Blog ★ Reloverse

Global Mobility cost controls — managing risk and reward when relocating talent

Controlling the costs of relocating employees overseas is complex and time-consuming. Cross-border compliance and ever-changing local tax rules mean it’s all too easy to get caught up in a web of inefficiency and risk.

In this edition of Reloverse, we look at how organisations outsource their expense, compensation and payroll management to speed up recruitment, relocation and reporting in the regions.

In-house or outsourced?

Why don’t leading Global Mobility (GM) professionals keep this function in-house? It’s easy to imagine that internal finance departments might be better equipped than anyone to administer expenses or process payroll. But making and reporting cost estimates and expense payments in an accurate, timely way takes specific, specialist skills.

Organisations relocate their best people to where they’re needed most, and recruit from a tight talent pool to fill gaps in global capability. Many practical problems are predictable, but political and economic changes in host countries can quickly create unforeseen challenges. One of the highest hurdles is delay. Property hotspots like London won’t wait for employers to react and respond to a rental offer—undermining the headhunting and hiring process of securing new talent.

On time, every time

Continuous updates to local legislation and tax treatments can derail even the best-laid plans of seasoned GM professionals, creating extra work at the centre and disenchantment from their senior staff in-country. Opening overseas bank accounts, reimbursing moving expenses and handling currency transactions require expert timing: when salaries, rents and school fees aren’t paid on schedule, talented assignees can feel frustrated, distracted and distant. It’s surprising how quickly things can unravel and how long it takes to rebuild that trust. It’s a diversion from the all-important strategic function GM teams are increasingly being tasked with. An expert, external point of coordination guarantees fast, reliable reimbursement—and compliant reporting to inform payroll and end-of-year tax filing.

Hard cash and soft currencies

Handling restricted currencies in remote or hard-to-reach places can be a major headache for almost every organisation. Brazil, India, Mexico, Russia and South Africa each present problems. And as China is reopening its doors to foreign workers and investment, getting any currency out of the country remains seemingly impossible. Process law, specific tax controls and the need for every single transaction to have the right paperwork add another, opaque layer. So it pays dividends (sometimes literally) to have a partner with up-to-the-minute expertise and financial feet on the ground.

Reliable remuneration

Running expatriate payrolls can also be complicated and create compliance risks. Managing international tax and social security obligations often relies on decentralised data, spread far and wide across an organisation. Consolidating that data and, in effect, splitting it between payroll and expense management is the first step to taking control. But often GM teams need to understand the nitty-gritty of what’s beneath those headline numbers.

Lots of companies now use an external balance sheet service that consolidates and compares data down to individual assignee or candidate level. This brings together salary, allowances, compensation, tax equalisation, housing norms, Cost of Living Adjustment (CoLA) data, relocation costs and other assignment expenditure. Balance sheets offer an exceptional level of insight and control for the term of every assignment—and are a dynamic alternative to a simplistic, static spreadsheet.

Focussed on the future

Payroll and assignment cost control touch GM, Human Resources, finance functions and regional management. Parallel processes and multiple payment systems create overlap, confusion and duplication of effort and expense. Research shows that business leaders want GM and HR professionals to spend less time on administrative tasks and more on talent, advisory and risk management. When estimated and actual costs are processed by a single, external partner, it’s easier to make informed, strategic decisions. Getting this holistic data needn’t mean total outsourcing—simply shifting the burden of the day-to-day to a trusted, expert partner—freeing GM to focus on the future.

Aki Amde, Head of global expense management, compensation and payroll at Santa Fe Relocation, explained, “Managing a relocation compensation programme yourself consumes internal resources. Understandably, Global Mobility professionals want to be more engaged in their organisation’s talent decisions at a strategic level without constantly worrying about cost and compliance. With a well-organised mobility partner, they can avoid pitfalls and the knock-on effects that undermine employer reputation and restrict opportunities”.

If you’re looking for a financially astute partner that understands expenses, compensation and payroll spanning the entire relocation journey, we would love to support you and your international teams. Simply drop an email to reloverse@santaferelo.com and we’ll get back to you.