FIVE KEY PRINCIPLES FOR EXPATRIATE ROI Working toward an effective program in an imperfect, rapidly changing world By Yvonne McNulty, Ph.D.
Expatriation is a big topic and getting bigger. Tens of billions of dollars are spent annually by organizations to move expatriates around the world, yet year-on-year, these companies struggle to manage and improve the return from these expensive employees. Expatriation is also changing, as the familiar there-and-back models of the past are being supplanted by a great diversity of complex patterns of mobility that create new challenges and opportunities for expatriates and their organizations. Issues of compensation, career, and family are changing not only the employment relationship between expatriates and their organizations, but also the very landscape of global mobility. Exacerbating the challenges associated with expatriate return on investment (eroi) is the reality that no company has its global mobility program nailed perfectly aligned with other business units and free from bumps in the road, cost-cutting woes, and other challenges. In my consulting work, I ve met enough mobility managers to know that international assignments do not always operate under conditions are understaffed; and they often lack the expertise to take on a large-scale, long-term change-management project such as eroi. And no matter how well intentioned, it s not enough to charge one department with a new eroi project, because that is beyond what one department does. This is a common problem not only of mobility departments but also of HR departments, not to mention operations, manufacturing, services, and a whole host of other business functions with a stake in, and an impact on, eroi. The whole business reaps rewards from an effective eroi program, so the whole business needs to be involved in how it is structured and implemented. So what can mobility managers do to start developing an eroi program that makes sense, amid the breathtaking speed with which the internationalization of business and of life in general is growing and changing expatriation? As might be expected, much has been written about eroi, but little progress has been made on its development and execution. However, more than a decade of research, including collaborations with some of the best consulting firms in our field, have resulted in the following five key principles for effective expatriate ROI. PRINCIPLE 1 REFRAME YOUR THINKING FROM INTERNATIONAL ASSIGNMENTS TO GLOBAL MOBILITY Expatriation practice has evolved considerably from from there-and-back international assignments to continuous global mobility. This change has been driven by steady growth in globalization, the rising importance of the international labor market, and changing international employment relationships between expatriates and their companies. Many tunity to develop an international career, but their aspirations often cause long-term problems for their organizations. Such global careerists will present
GLOBAL CAREERISTS ARE, IN FACT, THE NEW EXPATRIATES. ongoing challenges, as well as provide substantial are about and the value they potentially bring. In short, expatriation has evolved from a focus on international assignments to one that demands global mobility as a growing and necessary expectation. This requires that companies focus away from repatriation and instead on reassignment; that global careerists be embraced as the new expatriates; and that lifetime employability be recognized as a key driver for the emergence of individual ROI as a catalyst for downplaying corporate interests. PRINCIPLE 2 CHAMPION EROI To get the attention eroi deserves, reforming the mobility department to adopt an eroi mindset is only one of the steps required. Other departments need to be involved, from the CEO to the most junior HR staff member and all the way back again, to ensure that an effective eroi program is driven from the top down. To achieve an eroi approach, most companies need one or more eroi champions senior managers or directors who are passionate about global mobility, probably have personal expatriate experience, and are supported by top management in terms of time, energy, resources, and scale change for however long it takes. build it, implement it, and own it also matters. Key to their success will be the CEO s involvement to encourage, or even enforce, compliance. Who in your organization has the skills and passion to drive a new eroi initiative? PRINCIPLE 3 THINK LONG-TERM, ACT SHORT-TERM While long-term planning has its place in global mobility, short-term results can also be advantageous. To achieve superior eroi, companies need long-term strategies and short-term wins outcomes that feed into eroi evaluations on a quarterly or 10-year plans. Some assignees, such as locally hired foreigners or foreign executives in local organizations (FELOs), can provide strong short-term eroi results because their employment is usually tied to on-assignment gains, and they are cheaper to headquarters, albeit more expensive to employ, can provide more extensive longer-term eroi gains because their employment is often tied to succession and talent-management planning. The combination of think long-term, act shortterm is becoming a new reality for many companies as they struggle to staff their offshore subsidiaries, not because they feel compelled to give up the longterm strategizing that is an effective part of their eroi approach, but because for some companies shortterm ROI is the only means of achieving true eroi success. My point is that putting all of one s eroi eggs into one long-term basket is a mistake: Shortterm gains are an essential shared reality for today s world of global mobility. PRINCIPLE 4 EMBRACE GLOBAL CAREERISTS Global what? While we don t use the term very often, global careerists are, in fact, the new expatri- 60 Mobility December 2013
to succeed on the international labor market, who are also active participants in the wider global economy, and who seek to develop skills and networks that are valuable in that economy. Often multiculturally empowered at a young age, they take risks, and they juggle competing priorities of career, romance, travel, and personal opportunity. They reinvent their careers, and parts of themselves, by taking control and seeking to direct their own lives. Today s global careerists are gutsier than ever, buoyed by an international labor market that increasingly supports job movements outside the safety of their companies, especially during an international assignment. And of course the impact on eroi, particularly in relation to staff retention and the longer-term eroi each expatriate holds, can be huge. How can these incompatibilities be adequately dealt with in the world of expatriate management, particularly if global careerists are not only here to stay but also increasing in number? It comes down to companies working smarter but not necessarily harder. Savvy organizations have learned to embrace and use global careerists to their advantage by leveraging what they have to offer. These companies recognize that many global careerists already exist in the organization despite their covert nature, identify where they are among their ranks, strive to understand what makes them tick, and then leverage their skills and talent in the short term without losing sight of longer-term opportunities. Rather than being victims of the global war for talent, these companies act as facilitators of expatriates global careers, unafraid to engage in power-sharing employment arrangements in exchange longer-term gains, if the employment relationship can be sustained. In eroi terms, this approach makes a lot of sense because when all is said and done, the short-term eroi that global careerists are guaranteed to deliver is a valuable proposition that does not require the massive investment their traditional HQ expatriate counterparts demand. In short, global careerists can impact the bottom line faster and with more impact than traditional expatriates. In today s cost-cutting environment, that s not necessarily a bad thing. The reality is that more value can be gained by having a proportion of global careerists in the global staffing mix than by using any other type of expatriate. Indeed, the most successful companies in the coming decade are likely to be those that utilize a smaller cohort of traditional HQ expatriates in favor of global careerists as the dominant part of their international talent pool, not just because they are less expensive to employ but because, over time, there are likely to be more of them available on the international labor market, making them easier to find. We cannot forget, though, that global careerists are individuals with long-term personal agency who can sustain global careers that involve multiple moves over multiple locations, but not necessarily with the same employer. What attracts global careerists is a feeling that their global aspirations are understood and that mobility is a valid personal goal as well as a valid corporate objective. A policy needs to be put in place that balances their interests with those of the organization. PRINCIPLE 5 ACQUIRE A DYNAMIC TALENT POOL are sourced from, when and how they are deployed, and whether they stay or go can impact on eroi pool and deploying it to where it is most needed is no longer a nice-to-have, it is a necessity, a critical decision science to assist in global reliant only on traditional HQ expatriates, but range of assignee types and locations around the world. But widening the talent pool does not necessarily mean hiring or deploying only star talent or A-level players, as advocated by global man- & Company in the late 1990s. This while this elite group of employees be high-maintenance individuals with complex needs. While we cannot ignore that star talent frequently drives a disproportionate share of an www.worldwideerc.org Mobility 61
organization s business performance and shareholder value, talent is nonetheless needed at different levels for different reasons. Behind the top 10 percent of the high-achieving workforce lies a bigger pool of B-level employees just as intelligent as their A-level colleagues and also steady performers, but perhaps with less ambition and more desire for work-life balance. When we widen the talent pool, we no longer ask, Do we have enough expatriates? but, Do we have the right mix of people? All of which is to say, while it is one thing a dynamic talent pool, it s another entirely to go out One way to develop a talent pool, of course, is to buy talent, which often saves time and is less expensive than building talent internally. Here, global careerists can play a crucial role, because they are already in the international labor market and are able to hit the ground running. They can also be recruited and compensated differently and less expensively than traditional HQ expatriates. Where do we buy the talent we need? First, we can look to competitors in our industry whose employees often answer the phone when the headhunters call. Another approach is to think regionally. The rise of the Asian leader over the past decade, for example, has transformed how and where talent can be sourced. Regional talent flows in Asia- Pacific are increasing, with many companies fulfilling their talent needs from within (and not external to) the region. An alternative to buying a talent pool is, of course, to build the talent that already exists in your organization because, no matter how diverse a talent pool becomes, traditional HQ expatriates will always remain an extremely import- is because they bring with them stability and security, and can be counted on to still be around when the global careerists have moved on to other opportunities. fect candidate for any given role is ideal, sometimes it comes down to deploying the best available person, even a second WHILE IT IS ONE THING TO PAY LIP SERVICE TO FINDING THE RIGHT TALENT, IT S ANOTHER ENTIRELY TO GO OUT THERE AND ACTUALLY FIND IT. or third choice. In crunch time, when talent is short, this is often when traditional HQ expatriates are most in demand and can be counted on to deliver. GETTING BACK TO BASICS This article began with the idea that achieving an acceptable expatriate return on investment is not only essential, but entirely possible when expatriates needs are better understood and managed more effectively. For many companies, this involves getting mobility program. For other companies, much less change may be necessary. But considering what is at stake, how mobility managers navigate the challenge of eroi is critical for both immediate and long-term expatriate ROI that are essential to many companies competitive advantage. M Yvonne McNulty, Ph.D., is co-author of Managing Expatriates: A Return on Investment Approach (Business Expert Press, 2013). She can be reached at +65 9107 6645 or by email at ymcnulty@expatresearch.com. 62 Mobility December 2013