nowledge & Wisdom G E B P 50 Time for a Revolution in Executive … · 2018-09-26 · May 2016 - Global Benefits Vision 3 global-benefits-vision.com 09 Index of Articles 3 Table of

global-benefits-vision.com May 2016

Knowledge & Wisdom for Global Employee Benefits Professionals

18 Lifecycle DC Pensions in Brazil

Andrego Barbosa De Oliveira

26 Pension Funds Investing in Hedge Funds – the New Normal?

Eric Muller-Borle

40 Picking a WinnerManaging Expatriate Selection RiskPaul Pittman, Natalie Richter

50 Time for a Revolution in Executive Pay?

Dr. Sandy Pepper

http://www.global-benefits-vision.com

May 2016 - Global Benefits Vision 3

global-benefits-vision.com

09 Index of Articles

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Table of Contents

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hoMMAge à JACques rouxel

Picking a Winner – Managing Expatriate Selection Risk

Paul Pittman, Natalie Richter

40

Pension Funds Investing in Hedge Funds – the New Normal?

Eric Muller-Borle

26

Lifecycle DC Pensions in Brazil

Andrego Barbosa De Oliveira

18

Time for a Revolution in Executive Pay?

Dr. Sandy Pepper

50

Yellow Fingers and Diversity

Why Gender Related Quotas Often Fail

to Deliver Desired Diversity OutcomesNorman Dreger

10

08 Upcoming Conferences and Events





Profiles of Contributors

page 40 : Picking a Winner – Managing Expatriate Selection Risk→

Natalie Richter is a Management Consultant and coach specialised in Culture and Communication

who was lived and worked in Asia, Europe and North America. In her 14 years in Asia she was

both an expat and an accompanying spouse working with both local and global companies and

universities. In Canada, she consults for a number of global relocation companies based in the United States and Europe.

In addition, she has taught Cross-Cultural Management at the Schulich School of Business in Toronto, Canada to both

undergraduate and graduate business students as well as tailored culture and communication workshops for global executives

through the Schulich Executive Education Centre.

Her coaching practice is based on her Becoming W.O.R.L.D. Wise™ Global Skills Development Process. Her areas of

specialization are: relationship-building in high corruption risk countries and industries; organization and team culture

development and integration; leadership branding through effective communication and a wide range of other communication

and culture-related areas. She has worked with both top leaders (e.g. Managing Directors; General Managers; country Presidents)

and project/team leaders who come from a wide range of functional and industry backgrounds. She speaks English, French,

German, Japanese and Cantonese and holds a BA in Political Science from McGill University and an MA in Applied Linguistics

from the University of Surrey. She is an Adler Trained Coach and has received extensive training on the ROI Methodology.

Natalie richter [email protected]

priNcipal & ceoManagement Consultant and coach

Paul founded The Human Well in 2003; a boutique practice providing international and domestic

HR advice to boards and senior management. He has more than 30 years of human resource

experience and consults on matters focused on improving the return on investment in people.

Paul has led successful HR teams including global employee benefits management at Massey-Ferguson, Laidlaw, Japan

Tobacco International (formerly RJR Nabisco), and Alcan where he integrated HR practices world-wide following the merger

with Pechiney. He also led the HR practice for Andersen and the international practice for Mercer in Canada.

He was responsible for the HR integration teams in the $8 billion acquisition of RJR International by Japan Tobacco in 55

countries, the $12b IPO of Novelis Inc., and in delivering $20m in savings from global rationalization of HR at Alcan.

He is a former member of the Conference Board of Canada’s Council of Human Resource Executives, speaks at conferences

and publishes articles globally as well as serving as an expert witness.

He has lived in the UK, Canada (Quebec and Ontario) and Switzerland and worked extensively in many other parts of the

world and is currently located in Toronto. He is an accountant by training and served on the boards, including as chair of

several not for profit organizations.

paul [email protected]

the humaN WellFounder



40 Global Benefits Vision - May 2016

Picking a Winner – Managing Expatriate

Selection Risk

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SStories are good. Stories help convince employees whom you want to transfer to another country that you will actually deliver what you are promising.




Selection for international assignments is

not one-sided. Being able to select the right

employee depends on having the right group

from which to select, individuals motivated by

“what’s in it for me?” If the best candidates

cannot see a clear personal advantage, they are

unlikely to volunteer.

It used to be common for employers to suggest

that not accepting an international assignment

would be career-limiting. Employees called

that bluff when they saw their colleagues return

with no job and no recognition or desire by the

employer to take advantage of the experience

they had gained.

Emerging global corporate cultures and

training and development programs are ensuring

that companies are using fewer international

transfers to fill important vacancies. There are

fewer candidates, too, but ironically greater

care is required to select the right candidate to

mitigate risk and to ensure that the mobility

process is highly regarded by top candidates.

Willing assignees are likely to be more successful,

and a pool of willing candidates is a precursor to

a good mobility reputation.

In our previous article, “Managing Mobility,”

we addressed administration in the context of

company philosophy. This companion piece

addresses the selection of candidates and why

dedicating effort to this endeavor is a worthwhile

investment. A strong reputation, meaningful

family support, and appropriate financial

incentives will ensure the best candidates and

thus reduce the risk of costly assignment failure

and underperformance.

ASSIGNMENT RATIONALE

Sending an employee to work in another

country is a costly undertaking. The return

from that investment comes from achieving the

assignment’s goals and growing the pipeline

of employees who have an international

understanding of the company and how it

operates. Conversely, value can be destroyed

with the wrong candidate, e.g., someone who

is under-qualified, culturally unsuitable, or

ethically ill-equipped. The subject matter of

this article is how to select better-qualified

candidates for international assignment

and minimize risk.

Paul Pittman Natalie Richter

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A positive internal reputation about mobility and career progression is

an important part of selection and improving assignment performance

If the best candidates cannot

see a clear personal advantage,

they are unlikely to volunteer





Most assignments fall into one of four categories, with their relative values generated by completion of the

assignment and realizing the enhanced potential of the candidate in the future:

1. leaDer (e.g., country, region, project,

or portfolio manager)

2. maNager (e.g., department head,

functional specialist)

3. specialist (e.g., technician, expert)

4. skilleD (e.g., high potential, developmental)

assigNMeNt categories

1.Leader 2. manaGer

3. SPeciaLiST 4. aPPrenTice

Sour

ce: T

he H

uman

Wel

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The value of these roles differs

by company, reflecting the type

of business, the industry, and the

company’s talent-management

process. Some organizations, for

example, may place a greater value

on the apprentice than the manager

or specialist, for example, because

of future potential gained from

the assignment experience. The

value of the assignment in the

organizational context needs

to be understood to develop a

customized selection framework.

For example:

What is the value of the assignment?

b What are its exact goals?

b What is the approximate NPV?

b What is the envisaged legacy?

What will be the developmental experience

gained by the assignee?

b For which roles or projects will the experience

qualify the employee?

What are the skills and experiences required

by the role?

b Leadership?

b Technical?

b Political?

b Change management?

What predominant values will be required to be

exhibited in the role?

b Corporate?

b Local?

How important is external relationship-building?

b How much of the role will be achieving goals

with the local community?

How important is family integration?

b What role are family members required to play?

b Is there a social component?

How important is prior experience?

b Working within the company culture?

b Working within the local national culture?




By addressing questions relative to the specifics

of the company we systematically form a deep

understanding of the role itself and the attributes

required to make it a success—a much deeper

understanding than for a domestic appointment,

where there are more checks and balances.

These characteristics are not self-contained;

they overlap. They are also not finite—we are

seeking indicators of the weighting of their

importance to understand how deeply they need

to be explored with prospective candidates,

and shortcomings anticipated and rectified.

The perfect candidate does not exist. As in any

succession plan, addressing gaps mitigates risk.

The cost of an international transfer is three to

four times that of a domestic appointment, and

this alone warrants a deeper understanding of

the attributes needed to improve the likelihood

of success and reduce the risk of failure. Having

to bring a family home and send a replacement

exponentially increases the cost. Often, however,

it is not a binary assessment. Complete failure

is easy to spot; it’s more difficult to identify

assignments that are under-delivering, and

to determine what to do about them in order

to preserve value.

These considerations should not examine

the assignment as a self-contained activity.

Selection should also consider the desired

legacy that an organization wants to result from

the assignment. Our two case studies examine

legacy and its impact on an assignment, both

positive and negative.

What is the value of the assignment?

MWhat are its exact goals? MWhat is the approximate NPV? MWhat is the envisaged legacy?

What will be the developmental experience gained by the assignee?

MFor which roles or projects will the experience qualify the employee?

What are the skills and experiences required by the role?

MLeadership? MTechnical? MPolitical? MChange management?

What predominant values will be required to be exhibited in the role?

MCorporate? MLocal?

How important is external relationship-building?

MHow much of the role will be achieving goals with the local community?

How important is family integration?

M What role are family members required to play? M Is there a social component?

How important is prior experience?

MWorking within the company culture? MWorking within the local national culture?





SELECTION FRAMEWORK

We do not recommend an explicit approach to

selection; the design and features should reflect

the philosophy and values of your company. We

do, however, advocate a systematic approach

that addresses the detailed requirements of the

assignment and matches these with potential

candidate profiles. The framework should

identify gaps in the match and steps to mitigate

the resulting potential risks.

No assignment should escape this process,

no matter how apparently insignificant. Even

the most minor positions can cause significant

damage when they go off the rails. In fact,

potential value destruction may be greater

in some cases than projected assignment

value, making selection screening a critical

risk-mitigation tool.

A framework for the selection of candidates for

expatriate positions should be easy to deploy and

trusted by the leadership team. It will include

attributes of the domestic selection process,

extended to include screens to assess suitability

for a mobile assignment. These should be

weighted for each assignment to reflect the

importance of the task, value to the company,

and specific requirements of the position.

There needs to be total clarity around the

objectives of the assignment, what the candidate

will be required to accomplish, and how success

will be measured. What is the legacy that we

want the candidate to leave behind? What

skill transfers are required? What will be the

culture and the resulting relationships with

customers and suppliers? These are hugely

important discussions that cannot be left until

the first performance review. Success for many

international change projects is often “we’ll

know it when we see it,” frustrating both

those making the selection recommendation

and potential candidates.

A selection framework will improve the

identification of shortcomings and areas for addi-

tional preparation or skill development, enhance

the likelihood of success, and mitigate risk.

assigNMeNtDetailed qualitative des-cription of the role and its objectives

Relative Value of Assignment

X Critical

Duration # of years

Estimated value $X Significant

X Important

caNdidate

Define likely next role(s) for the selected candidate and their availability

Relative Value of Candidate

X HIPO

Projected Time Frame

# of years

Value of loss in the event of premature departure

X Executive Successor

X Senior Manage-ment Successor

sUccess factors AcceptableTraining/Coaching

RequiredAssignment Support

RequiredRisk Mitigation

Actions

assigNMeNt attribUtes

e.g., Cultural flexibility* √

Cultural competence √

Corruption management √ √

Change management

Family readiness √

selection FraMeWork For the xyz co. inc

*Assessment conducted by external cultural expert following debrief after “look see” visit




WHAT’S IN IT FOR ME?

Selection by the preferred candidate (i.e.,

the candidate with the highest level of predicted

success and lowest risk) will only occur with

the appropriate incentives. These can be

summarized as:

family support. Fundamentally this

includes shelter, safety, and education

for children, and extends to spousal

career, volunteer, or educational support.

Increasingly, this will include the family’s

general well-being as candidate pools shrink

and become more demanding. Traditionally

assignments have underperformed or failed

because of issues associated with family

settlement unrelated to the workplace.

Selection and preparation must recognize

these risks, and assess the family’s

preparedness and the additional steps that

may be required to mitigate risk. However,

single, less-experienced candidates may

represent greater risk.

fiNaNcial iNceNtiVes. After clearly

articulating the assignment objectives

and agreeing upon them with the selected

candidate, a targeted incentive plan should

be developed reflecting appropriate “pay at

risk” and stretch targets. Incentive targets

should directly reflect the assignment

goals and objectives.

career iNceNtiVes. No matter the

significance of an assignment or the career

stage of the candidates, they will be keen

to assess the impact on their careers before

accepting an assignment, particularly

one associated with high personal risk.

An employer must be able to realistically

articulate the impact on a candidate’s career

by identifying the potential roles that may

be available to the candidate after successful

assignment completion.

There can of course be no guarantees, and

career opportunities must be updated and

revisited with the candidate annually. An

employer must make genuine and realistic

efforts to deliver on opportunities. C-suite

positions may require the candidate to compete

with others. If no position is available an

employer will need to consider whether the

value of a candidate having successfully

completed an assignment justifies the creation

of a position to retain the skills within the

company. Alternatively, an appropriate

retentive financial incentive that contemplates

exit from the company upon completion of the

assignment should be agreed upon. Clarity and

best efforts to deliver will enhance a company’s

mobility reputation, minimizing the apparent

risk for future candidates.

11.

22.

33.

Family Support

Financial Incentives

Career Incentives

WhaT’S in iT for me – Wiifm?





A list of the attributes of a successful candidate was developed for the selection framework:

iNterNal experieNce — The required

leadership experience in the parent company’s

culture, approach to employee engagement, and

management of its processes essentially ruled

out external candidates.

chaNge kNoW-hoW — The home office has

many checks and balances that enable leaders

to develop their skills, and a common language

aids the avoidance of misunderstanding.

The selected candidate would not have these

available and must be able to navigate change in

an alien environment.

family reaDiNess — The company pays

little attention to what goes on in the home life

of a leader at HQ. Substantial social activity, and

perhaps not all friendly, will be required to mend

relations with the government, community,

and work force. What is the preferred status

of the proposed candidate? Will the company’s

representative be deemed more trustworthy if

accompanied by a family? Are local relationships

easier to build with family members

involved? Will the family be able to adapt to

the local environment?

cultural BackgrouND — Leadership

skills tempered with a background in the local

culture and the ability to build relationships

with influential local people (e.g., government

officials) would be beneficial. Equally, care is

needed to avoid candidates with backgrounds

that might be regarded antagonistically by

the local workforce.

cross-cultural leaDership — Successful

change leadership in other new markets following

a major transaction irrespective of cultural

background may prove to be valuable experience

here. Care is required, however, to assess whether

the skills acquired are transferrable to this new

context. Ability to undertake cultural due-

diligence and indicators of cultural flexibility

are also valuable.

collaBoratiVe — This appears to be an

assignment that attracts a lot of interest from

home office, and the selected candidate needs to

be both eager to seek out assistance and tolerant

of interested stakeholders asking the same

questions and proffering the same advice.

The organization had made a strategic acquisition to expand its products into a

potentially lucrative new market, but had learned after closing, during the integration

process, that resentment over the sale of their employer was creating challenges with

the local workforce and the home office. The company’s products required government

approval, and a number of questionable ethical practices had been uncovered

that placed the company’s status and relations with the

local government in a delicate position. An experienced leader

was required to transform the culture and integrate the new

operation into the organization.

The position required a candidate who could quickly establish credibility and trust with

employees in the new country and gain the buy-in to affect change, assess strengths and

weaknesses, and manage the potential risk of corruption.

Case Study #1




The success of this assignment is not going

to be based on technical competence, but rather

on the ability to leverage leadership experience

and apply it to a new environment. To this end

attributes were prioritized into those considered

to enhance success and those vital for avoiding

further damage to the workplace culture. They

were then approved by leadership stakeholders

before selection screening commenced. It

was agreed and factored into the selection

process that a successful assignment would

add significant value, but a negative leadership

legacy must be avoided.

For example, the organization applies high

ethical standards to its global operations, but

should a higher standard apply in a case where

remedial action is required? Alone in a new

environment many home-office managers have

been been persuaded that certain behaviors

are commonly accepted locally. How will this

higher level manifest and what additional

preparation should be undertaken for the

manager and family?

A mobility solution is being considered

because no qualified local candidate exists.

This has quadrupled the cost. An investment of

this magnitude anywhere else in the business

would warrant significant analysis and risk

assessment; a mobile assignment with similar

value should command the same assessment.

The selection framework is the vehicle through

which to do that.

aTTribuTeS of a SucceSSfuL candidaTe

Cultural Background

Cross-Cultural Leadership

Collaborative

Internal Experience

Change Know-How

Family Readiness





The subcontractor had not been through

Greenroad’s expatriate screening process but

was the only qualified technician available. The

duty manager knew how critical the pipeline

contract was to Greenroad, and it was preferable

to cover all the bases by having someone at the

ready just in case additional help was needed.

The duty manager was focused on the repair

and gave little further thought to the backup,

who had arrived in-country but had failed to

collect the letter of invitation from Greenwood

for immigration purposes that was waiting at

the airport from which he departed. Knowing

that the assignment was important and frankly

needing the money, he thought he would use

the introduction letter associated with his

prior employer, which he still carried with

his immigration papers.

While he was awaiting clearance, the

immigration officer discovered that the

subcontractor had previously left the country

without settling his exit taxes, leaving an

assessed amount unpaid. His previous employer

had since left the Kingdom under dubious

circumstances, owing a considerable amount

in corporate tax.

The previous invitation letter had long

expired and the old employer, in the eyes of the

immigration officer, was somehow associated

with Greenwood, who represented a means of

recovering the owed taxes. Meanwhile, to try

to smooth a path through this bureaucratic

maelstrom, the subcontractor thought that

bribing the immigration officer might help.

Shortly after this the duty officer, still focused

120% on repairing the fractured pipeline,

received a visit from the local police.

The success of this assignment was going to

be based entirely on the successful deployment

of technical competence. The skill set, however,

was intended as backup and unlikely to be

utilized. The value of the assignment was

perceived to be relatively low, but the potential

damage to corporate reputation proved to be

incalculable in terms of Greenwood’s lost future

business with potential clients and the local

government, and remedial costs mounted.

Greenroad Engineering managed pipeline implementation and maintenance

as a subcontractor to a major oil company in a significant Middle Eastern

country. Greenroad was selected because of its pristine corporate reputation in

the Kingdom and its knowledge of local conditions. In fact, 75% of Greenroad’s

revenue stemmed from this market, as newcomers to the

territory began to see the company as a beneficial conduit

through government compliance and approvals.

A fracture in the pipeline during the Christmas break

highlighted that the company’s in-country repair skills were at minimal levels. The

duty manager felt sufficient personnel were available to deal with the emergency, but

called up an “on standby” sub-contractor from a nearby recreation location that had

not worked for Greenroad previously, just in case an extra set of hands was required.

Case Study #2




At the heart of this challenge was an individual

who, had he gone through a pre-assignment

screen, would likely have failed the corruption

and ethical components. The assignment itself

was deemed to have so little value that it wasn’t

worth the inconvenience of a proven process.

Still, unintended consequences can cause

considerable value destruction when processes

are not followed.

A selection framework that can be deployed

quickly, and that is understood and trusted by the

leadership team, will assess suitability for a mobile

assignment and weight criteria in line with the

importance of the task, its value to the company,

and the position’s specific requirements.

TRACKING RESULTS

All information is helpful, and at the end of

each assignment the selection framework should

note how accurate the predicted attributes

and the initial assignment analysis proved to

be. Any unanticipated skills or competencies

successfully utilized and observed during the

assignment should also be noted.

The overall assignment success rate should

be monitored; incremental refinements should

be introduced and their impact noted. What

is important is the organization’s ability to

observe and remedy assignments that are

underperforming before they become failures.

The selection framework should further

identify where support is required during

the course of an assignment and the success

of its delivery.

CONCLUSIONS

Ensuring a strong mobility reputation will

encourage the best and most experienced

candidates to volunteer for international

assignments and remain with the company

after these have been completed.

Deconstructing the purpose of an assignment

will provide deeper insight into the opportunity

and the risks associated with failure, enabling

them to be mitigated.

Detailing the objectives of an assignment

and the envisaged legacy will improve

understanding of the elements required for

success and development of appropriate

performance incentives.

Developing a systematic approach to selection

will improve the ability of the organization

to predict and take steps to improve

assignment success.

Delivering on promises related to

careers and family support will encourage

employees to undertake further assignments

and enable the organization to leverage

valuable experience. ∞

A positive internal reputation about mobility and career progression is

an important part of selection and improving assignment performance



Documents

nowledge & Wisdom G E B P 50 Time for a Revolution in Executive … · 2018-09-26 · May 2016 - Global Benefits Vision 3 global-benefits-vision.com 09 Index of Articles 3 Table of