The Future of Global Mobility in a Post-COVID-19 World Part 1: Remote Workforce
The coronavirus pandemic has ushered in a “new normal” in how business is conducted across the globe, and mobility managers have had to adapt quickly to these changes. Even as we continue to contend with the ongoing effects of the pandemic, the discussion of what employee mobility will look like post-COVID-19 has started. Employee mobility strategy will need to be aligned with how companies adjust to the new landscape. To determine the best way forward, we must first look at what is on the minds of company leaders and where they are focused.
Based on the recent BDO European Survey: Combatting the Crisis with Business Resilience, which reviews the responses of 244 business leaders across eight European markets (Belgium, Denmark, France, Germany, Italy, Norway, Spain and the United Kingdom), business leaders have restructured their priorities. While attracting and retaining top talent remains in the top five priorities, driving down costs and adopting new digital solutions have surpassed talent in terms of importance. Additionally, the pandemic has exposed supply chain vulnerabilities, and a majority of companies have stated that they will take specific actions to diversify their supply chain as they move forward. Will supply chain diversification require new locations and for talent to be deployed to those locations? Finally, with so many employees working from their homes rather than being physically present in a main location and many companies poised to allow employees to work from home permanently, how will this affect the need for, and volume of, employee transfers?
Source: BDO European Survey: Combatting the Crisis with Business Resilience
In this three-part series, we review the impact of three factors—remote workforce, diversified supply chains, and the need to reduce overhead and general business costs—on global mobility. This article looks at the remote workforce.
Impacts of Remote Working Environments on Global Mobility
Employees and employers have discovered a number of benefits from this new wave of working from home. For the employee, remote working allows for greater flexibility by avoiding long commutes and having the ability to achieve a better work-home life balance and more autonomy in terms of when and how work gets done. Many individuals have even elected to work remotely from another location that is further from their primary work location, i.e., a beach house, closer to family or even in a new country.
For the employer, where work from home is possible, many have seen an increase in productivity and, in certain cases, even an increase in engagement by various teams. Many large-scale companies have determined that a return to the office for the majority of its staff is not needed—even in the longer term—which can lead to considerable savings in areas such as rent and insurance.
But, what do these trends mean for mobility?
Whether the work from home environment will be a benefit or a hindrance to global mobility will likely depend on the industry. For example, manufacturing companies need employees to be physically present on the plant floor to help make the products, whereas in the technology sector, platforms exist to allow people to work efficiently from wherever they are. In situations where employees have to commute to a specific location on a daily basis, mobility may not change much, regardless of the pandemic—employees will still need to relocate from time to time to ensure proper staffing levels in each location. However, the situation may become more complicated for industries where a virtual workforce becomes the norm. The shift to a remote workforce may give a company an opportunity to reduce certain operating expenses, adopt new technologies and digital solutions, etc.
As an increasing number of employees work remotely, will the need for talent mobility decline or will it increase as employees explore new locations to call home and work from there? With a more remote work environment, the global talent pool takes on additional meaning. If it doesn’t matter where the work is done, the employer should have a broader talent pool to draw on, i.e., the ideal candidate may be located across the country or across the world.
With the shift to a mobile workforce, the role of mobility managers likely will need to evolve as well. Instead of planning and executing on traditional long-term assignments, mobility professionals will need to direct their focus to a host of new challenges that inevitably will arise. For example, what will it mean to keep someone “whole” who has chosen to work in a remote location rather than the traditional employee who was asked to transfer? Should a “home-country” or “host-country” approach be used with respect to salary, benefits, etc.?
It also will be necessary to monitor how governments react to this new era of remote workers and whether they revise relevant tax laws and guidance. For instance, New York state has the right under current legislation to subject employees of New York-based companies to income tax even if the employee chooses to work from another state. If the employee chooses to work from another state, or even another country, will there be double taxation of income? If so, will the company have to compensate the individual or will the individual have to bear the burden of the double taxation? Further, how will remote workers affect the corporate tax liability of a company? Many states and countries have rules that look at where employees are performing work for a company, which could create nexus or “ties” to that state for the company. Too many ties and the company will have to pay corporate tax in that state. A similar issue exists internationally, i.e., whether an employee working remotely in a country for an employer located in the U.S. creates a permanent establishment (PE) of that company in the foreign country. Many governments have relaxed their nexus or PE rules during the pandemic to prevent companies from establishing a taxable presence, but these measures are temporary; it will be necessary to see whether and how governments further adjust these rules longer term. As they do, mobility managers are likely to be asked to help coordinate and manage these impacts and they will need to have a closer working relationship with all relevant corporate stakeholders.
Some companies have started to re-assess the remote workforce policy and have developed policies to manage a remote workforce, which generally outline the type of activities that can be done remotely and what locations are or are not acceptable. Even companies that are proactively trying to better position themselves to protect their business and employees will need to regularly review the policies to ensure they meet the needs of an evolving work environment. As companies continue to compete for top talent, being flexible and adaptable to remote workers will be critical.
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