The wind of change?

Two seismic events that rocked 2016 are threatening to change the face of talent mobility across countries and continents. HRM Asia investigates how Brexit and the US Presidential Election will impact HR and the free movement of skilled talent across borders in 2017.

It is fair to surmise that 2016 was a year characterised by two major global events.

On June 24, a referendum to decide whether the UK should stay or depart from the European Union (EU) saw citizens vote in favour of the latter, a stunning phenomenon dubbed as “Brexit”.

Five months later, on November 9, Donald Trump, a billionaire tycoon who had never held any prior political office, stunned favourite Hillary Clinton in the US Presidential Election to become the superpower’s 45th leader.

A familiar theme underpinned both Brexit and President Trump’s election win.

Protectionism – the idea that governments should protect local businesses from international competition – was a central campaigning plank for the UK Independence Party which endorsed the UK’s defection from the EU.

One key reason attributed to the successful Brexit vote was that UK citizens were frustrated with migrants who had been accused of taking their jobs.

Meanwhile, President Trump promised to ensure that jobs were offered to American workers first, and said his administration would do all it could to ensure further jobs were not moved abroad.

This protectionist nature has also been epitomised in the international trade arena, with President Trump (who took office on January 20) promising to dump the Trans-Pacific Partnership, a 12-country trade deal that had been agreed to but not yet ratified among the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile, and Peru.

President Trump has labelled the Trans-Pacific Partnershipas “job-killing”, and claims it would lead to US manufacturing jobs being displaced.

Mobility at stake

Mobility and HR leaders in Singapore say talent mobility will be placed firmly in the spotlight this year.

“Both Brexit and the US Presidential Election were won on campaigns characterised by protectionist manifestos; therefore mobility could be significantly impacted,” says Mario Ferraro, Global Mobility Practice Leader - Asia, Middle East, Africa and Turkey, of global consulting firm Mercer.

Still, with the UK’s actual exit from EU  at least two years away, and with any reforms in the US requiring approval from the Congress, Ferraro says it is far too early to predict what the impact will be, or how soon the effects will become tangible in Asia-Pacific.

Ferraro expects some businesses to move out of the UK, given the likely immigration restrictions. The UK can also expect fewer new businesses to launch over the next few years, while existing businesses that stay are likely to have reduced hiring plans.

Conversely, trade restrictions in the US would have a positive short-term effect on the national economy there, with more organisations moving their operations (back) to the US in order to have the best possible access to that massive market. Mobility into and within the country is likely to increase as a result.

“If the proposed UK and US reforms are implemented, it is also likely that immigration procedures will become more stringent, which may have a number of implications, including a more careful ‘needs assessment’ when planning international assignments, the need to evaluate alternative candidates, and possibly a higher incidence of short-term assignments instead of long-term or permanent transfers,” says Ferraro.

Cartus, a global company specialising in corporate relocation services, conducted its annual Global Mobility Policy and Practices survey at the end of 2016.

The survey found that of the 174 global mobility managers who participated, 52% reported that over the past two years, their international assignment volume had been higher, and 35% said it had remained the same.

“This indicates that the current picture for international assignments is positive,” says Kenneth Kwek, Senior Vice President and Managing Director, Cartus Asia-Pacific.

The survey also showed that 63% of respondents cited visa and immigration regulations as a top challenge for their mobility programme, second only in importance to relocation cost control.

“While it is not a result of ‘protectionist’ sentiments, visa and immigration regulations are becoming more complex and companies are needing to ensure rigorous compliance in this area. This includes understanding visa implications at the early candidate selection stage and allowing more time to secure necessary visas and work permits prior to a move,” says Kwek.

Karunesh Prasad, a senior HR leader who worked in India, Europe, and the US before setting up his own consulting company in Singapore, believes that after the “initial storm” has passed, countries will adopt “a balancing act” to focus on growing their national economies.

“We must not forget that talent is not an isolated topic,” he says. “With talent comes increased gross domestic product, spending power, taxes and skills to keep the country running

“Protectionist sentiments are good if they are applied with positive backup policies to grow talent, and invest in training and re-training, while growing the economy.”

Prasad likens protectionism to a Rubik’s cube.

“You cannot decide to fix only one side and assume that you are done,” he says.

“Global forces are too strong and I only see talent mobility increasing with more moves.”

Skills conundrum

Surveys conducted in the aftermath of Brexit have already shed light on the uncertainty engulfing multinational organisations when it comes this new landslide talent mobility.

According to the Labour Market Outlook Autumn 2016 report by CIPD, many companies are pessimistic about the prospect of restrictions between the UK and Europe.

More than four in ten (42%) firms say that this would have a negative impact on their operations, compared with just five percent that say it would have a positive impact.

The report focused on access to appropriately skilled labour as one key driver of productivity growth for employers.

On this front, the survey suggested Brexit could already be having negative consequences. Close to three in ten (28%) companies that employed migrant workers reported evidence that these talents were considering departing from the UK.

In addition, more than a third of organisations that the same believe it will be tougher to hire EU-based migrants in the UK over the next 12 months as a result of the vote to leave, while 32% think Brexit will also make it harder to recruit non-EU migrants over the same period.

The Planning for Brexit: Talent Implications report by Mercer found that 66% of organisations anticipated focusing on a “build” talent strategy – developing and promoting talent from within.

Still, the majority of companies have not altered their existing mobility programmes yet. Only two percent of firms participating in the Mercer study reported that the UK referendum result had had a significant impact on their current mobility programmes with regard to assignments into and out of the UK.

In addition, 13% of companies did not expect to witness a decrease in inbound assignee numbers to the UK over the next two years, while 57% said that it was too soon to truly tell.

While Ferraro says Mercer is not witnessing a reduction in assignment opportunities directly attributable to Brexit or the US election at this stage, he cautions organisations to not make large-scale changes lightly. He says organisations that do reduce opportunities for cross-border talent deployment may suffer over the long term, as they may be unable to deploy critical skills where and when they are required. 

“The organisations most likely to feel a negative impact will be those that adopt a more tactical and less strategic approach to mobility, which means that they use mobility primarily to deploy skills where the work needs to be done, rather than leveraging mobility for knowledge transfer and the development of local talent,” he says. 

On the other hand, Ferraro warns that a protectionist environment may also lead to some companies deciding to move their work to where talent is more freely available, instead of moving talent to where work needs to be done.

Direct impacts

While Prasad is adamant that recent global developments will not thwart global talent mobility, he says if Brexit and the US election actually follow through with protectionist mindsets and policies, alternative hub locations for business will emerge.

“Watch out for Ireland, Canada, and many more new destinations,” he says.

Prasad lauds Singapore as an example of how countries should dovetail talent mobility alongside developing the skills of the local workforce.

“I love the continued focus, balance, and actions on talent by the Singapore government. An ageing population and talent gaps have been beautifully addressed with multiple interventions and the government continues to regulate influx in a very balanced and smart manner,” he says.

Leveraging on technology is another platform for growing talent across borders, even if immigration rules tighten.

“Most large multinationals use virtual teams with global roles based out of different geographies and with opportunities to participate in global projects,” says Prasad.

While governments may attempt to hinder talent mobility, Prasad says the realities of global business will eventually outweigh these additional regulations.

“In one of my roles, I worked as HR Director for General Electric’s Oil and Gas business and I realised that the industry has probably one of the most mobile workforces of all industries. Project by project, teams are formed and after completion, the team moves on to the next one, most likely on another continent,” he says.

According to Prasad, adopting a protectionist mindset will be detrimental only to countries, and not to individual companies.

“Stopping this trend has a direct impact on a country’s GDP and the economy. Imagine what will happen to Silicon Valley start-ups without foreign talent, and what it will do to the economy of the US as a result,” he adds.

HR’s need to evolve

While Ferraro says it is crucial for HR departments to constantly re-align their talent strategies in line with changes in the structure, operating model and strategic direction of their organisations, global events may ultimately require businesses to re-think their plans.

“Therefore the changes required in the HR function will need to be business-driven,” he says.

According to Kwek, while it is unlikely that HR will have to completely rethink their plans, it is already becoming increasingly important for departments to exercise flexibility in their mobility programmes.

Prasad says the role of HR in many businesses has now evolved to that of building local talent, while simultaneously building organisational capability around virtual teams, and fostering collaboration, digitisation and a culture of accountability instead of a manager-and-task- driven culture.

“As HR professionals, we also have the responsibility of working with the government and influencing them to make the right decisions,” he says.

In addition, Prasad echoes his belief that the next big wave of talent is coming via the “gig” and freelance culture now emerging in the US. This will create more opportunities without political boundaries, he says.

“A few of the norms may change in this game, but talent mobility is here to stay.”

Brexit scares off top-notch scientists

The landmark Brexit vote that has set the UK up to leave the European Union is already making waves across the scientific community in particular.

A survey of academics in the UK has revealed that some world-class scientists have been rejecting positions at universities in the UK since the June 2016 referendum.

One in five were planning to depart from UK research posts, attributing the planned move the Brexit result.

Mike Galsworthy, of Scientists for EU, which has been amassing reactions from its membership since the referendum, said of nearly 400 responses, there were 84 cases of people planning to leave UK research posts.

This has sparked fears of a mass departure of top scientific talent that could derail the UK’s status as a global science hub.

According to Galsworthy, chief reasons for the probable departure were due to a likely “surge in xenophobia, making foreigners feel unwelcome”, as well as the uncertainty of the science funding landscape.

 

Indian companies thwarted by H-1B threat

US President Donald Trump’s pledge to generate jobs for Americans is poised to come at the expense of a specific work visa, known as H-1B.

H-1B visas permit skilled foreign workers to work full-time in the US for up to six years.

While campaigning during the then US elections, President Trump said he would “end forever” the use of the H-1B, declaring it a “cheap labour programme”. In its place, he planned to institute an “absolute requirement” to hire American workers first for every visa and immigration programme.

According to a report by the US Citizenship and Immigration Services, Indians have been largest recipients’ of H-1B visas. Pravin Rao, chief operating officer of Infosys (the second-largest IT firm based in India), says many global organisations will be rethinking their strategies.

Companies may “have to accelerate hiring of locals” in the US, and “start recruiting fresh graduates from universities there.”

This will, in the process, decrease the intake of engineering talent from India.

 

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Sandeep Aggarwal, Chief Financial Officer of Aon-Hewitt Asia-Pacific, shares his thoughts on the Workday finance and HR analytics platform. He says the cloud-based system is intuitive and easy-to-use, but still provides powerful insights across the functions.

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