Construction companies need to manage the growing impact of international mobility

TORONTO, October 10, 2008 — Over 90% of construction companies rank 'international mobility' — moving employees around the world for business needs — as important to their company's success, according to PricewaterhouseCoopers' (PwC) latest survey of construction companies around the world. All indications suggest that the trend for international mobility is set to increase significantly, as construction companies in developed markets currently suffer from slower economic conditions and as a result many are looking to emerging markets, where more robust economies, substantial oil revenues and major deficits in the existing infrastructure, spell opportunity.

Competing in an international market and winning contracts overseas means moving people around the globe — whether it be for a few weeks overseas to win a contract or for many years in order to deliver work. The survey, of 24 major construction companies in eleven countries, showed that nearly 70% of respondents say that short-term construction projects are the main factor driving international mobility initiatives. Furthermore it indicates that many construction companies recognize the importance of international mobility and of talent management to their business — but very few, if any, have developed a systematic approach which links the two.

"International mobility is very important to the success of construction companies, both today and in the future," says Michael Clifford, Leader of the PwC Canada Engineering and Construction practice. "But moving just one employee from one location to another can be a time consuming, costly and potentially risky business. There is seldom a sufficient level of experience or capability within companies to identify, let alone deal with the breadth and complexity of issues that arise. Our survey has highlighted that in planning international assignments there is insufficient understanding of the true cost, lack of a systematic approach and a lack of link up with the talent management agenda."

Challenges can include:

• Developing and implementing an effective policy for managing overseas assignments
• Putting in place appropriate support in the host country for the assignee and their family once they arrive
• Coping with a host of compliance obligations and risks, starting with immigration and ranging from tax and social security compliance issues to local employment regulations
• Motivating and retaining employees who are assigned overseas
• Making sure that the development of the company's talent does not stop when assignees are seconded overseas
• Managing the costs associated with international assignments

Many of the companies in the PwC survey operate in dozens of countries, and for most the number of overseas assignees runs into the hundreds, and a few companies are seeing their expat population number in the thousands. Most said they either have a written International Assignment Policy or are in the process of drafting one. Nearly all respondents report that complying with tax and regulatory issues is very important to their company and tax compliance for employer and employee topped their list of compliance issues.

Most companies surveyed cover the cost of home leave travel, living allowances, medical benefits and a relocation allowance for overseas workers but many respondents didn't see cost as one of their top priorities. Over a third don't actually estimate costs, and of those that do, many only use rough 'rule-of-thumb' estimates. A third of organizations surveyed said that international assignments impacted on their retention.

It is important to deal with the human issues around resettling, incentivizing and providing sufficient recognitions to employees working in a new environment. But only half of companies surveyed say they offer support for employees around cultural integration in the host country. Worryingly 32% of companies said they thought that an international assignment significantly increases the chances of an individual leaving the company.

Clifford notes, "Companies will need to increase their agility in order to staff key projects appropriately. They will also need to ensure that out of sight does not mean out of mind when it comes to top talent. And the task of managing an expanding global mobile workforce will not be an easy one, as many companies have already found."

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 146,000 people in 150 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its related entities have more than 5,200 partners and staff in offices across the country.

“PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.