Who would have thought that during a global pandemic, businesses would be looking to relocate or branch out in different countries? Well, according to over 80% of respondents in a new report, these businesses are now considering expanding their workforces by looking outside of their boards to find talent.
New research released by Globalization Partners and CFO Research indicates that most businesses are undeterred by the impact of COVID-19 and are still moving forward with plans for new or expanded international operations.
Some Employers Already Had Expansion Plans in Place
More than half of the respondents expressed interest in expanding or adding operations in the Asia-Pacific region. The findings also show that 83% of respondents said they are looking into a remote, global workforce model as a solution to the changes brought about by COVID-19.
Despite the pandemic-induced economic crisis, 45% of respondents are either currently expanding globally or only slightly delaying their expansion and will do it within 1 year. Another 9% maintain their intent to expand internationally but remain in a yearlong holding pattern.
After North America at 71%, the Asia-Pacific region (excluding China), targeted by 65%, was the most popular region for new or expanded operations. Capturing market share was the top-cited reason for expansion into these specific regions. Also highly cited was the desire to expand sales, diversify investments, and acquire top talent.
“This research offers grounds for optimism that the economic crisis caused by COVID-19 has not derailed international expansion plans for most businesses who were already on this path,” explains Nicole Sahin, CEO and Founder of Globalization Partners, in a press release. “However, the operational challenges, particularly around local legal rules, recruitment and compliance can take months to navigate.”
How COVID-19 Impacts Expansion
The data also found that employee health and safety was a top concern related to global expansion—cited nearly twice as much as the other leading issues, including new business strategies, increasing sales pipeline and revenue, and reducing organizational costs.
In addition, 83% of executives expressed concern managing multiple third parties and stakeholders in a foreign environment during a volatile economic climate. And 74% of executives expressed concern with navigating foreign banks and international employee payroll in these volatile times.
Expansion had been or was expected to be a long process for most of the executives. Eighty-six percent said their global expansion took or would take at least 5 months. That figure included 42% who put the time required at more than 1 year. As a result, dedicating resources to global operations was also a top concern for executives planning international expansion.
Sahin adds, “The survey supports all the key challenges facing companies as they expand globally. But the biggest issue is usually the time and cost involved with establishing legal entities or subsidiaries.”
How HR Can Help Expansion
According to Steve Black, Cofounder and Chief Strategy Officer of Topia, “global talent mobility must be a core part of any HR team’s global talent management strategy.” Black recently identified the top three mistakes companies make when it comes to global talent mobility and how to fix them. These include:
1. Not understanding how to use data to their advantage. After a decade in the global talent mobility space, we are no longer surprised by how many companies still know very little about the performance of their programs, the relationships between mobility and talent management, and how they compare with their peers.
Digitizing and automating mobility aren’t enough; to create true network effects, companies need to standardize global talent mobility data and processes such that every deployment becomes a rich source of insight for every enterprise on the platform.
For example, if a company has only moved five people from New York to Hong Kong, that’s its benchmark for moving a sixth employee. HR needs to benchmark the cost of moving employees from New York to Hong Kong against hundreds of companies and potentially tens of thousands of relocations.
2. Not adopting one platform to manage a global mobility strategy. The data required for a truly global talent strategy are fragmented among massive HR platforms, relocation logistics companies (e.g., real estate agents and moving companies), and thousands of companies that practice global mobility using different data standards and processes.
One consequence is that global mobility programs distort what companies know about their own employees—they might have to fire them in one system, hire them in another, and pay their mobility expenses using numerous other systems that can’t share data with each other.
A second consequence is that companies cannot benchmark their mobility programs across policies or against other companies, so they don’t know how their mobility costs and outcomes compare, and they struggle to measure the return on investment (ROI).
3. Not focusing on how to save money. Global mobility can be very expensive, and CFOs will likely be asking for cost-reduction opportunities as the business recovers from COVID slowdowns. But, it’s tough to find those savings opportunities when there’s no way to visualize global data on the economics of mobility, especially when relying heavily on outsourced providers.
With a comprehensive platform for managing mobility that also integrates with HR, finance, and other technology, companies gain insights to identify money-saving opportunities. The right technology can help reduce administrative overhead and lower mobility expenses—all while justifying the investment in this type of technology through substantial ROI.
Eventually, the coronavirus will become a thing of the past, but breaking into a new global market will always have its challenges. Keeps these tips in mind while you develop your company’s expansion plans and talent mobility strategies.