EY Human Capital Conference 2012: Managing global mobility risk - Is cost the barrier?

2012 Human Capital Conference23–26 October

Managing global mobility risk: I t th b i ?Is cost the barrier?

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Managing global mobility risk: Is cost the barrier?Page 2

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► The views expressed by panelists in this session are not necessarily those of Ernst & Young LLP.


Presenters

► Ben Webb ► Robert Bodie► GE Europe► [email protected]

► GE International► [email protected]

► Michael Mulroy► Ernst & Young LLP (UK)► [email protected]


Agenda

► A definition of “business risk”► A definition of business risk► Risk management in leading organizations► Global mobility risk► Global mobility risk► The General Electrics risk management environment► Global mobility risk — current themes and trends► Global mobility risk current themes and trends► General Electric global mobility services► How General Electric manages the risks that matter► How General Electric manages the risks that matter ► Conclusion — Is cost the barrier?


Business risk — culture, trends and practices

A definition of “business risk”

► Any event, action or inaction that threatens achievement► Any event, action or inaction that threatens achievement of business objectives.► Part of doing business, take risk to gain return► Four quadrants in “The Risk Universe”:

► Strategic — achievement of strategic objectives► Operational inherent in the day to day business operations► Operational — inherent in the day-to-day business operations► Compliance — regulatory and legal obligations► Financial — impact on financial and reporting processes


Risk management trends in leading organizationsorganizations

► Top of mind in the “C-suite”p► Driving improved business performance through risk

management► Mitigate the risks that matter► Reduce cost by eliminating overlapping risk processes and

optimizing controlsoptimizing controls► Use risk data analytics to improve decision making► HR is fully aligned with the wider approach to Enterprise Risk► HR is fully aligned with the wider approach to Enterprise Risk

Management (ERM):► Appreciation of appetite and tolerance► Strong tone from the top and governance embedded in the function► Differential investment in the risks that matter► Controls are optimized, effective and observed


► Controls are optimized, effective and observed

Global mobility risk – an overview

► People/talent impact on market reach now in the top three p p prisks for the CEO

► People costs are a significant portion of operating p g p p gexpense

► Globally mobile employees carry disproportionate cost/risk

► Risks inherent in global mobility:► Regulatory compliance ► Operational inefficiency ► Financial► Financial► Damage to reputation► Stiffer sanctions – including executive prosecution


g p

Trends in global mobility risk

► Challenges of fiscal stimulus with reducing tax revenuesg g► Increasing audit activity and focus on enforcement► Technology improving access to and sharing of data► Technology improving access to and sharing of data► A golden age of legislative change driving complexity► Perceived threat to employment base from emerging► Perceived threat to employment base from emerging

economies► Immigration a key electoral issueg y► Increasing focus on governance, ethics and

anti-corruption► Statutory and internal audit are taking an interest


General Electric global mobility services

General Electric overview

► General Electric is a global infrastructure and financegcompany

► Founded by Thomas Edison 130 years agoy y g► Businesses include – Aviation, Capital, Energy,

Healthcare, Home & Business Solutions and Transportation

► Over 320,000 employees in more than 150+ countries


Logos courtesy of GE

General Electric risk management environmentenvironment

► Integrity policyg y p y► Bottom-up compliance► Risk management► Risk management

environment applies to global suppliers and their suppliers

Employees

Global suppliers

Extended local suppliersExtended local suppliers


General Electric global mobility services

► Operates across more than 90 countriesp► Supporting mobile employees including:

► Traditional expat assignments p g► Short-term assignments► Commuters ► Leadership programs ► Peers ► Field engineers► Field engineers► Short-term business travellers


Global mobility services (GMS)

► GMS mission – support GE businesses with their global pp ggrowth and people development strategy

► Provide standardized flexibility to deliver on GME policy guidelines as determined by business and assignment needsE d t GE b i d l b ll bil► Engage and support GE businesses and globally mobile employees (and family members) through the life cycle of an assignmentassignment

► Deliver cost-effective services and subject-matter expertise through a global network of external suppliers and internal partners

► Ensure compliance with immigration and tax legislation


Risk management across the assignment

► Assignment life cycle:g y► Pre-assignment – intercompany/secondment agreement, package

design, multiple approvals, restricted payroll activation, acquisitionsacquisitions

► Immigration – strong DD, compliant entry/exit, constant monitoring► Relocation – local suppliers, HHG shipment, relocation expenses► e ocat o oca supp e s, G s p e t, e ocat o e pe ses► International payroll – completeness, accuracy► Tax/social security – payroll tax compliance, short-term business

ll i f i i h h i l i ltravellers, taxation of equity income, hypothetical taxes, social security

► Security, EHS – local policiesy, p► Repatriation – tax/pension status


Conclusion

Conclusion – Is cost the barrier?

► Effective risk management is commercially imperative:► Regulation is increasing, enforcement is becoming ever more sophisticated► Regulation is increasing, enforcement is becoming ever more sophisticated

and aggressive ► International mobility is more varied and complex ► There is a shift from developed to emerging markets► There is a shift from developed to emerging markets

► Organizations are looking to drive value from risk management activities: ► Optimized processes and controls ► Reduced costs through stronger policies► Reduced costs through stronger policies ► Strong data facilitates better business decisions

► Doing the right thing is critical to brand protection:► Immigration is more politically sensitive than ever before ► Governments and electorate are less tolerant of unethical business practice ► Shareholders and investors place a premium on good risk management


Questions
