Fluidity of assignments: from virtual to permanent

16 April 2019

Everyone wants to avoid assignment failure wherever possible, and two new options have gained prominence in recent years, both as extreme as they are logical.

We all know that repatriation can be risky for expats – a bit like atmospheric re-entry for astronauts. That’s why there is a growing case for virtual assignments (where the assignee never actually goes anywhere) – and permanent assignments (when they never actually come back). Let’s look at the pros and cons of these two types of “alternative” assignments.

Virtual assignments – the online expat

We manage, communicate, report, draft and calculate using laptops and other digital devices. So why do we need to move physically at all? That is the question that has driven the rise of virtual assignments: the idea that someone can be professionally dedicated to operating in and delivering value to a remote location – even though they never go there.

It is not a new idea. Like most Internet-enabled innovations, it was envisaged a while ago, when HR journalists enthusiastically seized upon future digital possibilities. With the Internet, anything can happen! The Wall Street Journal cited in 1999 the example of an executive who stayed in a hotel when he visited Singapore, but kept his house in Los Angeles rather than uprooting his family. Work was done online – or more probably over the phone, or a jumpy video-conferencing link so blurred that it made the moon-landing look like Cinemascope.

This was a primitive prototype of the virtual expat model and it has taken until now for the idea to be truly workable. In 1999, the world was not even ready for e-commerce, let alone virtual assignments. But since then, technology has not only developed but also matured to the point where collaboration with geographically dispersed teams has become sophisticated, instant and reliable.

The technology

Video conferencing tools – from the more sophisticated corporate options available from the likes of Cisco and Polycom to the more ad-hoc, laptop-based tools such as Skype or appear.in – are essential. Workgroup and collaboration platforms like Slack and Trello are also extremely useful.

A key requirement is that the whole tech infrastructure system is tried and tested. Hybrid systems abound and virtual expats need to operate as if in one place – which means a reliable, robust technical platform must be agreed in advance. Make it up as you go along and it will likely disappoint.

The timezones

Inevitably, a professional based in California is unlikely to work the same hours as his team in London. A slightly earlier start- or finish-time on either side can increase the duration of the crossover period, but the success of virtual assignments relies on tight time-keeping, combined with a flexible attitude.  

The cultures

Dealing with long-distance relocation is not the only challenge facing global assignees. They face different working practices, unfamiliar cultural norms and need to make efforts to build relationships with people who have different professional and cultural beliefs. Using common technology does not mean cultural differences are nullified. While most expats  talk about ‘culture shock’ as the experience of physically living in another country, cross-cultural awareness and understanding of online colleagues is every bit as important to a virtual assignee.

The budget

As with most web-driven alternatives to physical processes, costs are dramatically reduced. If the budget is not there for a physical relocation, going virtual may be the only realistic option.

However, circumventing the costs does not mean cutting the global mobility department out of the loop. They may still see it as a global assignment, albeit on an exclusively digital basis. Their understanding of how to make a success of transferring the skills of individuals from one country to another (and another working culture) remains extremely valuable.

Permanent assignments – goodbye and good luck

Permanent assignments – goodbye and good luck

The other extreme of these “alternative assignment” options is effectively a one-way ticket. Permanent transfers are increasingly common: last year, according to a survey by ECA, 40% of assignments longer than one year were permanent transfers. Four years ago that figure was just 22%.

This kind of transfer is more frequently used in finance and tech sectors – and is more prevalent in popular, well-known urban centres. Skills are transferable, and potential transferees are more likely to ‘make the leap’. Conversely, conventional assignments remain the most popular options in construction and oil & gas industries, especially to more remote locations.

Effectively, a permanent transfer means recruiting from overseas because those candidates are preferred to the local candidate pool. Specific skills are needed and the best candidate happens to come from overseas. The open-ended nature of the relationship is just like starting a new job, as opposed to committing to a fixed-term contract.

However, if there is a certain strategic task that needs to be done (launching a product, developing a new division, achieving a specific goal within a set timeframe), the traditional assignment format might be more suitable.

If one of the business aims is to nurture talent – i.e. to give overseas experience to key individuals so they can come home and contribute more fully on their return, a permanent assignment may not be the answer. But in the case of global organizations, this talent is retained within the company, if not within the individual’s country of origin – so the benefits of the assignment are kept “in-house” while the risk of repatriation (or reverse-culture shock) is avoided.

Do they work out cheaper?

Typically, a permanently transferred employee simply goes onto the local payroll. Depending on the relative cost of living, the salary may need to be increased to make it attractive, but the compensation is broadly similar in both assignment formats.

However, there are costs that are incurred in typical assignments that do not apply if the move is permanent. Location and mobility allowances are rarely included in host-based packages, and companies are less likely to fund other benefits for permanent transferees, e.g. children’s education, home leave and medical insurance. When surveyed, 65% of respondents said cost-effectiveness was their main reason for favouring permanent transfers.

Setting out a policy for the future

Setting out a policy for the future

Permanent transfers are most common between culturally and linguistically similar countries, e.g. from US to UK and vice versa. Also, visa requirements are simpler between countries with free movement agreements in place (e.g. EU states). This makes it easier both to manage the process and to persuade people to accept it, but there is a danger that companies are opting for permanent transfers without a formal policy in place.

In the ECA’s survey, fewer than half of the companies surveyed had formalized the process (compared to 80% for traditional assignments). This brings with it a risk of non-compliance and inconsistency, which can cause problems further down the line. 

The end of the traditional assignment?

It is interesting that these apparent extremes are both gaining in popularity. However, it is part of a bigger movement where businesses are simply becoming more agile at delivering packages that fit the needs of both business and individual.

Alongside the traditional long-term assignment, we are seeing core-flex transfers, expat lite options, STAs, and international commuters amongst a myriad of other formats. Permanent assignments and virtual assignments are simply two more flavours of the same thing, and demonstrate that global mobility is becoming smarter, more sophisticated and inevitably more complex to manage. Our job as global mobility experts (?) is to keep up.

 

What are the most common reasons for expat failure? Find out more here.

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