Measuring the Value of International Assignments - PwC

Human Resource ServicesSaratoga

Measuring the value of international assignments

Acknowledgements

We would like to acknowledge thehelp and support of a number ofindividuals and organisations withoutwhom we would not have been ableto compile this research. In particular,we would like to thank the membersof the steering committee whose input and guidance helped to shapethe framework for this research.

We would also like to acknowledgethe tremendous contribution made by all of the participants. They gaveup a significant amount of time to devote to data gathering, andproviding supporting materials, as well as meeting and discussingtheir international assignments policy and strategy with us.

Introduction 01

The case for metrics supporting this research 03

Research methodology 05

Research findings – the insights 07

Assignee selection andassignment purpose 09

Performance duringthe assignment 14

Investment 17

Repatriation, retentionand career development 23

Conclusion 27

Contacts for further information 30

Contents


01

The investment required to send employees on international assignment can be substantial; however, many organisations remain unclear about the benefits. Existing research indicates that there islimited measurement to determine how the benefits and costs compare, and to therefore establish what the return on investment is for organisations. Without a clear understanding of the return, it is difficult for an organisation to determine how effective its expatriate programme is as part of its overall talent management strategy.

This research seeks to develop an understanding of expatriate return on investment in greater detail than has previously been attempted. To achieve this, we have compiled a metric-based framework uponwhich the study is based. These metrics, used within the context of an organisation’s expatriate policy andobjectives for international assignees, will provide apowerful tool both for internal strategic management and external benchmarking.

IntroductionMeasuring the value of international assignments

The current mantra seems to be that international assignments are expensive but worth it.

02

An ‘expatriate’ as defined in thisexercise is an employee who is ‘not locally employed by the hostlocation, but who is transferred by the organisation and covered by acompany relocation policy i.e. is sentout from a home to a host country.’

We measured the benefits and costsfor various types of internationalassignments, whether it involves shortterm assignments to cover skills gaps,or extended periods in overseasoperations to develop the futureleaders of the organisation. We alsoanalysed differences betweendevelopmental and business-drivenassignments. The research goesbeyond the traditional boundaries offocusing simply upon currentexpatriates, by assessing what hashappened to the careers of individualswhose assignments ended up to three years previously. This builds acumulative picture of an organisation’ssuccess at retaining and developingthose individuals with internationalexperience.

PwC Saratoga1 developed the metricsused in this research in co-operationwith our research partners at CranfieldSchool of Management and oursteering committee, made up ofrepresentatives of multinationalorganisations.

We begin by explaining how and why we used metrics to support this research and the researchmethodology. We then present the key research findings, which arefollowed by in-depth analysis in four key areas

• Assignee selection and purpose ofassignments

• Performance during the assignment

• Investment

• Repatriation, retention and careerdevelopment

To provide greater insight, Cranfieldhas incorporated a number of minicase studies into this report, basedupon the experience of the participantorganisations. These help to positionthe context of the metrics using real-life examples.

1Specialist Human capital Measurement andBenchmarking area of PwC Human resource Services


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Many organisations already participatein exercises to benchmark theirhuman capital. These exercises mayinvolve either the measurement ofexecutive compensation levels, or the engagement and productivity ofemployees, or the investment in the recruitment and retention of keytalent. PwC is experienced in themethodology of benchmarking and,through PwC Saratoga, has theworld’s largest, most robust databaseof people performance metrics fromover 10,500 organisations.

Developing the discipline andcompetence to use metrics forevaluating people performancelaunches human capital issues, such as expatriate policy, into themainstream of business debate. This is a debate which continuouslyassesses the comparative value of an organisation’s assets, each oftencontending for a share of finiteresources. Without measurement,people become an easy target at the first sign of activity downturn or recession: no measurement, no value, no loss.

The case for metricssupporting this researchWhen discussing how we would approach this research,there was a range of choices. For example, we couldeither have completed surveys with internationalassignments managers or carried out a detailed case-study with a particular organisation or range oforganisations. These methods have been carried outbefore and, in discussions with Cranfield and membersof the steering committee, we found a strong desire to have an approach that combined metrics andorganisation-specific situations and analysis. This allowsus to provide participants with specific insights into the success of their mobility policies, permits them tobenchmark their positions relative to other organisations,and enables them to re-test results based upon theeffect of interventions made to either policy or processes.

Many of the importantdecisions we make can be made with data.Measuring the value of international assignments participant

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What are metrics?

We use the term metric to denote the use of at least two numberswhich, when combined in a formula,produce a numerical measure. For benchmarking purposes, thismeasure is compared with the samemeasure in other business units ororganisations, to establish acomparative positioning. We havedeveloped precise definitions tosupport each metric. Participants arerequired to apply these definitionsrigorously in order to ensure an‘apples-with-apples’ comparison with other organisations.

Figure oneExpat stretch profile of metrics positioned against other participants

Key Metrics ‘Best Performer Profile

Expatriate profile Expat Experience(Board/Exec level)% %ile rank 32

Expatriate investment Expat Mgmt Costs per Expat ($) %ile rank 71

Expatriate performance and development Change in Expat Performance (%) %ile rank 67

Lower Quartile 2nd Quartile 3rd Quartile Upper Quartile

13.2 27.3

10,944 26,608

6.7 7.9

Key to InterpretationThe Best Performer Profile shows the organisation’s results versus the target quartiles suggested by the sample.

Saratoga’s suggested target quartile showing threshold ‘Best’ quartile result

Organisation’s Result showing the gap versus ‘Best Performer’ quartile.

Organisation achieves the target quartile versus the sample.

An example of the benchmarkinganalysis carried out as a result of this research is shown in figure one.For the four selected metrics, anorganisation’s results are comparedwith those of the other researchparticipants. For example, underexpatriate investment, the participantshows a result for average expatriatemanagement costs per currentexpatriate of US$26,608 per annum.This cost places it in the third quartile,indicating that the result for thiscompany is significantly higher thanfigures reported by the organisationsin the lowest quartile of the sample.

Increasingly, HR professionals arebeing required to justify their strategicdecisions about expatriate policy andpeople management through the useof metric-based assessment. Thereare a number of key areas that arepotentially of importance tomultinational corporations, such as:

• retention – turnover rates ofrepatriated assignees can becompared with retention/turnoverrates generally.

• performance management – the appraisal data of expatriatedassignees in comparison with non-expatriated peers will holdinformation relating to theeffectiveness of working in aninternational environment, and may be especially useful insituations where internationalassignees have local objectives.

• cost – although many organisationshave a perception that expatriatesare more expensive than locallyemployed individuals, they only had anecdotal data to support this.By defining metrics relating to anorganisation’s investment in itsexpatriate population, we were ableto identify specific costs. Linkingthis to how expatriates are managedand developed, and an organisation’sability to retain and reintegratethem, goes beyond a cost focus to tentatively assess value.

By using metrics, we are able toanalyse and compare data acrossorganisations. Linking metrics togetherand using the contextual analysisdevised by Cranfield helps to developan explanation of why an organisationmay be ranked where it is. It alsoenables a discussion of the reasonseither for the success of anorganisation’s policy and processes,or the need for a potential change.

2.4

2.4 4.7

1.9


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Research methodologyWe sought participation from a wide range oforganisations in different industry sectors, including fast moving consumer goods (FMCG), engineering, IT, and other professional services industries. Theseorganisations have varying degrees of internationalassignment management experience. This varies fromorganisations with long established global assignmentpolicies and practices, to recently establishedorganisations just commencing a programme ofinternational moves. The participants wereheadquartered in the United States, the UK andcontinental Europe.

Nine organisations with a total headcount exceeding500,000 participated in the research. The expatriatepopulation typically formed between 0.3%-2.5% of total headcount. In absolute terms, the number ofexpatriates was 3,450, and we established that many of the expatriates performing key roles were either at a senior level, or were high potential candidates forfuture development. Sixteen per cent (559) of the total number of expatriates were female.

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In discussing participation with these organisations, we set thefollowing criteria:

• A high degree of co-operation withthe research team. This involved a range of calls and interviews to explore data requirements (most important were internationalinvestment data, careerdevelopment, performance and employee retention data over time, and in comparison withnon-expatriated peers), and detailsof the international mobility strategy,assignment purpose, and widerorganisational context driving thedesire for international mobility.

• The organisation would commit toproviding the data required to testmetrics within a specified timeframe(approximately two months) toenable us to complete the research.

• The organisation could identify a 12 month base ‘reporting period’.

We asked organisations to identify thereporting period so that we could usethis to provide added context anddimension. For example, by identifyingthe base reporting period, we wereable to ask the organisations to reviewmeasures for returned assignees inthe two years prior to the reportingperiod. This will also, in future, enableus to re-test the results for the sameorganisation over later periods using a consistent reporting period toestablish whether interventions to the organisation’s assignment policyor practices produce changes to their results and ranking.

In selecting the reporting period, wedid not impose a specific 12 monthperiod upon all of the participants;instead, we asked organisations toselect a recent period over which they could easily extract data. Someorganisations used the calendar year2005 as being their operating year endor the most common tax year end(and hence standard compensationreporting period). Others, however,adopted a 12 month period whichfitted in with either their financial ortheir performance management cycle period, or both.

How easy was it to get the data?

When we met with participants for the first time to discuss the researchand the details required, many wereconcerned that the information wouldnot be easily available to them, orwould need to be sifted from severaldifferent systems and sources.However, we found that, over thecourse of the research phase, the data extracted was of very highquality, both in terms of completenessand accuracy. We are thereforeconfident that the findings presentedin this report have empirical value toall readers and users of this material.


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Figure twoSome of the key research findings

Profile• 18% of all expats are assigned for developmental purposes

• 32% of all expats are ‘top performers’

• International assignment length is 29 months

• Continued increase in the level of international assignments

Investment

• International assignment cost is US$311,000pa

• Large variation in the amount paid in assignment allowances

• Only 4% of assignments are terminated early

• There is a 13% net performance improvement of expats on assignment

Career development

• 24% of all Board/Exec level employees have international expertise

• Organisations lose up to 40% of returned assignees within 12 months

• 23.7% of returned expats promoted in first year of repatriation

• Turnover in 2nd and 3rd year after repatriation is below domestic levels of turnover

Research findings – the insightsThe table below presents some of the key data extracted from the research. These provide some overall trends and average statistics to illustrate keyaspects of the assignment life cycle. Using this data and the metrics combined with the contextual analysis,we found a number of areas where organisations couldmake improvements either to their processes, or thelevels of support for their (international assignment)programmes, or both.

note: figures and % values shown above are average results for all participants

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Organisations are much more focusedon the selection of assignees than on repatriation. The average time toaccept assignments is 65 days;however, most participants have no real repatriation structure.

There is some evidence to show thatorganisations that have focused plansand that seek to place employeesusing their acquired skills have higher degrees of retention and post- assignment promotions.

International assignments are good for the careers of individuals in themedium-term.

After the assignment, promotion rateswere higher than for non-expatriatedpeers in the next job, either in theirhome location or on anotherinternational assignment.

Turnover of repatriated assignees was higher than peer turnover ratesduring the first year of return to the home location.

Where turnover was higher,companies identified inadequatecareer planning, from bothorganisations and individuals, asprimary reasons. However, onceformer expatriates were beyond the‘career wobble’ phase, medium-termrepatriate turnover rates are lowerthan that of non-expatriated peers.

2Copies of the first topic research findings are availablefrom the contacts listed at the end of this report.

Organisations that use a destinationpay methodology tend to havesignificantly lower costs ofassignment, but no visible difference in performance to thoseusing a balance sheet method.

Although demographic factors mayaccount for an organisation’s decisionto use destination pay rather than the traditional balance sheet method,we did not find that employees’performance was dependent upon the assignment package.

Although the overall net performancerating increases by 13% onassignment, the net performanceincrease is only 6% in the year ofrepatriation, with several organisationsshowing negative net performance.

There was some clear evidence toillustrate that performance doesimprove while on assignment.However, performance variances are much more pronounced onrepatriation, evidencing that manyinternationally experienced individualsexperience a ‘career wobble’ on returnand have difficulty in adjusting to the home country environment. This evidence is consistent with theresults of our first research topic‘understanding and avoiding thebarriers to mobility.’2

Data from the research has providedkey insights that will shape futurestrategic decisions, for example:

Organisations that do not specify aprojected assignment duration tend to pay the highest in assignmentallowances and had longer thanaverage assignment durations.

It is questionable over a longer periodwhether the organisation continues tobenefit from the individual’s skills inthe assignment location. In addition,where no duration is specified, there is a risk that assignments areextended, enriching the individualassignee, but without clear benefits to the organisation in terms ofperformance.

Paying more in assignment-relatedallowances does not result in better than average performance.

We found no correlation that showed organisations that paidcomparatively more in allowances orbase compensation to their assigneeswere rewarded with top performance.


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Assignee selection andassignment purposeAs a starting point for the research, we sought toestablish the level of expatriate experience that existedwithin the participant organisations. We also reviewedhow organisations create opportunities for internationalexperience to be gained and whether they have formalprocesses to identify the purpose of the assignment,whether there is a candidate selection process that has a focus on pre-assignment performance, and how organisations manage the selection to acceptance process.

Expatriate experience –how significant is it?

In the research we identified thatexpatriate-experienced employeestypically make up between 0.5%-2.5%of the overall headcount within theorganisation. For this metric, we asked participants to identify allindividuals currently employed in theirorganisation who had internationalassignment experience within thatorganisation (i.e. excluding those who had been on assignment withother companies prior to joining that organisation).

This overall percentage level is quitelow, but this includes all employees in the organisation, many of whomwould be in domestic roles or at ajunior level where internationalexperience would often not beexpected or required. We furtheranalysed this metric by both role and level in the organisation andfound more pronounced results,emphasising the importance ofexpatriate experience.

For example, the level of expatriateexperience at main board or similarexecutive level (e.g. country heads,territory leaders, and so on) was found to be on average 24%. In onemultinational organisation, this was as high as 64% of the executive level.For senior managers, the averagelevel of expatriate experience wasalmost as high with nearly one in fiveindividuals having been assignedinternationally during their career with the organisation. Figure threedisplays expatriate experience atdifferent levels of seniority.

Therefore the metrics suggest that, at more senior levels in organisations,international experience is valued.Exploring this further, qualitativeresearch among the participantsenabled us to learn that it is becominga pre-requisite for advancement tosenior levels in some organisations.

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Figure threeExpatriate experience atdifferent levels of seniority

30

25

20

15

10

5

0

Board/Exec Senior Manager Manager

Are organisations selecting their best performers?

We asked participants to assess how many of their new expatriateswere graded in their top performancecategories, for the performanceappraisal immediately prior to the start of the international assignment(top performance generallyconstituting the top 15%-25% of all individuals). Most participants use a five point grading system andseveral had a forced distribution ofperformance ratings. Generally the top 5%-10% of performance equatedto ‘exceptional’ performance, whilethe next 10%-15% equated to ‘stronger than expected’ or asimilar definition.

We established an average of 32% of new expatriates being in the topperformance category, as assessed by the organisational representatives.Certainly, this would indicate thatorganisations do place a performancepremium on expatriates. However,there were some marked differenceswithin the range, with one organisationidentifying 79% of all new expatriatesas being top performers while, at the other end of the scale, anotherorganisation found that only 1.5%were in the top performance category.

A mobile workforce isimportant in helping usmeet our business goals,in filling specific needsfor skills, in supportingdevelopment of localemployees through skills and best practicetransfer, and in improving diversity.

case study

A focus on selectionpay dividends

The participant is a globally operating FMCG organisationemploying more than 36,000employees. One of its corporateobjectives is strong internationalgrowth. A key goal of internationalmobility is the development of abroadly experienced group ofemployees that supports the needsof international expansion andsuccessful operational activities. The purpose of having internationalmobility is clearly stated in itsbusiness plan.

However, the organisation hashistorically had performance and retention issues within itsinternational assignee workforce.Several individuals identified for an international assignment wereregarded as average performers who were often pushed to go onassignment by the home countrybusiness. The participatingorganisation has therefore takenseveral steps to gain greater valuefrom the international assignmentexperience through a more focusedapproach to assignee selection and assignment purpose.

As a starting point, all individuals are now asked as part of their annual appraisal and objective-setting process to indicate theirpreparedness for international

continued overleaf


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mobility, as well as identifying anypotential considerations which mightinhibit mobility (e.g. dual careerissues, school age children). Thisprofiling of candidates enables anypotential issues to be raised anddiscussed with the individual at anearly stage in assignment selection.

Prior to any assignment beinginitiated, a business case rationaleform has to be completed thatspecifies the overall purpose of the assignment, including:• the business case for the

organisation • a description of the role and

position in the host location• the development plan for the

individual• his or her most recent

performance rating• the intended benefits of the move • the business objectives to be

achieved during the assignment.

Part of the process requires detailedassignment budget calculations to be produced for the expectedassignment duration, so that thebusiness is clear on the overall levelof investment in filling the position.Verification that the sending andreceiving units have been consultedand support the move is required.

As a consequence of these changedprocesses, this organisation now has33.4% of all assignments identifiedas primarily for developmentalpurposes, against an overall averageof 18.2% among our participantorganisations. It also identifies 23% of its total current expatriatepopulation as being drawn fromspecific talent pools.

Its focus on selection, determiningpurpose and constructing a businesscase which is signed off by the threestakeholders (home country, hostcountry and the assignee) means that this organisation is selecting high performing candidates. Justover half (51.2%) of new expatriatesare being rated in the organisation’stop performance categoryimmediately prior to the assignment;this compares with an averageacross all participants of 32.3%.

This organisation expects that, within five to ten years, all employees at a senior managementlevel should have had internationalexperience; its changed focus onselection and purpose puts it well on track to achieve this goal.

Are organisations clearabout assignment purpose?

We categorise assignments into threebroad purposes (see figure four below)and we looked at all of the participantorganisations’ processes, in order todetermine whether:• they have formal assignee

selection policies• there is a business case sign-off

and an assignment objective-setting process

• there is an administrative processthat supports this.

We found that only half of theparticipating organisationsdistinguished the assignment purpose according to the categoriesshown in figure four, and had aselection process in place. For those organisations that were clearabout purpose, we found that theorganisations either had a higher than average level of top performerson assignment, or their assigneesshowed marked improvement inperformance on assignment.

Figure fourInternational assignment by purpose

Assignment purpose Primary business drivers Benefits accrue to the

organisation/individual

Short term business needs • Skills shortage • Over short term

• Rapid deployment

Control and coordination • Control • Tends to be medium

• Transfer corporate culture to long term

• Knowledge/process/

technology transfer

• Launch new initiatives

Developmental (strategic) • Planned career development • Primarily longer term

• Global leadership

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case study

Pre-departure – Clarifying purpose, setting goals andformalising processes

The importance of setting clearassignment goals and havingprocesses in place to help deliver on these is important to theoutcomes of an internationalassignment for both an organisation and the individualassignee. Communicating these in a comprehensive, digestible format can: • lessen the potentially detrimental

effects of role ambiguity• enable the individual to quickly

adjust to the new position andlocation

• provide greater objectivity in the appraisal of expatriateperformance

• help to avoid premature returnbecause of underperformance on assignment.

Within this global organisation, aformat and process which explicitlyclarifies assignment objectives,identifies the added value of theassignment, and facilitates individualcareer planning is put into place.

An expatriate assignment is a great experience… your life will change and a lot of things need to be organised for your relocation in a very short time.

This process consists of acombination of:• a comprehensive pre-departure

pack of focused pertinentinformation (for individual assignees and their family)

• a process and format whichfacilitates discussions between the individual, the home and thehost, helping to clarify roles andresponsibilities before, during, and after the assignment

• a focused set of questions aboutthe assignment objectives,managerial objectives for theassignment, and a businessrationale for the duration of theassignment, forming the basis of a ‘value agreement’ which must be signed off before the assignment can start.

Although this may result in a longer average time to accept the assignment (this organisationreported among the longest average times to accept), becauseassignments tend to be long (thiscompany had the longest averagelength of assignment), an integrateddiscussion of business goals andindividual objectives can provide anessential tri-partite forum to facilitatesynergy in goal-setting and clarity ofexpectations. This more formalisedprocess has helped the organisationto achieve clarity in objective-settingfor assignments and has resulted in a high level of satisfaction withpersonal performance amongassignees during their assignment.


The selection timeframe

We studied the average time for newexpatriates to accept internationalassignments within the reportingperiod. The mean was 65 days, andthe range extended from 30 to 92days. The period for determination ofthis metric was defined as the periodfrom the date when the internationalopportunity was first identified withinthe organisation, to the date on whichthe individual assignee accepted theassignment terms. This was notmeasured through to the actual startdate of the assignment, because weconsidered that, after acceptance,there could be factors which wouldpotentially inhibit the start date butwere outside the organisation’scontrol. Examples could include thetime taken to get work visas/residencepermits, a delay caused by familyissues such as the start date of the next school term, or theaccompanying partner needing to work out a notice period.

Organisations with formal selectionprocesses all had above averagelonger times to accept than theorganisations with no processes. This could lead to a simple conclusion that the formerorganisations spend more timeprofiling candidates, preparingcomparative assignment budgetedcosts, and so on. However, thesesame organisations also tended to select on average more topperformers or had assignees whoshowed positive performanceimprovement while on assignment. We therefore concluded that thebenefit of a more formal and thoroughselection process is paid back withgreater on-assignment performance.

Who provides pre-assignment learningand development?

We asked the participants whetherthey had formal programmes in placeto educate new assignees aboutcultural lifestyle differences in theassignment destination, or aboutpreparing for life as an assignee.Although most organisations offered a short pre-assignment visit where the assignment destination was inanother region or culture, we foundthat the purpose of this trip wasprimarily to meet new businesscolleagues and to deal with issuessuch as home and school searches.Several of the participantsacknowledged that they would like to devote more attention to the softeraspects of preparing the assignee(and the accompanying family) for life away from the home location.

Interpretation • Organisations tend to select high

performers and to a lesser degree,people with high future potential for international assignments.

• Selection should be linked toperformance, potential, and thepurpose of the assignment.

• There should be clear expectationsetting. Clarity is needed aboutorganisational goals, supportmechanisms, and futureopportunities for individuals. These all increase the chances of expatriation success.

• Although existing studies oninternational mobility recommendthe assessment of softer aspectssuch as a desire to adjust,tolerance, or cultural openness of candidates, in practice theseappear relatively neglected.

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case study

Developing talent as part of a pipeline

Identifying talented individuals whoare willing to take up an internationalassignment and retaining themfollowing the assignment becomesthe key cornerstone of a successfulglobal development strategy.Creating an environment whichfacilitates improved performance and internal promotion maintains a healthy talent flow of potential future leaders within the company.

This organisation is a worldwideprofessional services firm, driven by a global people strategy ofdeveloping excellence in each of its 70 plus territories. The mantra of‘people as the most important asset’is supported by a strong focus on the use of international assignmentsas a developmental opportunity. This organisation has the greatestproportion of international assigneeson assignment, primarily for

The right people in the right place to drivebusiness growth.

Performance during the assignmentWe asked organisations a range of questions aboutperformance. We have already looked at whetherorganisations select their best performers forinternational assignments. We therefore wanted toreview how the performance of expatriates is managedwhile on assignment and to what extent this continueswhen the assignee is repatriated. We produced metricsrelating to a number of performance-related areas,looking at appraisal ratings and the degree to whichexpatriate performance improved or declined during the assignment.

developmental purposes, amongparticipating organisations.

Explicit performance criteria forinternational assignment selection,brings forth the most talentedcandidates (i.e. only top performersare considered for assignment). This organisation reports the highestpercentage of new expatriates rating as top performers, amongparticipating organisations.Assignments are typically structuredfor a maximum duration of 24months and individuals areencouraged to retain links with their home country throughout theassignment. Individual assignees are supported centrally by aninternational assignmentsadministration team whichencourages assignees to review their personal development plansevery six months, and use home and host mentors throughout theirassignment period.

continued overleaf


Does performance improve while on assignment?

Having established that, on average,32% of new expatriates are in the topperformance category as assessed bytheir organisation, we reviewed theon-going performance of currentassignees.

We found that positive performancetended to hold up with an average of 29% of current expatriates beinggraded in the top performancecategory. More importantly, we foundthat, on average, 28.4% of currentexpatriates had improved theirperformance rating in the period,while, on average, only 15.3% showed a decline in performance.

In most participant cases, of theorganisations that showed a decline in top performance, the reduction inratio was only marginal. However, oneorganisation showed a marked dip ofover 12% in the number of currentexpatriates rated as top performers.There was no obvious explanation for the apparent performance dip;however, in discussing this metric with the organisation, a concern wasexpressed that expatriates are not asclosely managed, in terms of objectivesetting and regular review as underthe home country appraisal system. In addition it is believed that the localHR function does not understand the more complex needs either ofindividual assignees or their family.

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Who manages the appraisal process during the assignment

We sought to establish which of theparticipant organisations involved both the home and host business in the annual performance appraisalprocess. Despite many organisations’stated policy aim that on-going career links with home country wereencouraged and should bemaintained, we found that only one of the participants actually involvedboth the home and host countrymanagement in the annualperformance review process and on-going objective-setting. Theremainder all had performanceappraisals conducted solely in thehost location.

Generally, therefore, there was a riskof divergence between global andlocal goals, leading to the potentialneglect of longer term career planningor objectives that are consideredimportant by the home location.

case study

Performance onassignment – a step up the career ladder

This multinational organisationemploys more than 25,000 people inover 30 countries. The organisationuses a performance and potentialmatrix to position the performance of managers across a range ofcompetencies. In selectingcandidates for internationalassignment, the organisationconsiders candidates who possessthe critical skills and experience

Within the broad organisationalphilosophy of self-management incareers, the organisation provides a suite of formal developmentprogrammes to support on-goingpersonal development. Performanceremains high throughout theassignment: this organisation showsthe highest percentage of topperformers while on assignment, and has among the highest retention ratios.

Internal promotion for repatriates was highest of all of the participatingcompanies (where data wereavailable), with more than 50% ofrepatriates achieving an internalpromotion within 12 months of return to home country. Furthermore,an impressive 96% of expatriateswho had returned from assignmenttwo years prior to the reportingperiod were still employed within the organisation.

Alongside a high (top of theparticipating organisations) positivechange in repatriate performance,this organisation is successfullyutilising international assignments as an important vehicle for talentdevelopment (showing the highestpercentage of employees withexpatriate experience), and thedevelopment of a pool of potentialfuture global leaders of theorganisation.

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needed for the assignment, and thedevelopment prospects and careerprogression expectations of thecandidate. It does not, however, review prior performance appraisalsas part of the selection process orset a minimum performance graderequirement.

An HR representative explained that an international assignmentis seen by employees as having three potential benefits: a financialopportunity (it had one of the highest overall investment figures per assignment), a careeropportunity, and a prospect ofpossible promotion at the end of the assignment.

During the reporting period, theorganisation reported that 17% of allcurrent expatriates were in the topperformance category. Importantly,18% of its current expatriatesshowed improved performance overthe reporting period, while 9%received a lower performance rating.

This trend continues after theassignment with nearly 17% of newly returned assignees showingimproved performance, and animpressive 40% of individuals being promoted upon return.

For this organisation, the international assignment experienceappears to be a good one, withindividuals motivated to performstrongly during the assignment, and with a reasonable prospect of promotion at the end.

Assignment failure – how significant is this?

We researched the early terminationrates of international assignments.Anecdotally, the reason given forassignment termination often involvesa failure to culturally assimilate withinthe host territory. However, we foundthat the average internationalassignment termination rate (bothemployee- and employer-initiatedreasons) was only 4%. This issignificantly lower than mostorganisations’ normal turnover rates.Perhaps the expected costs ofrepatriation and the disruption to the individual’s family situation arereasons for organisations not initiatingearly returns, unless businesscircumstances force the issue.

When we analysed these results inmore detail, we found that severalorganisations had no employee-initiated terminations while onassignment. In one case, anorganisation terminated 10% of itsinternational assignments during oneyear. A merger of two internationalbusinesses caused a business re-organisation and realignment, and the terminations were in line with ageneral reduction in headcount forthat organisation in the post-mergerperiod.

Excluding this extreme factor, theaverage for early termination ofassignment falls even further. Wediscussed the reasons behind earlyassignment terminations and foundseveral instances where the reasonwas related to a positive rather than a negative factor. For example, theindividual or the organisation found a better role for the individual eitherback in the home location or inanother territory, or a promotioncreated a need to move the individual into a new role.

We were therefore able to concludethat there was no significant indicator of assignment failure.

Interpretation• International assignments

deliver a net positive effect on performance for the organisation,both for the percentage of peoplewho are identified within the highperformance category, as well asfor individuals generally, whentracking their performance over time.

• The appraisal process tends to behandled by the host country only,despite suggested best practiceand most organisations’ stated goalof involving both the home and hostlocations in the appraisal review.

• Clear career paths and the use ofmentors and coaching are seen tolead to better performance.


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InvestmentMost companies view the cost of the internationalassignment as being a critical factor in the decision tosend employees overseas (particularly for longer-termassignments). In our experience, organisations tend toover-emphasise the up-front costing of the assignment.Very few of the organisations which participated in theresearch had readily available information on what theiroverall assignment costs were or actually trackedassignment costs after the assignment commenced.

In this section of the research, we examined a number of factors involving the ‘costs’ of internationalassignments. We looked at the direct costs of theassignment, but also at how much is spent onassignment administration, outsourced costs, and theinvestment in learning and development specifically for the assignment.

International assignmentremuneration methods

All of the participant organisationsused a long-term internationalassignment policy, although someparticipants had variants to deal withshort-term assignments. Two of theparticipants also used developmentalassignments and regional policies.The long-term assignment policytypically forms the basic frameworkfor international moves and transfers.In the majority of cases, the policyprovides for a balance sheet methodof determining compensation, where the individual is paid ona commitment that their netcompensation should leave them in a position where they are no better or no worse off than had theystayed at home. However, two of theparticipants use a destination payapproach to compensation, and oneorganisation uses a mix of expatriatecompensation policies, typicallydependent upon regional factors. This distinction exposed importantevidence about costs andperformance which is discussedfurther below.

An analysis of investment

We looked at the investment ininternational assignments to assessthe overall costs associated with the management of expatriates. To do this, we examined the directcompensation costs and the costs tothe organisations of managing theirinternational assignments programme.The overall average investment in aninternational assignment per annumwas reported as US$311,0003 for thenine organisations that participated.The breakdown of this cost is shownin figure five below.

The major part of this investment isthe total compensation and long-termbenefits paid. The sum of these two items of employee reward andbenefits is, on average, US$190,000and, as figure five shows, is itselfhigher than the amount paid inaverage management remunerationfor all employees.

For this research, we defined totalcompensation as gross base salary,bonuses, profit-share, employer social security contributions, andother cash compensation which forms part of non-assignmentcompensation. Long-term benefitsinclude contributions by the employerto pension plans, healthcare, disability,and life insurance cover. We excludedamounts related to stock options,awards or other above base incentiveprogrammes geared to shares, on the basis that these amounts weregenerally not offered as assignment-specific items and could significantlyaffect the investment figures.

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3For the purposes of this report, all figures are shown in US dollars and are converted from GBP at US$1.82 to £1.

Figure fiveAverage breakdown ofexpatriate investment

Allowances 32%

Long-term benefits 11%

Management costs 7%

Compensation 50%

We compared the average expatriateinvestment figure with the averageinvestment in all management levelemployees as shown in figure sixbelow.

This illustrates that, compared with an all employee group, expatriates aregenerally better rewarded, but it alsohighlights the assignment allowancepremium paid. Expatriate allowancesmay be location/family size dependent(e.g. cost of living adjustments). Giventhe range of cost-related surveysalready publicly available, a detailedanalysis is not included here.

Figure sixComparison of theremuneration levels ofexpatriates and all managers4?

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

0Average Management

Expatriate RemunerationRemuneration Saratoga average

across Europe & USA

All $ refer to US$.


The combination and close correlationof these two metrics indicated thatwhere the organisation sought to begenerous with assignment allowances,but did not put a time barrier to theoverall assignment period, there was a much longer average assignmentlength. Although there may be genuinebusiness reasons for this approach, it raises the question of whetherassignment durations are beingextended by the expatriate, seeking to remain in the host location, in orderto retain the value of the generouspackage. If this is the case, there is afurther question mark over whetherthe organisation gets increasedpayback in terms of assigneeperformance over the longer-term.

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4PwC Saratoga average across Europe & USA basedon data from PwC Saratoga’s international humancapital and HR database.

Compensation

Long-term benefits

Allowances

Figure sevenAssignment allowances versusaverage assignment length

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

020 25 30 35 40

All $ refer to US$.

Is there a payback for generous organisations?

Figure six shows that the amount paid to expatriates is clearly greaterthan that paid to their non-expatriatedpeers generally, so we sought toexplore whether there was a linkbetween compensation andperformance, and therefore what kindof payback organisations received.The results were quite pronounced,but not as we expected them to be.

First, we found that the organisationswhich, as a matter of internationalassignment policy, did not havestandardised assignment durationshad the longest average assignmentlengths. Conversely, those that stateda fixed duration tended to have anaverage assignment duration whichclosely matched their published figure.We further found that organisationswhich paid the highest in assignmentallowances per annum (defined as allallowances paid for the assignmentperiod over and above normal baseand bonus compensation and homecountry benefits) tended to havelonger than average assignmentdurations. The effect of these metricsis represented in figure seven right.

Average assignment length (months)

We explored whether there was a link between the level of assignment-related allowances and assignee topperformance during the assignment.We questioned whether payingassignees more generously shouldlead to better on-assignmentperformance (or perhaps improvedperformance compared with pre-assignment performance). Figure eightbelow illustrates that there is not a similar close correlation betweenthese two metrics. Although at thevery bottom of the scale, theorganisations which pay significantlylower than other organisations have arelatively low level of top performers, it can be seen that the organisationspaying the highest allowances did nothave markedly difference performancelevels to the other participants.

Finally, we tested whether theorganisations which paid higher on-assignment allowances had a problemwith retention post-assignment(indicating that expatriates perhapsfind difficulty adjusting to their home-based compensation after the assignment). We found no strongevidence to support this, which maysuggest that other factors affectturnover rates in the period afterrepatriation. This is further discussedin the career development section of this research (see page 23).

When we asked participatingorganisations how they reacted toassignees citing issues over the valueof their package, they stated that themost common reaction was to accedeto additional allowances to retain the individual on assignment.

However, the above analysisdemonstrates that whether expatriatesreceive generous allowances or stayfor shorter or longer periods on theirinternational assignments does not seem to influence eitherperformance or retention. It istherefore questionable whether suchgenerous packages really do provide a return on investment. Although itwould be difficult for organisations to reduce allowances for existingexpatriates mid-way throughassignments, it would be interesting to see whether an organisation thatchose to reduce the value of thepackage for new assignees saw areduction in the numbers wishing togo abroad, or whether performance orachievement of assignment objectiveswas reduced. The first joint researchproject between Cranfield and PwCindicated that financial incentives are often less important thanorganisations believe. However, ifcompensation is pitched too low,financial issues may become a barrierto continued employment with theorganisation.

The reasons may, instead, lie in issues such as general performancemanagement, expectations relating to repatriation, and longer-term careermanagement approaches. These willbe explored below.

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Figure eightAssignment allowances versus current expatriate top performance

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

00% 10% 20% 30% 40% 50% 60% 70% 80% 90%

All $ refer to US$.

Percentage of current expats that are top performers

The investment in assignment administration

We measured the average number of expatriates supported byinternational assignment managers or administrators within theorganisation. We defined this asindividuals who spend more than 50% of their working timeadministering internationalassignments. The mean level was one administrator per 37 assignees.

This compares with the level ofadministrative support provided tostaff in all organisations where themanagement ratio is typically 70:1.Within our participating organisations,we found that the range of resultsvaried from between a support ratio of 15:1 and 100:1, indicating thatsome organisations provide almostfive times as much resource tosupport their international assigneesas their domestic workforce.

This may be explained by the seniorlevel of individuals being selected for assignment and consequently the degree of one-to-one serviceoffered by the expatriateadministration function.

The management of international assignments

Organisations spend significantamounts on supporting theirexpatriate programmes. We definedassignment management costs asbeing a combination of the internalcosts to the organisation of employingstaff primarily devoted to themanagement of their expatriatepopulation, plus the overall costs ofoutsourced services. In total, theaverage management cost perexpatriate was US$22,378 per annum in comparison to US$3,000 for the PwC Saratoga average of all employees.

Outsourcing spend

Most organisations will outsourceactivities or processes to:

• focus scarce resource on eitherstrategic or core activities

• reduce their costs• manage their risks• buy in expertise.

All organisations in the survey haveoutsourced some of the process ofexpatriate management to externalvendors, be it the process ofmanaging tax compliance, assignment costing, removalsmanagement and so on.

Overall, we found that, of the totalexpatriate management costs, 75%were outsourced costs. This wouldindicate that major organisations useexternal expertise to a large extent.

Figure nineExpatriate managementcosts versus all employeemanagement costs?

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

0Expatriate Employee

Management ManagementCosts Costs – Saratoga

average acrossEurope and USA

All $ refer to US$.


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The amount spent onpre-assignment learningand development

We also sought to determine the level of learning and developmentspend per expatriate, as part of overall assignment managementcosts. We defined this is as theamount spent on pre-assignmentcultural training, language training and any professional qualificationsrequired to meet the host countrystandard.

With an average of 0.5% of the totalinvestment per assignee, this was asignificantly smaller element of thetotal investment, compared with theaverage levels of on assignmentallowance expenditure. The averagepre-assignment learning anddevelopment spend amounts to onlyUS$1,521 per assignee. Severalorganisations indicated that theyspent nothing on pre-assignmentcultural training at all, even thoughthey believed that it would benefittheir individual assignees and helpthem to adjust more quickly to theassignment location.

The total average cost ofan international assignment

For participants that use a balancesheet method, we found that theaverage cost per internationalassignment was US$1,032,000.Organisations that use the balancesheet method of compensation had significantly higher costs perexpatriate than those which use adestination pay approach: the rangeof average cost for the balance sheetmethod varied between US$774,000and US$1,320,000 per assignment.The average assignment cost for the destination pay method wasapproximately US$273,000 per assignment.

The relative cost of thebalance sheet method

This analysis shows there is a cleardistinction in assignment costsbetween those organisations that use a balance sheet method ofdetermining assignment compensationand those that use a destination pay approach.

Two of the nine participants use a destination pay approach tocompensation delivery for theirinternational assignments. This meansthat they move assignees onto a local market rate for the assignmentposition, as determined by localmarket conditions in the host country.They typically do not tax equalise,although they will meet certain tax costs on relocation-relatedexpenditure in the host location.Assignees are expected to adapt to the living standards of their local peers.

We looked at the demographics of the assignee populations to determinewhether there were materialdifferences in the destinations ofassignments or other factors whichwould explain why the cost differencewas so marked. We found that theorganisations that used destinationpay tended to have a high proportionof younger expatriates, who wereoften single and who initiated themove as part of their own career plan.We did not find that there was adifference in the location to whichassignees were posted. There weresimilar levels of deployment betweenhigh (approximately 60%), medium(35%), and low cost (5%) assignmentdestinations.

We established across all data thatneither assignment pay nor paymethod influenced levels ofassignment performance.

For organisations using the balancesheet approach to compensation, theaverage investment per expatriate wasa little over US$360,000 per annum.Although base compensation figures(i.e. average base and bonuscompensation) were relatively similar,we noted marked differences inexpatriate allowances. These variedfrom as little as US$20,000 for oneorganisation to US$250,000 at theupper end of the scale.

Interpretation• The average expatriate assignment

cost per annum is US$311,000,with a range of betweenUS$103,000 and US$396,000.

• There are markedly lower costs for those organisations which use a destination pay method, but with no significant difference in assigneeperformance compared with thoseon a balance sheet method.

• Generous assignment-relatedallowances do not, on average,result in either higher performanceor assignee retention, but docorrelate with overall length ofassignments.

• Existing studies show that manyassignees and accompanyingfamily members find it initiallychallenging to adjust to life abroad.However, organisations spendrelatively little in pre-departurelearning and development,compared with the amounts paid in relation to on-assignmentallowances.

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23

Repatriation, retention and career developmentAlthough organisations emphasise the business case forinternational assignments and much of the immediatereturn on investment is gained during the assignmentperiod, the effect of international experience can be justas important in longer-term career development. It isperhaps surprising therefore that only two of the nineparticipant organisations had a formalised repatriationprocess which focused on preparing the individual forthe next role within the organisation.

A number of participants provide a guaranteed right of return to the home country, but not all of them then committed to finding the individual a position.In only a few instances did organisations focus on theinternational experience and how this would be used.

Previous surveys, including our first research topic, have shown that repatriation is the area of highestdissatisfaction among expatriates with respect toorganisational policies. International assignees hope for a holistic process which gives them an earlyindication of their next position and an adequateprospect of further career advancement.

Figure tenNet change inassignee performance

20.0%

17.5%

15.0%

12.5%

10.0%

7.5%

5.0%

2.5%

0.0%

-2.5%

-5.0%on year of year after

assignment repatriation repatriation

Analysing employeeperformance aroundthe time of repatriation

We gathered a number of metrics to enable us to study the relativechange in employee performance at three important points in theassignment cycle:

• during the assignment• in the year of repatriation• in the year after repatriation

The typical range of net change inemployee performance for theparticipant organisations is displayedin figure ten below.

This figure shows where improvedperformance is greater than declined performance for participantorganisations. The 0% line means thatoverall there is no net improvement inperformance; hence where the rangeis above this point, there is an overallimprovement in performance acrossthe participating organisations.

In reviewing the three key stages in the assignment lifecycle, wetherefore established that, during theassignment, employee performanceshows a net improvement rangingbetween 3% and 7.6%. However, in the year of repatriation, there is a much wider range with someparticipants reporting overall anegative change in employeeperformance. This is consistent withthe findings of our first researchproject where we discussed the‘career wobble’ which is oftenexperienced by repatriated assigneesin the immediate months afterrepatriation. In the year afterrepatriation, typical net employeeperformance moves back into thepositive range. The narrow bandimplies that organisations experiencea net positive change in performanceimprovement of between 5% and 7%.

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75th percentilemedian25th percentile

The retention challenge

Leading up to the date of repatriation,we know from our previous researchthat expatriates would welcome more opportunities to re-establish old contacts in the corporate centre, hope to be mentored in the changedrealities at head office, and expect tobe debriefed. They also find honestyimportant. These expectations arevery frequently unfulfilled, so surveysshow that more than two-thirds ofexpatriates are not content with therepatriation approach of their firms,and that up to 75% of expatriatesconsider leaving their employer eitherduring or after their work abroad. It was, therefore, no surprise that we also encountered retention issueswithin some of our participantorganisations.

Repatriation – who gets the benefits?

We have found further supportingevidence of the continuing trend forgrowth in international assignments.The number of new expatriatesexceeds the level of returnedexpatriates. On average across all participants, the number ofassignments ended over the reportingperiod was 28%, a figure which is 6% lower than the average number of new assignments, in relation to allcurrent expatriates. At the end of theirassignment, some assignees wouldhave immediately moved on toanother international assignment orlocalised in the host country, ratherthan returning home.

Of the assignees who returned to their home country, 85% were stillwith the organisation by the end of the reporting period, suggesting ashort-term turnover rate of 15% ofassignees in the year of return; this isabove expected annual turnover ratesfor all employees.

It does appear, however, thatorganisations that can manage their repatriated assignees after theassignment period are paid back withlonger-term loyalty. Figure elevenshows that, over time, repatriatedexpatriates tend to stay with theorganisation, and retention rates aremuch higher than the equivalentfigures for all employees.


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case study

Illustrating the retentionchallenge for organisations

This organisation is a company thatpursues a strong developmentalpurpose within international mobility.The research data indicates a goodon-assignment performance ofcurrent expatriates, with 40% beingamong the top performers and atrend of improved performanceexceeding lower performance while on assignment.

However, this organisationexperiences substantial problemswith reintegration and retention ofinternational assignees. Our researchindicates that it has the lowest rate of promotion of returned assignees of any of the participatingorganisations in the year ofrepatriation.

An internal document outlines thatthe company ‘loses between 30% to 40% of expatriates within the first two years of their return frominternational assignment, not havingregained its investment of theassignment costs’. The data gathered in the research wasconsistent with these observationsand showed that, based upon theaverage assignment cost per annum,the loss of returned assignees iscosting the business at least US$25 million in lost investment each year. A mobility expert withinthe organisation stated that shebelieved that the expatriate turnoverrate within the first year after returnwould be so high as to create serious problems in attractingpotential assignees.

It appears that significantly moreneeds to be done in the periodleading up to the repatriation of theassignee to consider how the skillsand experience gained over theassignment period can be matchedto opportunities for ongoing careerdevelopment.

Our expatriation process has its weakest link in the phase of reintegrationinto the sending organisation. It is then that expatriates go through their deepest and most unexpected cultural and mis-appreciation shock phase.

Although we did not measure whathappened to the expatriates who leftthe organisation, we would expectthat they would have left to seek a similar position with anotherorganisation, often with a directcompetitor within the same industrysector. This illustrates the level ofinvestment to support internationalmobility programmes and the cost to the company when returningassignees are not successfullyreintegrated.

Since assignments are business-driven and role-based, the pushcomes via the job evaluation system.Promotion during assignment isregularly attained and a number of expatriates come back to apromoted role. Data on internalpromotion of expatriates show aconsistent trend of about one-thirdbeing promoted on return. Althoughthere is no guaranteed return homefor expatriates (because positions are role vacancy driven), theorganisation reports a consistentlyhigh retention rate over time.Combined with longer-term (twoyears returned) consistentlyimproving performance, this datawould indicate the possibility of good longer-term utilisation of skills within the organisation, withpotential benefits accruing to bothcompany and individuals.

Interpretation• Very few organisations focus on

either repatriation or the nextopportunity to the same degree as initial selection.

• The turnover of 15% of repatriatedassignees in the first year isgenerally higher than all employeeturnover.

• Medium-term repatriate turnoverremains stable: if the employeedoes not suffer (or recovers from) a ‘career wobble’, then chances oflonger-term retention are good.

• Where turnover was higher,companies identified inadequatecareer planning from bothorganisations and individuals as a primary reason.

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case study

Illustrating the retentionchallenge for organisations

A lack of data caused by limitedmeasurement systems leads manyorganisations to continue to makethe often very expensive ‘leap offaith’ that international assignmentswill result in pay-offs in terms ofbusiness benefits and individualcareers. If companies are to reap the benefits of internationalassignments, then short- andparticularly longer-term issues, such as repatriate performance,retention over the longer-term andpromotion as a proxy for added value to the organisation, becomeimportant factors.

This participant is a globallyoperating service organisation withmore than 100,000 employees.Within the company, internationalassignments are based exclusivelyupon business-related goals, andobjectives are set for the role, not for the individual’s personaldevelopment or for the overallachievements of the assignment. This clearly articulated businessrationale means that internationalassignments are not considered amust for career progression per se;however, it does generate a focus on how international assignments fitwithin talent management. Thesuccession planning processconsiders the experiences requiredby individuals to facilitate theirprogress and maintain a talent flowwithin the company. Thus,international assignments arepositioned as one of the criticalexperiences valued within the general career structure of theorganisation as a whole.

Figure elevenRepatriation of returned expatsversus management retention

100%

95%

90%

85%

80%

75%

70%

65%year of year after 2 years after

repatriation repatriation repatriation

Expatriate Retention

All Employees – Saratoga average across Europe & USA


ConclusionThis research demonstrates that, as the trend forinternational mobility increases, organisations are placing a greater emphasis on the placement anddevelopment of talent. Our approach of using metricsand contextual analysis enabled us to present a muchdeeper analysis of the dynamics in international mobility– including strategic purpose, selection, investment,career development and performance – than had beenattempted before. We find that many organisations havea largely hands-off approach to career managementduring the assignment, and a lack of focus on therepatriation process and the use of acquired skills.

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There is clearly a risk to a businesswith this approach. Employees areoften selected based upon existingknown strengths and performanceprior to the assignment. Inevitably,there will be differences in the newrole or function with additionalpersonal challenges along the way.For many organisations, there is anexpectation (or hope) that performancewill at least remain stable or, betterstill, improve during the assignment.

We found in a number of casesevidence of overall averaged improvedperformance on assignment. Howeverthe general lack of investment in pre-departure learning andinvestment, as well as the reliance on host country only appraisalmanagement, it means that theindividual may not be prepared to hitthe ground running in their newlocation. They may also not interacteffectively enough with their home

location to ensure that their newlyacquired skills and experience will beof benefit to the organisation in thelonger term. We question whethereven greater levels of improvedperformance could be achieved, aswell as a reduction in the average level of decreased performance ifthese issues are addressed byorganisations.

We also found that when problemsarise, the first reaction oforganisations is often to offer moremoney to the employee, perhaps inthe hope that this will delay or preventhaving to deal with the more difficultissue of performance or even earlyreturn. This might provide a short term solution but we would questionwhether this achieves a longer termbenefit for either the employee or theorganisation, if the fundamental causeof the problem is not adequatelycorrected.

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Issues to consider and actions to take

Our research showed that currently there is no model system in place forensuring optimum return on investment. However, many of the researchparticipants are making very positive steps towards achieving this, and usingthe information obtained during the research, we have been able to build anoverall strategy for other organisations to help them to achieve a positive returnon their investment. Below we have outlined some of the good practiceprinciples that organisations could consider:

1 Be clear about the overall organisation and individual objectives forinternational mobility and their link with business strategy.

2 Ensure that assignee selection is a three-way process (assignee, home andhost business sponsors) with a documented business case.

3 Be clear about the assignment purpose and the assignment-specificobjectives to be achieved.

4 If the purpose changes (e.g. from short-term skills gap to a longer-termassignment), be sure to re-frame the assignment purpose and businessobjectives.

For the expatriates, as theirexperience and hence net worth to the organisation increases, so doestheir marketability and attractivenessto competitor companies. Therefore, a failure by the employer to focus on career development and how toleverage those acquired skills onrepatriation can be unsettling for theindividual, with the risk of losing atalented high performer, if the situationis not appropriately managed. Thehigh turnover rates upon repatriationwe found during the research clearlyhighlights a problem of lost value toorganisations.

For the participant organisations, the process of research was both achallenging, but also stimulatingopportunity. Many were, in truth,sceptical of their ability to obtainmeaningful data from their internalsystems in the timeframe permitted.However, the quality and volume ofthe data obtained in a relatively shorttime frame highlights that in fact muchof this ‘hidden’ information can besourced when required. By utilisingthe metric-led approach, we havecreated an environment where theseorganisations may now compare theirfuture results against these researchfindings and establish what effect their interventions will make oninternational assignment policy and process.


29

5 Manage the performance appraisal process during the assignment bykeeping a focus on the achievement of the assignment objectives.

6 Involve the home and host country, where possible, in the performancemanagement process, and particularly the longer-term career development discussions.

7 If the assignment objectives have been achieved, make a criticalassessment of whether the assignment should be ended.

8 Be aware of individual assignees’ needs relating to repatriation and help to facilitate the transition back to home country

9 Focus on the next role and the use of the international experience in thesubsequent stage of an individual’s career development.

10 Regularly review the performance of the international assignment policy and benchmark results against other organisations.

Next steps

Through our research, we have gathered a great deal of data about theparticipant organisations and spent much time with their international mobility experts. This has enabled us to collect a significant amount of data for benchmarking purposes. The metrics will be made available throughPwC Saratoga so that other organisations will be able to measure their ownperformance against our participants. As our database of results grows, weexpect to be able to provide data analysis broken down by industry sector,geography and assignment policy type.

Contacts

Human Resource Services

George YeandleE [email protected] + 44 (0) 207 212 4638

Alan JohnsonE [email protected] + 44 (0) 207 212 2043

Richard PhelpsE [email protected] + 44 (0) 207 804 7004

Michael WoodE [email protected] + 44 (0) 207 212 6986

Cranfield School of Management

Dr Michael DickmannCranfield School of ManagementE [email protected] + 44 (0) 1234 751122

Dr Noeleen DohertyCranfield School of ManagementE [email protected] + 44 (0) 1234 751122

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If you are interested in discussing the issues raised in this publication, or if you would like to talk to one of our experts about the on-goingdevelopment of these metrics, please contact one of the following:

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PricewaterhouseCoopersHuman Resource ServicesPricewaterhouseCoopers Human Resource Servicespractice works with clients who strive to make theirpeople a sustainable source of competitive advantage.Our strategy is built on our own belief in developing ourrole to be creative and effective team players committedto outstanding client service. We bring the ability to takefresh perspectives, to think differently, and to developand implement new and value adding solutions.

We work in close relationships with clients to offer practical, multi-disciplinedapproaches to the increasingly complex changes facing business one of themain challenges is to create environments in which their people can work more effectively. Our Human Resource Services practice brings together all of the professionals working in the human resource service arena – tax,benefits, retirement, communications, financial planning, internationalassignment, equity, culture and change, compensation, strategy, regulatory,legal and process management – affording our clients an unmatched breadthand depth of expertise, both locally and globally.

Our expertise in tax, law, actuarial, accounting and compliance issues,combined with our knowledge of employment best practices, sets us apart.


This publication (“Report”) has been prepared as general information on benchmarking issues, and incorporates aggregated data from various thirdparty sources and respondents. PricewaterhouseCoopers LLP (“PwC”) has not independently verified, validated, or audited the data received fromsuch third parties. PwC makes no representations or warranties with respect to the accuracy of the information contained in this Report, and in noevent will PwC, its related partnerships or entities, or the partners, agents or employees thereof be liable to the user (subject to any agreement withthe user to the contrary) or to any third party (including any of the user’s clients) for any inaccuracy of information contained in this Report (includingany errors or omissions in its content, regardless of the cause of such inaccuracy, error or omission), for any usage of, decision made or action takenin reliance on the Report, or for any consequential, special or similar damages even if advised of the possibility of such damages. This Report is notintended to give legal, tax, accounting or other professional advice. No user should act on the basis of any matter contained in this Report withoutconsidering and, if necessary, taking appropriate professional advice on their individual requirements.

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Documents

Measuring the Value of International Assignments - PwC