Taking the longer-term view on international assignments

China Staff, May 2008 by Martin, Glenn

Companies that operate internationally are expanding their expatriate workforce but many are finding it difficult to apply longerterm thinking to international assignments, Glenn Martin discovers.

A study by international membership organisation for international HR professionals ECA International has found that many employees are given assignments in response to immediate business needs and the return on investment (ROI) of these assignments is seldom calculated.

ECA International examined the trends in international mobility and the factors driving the changes. The cost of the short-term tactical approach to international assignments is that the full potential value of assignments-for the company and for the employee-is not fulfilled.

According to Lee Quane, General Manager for EGA International in Hong Kong, the study found that 70% of the 263 companies surveyed had increased their expatriate workforce in the last three years. Nearly twothirds of the companies were expecting further increases to occur. The major reasons for the growth were strong global economic performance and the company's expansion into new markets.

Companies are calling on more employees to be internationally mobile because their growth is outstripping the supply of suitable skilled local workers in the host countries. The key skills that are required for the assignments are the ability to manage a business unit in a situation that is removed from the head office support. The individual has to be able to establish systems, build the business and develop a corporate culture among local staff.

Tactical reasons for assignments

As expatriate assignments often arise in response to an immediate business need, HR is often brought in just to sort out the practical arrangements. What gets lost in this situation is a focus on the potential longer-term value of such assignments.

Quane said that companies are losing the opportunity to generate long-term benefits with this narrow focus on tactical matters. As skilled, experienced employees become more soughtafter in the Asian business environment, companies have to start thinking about what they can do to retain their top talent.

For the same reasons, companies (and HR) often do not have a plan for what the employee will do upon their return from the assignment. This is often not addressed until near the end of the assignment, which might be a two to three year placement. Hence, employees are uncertain about their future and have no assurances about promotion on their return, even though they will have gained valuable experience.

The reasons companies gave for assignments, in order of frequency, were:

* to manage a local operation (77%);

* to pass on technical ability and know-how (69%);

* because local expertise was not available (65%);

* to exercise corporate/financial control (47%);

* for career development (36%);

* to groom for a senior position (31%); and

* training for a recent graduate (4%).

Companies generally have multiple reasons for assignments. Quane said the emphasis on career development had declined as a reason between 2001 and 2003, but it is now an increasing importance to companies.

Value in taking the strategic perspective

Quane said that although the tactical reasons may be pressing, companies which obtain the best return on investment from the mobility of their employees are the companies which attend to the longer-term, strategic aspects of assignments. One factor which is making this imperative is that companies are now experiencing increasing difficulty in obtaining employees' interest in international assignments.

As economies in Asia continue to grow rapidly, there is more competition for employees, and talented employees can find other job opportunities without going overseas. Employers have responded to this pressure by offering more attractive salary packages and benefits to employees to entice them to take up international assignments.

However, employees are not just looking for higher pay. They are looking for career development and opportunities for future promotion. Multinational employers with larger workforces are more able to create opportunities that are primarily for career development, but Quane said that other companies can also initiate policies that include scope for assignments geared towards career development.

Having a career development policy in place will enable the company to plan for such assignments and take the opportunities as they arise. The company can look at an employee's career development plan over a time frame of, for instance, five to six years, and be flexible in its implementation.

Policy on career development enables companies to consider how the learning potential of assignments can be maximised, even where the priority is the business results of the overseas business unit. There are ways in which companies can encourage and support career development without high financial investments. Some of these initiatives are as follows:

* having a mentor from home base keep in contact with the expatriate, to keep him or her informed about what is happening back home;