Compensation, while important, is only one factor contributing to a successful international assignment. We look at other areas where HR managers must look for potential pitfalls and offer tips and solutions for easing the process.

On this page:

• Introduction
• Problem: Selecting suitable candidates
• Solution: Preparing suitable candidates
• Problem: Prima Donna syndrome
• Solution: Temporary Prima Donnas
• Problem: Communication among expatriates
• Solution: Fairness with expatriates
• Problem: Intra-company communication
• Solution: Intra-company communication links
• Do not lose sight of the details

Introduction

Sending employees abroad in recent years has become a far more complex undertaking that requires a focused strategic approach to expatriate management, as well as close cooperation with line managers to achieve company goals. While some influential factors are beyond an employer’s control, such as the global economy or politically dangerous conditions, other factors fall within the company’s strategic decision-making process.

Balancing cost control with employee needs is a complex task

One example, the increasing use of diverse assignment types—ranging from a few months to a few years, 'commuter' expatriates, or even indefinite assignments—sometimes require different candidate types. Compare the younger, less experienced employee who is more likely to go on a career development assignment with an executive who will be responsible, on a long-term basis, for the subsidiary operation.

To make matters more challenging, some of these assignment options—for instance short-term assignments that last from three months to a year—may necessitate their own policies; all well and good, as long as the policies are consistently applied, with differences from other assignment types based on solid reasoning.

Beyond these factors is the mandate to balance cost control with employee needs, which involves calculating cost-effective differentials, negotiating competitive packages, moving the expatriates and their families to appropriate housing, providing cultural orientation and country information, and so on.

Although it is obvious that managing the expatriate population does not solely revolve around pay and benefits, other aspects central to expatriate administration are sometimes overlooked in the desperate need to fill foreign vacancies.

The resulting failure of an assignment can stem from any number of reasons, including unexpected early repatriation due to family problems, unmet business or personal career objectives, and local problems in the host country. To minimise failure as a result of avoidable circumstances, HR must consider the overall picture and not lose sight of potential trouble spots.

'High-maintenance' expatriates and ineffective communication often underlie the problems facing HR. The following discussion illustrates how troublesome these issues can be and offers some practical solutions.

Problem: Selecting suitable candidates

Unfortunately, some expatriates require more 'hand holding' than others, not only before and during an assignment, but also on repatriation. As a consequence, HR professionals may find themselves more deeply involved in the lives of these people than they prefer to be when family and personal issues surface during the candidate selection process (and, later, during the assignment).

What complicates the issue is that existing problems are only exacerbated by the stress of moving to a strange new world and its accompanying difficulties—emotional survival during the transition phases, decisions about boarding schools or local facilities, a child or spouse with disabilities, elderly parents in the home country, foreign culture and traditions, isolation from everything that was dear and familiar, depression and loss, loss of dual income and its impact on the non-working spouse, new neighbours, and work stress in a new workplace.

On top of this overwhelming mountain of trouble, hardship conditions in the assignment location have the potential to make matters even worse—all at a time when the family’s usual support network is on the far side of the globe.

Once the assignment commences, troubled employees may start to exhibit a lack of productivity. HR managers are then charged with the impossible task of trying to sort out whether an employee’s malaise is related to home stress, job insecurity, culture shock, hardship conditions—or any other possible source.

Solution: Preparing suitable candidates

Common sense and awareness can go a long way toward easing these problematic situations. To begin, when selecting the right individual for the assignment, it is critical to go beyond a simple cost-benefit analysis and understand not only why the position needs an expatriate (rather than a local-national employee), but also how this particular candidate would fit the role.

Regional selection criteria
Geographic Region	Asia-Pacific	Europe and the Middle East	The Americas	Japan
Most important criterion	Skills or competencies	Skills or competencies	Skills or competencies	Job performance
Second most important criterion	Job performance	Job performance	Job performance	Job level
Least important criterion	Marital status	Marital status	Marital status	Projected assignment cost for the individual
Second least important criterion	Language ability	Projected assignment cost for the individual	Language ability	Marital status
Source: ORC Worldwide’s 2002 Worldwide Survey of International Assignment Policies and Practices

If the individual is not a good match in terms of temperament and skills, but the company is desperate to fill the position and decides to send that individual abroad anyway, be prepared for trouble down the road.

Once the candidate has been chosen, give the expatriate and any accompanying family members all the support and information they need—within reason, of course. After all, the company budget does have limits. But when appropriate, depending on the particular assignment location and the employee’s background and skills, be sure to:

• Provide culture and language orientation to make the unfamiliar become a little less strange.
   
• Authorise pre-assignment visits for the expatriate and spouse so that they can find appropriate accommodations, explore the host city and surrounding environs, and investigate schools and shopping. Encourage the family to involve the children in the discussion of educational options.
   

• Common hardship factors Depending on local conditions, the factors below may contribute to making the host location undesirable, dangerous, or difficult: Housing—availability and quality of expatriate housing, limitations due to crime or security considerations, reliability of utilities; Climate and physical conditions—conditions of excessive temperature or weather, risk of major climatic problems or natural disasters; Pollution—severity of atmospheric, water, radiation, and noise pollution; Disease and sanitation—health risks, public sanitation, need for food or water treatment; Medical facilities —availability and quality of health care facilities and medical staff; Education facilities —availability and quality of schools for expatriate children; Infrastructure —quality and reliability of telephone, mail, utilities, road conditions; Physical remoteness— geographic isolation, travel systems; Political violence and repression—risk of violence, terrorist activities, government repression; Political and social environment—freedom of expression, human rights, intolerance, corruption, poverty level; Crime—risk to person and property, police force; Communication—use of major world languages, media availability, and censorship; Cultural and recreation facilities—availability and range of sports facilities, theatre, and so on; and · Availability of goods and services—availability and quality of food supplies and clothing.

  Provide local contact information so that the family will be welcomed on arrival. A combination of company expatriates and new local-national colleagues can be very beneficial, along with the advice of a destination service provider. According to the '2003 Global Survey of Expatriate Housing Policies,' conducted jointly by ORC Worldwide, TheMIGroup, and Worldwide ERC®, 83.8 percent of the participants provide destination services to their assignees.
   
• Assign home-country mentors who are familiar with the challenge of expatriation to help guide the assignee’s career during the assignment, and have the two meet before the relocation occurs. A mentor can stay abreast of the new skills and competencies learned by the assignee, as well as job opportunities in the home country (or other possible foreign destination should the assignee be willing to accept a subsequent foreign assignment).
   
• Provide EAP contact information so that the assignee will have someone to call should a crisis arise, especially if counselling in the assignee’s native language is unavailable in the host location.
   
• Provide an explicit job description so that the employee knows precisely what is expected, thus minimising insecurity about vaguely described position responsibilities. An explanation of reporting relationships and peer positions within the organisation is also useful.
   
• Inform the family, prior to their acceptance of the move, of expected hardship conditions so that they can prepare themselves beforehand (see chart 2: Common hardship factors). 

After these steps and others have been taken, if warning lights still go on before the assignment even begins, be proactive. Do not send that family overseas.

Problem: Prima Donna syndrome

Some expatriates have great expectations about receiving special perquisites, whether due to the special status of their position, local policies and practices, or promises made during individual negotiations.

When these perquisites are taken away from the assignee on repatriation or reassignment to another foreign location (assuming the new host country has different policies), some assignees’ egos may suffer if they perceive they are no longer considered special enough to merit superior treatment. Unfortunately, even when they are back at headquarters, some of these expatriates may still expect club memberships, company cars, and so on, because they feel entitled to them.

The time spent and effort made by HR per transaction, for instance per 'high maintenance' expatriate, is sometimes very high. It is not unusual for HR to spend a lot of time on expatriate issues even though this group only represents a tiny fraction of the employee population. With the broad spectrum of problems that may possibly arise above and beyond the pay package, this inordinate amount of time is understandable. However, in some situations, HR ends up spending far too much time on 'noisy' expatriates who only represent a fraction of the entire expatriate population.

Solution: Temporary Prima Donnas

To avoid or, at least, minimise an unnecessary administrative effort, it is advantageous to clearly communicate both the general policy provisions and the details of the individual’s specific package to reduce the question-and-answer time. The terms and conditions of an expatriate’s pay package—the nature and length of the assignment, pay elements, pay delivery method, home leave, vacation, potential reassignment, repatriation, and so on—should not be vague, nor should they be confining.

They should allow some measure of flexibility to handle unforeseen circumstances  But remember, before implementing an agreement with the expatriate, have a legal or tax expert review the wording to prevent any disagreement or miscommunication.

In addition, to address the problem of high expectations for prima donnas, be very clear about how the individual’s pay package will change on repatriation or reassignment to another host location.

Although the employee may expect to receive the same package in another foreign city, local policy may mandate otherwise. For example, host policy may allow a company car and driver in Beijing, but not in Berlin.

An additional proactive strategy to implement for all expatriates—not just the high-maintenance individuals—is to genuinely use their new-found international expertise at the completion of the assignment.

Ask repatriates to share their experiences with new expatriates who are about to go abroad and, if interested, involve them in a mentoring program for new assignees so that they can feel useful and appreciated.

Problem: Communication among expatriates

Although communication among expatriates is to be encouraged so they can share their experiences, problems can and will arise when the topic eventually comes around to compensation, as it often does. Many informal expatriate networks—either in the host country or within a region—often exchange “confidential” information that should not be accessible to them, such as the salaries of their colleagues.

As the 'cherry-picking' syndrome indicates, some expatriates get together and discuss the good points of other people’s pay packages without looking at the overall picture.

For example, while it’s obvious that 'so-and-so was given a company car,' they conveniently forget that so-and-so’s job is sales-oriented and involves extensive travel within the region.

Not understanding the rationale behind certain pay elements may lead some expatriates to demand—and successfully receive—unnecessary extras, which will ultimately have an adverse effect on the company’s bottom line, as well as peer morale.

Solution: Fairness with expatriates

As with the Prima Donna syndrome, there is a need for a clear and consistent policy that discourages not only unnecessary exceptions, but also individually negotiated deals. Do not be secretive about policies, which only leads to the perception that some employees are treated better, whether it is true or not.

Because a company’s policy cannot cover every possible contingency, make sure that approved exceptions are indeed legitimate requests. Carefully consider them to ensure they are supported by a strong rationale. And, if HR starts to receive too many similar requests, perhaps it is time for the policy to be reviewed and revised. Remember, management can be flexible but still maintain control.

Problem: Intra-company communication

Interaction among expatriates is not the only communication perspective to be considered. HR managers also need to be aware of the need that expatriates have to maintain a sense of connectivity with their home country. Assignees should stay abreast of general company news, as well as information related to their job function, business unit, and technical systems.

Keep in mind that the feeling of disconnection may be exacerbated if the company employs an outsourcing service provider to handle relocation issues, such as property management, moving logistics, cultural orientation, or immigration documentation, in effect, creating distance or a buffer between HR and the employee. Above all, once expatriates arrive in the host country, it is critical to avoid making matters worse by having them feel 'out of sight, out of mind.'

Solution: Intra-company communication links

Helping the assignee avoid a sense of isolation and working in a vacuum is possible through a number of proactive steps, some involving hands-on interpersonal interaction, while others rely on technology:

• Create a linkage to headquarters, through periodic newsletters from the home office, conference calls when the home office unit is holding an important meeting, and visits from headquarters management;
   
• Initiate an informal network, encouraging the assignee’s peers—both at home and abroad (in other company worksites)—to chat, either via conference call or through an on-line bulletin board;
   
• Establish a mentoring program, as mentioned earlier;
   
• set up virtual connections, using different media types to ensure that all assignees—whether more comfortable with hard copies, the intranet, or e-mail—receive the corporate message;
   
• Authorise home office visits when the assignee is on home leave to allow the individual time to reconnect with colleagues; and
   
• Encourage and pay for trips to regional offices so that the assignee minimises the feeling of isolation. 

When implementing any of these suggestions, be sure to help the expatriate maintain a balance between loyalty to headquarters and the host-company operation. If the assignee clearly understands the expectations of both parties, which should not be in conflict, it will help avoid divided loyalties.

Do not lose sight of the details

Paying attention to all the relevant details before the assignment begins will place HR in an advantageous position.

Going further, monitoring the expatriate’s job performance throughout the assignment can help prevent minor situations from becoming insurmountable problems.

And above all, consider what the expatriate really needs to succeed and avoid an early, unexpected repatriation.

The formula is simple and depends largely on common sense: Careful selection + sufficient preparation + support and interaction (before, during, and after the assignment) + clear job expectations + freedom and resources to achieve business goals + informed repatriation = successful completion of the assignment.

Updated September 2005

Tricia A. Danielsen tricia.danielsen@orcww.com is a senior consultant for ORC Worldwide’s international compensation practice area in New York City, NY, specialising in expatriate tax issues.

Stephanie V. is director, international compensation, ORC Worldwide, New York City, NY, specialising in the development, communication, and implementation of cost-effective expatriate policies.

Published with the permission of Worldwide ERC(R) from the February 2005 issue of MOBILITY.

Subject: Strategy