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By Valerie Frazee
Apr. 1, 1997
Staggering numbers point to the fact that American multinational corporations are spending millions of dollars to place expatriate employees in overseas assignments only to see their investments walk out the door—literally.
According to the report “Managing Expatriates’ Return,” published last year by The Conference Board based in New York City, two-thirds of the HR expatriate managers who responded said their expats cost three or more times their domestic salaries. Many experts estimate that number to be as high as $250,000 a year, or $1 million to send an expatriate family overseas on a four-year assignment.
Now consider these statistics: Repatriated managers in U.S. firms leave their companies at twice the rate of domestic managers without international experience. Another study cited in the Conference Board report shows that 20 percent of repat managers leave their companies within one year after returning from overseas assignments—and as high as 50 percent leave within the first three years.
It’s impossible to know the opportunity cost to these organizations of losing their repatriates’ global experience. But the good news is it’s not hard to take the first steps in addressing the problem. Global Workforce assembled the following round table of experts to discuss the key issues.
Throughout the round-table discussion, several themes emerged as key strategies for implementing a successful repatriation. It’s clear that HR must work closely with line managers and expatriates throughout the term of the assignment to implement programs and strategies that will safeguard the assignment. It begins with managing expectations and it ends with creating a receptive, globally minded environment to which your expats can return.
As Steve Shephard of Hill Associates pointed out: “Repatriation begins at the time you put your name in the hat to go overseas.” So our conversation started there.
Manage expectations with a repatriation agreement.
The most simple lesson this round table brought forth is that HR can head off a slew of problems by doing one thing: making sure everyone involved has realistic expectations about certain key issues. Can such an obvious idea really be a standard problem? Absolutely.
In general terms, expats are sent overseas to do one of three things: “fight fires,” develop their management skills or satisfy a job-rotation requirement. The majority of assignments are firefighting missions that call for immediate attention. In such cases line managers and HR are happy to find an appropriately skilled person who has a profile indicating he or she will adapt well in another culture. There’s little thought given to anything beyond the short term.
If you can get the key people involved—the line manager, the would-be expat and yourself—to talk through long-term expectations, you’ll improve your odds of a successful repatriation. Carol Jones of Deloitte & Touche LLP explained: “We encourage our assignees to sit down with the people who’ve asked them to go on assignment [to ask questions like:] ‘Why am I going? Am I supposed to go out there to fix this technology problem in Japan? Or am I supposed to learn everything I can about the Japanese way of doing business because I need this for managing my next assignment?’”
Simply put, expats need to know why they’re going to a foreign post. It makes a difference if it’s simply a functional assignment and not meant to be an opportunity to develop management skills. If they mistakenly believe it’s the latter, of course they’ll be disappointed when they return to a lateral position years later.
Michael Tucker of Tucker International added that expats these days are often very direct about asking what the company will offer them when they return: “[Expats ask:] ‘What are your plans for me, assuming I do well and this works out?’ And there should be a pretty darn good answer to that. There can’t be a guarantee, but there should be an international/domestic career-planning process with options laid out and requirements set so you can tell the person: ‘These are the things you need to do to be continually seen as an attractive person and to get the best assignments after this,’” Tucker said.
Of course, with organizational change, it’s tough to predict what the company’s hiring needs will be several years down the road. But today’s international assignees are going to expect you to try: “I think most HR people would say that employees just aren’t accepting the job anymore unless they’re given some sort of assurance that at the end of the assignment, there’s a job for them somewhere in the 50 states,” Tucker said.
Once you’ve had a conversation, put what was discussed in writing. Create a repatriation agreement outlining the expectations of each party. Shephard shared his suggestions for what should be included in a repat agreement: information about compensation, transportation, schools, the domestic residence, in-country support and placement following repatriation.
Money matters also are bound to become a big issue for returned families if they come home with unrealistic expectations. According to Ann Tagawa of Prudential Relocation Intercultural Services, expats experience approximately a 30 percent decrease in salary after losing their expat bonus. She said: “They lose all the perks like their housing allowance, their children’s tuition, the [club memberships]. Someone once described it like being Cinderella and midnight has struck: They’re stripped of all these things.”
At the same time, expats are struggling with a significant number of one-time expenses, such as a house and new cars. Tagawa added: “Companies can alleviate some of this by providing financial counseling for their expats before they expatriate. Then when they return, [companies] can provide tax counseling and financial planning to help ease this process, as well. Almost [all expats are] going to have to go through some [financial] loss unless they’ve been saving like crazy while they were overseas.”
Carry career planning throughout the assignment.
Before the employee accepts the assignment, he or she wants to know that it fits logically into his or her career path and that the company will value the experience. Up-front discussions and a repatriation agreement may have allayed any fears at the outset, but once expatriates are overseas and they haven’t heard any ongoing discussion of their career advancement, they’re likely to begin worrying. “There’s always that issue of being out of sight, out of mind; and that’s the most difficult thing to overcome. I think every company struggles with it,” Kevin Jeffries of SBC Communications explained.
According to our experts, career anxiety is an early symptom of repatriation. It often sets in long before the employee returns home. And with reason—according to a study by the Conference Board, 60 percent of respondents reported that fewer than 25 percent of their expats know what their home-office position will be as close as four months before their return.
There’s another dynamic that makes the situation different from domestic career planning. Martin Bennett of Bennett Associates explained that international assignments tend to create an attitude of dependency in expats since so many details of their lives are handled by their companies while they’re abroad. This often carries over into their career-development plans. “If a person’s not working on their own career advancement as they would if they were in their home environment, then they’ll quickly find out that companies aren’t necessarily going to have a position for them.”
So what can you do? Create opportunities for expats to manage their career development themselves. Several panelists stressed the importance of sharing information about available positions worldwide. Provide home leaves so expats can check in with business contacts at the corporate office. Establish a resource center that expats can call on a regular basis throughout the last year of their assignment. “We have our Staffing Center here [in the States] that’s responsible for staffing throughout our whole company. And we have specific individuals who have responsibility for our international folks, both on the expatriation side and the repatriation side,” Jeffries explained. “They know [what’s available] and they know the skill sets of the people whom they’re trying to place.”
Even if your expats have taken a proactive approach to their career planning, they’re still going to need you to keep them informed. Bennett said that he has worked with repats who were stunned to learn some things that their peers had known far in advance. “We saw many angry people in repatriation because No. 1, they didn’t understand that when a company downsized people were going to be asked to leave. They hadn’t had all the warnings that their colleagues [at home] had who are now situated very well in other companies,” he said.
It’s important to challenge your expats to maintain relationships with several of their colleagues to help them monitor organizational changes. Providing them access to a corporate intranet and an Internet e-mail account was suggested. Some companies organize regular visits from home-office personnel. But the favorite idea among our round-table participants was establishing expatriate/mentor partnerships.
“The most successful program I’ve found is AT&T’s HR International,” Shephard said. He described the program: “Every employee sent overseas has a person who’s responsible for their well-being and is two levels above them in the corporation. That person is tasked with ensuring that the offshore employee is kept in the loop and comes home periodically for meetings and just to hang around the office and be seen.”
Tagawa explained a common oversight in such a mentoring arrangement: “One problem with reorganization and personnel changes is the person who’s assigned as a mentor and knows what that expat’s going to be doing may not even be with the company four or five years from now. So it’s the kind of thing that if it’s offered to the expat, and there are changes like that, then management needs to put someone else into that position to continue the process and not leave the expat just dangling out there.”
Prepare repats for reverse culture shock.
After career planning, our expert panel cited handling the cultural transition as the next difficult challenge. When our conversation turned to culture shock, Jones summed it up, “I think the most difficult adjustment is that they don’t expect to have to adjust.”
Shephard, having experienced repatriation and reverse culture shock firsthand after five years in Spain as a teenager, described the experience of an expat: “You go [overseas] and although, yes it’s different, you’re prepared for it, so the transition is somewhat manageable. Now, in the course of your four-year tour, you’ve learned new languages; you’ve learned to operate in a multicultural and multinational environment; you know how to do business with people from different cultures; you’ve adapted to a set of skills that you never had before. You’ve had a big office and a car with a driver. You’ve lived in a huge house. And now you’re going home.
“Well, this is when the problem starts to happen,” Shephard continued. “Your company typically treats your return as an [evacuation]—because how hard could it be? You’re coming home. But point of fact, [where you came from] is now home, and as a consequence, your return to your passport country is just like another foreign assignment.”
Shephard described what our experts said was a common experience of repats when they’re faced with friends and family members asking about their time overseas: “Their eyes glaze over for the first 10 seconds because they don’t have a clue what you’ve talking about or they brand you a braggart because: ‘All he ever talks about is the time when he was in Abu Dhabi. Well, who cares about that?’ But in fact that’s all you have to talk about.” This is a painful experience that often causes the returnees to migrate to the social sidelines.
You might be surprised by the type of person who has the most difficult time with this cultural adjustment. Tucker explained: “We find that those who adapt most completely to living and working in another culture are the ones who have the toughest time coming back again. We think that it’s because their lives have changed so much… Their values have changed, their lifestyles have changed and so readjusting back to the home environment is really hard for them.”
That begs the question: Would you be better off selecting a person less-likely to adapt well? Tucker responded: “[No,] but it’s even more important to do training on the other end—and to help people remember how they adapted to the other culture and pull out all those skills and attitudes and apply them back in their home country.”
Other than planning a debriefing session in the form of a traditional intercultural training program, what can you do to help them cope? And what are the issues you should be prepared to deal with? To start off, you should identify whether any of your expats are likely to experience more trouble than average and expect to give those individuals more attention during their adjustment period. Younger expats who’ve embraced the culture completely (older people have more experience adjusting to life’s transitions), a spouse planning to re-enter the workforce and children are going to need your support more than the others; although it’s likely that every repatriate, to some degree, will suffer some discomfort.
Also, the members of our round table suggested you make a commitment to help your expatriates start the readjustment process before they return. “Give at least six months’ notice to the repat family that they’re going to be coming back home. That’s really important because it gives them a chance to reach closure on the assignment, say their goodbyes, finish their projects, complete the work that’s under way and try to tie up all the lose ends,” Tagawa said.
Several intercultural service providers have programs to incorporate the adjustment period into the last year of the overseas assignment. Tucker explained his company’s program: “We like the employee and the spouse to complete [our “Repatriation Planning Guide”] several months before they come back. It starts them thinking about the international assignment, summarizing how they’ve learned and changed, and preparing them for the repatriation process… [When they return] we help them focus on some of those issues they’ve already identified. We like to wait and do the training a few months after they’ve come back, so they’ve experienced a lot of the repatriation difficulties.”
Cultivate a global mindset in your home office.
Let’s say you do everything right up until this step. You defined expectations upfront; you established ways for expats to manage their career development and stay connected to the home office; you acknowledged the difficult cultural conflicts your repats would be experiencing; and you implemented methods to help them with the transition. Even so, your repat program isn’t in the clear. It has yet to face its toughest challenge: incorporating your repats into their new work environments.
Shephard described the situation from the assignees’ perspective: “[Repats] want to use their new-found skills. They feel empowered. They feel special. They feel like they’ve done something good for the company, and they have. … But what happens is HR and line management don’t understand this since they haven’t been through it, so they put [the repats] in cubicles and they bring their salaries back down to where they’re supposed to be in the domestic environment.” Then, doing what feels like mundane work and using none of their newly acquired skills, some of the repats quickly grow dissatisfied. Shephard continued: “I now have interviewed hundreds of people. I’ve seen the same cycle over and over again, and it works like this: They get bored; they get frustrated; they get angry; and they leave.”
At this stage, more than any other, our experts advised handling repats with care. It’s not difficult to show your repatriates that the company values their international experience—so long as your company actually does. Members of the round table suggested holding a homecoming reception. They also suggested asking the repat to give a presentation to key executives or present his or her findings in a report. The repat could be invited to participate on a global task force, or could be encouraged to contribute his or her international perspective during regular meetings.
If your company is committed to developing a global business, making repats feel valued will be a simple task. Managers won’t forget to use their repats as internal resources and will look for ways to make use of their global competencies. If this isn’t the case, you have a bigger job at hand. You’ll first need to work at establishing a corporate value that embraces the idea of transforming your company into a global learning organization.
It makes sense that if your repats feel the organization isn’t receptive to their perspectives, then they’ll soon become reluctant to contribute. Jones explained the situation at Monsanto: “The hard part is to get the employees to go through the debriefing because they feel somewhat hesitant to showcase their knowledge [in this] organization that they’re trying to fit into. So we’re trying to get upper management to send the message that employees are going on assignment, that it’s an investment, and that the company wants a return on the investment and expects an acquisition of knowledge while they’re out and a transference of knowledge when they come home.”
The intercultural training offered a few months after arrival in the home country will be of use in this area too. As our experts said, trainers can help the employees learn to recognize some of the skills they developed. And the counselors may help the repat find a new position within the organization that will make use of these skills.
So why aren’t companies offering repatriation assistance more consistently? Tucker said: “For many years, we’ve had the lip service of people who say they want to do repatriation training, but that seems to be the last place they put their money. … More are doing it now than before, but it’s still the poor stepchild of the intercultural services.”
Tucker said that the reason may have to do with trying to determine whose budget would cover the expenses. He added that some of the problem may be that HR and the line managers simply don’t understand the importance of the issue. Tucker explained: “[They may be thinking] ‘What’s the problem? I mean, this is our country, after all, and we don’t have a problem.’”
Even so, Tucker believes companies recognize that retention is a challenge: “I think many companies would say the loss of talent upon repatriation is a bigger problem today than overseas failures.” And at a million dollars a shot, most of us would agree that it’s an issue worth reevaluating.
Global Workforce, April 1997, Vol. 2, No. 2, pp. 24-28.
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