Is Brexit driving organisations to consider relocation en masse to another country?

Brexit has created a wave of uncertainty rippling through boardrooms across the world that raises a serious consideration for a company, or its supply chain, to relocate as a whole to another country. While the message we currently hear from organisations is ‘business as usual, or too soon to act’, there will be many organisations currently undertaking strategic analysis on whether or not to relocate their whole company, en masse, to another country.

This paper explores the mobility dimension of Brexit that is likely to be at the top of many CEO’s agenda, which by default should also be at the top of a Global Mobility leader’s agenda.

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Introduction

Whether directly or indirectly, Brexit is a catalyst for companies to focus on their strategy over the short to medium term in response to the potential trading and commercial impact that could be triggered by the UK invoking article 50 of the Lisbon Treaty.

Moving a whole headquarters, or indeed an entire organisation, from one country to another is a totally different mobility strategy, which requires a well-thought through plan. The end-game for any such relocation should be to ensure as many of the desired talent agree to relocate, remain engaged and retained on a long-term basis. Global mobility teams play an absolutely pivotal role in enabling organisational success and return on investment, by making sure that there is a well-structured, one-time relocation programme for the organisation as a whole.

Employee acceptance is key

A permanent move aims at fully integrating an employee and possibly their accompanying family into a new country. For some, it is an exciting new chapter in their lives whereas for others it may require a challenging shift in mind-set. Effectively, this is an organisational change management process as much as it is a logistical relocation. The ‘take-up’ or acceptance rate of an en masse (group) relocation will ultimately be influenced by the supply and demand of the labour market, employees’ career views as well as that of their accompanying partner, the ‘marketing’ and nurturing provided to employees, and the management of expectations of all the stakeholders. Faced with potential redundancy, an employee may relocate under duress but potentially leave within a short period of time. Especially if the employee can find a better offer elsewhere. A positive relocation experience therefore plays a crucial part in the attraction and retention of key personnel.

The effect of group dynamics

The effect of the group dynamics should not be underestimated. In employee groups there are always different attitudes to a planned relocation, and the people with a negative stance towards it will influence other members of the group.

Any insecurity due to a delayed or incomprehensive communication about the relocation can become detrimental for the acceptance success of the targeted employee(s). Senior management commitment, and the use of strategic messaging, is a great way to mitigate the risks of the effect of group dynamics.

Our recent webcast led by guest speaker Chris Debner, a renowned leader in strategic mobility advisory and the relocation of organisations and their employees, highlighted the key considerations overleaf that organisations need to adopt—a holistic approach to their group relocation strategy – to ensure that executive management are fully briefed and educated on the four pillars that underpin a successful company relocation en masse from one country to a new location.

Process + Project planning and coordination of the Relocation process. + Change management / employee communication. + Capacity management: Resource allocation / outsourcing. + Tracking (e.g., work permits, payroll and compliance).

Cost + International compensation benchmarking + Vendor selection and engagement + Cost projections / accruals + Recharge / cost allocations

Policy + Relocation package design + Creating of a customised group move policy + Alignment with existing or new HR policies / HR strategy + Employment conditions, contracts and works councils

Risk + Risk of business disruption + Retention of key talent + Compliance for tax, social security, immigration + Permanent establishment risks in BEPS times

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Conclusion

The trend that companies are likely to relocate groups in the wake of the Brexit poses a great opportunity for the Mobility and Talent Management functions to prove themselves to the business leadership. Group relocations require extensive change management that needs strategic planning and consideration of the associated challenges and risks. Companies tend to have little or no experience in relocating groups, and the impact of the multiple risks materialising is far greater.There is only one chance to get it right. It is strongly recommended to properly prepare for a group relocation, ahead of any announcement. Project planning, the right strategy, change management and possibly the selection of trusted partner(s) are all of paramount importance to ensure that business continuity is maintained, and key talent is retained post relocation. Organisations need to ensure that before they get too far into the process of relocation they have a team who can provide the necessary support from the planning, through to post relocation stabilisation.

It is evident that directly as a result of Brexit, and possibly indirectly, global mobility functions have been offered an opportunity to demonstrate how they can help shape the future growth of a business. If your global mobility function has yet to be invited to discuss potential talent moves in this crucial business decision, then we recommend a pro-active communication either directly to business leaders or through executive HR leadership. This is a task for all mobility functions in headquarters around the world, as this not only affects UK headquarters. Especially if a company has a substantial amount of talent in the UK.

Key questions

+ Do you understand who is to be targeted for the move, and who is to remain? + Is there a realistic timeline for the relocation? + Do you have a project plan that specifies timelines,

responsibilities and identifies where external help is needed? + Do you have considered a position versus talent move—is it that the company needs

the employee to move, or their job, and can a local hire carry out the same role? + Do you plan to offer key talent different package than other (local) employees—employee equity? + How does the group relocation strategy fit with company’s global mobility

strategy and other policies, such as the culture of the organisation? + What terms, and when, will localisation happen

(in the case that local packages are not decided from the start)? + Have you considered both one-off and ongoing costs, as well as replacement

and training costs for non-movers (cost management and control)? + What are the barriers and enablers of change and acceptance in the company? + Can you maintain a balance between keeping costs down,

while providing enough incentive for employees to accept the relocation? + Are tax and social security planning, and its related cost, being taken

into account when designing relocation compensation and benefits? + Does the relocation policy promote tax and legal compliance

and mitigate permanent establishment risk? + Is a close cooperation ensured between Talent Management

and the Mobility function with other work streams of the project? + Under what circumstances are ‘commuters’ allowed, if any? + Do you have a contingency plan for the quick hiring

of replacements (for employees that did not relocate)?

About the author

John Rason, Group Head of Consulting, Santa Fe Relocation

Recognised as a thought leader and speaker on strategic international HR, talent management and Global Mobility, John has 15 years of global consultancy experience. Having previously held senior HR leadership roles in numerous global businesses across a range of industry sectors, John now works with global organisations to create value and improve the structure of Global Mobility programmes; focusing on aligning strategic objectives with operational delivery. John can be contacted at john.rason@santaferelo.com.

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