Chuck Csizmar – CMC Compensation Group
Even a properly handled international assignment is a complex beast; the procedural morass that confuses as well as frustrates, the emotional stress placed on the assignee and family, the myriad details that could go wrong (and often do), and dealing with career risks inherent with being “out there”. And, to top things off, the entire enterprise is extremely expensive!
Even in today’s economy, though, the need to send employees overseas remains strong, and for good reasons – skill development, setting up a new business venture, organizing an acquisition, transferring knowledge through training and development, filling a skills gap, etc. It is more important than ever to ensure a successful assignment, since failure is very costly and potentially damaging to the business.
To help you manage your assignments successfully, I’ve put together a list of ten “rules of the road” to keep your expatriate program running smoothly. The first five rules follow below. Next week, I will post the other five (so watch for them!).
Rule #1 – Have a Policy and Use It
It is tempting for companies new to the international assignment experience to delay the development of written policies and procedures. With a thought of “we only have one or two people overseas” they deal one-on-one with individual employee situations and make decisions on the spur of the moment that affect only that one assignee. Such a practice ignores the advantage of standardized practice, and sows the seeds for future problems.
Documentation establishes standard practice, provides a managerial consistency that deflects exception requests and restricts (but does not eliminate) the “everything is negotiable” mentality. No matter the size of your expatriate program, making ad-hoc or one-off special arrangements without broader consideration of other existing or future expatriates is always a recipe for trouble. While attempting to placate an assignee, keep an eye that your decision does not aggravate others by creating a perceived atmosphere of special treatment.
Establishing and requiring adherence to an international assignment policy will also help the company lessen the impact of so-called “stealth expatriates”, employees working in another country without being part of the formal mobility program. Oftentimes, well intentioned managers with a get-it-done attitude often send people abroad without going through formal channels. This casual approach to a complex issue usually results in a high rate of assignment failure, as well as additional complexities and the risk of costly penalties (i.e., compliance with tax and visa regulations).
Rule #2 – Require a Business Case to Justify the Expense
Your procedures should require that requesting managers be informed of all projected costs associated with an assignment before an approval will be considered. Oftentimes a break down of these costs is buried among several budgetary line items, not readily evident to the casual observer. An inexperienced manager is usually unaware of the true costs involved. As a rule of thumb, an assignee with family will cost about 3 times salary per year, while an individual assignee would cost 2 times. You should require the requesting manager to sign off on the expense projections – making their approval visible within the organization.
The business case should also demonstrate why an assignee is required (vs. a local employee). What is the operational advantage for the business and how success would be measured? Does the proposal show how the expense will ultimately deliver an appropriate ROI? Soft answers such as “developing talent” and “global exposure” should rarely be included in the top tier of business justification, unless cost considerations have been relegated to a lower level of importance.
Rule #3 – Stick to Your Approval Chain of Command
Establish a clear hierarchy of who is required to approve both the assignment itself (not simply who supports the request) and the associated terms and conditions. You should operate on the presumption that managers, especially those with a tendency to use “stealth expatriates”, should repeatedly be made aware of who this “gatekeeper” is and what the requirements are for approval. A firm hand here will avoid repeated requests searching for someone to say “yes”, while providing an opportunity for the company to speak with one voice.
You should be cautious when dealing with demanding senior managers who support the request but in fact lack the authority to approve the assignment. If not forced back to the Corporate Gatekeeper for adjudication and confirmation, these senior managers could potentially disrupt the process by their inadequate understanding of particulars, by confusing and aggravating the candidate (or family) with mixed messages and by agreeing to terms and conditions for which they are not authorized.
Note: Once an unauthorized management representative commits assignment terms and conditions to an expatriate candidate, it will be difficult to correct any errors without compromising the initial goodwill established with that employee.
Rule #4 – Consider Non-Traditional Assignments
While the traditional expatriate assignment typically lasts from one to three years or more, evidence is growing that companies are increasingly using shorter assignments as a means to reduce costs, attract more candidates and reduce the failure rate.
Obviously, the shorter the assignment the lower the ultimate expense will be (taxes, allowances, gross ups, etc.). However, shorter assignments are also more attractive to candidates who would otherwise have passed on being overseas for several years, usually for family or career reasons. This opens up a new pool of potential candidates as well.
If the company’s goal can be defined in narrower terms (knowledge transfer, specific projects, filling a skill gap, etc.) a shorter assignment, or even a series of extended business trips might be a more reasonable strategy for the business case.
Rule #5 – Select Employees Who Will Become Good Ambassadors
Whatever the technical capabilities of the person you select for an overseas assignment it is critical that they (and their families) have the right persona for the role they will play as ad-hoc “ambassadors” for your company. While capability of performing the assigned role is paramount, assignment failure often occurs when the assignee or members of their family are unable to adjust to living in a foreign environment. Having a flexible nature, as well as at least a taste for adventure will go a long way in making everyone comfortable.
The assignee should live / reside as their local counterparts do, not as the expatriate is accustomed back home (style and size of house, neighborhood, distance to work, etc.). Cultural sensitivities should be considered, so the assignee may “fit” in with like jobholders. Your intent should not be to replace an expatriate’s home country style of living. Working relationships sour quickly if an expatriate Manager or Director lives markedly better than the local Vice President.
Provide cultural orientations and if necessary language lessons for all family members. Institutional differences (banking, medical care, driving, local bureaucracies, etc.) should be explained in advance. Surprises should be minimized, as they are usually negative experiences.
Note: Simply because the locals speak English is not a reason to avoid properly preparing the expatriate for the overseas experience.
In Part II of this article, in my next post, I will discuss the remaining five rules of the road for an effective international assignment program.
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