Mary van der Boon examines the positive impact today's expatriates can make on both overseas and head office company divisions.

Bert van der Hoeven is about to be made redundant, and he couldn't be happier about it.

After three years with his firm's Shanghai division, Bert is being sent home, safe in the knowledge that he will not be replaced.

Expat, replace thyself!

"When I was asked to come out here, it was made very clear that transferring what I know to the local manager was the essence of the position", says Bert.

"I even see it as a moral responsibility, because reserving all the top management positions for expatriates is very unfair to the local employees".

To say nothing of very expensive for the international firm.

Globalisation and sweeping economic and development trends have not only reduced the need for expatriate assignments, but the traditional role played by expatriates in international business has undergone a metamorphosis as extensive and profound as the change in the organisations themselves.

Top US management guru Peter Drucker's famous mantra, "Management is getting things done through other people" has finally come home to roost in the new age of IHR.

In a shrinking, wired, global world there are still many reasons why human resource departments choose to send expatriates rather than hiring locally.

These include meeting key strategic business requirements, such as the need to establish a business presence quickly in response to rapid market developments and helping to recruit, orient and train new employees.

Globalisation increases the need for representation following a cross-border merger, acquisition or joint venture and, perhaps still most importantly, expatriates play a strategic role in the transfer of corporate values and culture.

Executive development

Overseas assignments may also be viewed by head office as the means of developing a corps of internationally experienced managers.

"We use expatriates for a number of reasons," says Ted French, president of financial services and CFO of Case Corp., a Wisconsin, US maker of farming and construction equipment with $6 billion in revenues.

"Of those reasons, executive development is number one in importance. We are a global business and we need people to have a global perspective."

Expats can't solve all the problems

Long-term expatriates are still not viewed as the solution to every international business challenge.

The challenge for today's IHR managers is increasingly in determining when the business goals can be met with a short-term assignment, a series of international trips or a local national, and when an overseas assignee is necessary.

With 210 expatriates out of 140,000 employees, FedEx, the Memphis-based express delivery company, looks to fill as many positions as possible with local nationals.

"An expatriate is almost without exception more expensive than a local national," says Alan Graf, executive vice president and CFO of parent company FDX Corp.

"For both cost and management reasons, we want our expatriates to develop local nationals and eliminate expat assignments wherever possible."

But in a company in which international revenues are expected to exceed domestic revenues within 10 years, expatriate assignments are also an important leadership development tool.

Successful expats "come back with a broader knowledge of how FedEx works, and can make broader contributions to the company," Graf says.

Flow of expatriates set to change direction

HRM experts predict that in the future fewer expatriates will be sent from the developed to the developing world.

Rather, there will be an increase in assignments between developed countries themselves, as a result of extensive cross-border mega-deals and trading pacts.

Determining success

Changing economic conditions have forced human resource departments to look very carefully at the cost-effectiveness of expatriates, and the selection processes used to identify them.

In assessing the true return on investment of an overseas assignment, however, one must first establish criteria for measuring the assignment's success.

According to University of Melbourne business professor Anne-Wil Harzing all expatriate assignments fall into three main categories: filling a vacant position, management development and essential coordination and control.

Since expatriates are sent out for these very different reasons, says Harzing, practices with regard to their selection, training, appraisal and compensation might need to be tailored to these different reasons for transfer.

For instance, an expatriate who is primarily sent out for coordination and control reasons (and specifically to improve communication channels between headquarters and the local company) needs excellent language and communication skills.

These skills would be less important for an expatriate who is sent out to transfer technical knowledge (in this case, possession of specific technical expertise would be of most importance).

In terms of appraisal and compensation, appraisal systems that are geared towards the realisation of the specific objectives of the assignment would put the expatriate in a far better position to reach objectives.

"We feel too often expatriate assignment management has been seen as a one-size-fits-all exercise", says Harzing.

"Closer attention to the functions of international transferees and HRM practices tailored to these functions might make expatriate assignments more successful". And result in a more effective assessment of benefit related to cost.