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Imprint Publisher: Ernst & Young EMEIA Tax Maagplatz 1, 8005 Zurich, Switzerland Marketing Director: Alfred Raucheisen Program Manager: Alexander Lorimer Program Support: Gabi Wichmann Content Advisor: Monica Kremer Online Manager: Mikael Enoksson Publishing House: Infel AG Militärstrasse 36, 8004 Zurich, Switzerland Publishing Director: Elmar zur Bonsen Editor-in-Chief: Rob Mitchell Editor: James Watson Creative Director: Guido Von Deschwanden Art Direction: Käthi Dübi Project Manager: Michèle Meissner Picture Editor: Diana Ulrich Printer: Rüesch Druck AG 9424 Rheineck, Switzerland All rights reserved. Contents of this publication may not be reproduced whole or in part without written consent of the copyright owner. A part of this issue will be distributed as an insert in the Financial Times across Europe, Middle East, India and Africa in April 2012.
Stephan Kuhn Your feedback We work hard to make T Magazine useful and informative for our readers. But we would value your views on what we could do better. Feedback can be provided via the feedback form in this publication or a brief online survey, available here: www.ey.com/tmagazine/ survey Dear Reader By Stephan Kuhn Editorial The growing emergence of a “new global executive” Recruiting and retaining talent is a perennial challenge for any multinational business. In rapidgrowth markets, there is already intense competition for relatively small numbers of highly skilled and experienced workers, especially within middle and upper management, despite huge numbers of new graduates emerging each year. In developed markets, multinational businesses are grappling with other challenges: an aging workforce as a result of demographic change, and all too often a disconnect between the skills of the labour force and those that businesses need to succeed. Addressing these talent mismatches requires companies to think carefully about how they manage their human capital on a global basis. For many, the greater use of overseas postings is an important tool for filling talent gaps and transferring best practice around the world. Gaining experience in other markets is also a crucial part of management development, helping high-potential employees to develop the international experience and cultural understanding that will enable them to lead tomorrow’s global business. Can tomorrow’s CEO be someone without deep, first-hand knowledge of today’s rapid-growth markets? In recent years, the pattern of international postings has evolved. Traditional expatriate models, whereby companies relied on the experience of managers from developed markets to establish operations in rapid-growth economies are now just one part of the mix. Today, there is a much more fluid, dynamic approach to the migration of talent, with executives also moving from rapid-growth to developed markets, and also from one rapid-growth market to another. The emergence of a new generation of “global executives”, while beneficial for the business overall, presents companies with many challenges from a tax perspective. Different rates of income tax around the world can make it difficult for companies to create remuneration structures that equalize liabilities between jurisdictions. A related challenge here lies in crafting incentive structures that motivate global executives, without creating a mismatch between them and local workers. Beyond this, social security obligations and pension entitlements, complex enough in many jurisdictions, become even more challenging to manage for mobile employees. In addition, meeting the challenges of housing, schooling for children and potentially work assistance for spouses present complications. Obtaining appropriate residential and working permits are also critical steps in managing risks for both the firm and employees. Even employees who are not based overseas can present problems because they may trigger local tax liabilities if they travel frequently enough. In this issue of T Magazine, we look at the emergence of a new generation of “global executives”, either traveling frequently, or else shifting from one international posting to the next. We consider how companies are developing global talent management processes to build talent pipelines for the future, and explore the tax implications of this increasingly mobile workforce. We hope that you find the publication valuable and stimulating. Stephan Kuhn Stephan Kuhn is Area Tax Leader for the Europe, Middle East, India and Africa (EMEIA) region at Ernst & Young. Ernst & Young Issue 07 T Magazine 3
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