Expatriates, commuters, frequent-flyers: all part of the mobility mix. But who's tracking the various financial costs and the effects on employees? Dr. Hilary Harris, director of CRÈME, reports on what new research has uncovered.

Traditionally, organisations have used expatriate assignments as the main method of initiating, expanding, and controlling their international operations. Today, however, they are increasingly concerned about the cost-effectiveness and appropriateness of expatriations in a rapidly changing global environment.

Also, changes in the profiles of international managers and a growing awareness of work-life challenges have led employers to experiment with alternative forms of international working.

In today’s global economy, the strategic management of these international workers is becoming a critical component of an effective international HR policy. This article reports on trends in the use of different types of international employees and the implications for effective international HR policy and practice.

No longer just one assignee type

Writing about an international worker 10 or 20 years ago would almost certainly have meant an expatriate. Nowadays, organisations generally use one or more of four types of international workers to cover their global operations:

Expatriate assignments: involves the employee and family members moving to the host country for a specified period, usually more than one year.

Short-term assignments: a specified duration, usually less than one year. Family may accompany the employee.

International commuters: managers "commute" from their home country to a workplace in another country, usually on a weekly or bi-weekly basis, while the family remains at home.

Frequent flyers: the individual undertakes frequent international business trips but does not relocate.

Trends in international working models and the role of international HR

In order to gain a clearer picture of how organizations are using different international working formats, the Cranfield Centre for Research into the Management of Expatriation (CRÈME) recently conducted a survey among European multinationals and European subsidiaries of US multinationals.

The study found that organisations are increasing their use of all four types of international assignments.

This implies a greater need for a strategic approach to management and control of international employees from international HR professionals.

However, our survey findings questioned the degree to which employers were actually changing their tactics.

Although HR managers in worldwide headquarters would seem to be the obvious choice for handling policy determinations for international assignments, they do not always have such responsibility.

While participants indicated that headquarters HR determined most policies for long-term assignments, this figure dropped by half for short-term assignments and then dropped again to a quarter of the survey respondents for international commuters and frequent flyers.

Responses to questions about financial reporting responsibilities highlighted some of the problems facing HR administrators who are trying to manage new international working formats.

While two-thirds of the participants prepared a cost analysis for long-term assignments, only half did so for short-term assignments and approximately one-third of participants did so for international commuters. Less than a fifth of the study respondents were even aware of the costs of frequent flyer assignments.

These findings may be due to the fact that different staff members are responsible for monitoring the costs of each assignment type. According to the survey results:

• Worldwide headquarter HR managers are predominantly responsible for cost monitoring in relation to long-term assignments; however, regional HR, unit-level line managers, and worldwide headquarter line managers provide sizable input.
• Responsibility for cost monitoring of short-term assignments is more equally distributed, with the function often handled by worldwide HR and line managers, together with regional HR managers. Unit-level HR does not assume any great responsibility for such cost tracking.
• Unit-level line managers have a clear role in monitoring costs for both commuters and frequent flyers. In fact, there is little HR involvement in cost control for frequent flyers at any level. Several organisations indicated that they do not have a mechanism for monitoring costs for frequent flyers, which is problematic given the increasing numbers of people being sent on such assignments. It is unlikely that this group will be managed strategically if no information is available to HR.

True cost issues: going beyond simple finances

While control of financial costs is a critical issue in a company’s successful management of its international workers, HR needs to be aware of the broader costs associated with different forms of international assignment.

One of the main reasons organisations have been moving away from expatriate assignments has been the difficulty of dealing with dual-career and repatriation problems. Although such issues are not directly cost-related, they severely limit the effectiveness of long-term assignments.

The study indicates that the adoption of other international working formats may not provide the solution sought by many organisations. Participants viewed critical problems for short-term assignments as work-life balance issues, which include long hours on a project and separation from family and friends.

Interestingly, some of the companies concluded that short-term assignments are only suitable for single employees, whereas others “have no experience of this for married or equivalent personnel”, and a few respondents stated that such assignments suit a particular age group.

Consequently, some organisations are finding it hard to attract employees to these types of assignments. Another problem area involves controlling the number of employees on short-term assignments, with some companies citing that although there is an increased demand for control under a policy or guideline, short-term assignments “do not tend to be part of an official table menu”. In fact, a few companies mentioned frequent assignment extensions as a problematic issue.

Regarding international commuters, many organisations listed problems such as burnout, travel fatigue, and work-life imbalance (including “some resentment at time spent away from family”).

Organisations admit to being confused about the extent to which they should play a role in helping employees balance their work and family lives. Another concern is the difficulty of international commuters in dealing effectively with cultural differences, as very few organisations provide cross-cultural training for such assignments.

Frequent flyers create a different concern as many companies – without any policy for such assignments are still seeking to identify these employees within their work force.

Although frequent flyer problems are still undefined, we found many people struggling to cope with fatigue cause by extensive travel. Such issues, however, are not articulated. Many organisations appear to have an internal culture that considers long working hours and travel to be acceptable and not tiring. Yet organisations did cite burnout as a problem for frequent flyers.

Overall, these findings indicate that the true cost of international assignments extends far beyond the obvious compensation and benefits debate. Arriving at a clear understanding of these costs to both employers and employees alike is still a long way off – even more so for the newer forms of international mobility.

Getting a better handle on international assignments

To meet the new challenges presented by the use of diverse assignee types, HR managers should first understand the rationale behind each type and question the purpose of the transfer and how it fits within the organisation’s strategic aims.

The international HR function needs to actively manage each stage of an assignment – planning, selection, preparation, adjustment, performance monitoring and repatriation – in liaison with line managers.

And finally, a key action for HR professionals is the development of effective cost-benefit analyses for each type of international worker that goes beyond mere comparisons of compensation and benefits.

Although tailoring assignments to both organisational and individual needs and capabilities — and managing them better — can significantly improve the cost-benefit ration, the question remains: Can the HR function deliver this improvement?

February 2003

The research quoted in this article forms part of ongoing research into international HRM, carried out by the Cranfield Centre for Reseach into the Management of Expatriation. For more information contact Dr Hilary Harris, director of the centre, or visit www.cranfield.ac.uk/som/creme