It's no secret that expats are among the most expensive personnel resources within a company. But do organisations derive full value from their international assignees - and can IHR play a role in increasing that value?

These were among the questions posed by ETF's managing director Michael Elia at the start of the group's annual Congress, which this year focused on the theme "Driving Value through Global Mobility." Based in the United Kingdom, the ETF is an association that works to develop IHR solutions for its member companies.

Elia said the ETF picked the theme because the association wanted to focus its members' thinking on how organisations get a return on investment from their international mobility programmes.

"There is plenty of evidence that this is lacking," said Elia. "We see companies changing their IHR support infrastructure without any genuine regard to the likely implications on the success of current and future mobile employees; we see others apparently investing in career development, but putting no real emphasis on finding subsequent jobs for those so 'developed'."

"We see organisations initiating expatriate assignments where there is little evidence of any benefit to the company. In short, we see companies putting at risk large sums of money with little understanding of how this delivers a return and what they can do to influence the return."

 Elia started the Congress by challenging the "one size fits all" approach to managing international assignments, likening it to a sausage factory that makes and packages each product identically. Despite the advantages of efficiency, this strategy may undermine the overall value of the assignment to the company.

The "one size fits all" approach doesn't work because each assignment has different needs and different results, said David Yoxall, who also works with the ETF.

There are, however, a basic set of assignment types that can help IHR in approaching how it works with and manage expats. These include: technical need, knowledge transfer, management development, renewal, governance and organisational.

Each assignment type has varying degrees of risk, cost and value, explained London-based IHR consultant Peter Newhouse, who made a presentation called "Understanding Value" with Yoxall.

For example, a management development assignment has high risk and little immediate value. It is not necessarily as costly as other assignment types but could be valuable later. 

This is an issue which companies should consider carefully because of the high rates of expatriate failure, Newhouse said. "Though many already do think about such issues, some have reasonable screening tools to reduce potential assignment failure but many do not," he said.

"Furthermore, the tools for assessing risk are not very well developed. They tend to focus more on the personal attributes of the candidate … rather than the assignee's intended role," said Newhouse. "It is value that most companies struggle to quantify - it's very difficult to assess the value that will or can be derived from assigning an expatriate to a role."

Though few tools exist, Newhouse said the ETF has developed some of the best models available. Some of the ETF tools and programmes will be discussed throughout this series of articles.

In his presentation, Newhouse outlined the steps involved with international assignments. They include: identifying the opportunity, setting assignment objectives, selecting the candidate, authorising the move, evaluating the assignment in terms of performance and potential and planning the next steps for the assignee.

"These steps are more or less important depending upon the role and purpose of the assignment," Newhouse said. "For example, a developmental assignment probably requires all of the steps to be completed. The assignment of a finance director to sort out a mess in a subsidiary probably does not."

As well as these steps, there are a number of interventions which may be more or less important, depending on the assignment. To determine which interventions could be used to increase the value of an assignment, the approximate 30 delegates from companies such as Shell, Philips and AstraZeneca met in small workgroups.

The groups looked at questions such as 'do all assignment types require cross-cultural training?', 'Does every assignee need to have managerial skills?', 'Should there always be a pre-assignment visit to the host country?', and 'Can expat 'buddies' be omitted on certain assignments?'. These were amongst the possible 26 interventions presented to each workgroup.

Consider a hypothetical UK software expert that is being relocated to China to train local staff on a new system, which would be considered a knowledge transfer assignment. Also consider an organisational need assignment such as a Swedish research scientist being transferred to the United States to work with the company's new research group.

Would an incentive bonus for successful completion of the assignment be a critical intervention to increase the value of each assignment? Probably for the software expert but not the research scientist, one of the workgroups concluded.

What is essential for all assignments, argues Newhouse, is setting and evaluating assignment objectives as part of the performance management process. But many companies also struggle with this.

"For expatriates it requires even more discipline so they often fall between the cracks," he said. "After all, who are they really working for? An assignee from corporate HQ probably has many high-level company contacts - how does that affect the willingness of a host country supervisor to appraise the performance of the expatriate?"

It is also critical to have a process to understand the drivers for each assignment, said Elia.

"This information should be used to inform a 'smart-process' where the various assignment stakeholders are made aware of the actions they need to take to enhance the value outcome," he said. "This allows a company to focus the use of programme resources to optimum effect – a demonstrable 'value-add.'"

October 2004

[Part II of this four-part series looks at using metrics to assess expatriate programmes.]

Jennifer Hamm is a freelance journalist.