EXPATRIATE ROIFIVE KEY PRINCIPLES FOR

Working toward an effective program in an imperfect, rapidly changing world

By Yvonne McNulty, Ph.D.

E xpatriation is a big topic and getting bigger. Tens of billions of dollars are spent annually by organizations to move expatriates around the world,

yet year-on-year, these companies struggle to man-age and improve the return from these expensive employees. Expatriation is also changing, as the familiar “there-and-back” models of the past are being supplanted by a great diversity of complex patterns of mobility that create new challenges and opportunities for expatriates and their organiza-tions. Issues of compensation, career, and family are changing not only the employment relationship between expatriates and their organizations, but also the very landscape of global mobility.

Exacerbating the challenges associated with expatriate return on investment (eROI) is the reality that no company has its global mobility program “nailed”—perfectly aligned with other business units and free from bumps in the road, cost-cutting woes, and other challenges. In my consulting work, I’ve met enough mobility managers to know that international assignments do not always operate under conditions RI�UDWLRQDOLW\��ORJLF��DQG�HIÀFLHQF\��WKHLU�GHSDUWPHQWV�are understaffed; and they often lack the expertise to take on a large-scale, long-term change-management project such as eROI.

And no matter how well intentioned, it’s not enough to charge one department with a new eROI project, because that is beyond what one department does. This is a common problem not only of mobil-ity departments but also of HR departments, not to mention operations, manufacturing, services, and a whole host of other business functions with a stake

in, and an impact on, eROI. The whole business reaps rewards from an effective eROI program, so the whole business needs to be involved in how it is structured and implemented.

So what can mobility managers do to start devel-oping an eROI program that makes sense, amid the breathtaking speed with which the internationaliza-tion of business and of life in general is growing and changing expatriation?

As might be expected, much has been written about eROI, but little progress has been made on its development and execution. However, more than a decade of research, including collaborations with some of the best consulting firms in our field, have resulted in the following five key principles for effective expatriate ROI.

PRINCIPLE 1 REFRAME YOUR THINKING FROM ‘INTERNATIONAL ASSIGNMENTS’ TO ‘GLOBAL MOBILITY’Expatriation practice has evolved considerably from ZKDW�LW�ZDV�HYHQ�ÀYH�\HDUV�DJR��PRYLQJ�UHOHQWOHVVO\�from there-and-back “international assignments” to continuous “global mobility.” This change has been driven by steady growth in globalization, the rising importance of the international labor market, and changing international employment relationships between expatriates and their companies. Many HPSOR\HHV�MRLQ�FRPSDQLHV�VSHFLÀFDOO\�IRU�WKH�RSSRU-tunity to develop an international career, but their aspirations often cause long-term problems for their organizations. Such “global careerists” will present

60 Mobility | December 2013

ongoing challenges, as well as provide substantial EHQHÀWV�IRU�VDYY\�FRPSDQLHV�ZKR�´JHWµ�ZKDW�WKH\�are about and the value they potentially bring.

In short, expatriation has evolved from a focus on international assignments to one that demands global mobility as a growing—and necessary—expecta-tion. This requires that companies focus away from repatriation and instead on reassignment; that global careerists be embraced as the new expatriates; and that lifetime employability be recognized as a key driver for the emergence of “individual ROI” as a catalyst for downplaying corporate interests.

PRINCIPLE 2 CHAMPION EROITo get the attention eROI deserves, reforming the mobility department to adopt an eROI mindset is only one of the steps required. Other departments need to be involved, from the CEO to the most junior HR staff member and all the way back again, to ensure that an effective eROI program is driven from the top down. To achieve an eROI approach, most companies need one or more eROI champions— senior managers or directors who are passionate about global mobility, probably have personal

expatriate experience, and are supported by top management in terms of time, energy, resources, and LQÁXHQFH�ZLWKLQ�WKH�RUJDQL]DWLRQ�WR�VXSSRUW�ODUJH�scale change for however long it takes. ,I�H52,�PDWWHUV��WKHQ�ÀQGLQJ�WKH�ULJKW�SHUVRQ�WR�

build it, implement it, and own it also matters. Key to their success will be the CEO’s involvement to encourage, or even enforce, compliance. Who in your organization has the skills and passion to drive a new eROI initiative?

PRINCIPLE 3 THINK LONG-TERM, ACT SHORT-TERMWhile long-term planning has its place in global mobility, short-term results can also be advanta-geous. To achieve superior eROI, companies need long-term strategies and short-term wins—outcomes that feed into eROI evaluations on a quarterly or DQQXDO�EDVLV�EXW�GR�QRW�GLVUXSW�WKUHH���ÀYH���RU�10-year plans. Some assignees, such as locally hired foreigners or foreign executives in local organiza-tions (FELOs), can provide strong short-term eROI results because their employment is usually tied to “on-assignment” gains, and they are cheaper to HPSOR\��2Q�WKH�ÁLS�VLGH��WUDGLWLRQDO�H[SDWULDWHV�IURP�headquarters, albeit more expensive to employ, can provide more extensive longer-term eROI gains because their employment is often tied to succession and talent-management planning.

The combination of “think long-term, act short-term” is becoming a new reality for many companies as they struggle to staff their offshore subsidiaries, not because they feel compelled to give up the long-term strategizing that is an effective part of their eROI approach, but because for some companies short-term ROI is the only means of achieving true eROI success. My point is that putting all of one’s eROI eggs into one long-term basket is a mistake: Short-term gains are an essential shared reality for today’s world of global mobility.

PRINCIPLE 4 EMBRACE GLOBAL CAREERISTS

Global what? While we don’t use the term very often, global careerists are, in fact, the new expatri-DWHV³SHRSOH�FRQÀGHQW�DERXW�WKHLU�ZRUWK�DQG�GULYHQ�

GLOBAL CAREERISTS ARE, IN FACT, THE NEW EXPATRIATES.

www.WorldwideERC.org | Mobility 61

to succeed on the international labor market, who are also active participants in the wider global economy, and who seek to develop skills and networks that are valuable in that economy. Often multiculturally empowered at a young age, they take risks, and they juggle competing priorities of career, romance, travel, and personal opportunity. They reinvent their careers, and parts of themselves, by taking control and seek-ing to direct their own lives.

Today’s global careerists are gutsier than ever, buoyed by an international labor market that increas-ingly supports job movements outside the safety of their companies, especially during an international assignment. And of course the impact on eROI, particularly in relation to staff retention and the longer-term eROI each expatriate holds, can be huge. How can these incompatibilities be adequately dealt with in the world of expatriate management, partic-ularly if global careerists are not only here to stay but also increasing in number?

It comes down to companies working smarter but not necessarily harder. Savvy organizations have learned to embrace and use global careerists to their advantage by leveraging what they have to offer. These companies recognize that many global careerists already exist in the organization despite their covert nature, identify where they are among their ranks, strive to understand what makes them tick, and then leverage their skills and talent in the short term without losing sight of lon-ger-term opportunities. Rather than being victims of the global war for talent, these companies act as facilitators of expatriates’ “global careers,” unafraid to engage in power-sharing employment arrangements in exchange IRU�JXDUDQWHHG�VKRUW�WHUP�EHQHÀWV³DQG�SRWHQWLDOO\�longer-term gains, if the employment relationship can be sustained.

In eROI terms, this approach makes a lot of sense because when all is said and done, the short-term eROI that global careerists are guaranteed to deliver is a valuable proposition that does not require the massive investment their traditional HQ expatriate counterparts demand. In short, global careerists can impact the bottom line faster and with more impact than traditional expatriates. In today’s cost-cutting environment, that’s not necessarily a bad thing.

The reality is that more value can be gained by having a proportion of global careerists in the global staffing mix than by using any other type of expatriate. Indeed, the most successful companies

in the coming decade are likely to be those that uti-lize a smaller cohort of traditional HQ expatriates in favor of global careerists as the dominant part of their international talent pool, not just because they are less expensive to employ but because, over time, there are likely to be more of them available on the international labor market, making them easier to find.

We cannot forget, though, that global careerists are individuals with “long-term personal agency” who can sustain global careers that involve multi-ple moves over multiple locations, but not neces-sarily with the same employer. What attracts global careerists is a feeling that their global aspirations are understood and that mobility is a valid per-sonal goal as well as a valid corporate objective. A policy needs to be put in place that balances their interests with those of the organization.

PRINCIPLE 5 ACQUIRE A DYNAMIC TALENT POOL,Q�H52,�WHUPV��WDOHQW�ÁRZ�PDWWHUV��:KHUH�H[SDWULDWHV�are sourced from, when and how they are deployed, and whether they stay or go can impact on eROI LQ�VLJQLÀFDQW�ZD\V��%XLOGLQJ�D�G\QDPLF�WDOHQW�pool and deploying it to where it is most needed is no longer a nice-to-have, it is a necessity, a critical “decision science” to assist in global VWDIÀQJ�FKRLFHV��7KLV�PHDQV�QR�ORQJHU�EHLQJ�reliant only on traditional HQ expatriates, but LQVWHDG�KDYLQJ�D�VXIÀFLHQW�QXPEHU�RI�TXDOLÀHG�FDQGLGDWHV�GUDZQ�IURP�D�range of assignee types and locations around the world.

But widening the talent pool does not necessarily mean hiring or deploying only star talent or A-level players, as advocated by global man-DJHPHQW�FRQVXOWLQJ�ÀUP�0F.LQVH\�& Company in the late 1990s. This VWUDWHJ\�RIWHQ�EDFNÀUHV�EHFDXVH��while this elite group of employees W\SLÀHV�´KLJK�LPSDFW�µ�WKH\�FDQ�DOVR�be high-maintenance individuals with complex needs. While we can-not ignore that star talent frequently drives a disproportionate share of an

62 Mobility | December 2013

organization’s business performance and shareholder value, talent is nonetheless needed at different levels for different reasons.

Behind the top 10 percent of the high-achieving workforce lies a bigger pool of B-level employees—just as intelligent as their A-level colleagues and also steady performers, but perhaps with less ambition and more desire for work-life balance. When we widen the talent pool, we no longer ask, “Do we have enough expatriates?” but, “Do we have the right mix of people?” All of which is to say, while it is one thing WR�SD\�OLS�VHUYLFH�WR�´ÀQGLQJ�WKH�ULJKW�WDOHQWµ�WR�EXLOG�a dynamic talent pool, it’s another entirely to go out WKHUH�DQG�DFWXDOO\�ÀQG�LW��+RZ�GR�ZH�GR�WKLV"�

One way to develop a talent pool, of course, is to buy talent, which often saves time and is less expensive than building talent internally. Here, global careerists can play a crucial role, because they are already in the international labor market and are able to hit the ground running. They can also be recruited and compensated differently—and less expensively—than traditional HQ expatriates.

Where do we buy the talent we need? First, we can look to competitors in our indus-try whose employees often answer the phone when the headhunters call. Another approach is to think regionally. The rise of the Asian leader over the past decade, for example, has trans-formed how and where talent can be sourced. Regional talent flows in Asia-Pacific are increasing, with many com-panies fulfilling their talent needs from within (and not external to) the region.

An alternative to buying a talent pool is, of course, to build the talent that already exists in your organization because, no matter how diverse a talent pool becomes, traditional HQ expatriates will always remain an extremely import-DQW�SDUW�RI�WKH�JOREDO�VWDIÀQJ�PL[��7KLV�is because they bring with them stability and security, and can be counted on to still be around when the global careerists have moved on to other opportunities. )XUWKHUPRUH��DOWKRXJK�ÀQGLQJ�WKH�SHU-fect candidate for any given role is ideal, sometimes it comes down to deploying the best available person, even a second

or third choice. In crunch time, when talent is short, this is often when traditional HQ expatriates are most in demand and can be counted on to deliver.

GETTING BACK TO BASICSThis article began with the idea that achieving an acceptable expatriate return on investment is not only essential, but entirely possible when expatriates’ needs are better understood and managed more effectively. For many companies, this involves getting EDFN�WR�EDVLFV�WR�UHGHÀQH�DQG�UHVWUXFWXUH�WKHLU�JOREDO�mobility program. For other companies, much less change may be necessary.

But considering what is at stake, how mobility managers navigate the challenge of eROI is critical for both immediate and long-term expatriate ROI UHWXUQV��DV�ZHOO�DV�IRU�JOREDO�VWDIÀQJ�LQLWLDWLYHV�that are essential to many companies’ competitive advantage. M

Yvonne McNulty, Ph.D., is co-author of Managing Expatriates: A Return on Investment Approach (Business Expert Press, 2013). She can be reached at +65 9107 6645 or by email at ymcnulty@expatresearch.com.

WHILE IT IS ONE

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As the worldwide economy gains strength, competition for talent increases, and global leadership and skilled employees are in higher demand. Businesses and individuals who understand the importance of employee mobility and how to incorporate a strategic plan to build or support a workforce through effective global assignments will stay ahead of the curve.

That’s where Worldwide ERC® comes in. For nearly 50 years, our members have been recognizing that we’re all stronger and better for our connections to each other.When mobility professionals bring their expertise together, they offer unique perspectives on how to manage and move talent, increase employee and family satisfaction and productivity, and boost ROI and retention for employers.

Worldwide ERC® connects you with your peers, and serves as the center for mobility information and expertise. High-quality learning, benchmarking and professional development opportunities are at the core of all of our programs and services, and a willingness to share information defi nes our relationships. We teach and learn together.

Watch for your Worldwide ERC® 2014 membership kit in the mail, or renew online at www.WorldwideERC.org (see the “My Account” link at the top right). You can also email us at Membership@WorldwideERC.org, or call our eager staff at +1 703 842-3410 for assistance.

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FeATUReS

Contents

2 Mobility | December 2013

PG 40 WORlDWIDe eRC® FOUnDATIOn FOR WORKFORCe MObIlITy ReGIOnAl GROUPS SChOlARShIP PARTneRShIPExcerpts from winning 2013 essays

PG 50 MObIlITy MATTeRSBy Jon FergusonPopular apps for business on the go

PG 58 FIVe Key PRInCIPleS FOR eFFeCTIVe exPATRIATe ROIBy Yvonne McNulty, Ph.D.Working toward an effective mobility program in an imperfect, rapidly changing world

PG 64 DeSTInATIOn PROFIle: ChIleBy M. Diane McCormickThe long, thin Latin American country boasts a sound economy and hospitable local residents.

PG 52 WIShInG FOR A ClOUDy DAyBy Chris DraegerCloud-based SaaS systems are transforming the multinational payroll landscape.

COVeR STORy

2013 Fragomen Mobility - Services - 1st Proof.pdf 1 1/23/2013 7:55:30 PM

www.WorldwideERC.org | Mobility 5

ContentsDIRECTOR, COMMUNICATIONS AND MARKETING

Kristin M. Whitekwhite@WorldwideERC.org

COMMUNICATIONS ASSISTANTCheston McGuire

cmcguire@WorldwideERC.org

EDITORIAL/DESIGN/MEDIA SALESThe YGS Group

Kelly Winkler, Executive EditorLori Racey, Managing EditorSteve Kennedy, Senior Editor

Beth Hughes, Copy EditorTina Enck, Account Director

Ashley Reid, Editorial Coordinator

Jennifer Soucy, Creative DirectorMegan Meckley, Graphic Designer

Susan Welter, VP Media SalesStephanie Bunsick, Sales Manager

stephanie.bunsick@theYGSgroup.comZachary Buchanan, National Account Executive

zach.buchanan@theYGSgroup.com +1 717 505 9701

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REPRINTSCADMUS Communications, a Cenveo company

Tracy Harding or June Billman, ercreprints@cadmus.com+1 866 487 5625 ext. 3085 or 3086

ABOUT WORLDWIDE ERC®

Worldwide ERC® is the workforce mobility association for professionals who oversee, manage, or support

U.S. domestic and international employee transfer. The organization was founded in 1964 to help members

overcome the challenges of workforce mobility.

OUR MISSIONTo educate and network mobility professionals—worldwide

OUR VISIONThe first and foremost center for corporate

and government global mobility

OUR VALUESCustomers first—ALWAYSRevolutionary resultsUnyielding respectPassionate pursuit of excellenceInfectious positive attitude

Columns

On The Web

PG 8 PeRCePTIOnS An Exchange of the Heart

PG 30 GOVeRnMenT AFFAIRS Deadline Looms for State AMC Registration Laws

PG 32 DeSIGnATeD DRIVeR Barbara Casiere, CRP, GMS

PG 34 MeMbeR PICKS: bOOKS ThAT MAKe US beTTeR Strengths Based Leadership: Great Leaders, Teams, and Why People Follow

DePARTMenTSPG 6 CAlenDAR OF eVenTS

PG 10 eDITORIAl ThOUGhTS

PG 15 AROUnD The WORlDWIDe eRC® Worldwide ERC® Front Page Executive Spotlight Collective Wisdom YP40

PG 36 The nUMbeRS Global Talent 2021: How the New Geography of Talent Will Transform Human Resource Strategies

PG 75 ADVeRTISeRS’ InDex

PG 76 MObIlITy SnAPShOT Kitty T. Snelling, SCRP

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Looking for up-to-date industry news from around the world? Read GLOBILITY®, delivered twice a month to you! www.WorldwideERC.org: Resources tab

%H�VXUH�WR�XVH�WKH�*OREDO�:RUNIRUFH�6HUYLFHV�'LUHFWRU\�WR�ÀQG�LQWHU-national services, U.S. mobility services, and real estate brokers and appraisers. www.WorldwideERC.org: Find a Service Provider tab

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Calendar of EventsEXECUTIVE COMMITTEEChairman of the Board

C. Matthew (Matt) Spinolo, SCRP, SGMSCartus, Memphis, TN, USA

Chair-electPandra Richie, SCRP, SGMS-T

Long & Foster Corporate Real Estate Services Division,Chantilly, VA, USA

Vice Chair – FinanceCindy Salter, SCRP, SGMS

Brookfield Global Relocation Services, Scottsdale, AZ, USAVice Chair – Membership

Anita Blanchett, GMSBP, Middlesex, England, United Kingdom

BOARD OF DIRECTORSDeborah (Debbie) L. Balli, CRP, GMS-TSIRVA Worldwide, Plymouth, MN, USA

Sharon Byrnes, GMS-TStryker, Kalamazoo, MI, USADale L. Collins, CRP, GMS

Interdean–Santa Fe Group, London, United KingdomDavid F. Gage, SCRP

Federal Government, Baltimore, MD, USARobert J. Horsley

Fragomen, Del Rey, Bernsen & Loewy, LLP, Santa Clara, CA, USA

Kay J. Kutt, SCRP, SGMS-TAsian Tigers Mobility Ltd., Wanchai, Hong Kong

Mike PikerLenovo, Beijing, China

Gail H. Plummer, SCRP, GMSAltair Global Relocation, Plano, TX, USA

Pat SparksSprint Nextel Corporation, Overland Park, KS, USA

EX-OFFICIOPast Chairman

Susan Schneider, SCRP, GMSPlus Relocation Services, Inc., Minneapolis, MN, USA

CHAIRMAN, FOUNDATION FOR WORKFORCE MOBILITYBob Kelly, SCRP, GMS

New World Van Lines, Aurora, CO, USA

PRESIDENT AND CHIEF EXECUTIVE OFFICERPeggy Smith, SCRP, SGMS

Worldwide ERC®, Arlington, VA, USA

Mobility (ISSN 0195-8194) is published monthly by Worldwide ERC®, 4401 Wilson Boulevard, Suite 510,

Arlington, VA 22203-4195, +1 703 842 3400. Mobility examines key issues affecting the global mobility

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