Hiring expats comes with many benefits for both the company and individual employees. However, it costs many thousands of dollars to send an employee overseas to work – often 3 or 4 times as much as filling a similar role at home costs. Therefore, it definitely pays to ensure the right person is selected for the job, and subsequently given the right training and support as well.
Unfortunately though statistics indicate an alarming number of international assignments do not work out, primarily due to:
- Dissatisfaction with the job (so return early)
- Inability to adjust to living in a foreign country (return early)
- Poor performance (may last out the contract but don't perform up to expectations)
Another worrying trend is the high number of employees (~ 25% according to some studies) who do successfully complete an overseas assignment and return home only to resign within 12 months. In fact, the turnover rate of managers with experience working abroad is around double that of those that don't have this experience. It's an expensively huge loss of knowledge and experience for the company and is often compounded by the fact that many of these employees leave because they've been offered a similar job with a competitor.
This clear popularity of managers with overseas experience also signifies that spending time working overseas is now considered pretty much part of the on-job training for successful global executives and senior employees. Former General Electrics CEO Jack Walsh once remarked that "the Jack Welch of the future cannot be like me. I've spent my entire career in the United States. The next head of GE will be somebody who has spent time in Bombay, in Hong Kong, in Buenos Aires."
Indeed, those who have done an overseas stint will tell you that it's only by spending time working abroad that one can truly begin to get an appreciation of the global business world. Different countries have different business cultures, different business approaches and of course different rules and regulations. A one-size fits all approach therefore usually doesn't work, and companies that persist in thinking it does are ultimately setting themselves up for global business failure, or mediocrity at best.
A classic case in point is a well-known US company's strict no-alcohol policy for its theme parks around the world. When an executive was sent to live in Paris and manage their poorly performing theme park there, it didn't take him long to figure out why the park wasn't doing well. Wine and meals famously go hand in glove in Paris and France. They've been dining this way for centuries so it's fair to say they have the practice down to a fine art. The company's no-alcohol theme park therefore was not only an unattractive destination for locals for this reason but was also in many ways insulting. Once the executive understood this, he successfully persuaded management to not only drop the no-alcohol policy for this particular theme park but also sell wine!
Another thing he discovered after arriving in Paris was that Parisians prefer package deals so the company's policy of requiring direct bookings was a major business hurdle. Once he realigned company policy in France with what worked in France, sales and bookings took off to the point where the park became one of the most profitable for the company. The executive admits there is no way he would have learned any of this had he not spent time living and working in Paris.
This type of scenario is playing out all around the world. Global companies that understand the importance of either hiring experienced locals to run their overseas operations, or sending in qualified, suitable expats, are the ones doing well. Research has found that these companies, which represent a wide range of industries and aren't necessarily major multinationals either, all have several things in common when it comes to their employment policies and management of expat employees.
- 'reward for services rendered',
- way of getting poor/unpopular performers out of the way – typically these employees may be sent to remote locations where it's hoped they'll be out of sight, out of mind and unable to cause further problems,
- stopgap hole plugging exercise implemented just to resolve an immediate business need.
Instead, these companies have worked out that the most successful international assignment policies, from a corporate perspective, are those that:
Focus on recruiting/sending
- the right people to develop into global leaders and/or
- people that can make significant contributions to knowledge generation and transfer
In other words, their focus with overseas deployment is on developing knowledge and leadership. Working from such structured foundations, they can ensure those who fill overseas roles do so because they're keen to develop as leaders in a global economy and/or are interested in gaining and imparting knowledge. These individuals thus have a vested interest in making the most of their posting and, so long as they receive the right support and training, are more likely to stay the distance.
- have the right technical skills for the job in question AND are ALSO
- more likely to be able to live and work comfortably in a foreign country / culture.
Have an adequate and effective repatriation policy that:
- provides career guidance and
- allows and encourages expats to use their international experience when they return home
Given that these above points seem to be relatively straight forward and logical, one has to wonder why so many companies with expat employees get it so woefully wrong! As we mentioned at the start, employing and sending the wrong people overseas is a very, very expensive mistake, and one that companies presumably clearly understand they have a vested interest in ensuring they don't make. So why then are so many (up to 40% or 4 in 10 if some statistics and the INSEAD business school are to be believed) overseas assignments going wrong?
One significant reason seems to be that management tends to assume there is a global set of "good business rules", and that all businesses play by these same rules regardless of location. That means they also assume their expat employees can step straight into their new role in a foreign country without a hitch.
Granted, executives do understand that things like marketing strategies and negotiation tactics vary between cultures and countries but they often underestimate both the extent and the significance of these variations. More often than not it's presumed that someone who can perform the required tasks well at home will be able to successfully transition that knowledge to their new role overseas. As a result, these executives don't see a need to spend money on programs that can select and/or train the right candidates for overseas roles.
Second, it's often a case of "out of sight, out of mind" and company execs are not inclined to fuss over people who are getting paid very handsomely to do what they're doing. Loosely translated, that means home office execs can get somewhat blasé about their overseas employees, particularly when said employees are being more than adequately recompensed financially for their troubles. 'They're being paid to do a job so let's leave them alone to do that job.'
Third, when it's time for expats to come home, those that have never left home themselves find it difficult to understand why anyone would need to adjust to coming home. They are after all 'coming home' and surely they, and their families, should be able to pick up the reins of their former life and continue on as though nothing had happened.
These attitudes all play into a system where expat employees are sent off to muddle through, and often don't get any significant attention until or unless the proverbial hits the fan. Unfortunately though it's usually a classic case of 'too little, too late' by then. Any chance the company may have had to rectify or prevent the situation has long gone and the 'failed expat assignment' list gains another entry.
Some companies do certainly recognise the significance of making these mistakes but even so they then fall into the trap of getting their HR departments to take on the responsibility of selecting, training, and supporting expat employees. And that's fine so long as there are managers in HR that have themselves spent some time working abroad (rare) or at the very least know what it takes to meet the unique challenges (personal and professional) of a global relocation (also rare).
The good news however is that there are steps a company can take to improve their expat program success rate, and reduce their expat employee turnover rate. They can:
- make sure they are putting the right people in the right jobs in the right places,
- look beyond the person's ability to do their job at home, and consider all the other factors that make a successful expat employee – tolerance, ability to cope with and adapt to new situations, flexibility, self-reliance etc,
- adequately prepare expat employees for their deployment BEFORE they leave home by providing essential training like language classes and cross-cultural training,
- at the tail end of the assignment, give expat employees and their families enough time to prepare to return home,
- provide ongoing support for expat employees whilst they're overseas that is pro-active rather than reactive – results prove this one strategy alone can significantly improve the success rate of expat assignments.