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As Companies become More Global, Should They Hire Talent Locally or Transfer Employees Internationally?

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RISMEDIA, July 24, 2008-As they continue to increase their global presence, the world’s pharmaceutical companies find themselves wrestling with a multitude of challenges — from deciding whether to find local talent versus transferring employees internationally, to understanding the nuances of foreign labor markets, to developing a strategic workforce plan — according to a survey by GMAC Global Relocation Services and the Centre for Performance-Led HR at Lancaster University Management School in the United Kingdom.The survey, International Mobility in the Pharmaceutical Sector: The Challenge of Emerging Markets, collected data from senior international mobility executives from some of the leading pharmaceutical firms headquartered in North America and Europe.

“Companies that want to expand into emerging markets today face a significant dilemma,” said Scott Sullivan, senior vice president of GMAC Global Relocation Services. “While their employees are increasingly amenable to relocating globally, this is often a costly proposition for companies. Another option is to hire locally, but finding and managing the right people with the appropriate skills in these markets can be very difficult.”

Economic Conditions Affecting International Mobility

Economic conditions continue to exert pressure on the international mobility strategies for companies with global operations — and the pharmaceutical industry is no exception. The survey revealed that 59 percent of pharmaceutical companies have made efforts to reduce international assignment expenses.

The primary areas for cost reductions in the sector are:

– Vendor costs: 28 percent
– Cost of living allowances: 18 percent
– Increased reliance on policy localization: 18 percent
– Policy components (or amounts) offered to expatriates: 18 percent
– More care selecting candidates: nine percent
– Other: nine percent

“The survey shows quite clearly that companies are looking for ways to contain costs, reduce the cost of packages, such as cost of living allowances and other components, and that they are putting a greater emphasis on a policy of localization,” added Sullivan.

Measuring Return on Investment

Given the growth in emerging markets, a key question lingers: should return on investment be measured during the assignment, immediately following it, or after an appropriate time when any capability transfer might be expected to have happened?

“Interestingly, the international mobility function is monitored largely for contributing value to the organization, not necessarily for its return on investment,” said Sullivan. “To that point, only 12 percent of the respondents in the pharmaceutical sector reported measuring some form of return on investment, and even then, the calculations were qualitative rather than quantitative in nature.”

Additionally, there has been debate about the merits of using short-term measures that might look at the success of a particular assignment, or long-term measures that assess whether mobility in general has assisted in developing the capabilities of an emerging market.

“If a shift toward longer-term measures occurs, a logical step would be to evaluate the return on investment of the whole international mobility function using such metrics,” continued Sullivan.

The study also found:

– Eighty-eight percent of respondents in the pharmaceutical sector indicated they are moving to global standards; an additional eight percent are moving toward regional standards. A recent trend, associated with this need to balance standardization with flexible response to business needs, is to increase the number of mobility packages available. In addition, organizations have structured assignments to fit individuals and locations by introducing multiple assignment policies.

– More than half (53 percent) of companies in the pharmaceutical sector are looking for alternatives to long-term (more than one year) assignments. Their primary reason for doing so is to reduce costs.

– GMAC Global Relocation Services conducted the pharmaceutical industry-focused survey as a supplement to its Global Relocation Trends Survey, published annually since 1993. Each year, the Global Relocation Trends Survey provides companies with in-depth information and analysis on global mobility trends. (To obtain a complimentary copy of the Global Relocation Trends Survey or the pharmaceutical industry spotlight.

The company will host a complimentary Webinar presentation exploring the findings of the survey on August 19. Participation in the Webinar is free and limited to the first 100 registrants.

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