onboarding program, and delivering on EVP promises is critical – for local and relocated employees 25% of employees reported that promises had not been upheld Relocated Employees – Induction Strategies Based on our research, the following need to be included in an effective induction/onboarding program from the outset Cultural assimilation and training (self and family members) – before the employee arrives Work actively to minimise family concerns Wherever possible, provide employment options for partner Be clear about career benefits (e.g. advancement) Ensure that the employees has a full understanding of the housing and living situation (including costs, and differences) Ensure that the logistics regarding immigration, payroll and employment are handled by HR (not the employee) – this needs to occur before the employee lands! Ensure a buddy/mentor is assigned from the outset Relocated Employees –Strategies to Maximise Success Understanding of key stakeholders/key relationships Introduce key executive team and other relevant team members Overview of approach to market and key clients/stakeholders HR policies and processes L&D plan Role - responsibilities and accountabilities Monitor employee satisfaction regularly Ongoing performance review and follow up Actively demonstrate commitment Questions?
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