value international assignments

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Delivering A Successful International Assignment

Anne morris.

• 9 October 2019

IN THIS SECTION

• 8 minute read
• Last updated: 9th October 2019

Organisations deploy personnel on international assignment for many reasons. Whether you are addressing an internal skills gaps, supporting leadership development or looking to improve working relations across borders, for any international assignment to be successful, there will be a multitude of legal, immigration, tax and pensions risks to manage when sending employees overseas.

This article covers:

International assignment objectives, international assignment structures, employment law.

• Immigration options 

Assignee remuneration

Professional support for international assignments.

Global mobility programmes have traditionally been developed with a uniform approach, driven largely by cost management and operational efficiencies. However, organisations are increasingly taking a more flexible and bespoke approach to overseas assignments in order to attain advantage in areas such as compliance and talent development and retention.

While a one-size-fits-all approach to the fundamentals of mobility management may be a commercial reality, overlaying this should be areas of specific consideration and capability that can be adapted to the specific needs and risks of each international assignment. This allows for greater focus on the assignment’s commercial objectives and the agility to respond to the organisation’s changing global mobility needs .

From the outset of any successful assignment project, there should be clarity of objectives. Why as an organisation is the decision being made to invest in sending an employee to perform services in a different country?

International assignments can offer value in many areas, many of which typically present in the longer-term.

Internal knowledge transfer is a common assignment objective to address talent or skills shortages within overseas regions. Deploying key talent with specialist knowledge and skills to train and upskill local team members can help to resolve local labour or skill supply issues. The cost/benefit analysis can explore potential missed opportunities or delays resulting from shortages in the local talent market.

International assignments are also highly effective in building relationships and improving intercultural working. This could be relationships within an organisation, with local clients and intermediaries or local authorities. Face to face interaction remains highly effective and valuable in building influence on the ground and can offer significant potential for advantage over competitors.

Beyond relationships, value is also created in the knowledge gained by assignees working overseas, from insight into local customs and culture, improved language capability and a general understanding of how business is ‘done’ within the region and helping to adapt organisational protocol to suit the local environment. Combined with the assignee’s existing market and organisational knowledge, they can offer a global perspective with local details, bringing considerable potential to build competitive differentiation.

With clarity of objective, you can then consider whether an international assignment is the most appropriate solution . Is it possible to hire or promote locally? Would multiple, shorter trips be as effective in performance terms but with lower cost implications? International assignments demand significant investment and it will be important to assess cost projections against expected return and value to the organisation.

As well as clarity of objectives, a successful international assignment also requires clarity of contractual terms, both to manage the expectations and understanding of the assignee, and also for the mobility team to identify support needs and potential risks. 

Now more than ever, organisations are developing portfolios of mobility programmes to enable an agile approach to global mobility that responds to the organisation’s changing needs for international personnel mobility. Assignments come in increasingly different shapes and sizes, from permanent relocations or temporary exchanges, secondments or transfers to a different region or to a different organisation.

While organisations demand greater flexibility and agility from their global mobility programmes, underpinning the activity should be an appropriate assignment structure with a supporting contractual agreement that enables compliance with regulatory and legal duties.

When considering which structure to adopt, organisations will need to consider a range of factors including the type of assignment and the relevant environmental context such as regulatory, immigration, employment law, tax, pension implications. 

For international assignments, where the employee is moving from the home country employer to a host country employer, the employer could consider a number of assignment structures, including:

• The employee continues to be employed solely by the home employer.
• The employment contract with the home employer is suspended for the duration of the assignment while the employee enters into a new employment contract with the host employer .
• The employment contract with the home employer is terminated with a promise of re-employment at the end of the assignment while the employee enters into a new employment contract with the host employer .
• The employment contract with the home employer is suspended and the employee enters into a contract with an international assignment company (IAC) within the employer group
• The employment contract with the home employer is suspended and the employee enters into a contract with both an IAC and the host country employer.
• The employee remains resident in the home country and works in a host country under a commuter assignment.  

Each type of assignment structure offers advantages and disadvantages which should be considered in light of the individual assignment. For example: 

• Do employment laws in the host country require the assignee to be employed by a local entity? 
• Would the assignee be agreeable to ending their home country contract and starting a new agreement with a new entity in the host country? 
• Are there terms in the home country contract that would need protecting in any new agreement, such as restrictive covenants? 
• Which jurisdiction would prevail, the host or home country? 
• How would local laws interpret a situation where there is no contract of employment with the employer in the host country? 
• Issues such as income and corporate tax, pension and employment rights and responsibilities will need to be identified and assessed against the specific assignment objectives and budget and the assignee profile and circumstances. 

Employment law implications come hand-in-hand with selecting an appropriate assignment structure.

Home-country employment contracts for employees on assignment from the UK to an overseas jurisdiction should generally be interpreted under the laws of England and Wales. If a host country contract is used, there should be specific provision in the agreement to determine which jurisdiction would prevail. However, neither position is guaranteed, for example where issues of domicile arise which may supersede any contractual provisions. Again the need is to assess on an individual assignment basis.

As well as explicit contractual considerations, employers should also be aware of any statutory rights or implied terms under UK law that may continue to apply even in the host country.

Specific provisions may also need to be made to ensure confidentiality and appropriate handling of commercial and sensitive information. While this may be standard or expected for senior employees, those on assignment should also be considered for such terms relevant to the type of assignment and the commercial objectives of the project.

Immigration options

Successful international assignments will invariably require careful consideration of the immigration requirements. Governments across the globe are adopting increasingly protectionist stances towards economic migrants, as policies seek to favour domestic workers. This means business travellers and visa holders are now facing greater scrutiny when applying for work visas and when trying to gain entry at the border. 

Visa options and criteria vary between countries and are subject to frequent change. Where permission is required for the assignee to work in the host country, it will be important to ensure the assignee applies for the most appropriate route to meet the assignment need, whether that is a work permit or a business visitor visa. The immigration requirements and options will be determined in most part by the rules of the home and host countries, the nationality of the assignee (and any of their dependants who will be joining them overseas) and the nature of the activities the assignee intends to perform during their time in the host country. 

For example, a British citizen may be eligible to travel to the US to attend sales meetings and work conferences for up to 90 days  without having to apply for a visa but to conduct ‘gainful employment’ they would need to look at a specific work visa, such as the L-1 visa for intracompany  transfers. 

A further factor will be the specific requirements of the visa or permit. Work visas, for example, may require sponsorship of the employee by a local entity with valid sponsor status. The application process for work visas are typically resource-intensive and in many cases will require the employer to provide compelling evidence as to why the role or work cannot be performed by a worker resident in the host country. 

Preparation will, therefore, be critical, ensuring there is sufficient time to consider the relevant immigration options in light of local rules, and to then make the required application. Complications may also arise where the employee does not meet certain requirements under the local rules, for example if they have a past criminal conviction or negative immigration record. This will require careful handling and, depending on the host country’s rules, may require submission of a visa waiver to explain the issue and provide assurances of the employee’s eligibility by requesting a discretionary decision on the application.

Relocation packages are typically the biggest expense associated with an international assignment. While cost control will remain a concern, it is important for employers to ensure they are offering packages that are competitive within the market and that the package will support both the commercial objective of the assignment and compliance with associated legal and tax risks.

Home-based packages remain common, including those which may be markedly above local market compensation levels, particularly in circumstanecs where the assignment need is business-critical.

It may be possible however to look at offering a lower package than the home-based option, by either localising the package to harmonise with host nation levels or to develop a ‘local-plus’ offering that maintains a degree of competition, but this can be challenging to apply consistently across all assignment types and locations.

Again, consideration should be given to the individual assignment and the assignee. Millennial workers for example are generally understood to value international experience and the remuneration package may not be their primary concern where the opportunity for overseas exposure is available.

For organisations with a substantial cohort of international assignees and travellers, it may be more appropriate to build a compensation scheme specifically for globally-mobile personnel.

Importantly, assignees who will remain under an employment contract in their home country may continue to be subject to home country payroll while on assignment. This will also enable pension and benefits to be offered in the same way through the home country. Taxation, however, raises more complex issues, for example where withholding rules apply in the host country. This will require specialist guidance to ensure tax liabilities in the home and host country are correctly managed and met withiin the appropriate timeframes.

International assignments are demanding on the employer and the employee, but have become critical given the business imperatives to meet talent and development needs and achieve competitive advantage . 

Employers should not lose sight of the need to understand the specific risks of each individual assignment, which increasingly demand bespoke solutions. While compliance , efficiencies and cost control should be underpinned by a solid global mobility infrastructure of policies, systems and procedures, the current shift is away from a uniform approach to assignment management, instead moving towards more agile management of each assignment, shaped by the specific assignment objectives, budget and risks in relation to immigration, tax, remuneration and employment law.

DavidsonMorris’ specialist global mobility consultants provide expert guidance to employers on all aspects of international assignments, from programme management and implementation to strategic consultancy to ensure value and return on the mobility investment. We understand the commercial drivers behind mobilising workers and the need to ensure compliance without impacting return on mobility investment.

We work with senior management teams, HR and mobility professionals to develop strategies that ensure effective compliance risk management while supporting delivery of the organisation’s global mobility objectives. For advice on making the most of international assignments, speak to us .

Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.

She is a recognised by Legal 500 and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.

Anne is an active public speaker, immigration commentator , and immigration policy contributor and regularly hosts training sessions for employers and HR professionals

• Anne Morris https://www.davidsonmorris.com/author/anne/ Understanding British Values
• Anne Morris https://www.davidsonmorris.com/author/anne/ Family Reunion and Immigration
• Anne Morris https://www.davidsonmorris.com/author/anne/ Child Student Visa: A UK Guide
• Anne Morris https://www.davidsonmorris.com/author/anne/ The UK Exempt Vignette: A Guide

About DavidsonMorris

As employer solutions lawyers, DavidsonMorris offers a complete and cost-effective capability to meet employers’ needs across UK immigration and employment law, HR and global mobility .

Led by Anne Morris, one of the UK’s preeminent immigration lawyers, and with rankings in The Legal 500 and Chambers & Partners , we’re a multi-disciplinary team helping organisations to meet their people objectives, while reducing legal risk and nurturing workforce relations.

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Please note you do not have access to teaching notes, international assignments – extending an organizational value framework.

Journal of Global Mobility

ISSN : 2049-8799

Article publication date: 2 June 2020

Issue publication date: 25 August 2020

This study aims to present a framework relating to the organizational value of international assignments (IAs). This extends the existing framework by Lepak et al. (2007) and applies to other fields researching questions of value.

Design/methodology/approach

This is a conceptual paper that applies new thinking to the critical practical and theoretical issue of organizational value in global mobility (GM) and international business (IB) literature. The Lepak et al. (2007) framework is explained, used and extended to appraise the value of IAs to organizations.

The primary contribution is the establishment of a value framework within which future IA research can position itself, refining extant measures and thereby enabling greater cohesion in future studies. The secondary contribution, impacting beyond the field of GM, is the development of this framework, including the identification and discussion of value itself, the significance of organizational sub-levels, the extension of the definitions of isolating mechanisms and competition to explicate value capture, the importance of temporal analysis and the inclusion of value assessment.

Research limitations/implications

The paper is limited by its application to IAs at the organizational level only. However, the relationship with other levels is also explored. Research within different contexts or focusing on the other levels of value will increase the understanding of value.

Practical implications

Definitions of the value of IAs are extended, and practitioner implications are discussed.

Originality/value

A new framework for evaluating the organizational value of IAs and new definitions to enable this value to be assessed are produced.

• Value creation
• International assignments
• International business

Renshaw, P.S.J. , Parry, E. and Dickmann, M. (2020), "International assignments – extending an organizational value framework", Journal of Global Mobility , Vol. 8 No. 2, pp. 141-160. https://doi.org/10.1108/JGM-12-2019-0055

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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01 March 2016

The value of an international assignment is as important as the cost

Phil renshaw, companies are surprisingly poor at calculating the value of international assignments while fully counting the cost. cue the finance function to help, says phil renshaw.

This article was first published in the March 2016 UK edition of Accounting and Business magazine.

Despite the ever increasing use of international assignments to address business needs, most organisations have little direct evidence as to whether these are sensible investments. This presents an opportunity for finance and HR professionals, working together, to deliver value – putting a stop to wasteful assignments and expanding those that generate clear business benefits.

The belief that international assignments are core to building global businesses and to developing leaders continues to grow. A shortage of global talent is regularly cited as an obstacle for businesses looking to grow. The big accountancy firms, such as KPMG and PwC, require candidates for partnership to have an overseas assignment under their belt.

Surprisingly, most organisations do not appear to realise the value of international assignments. According to the 2015 Worldwide Survey of International Assignment Policies and Practices by consultancy Mercer, 90% of organisations do not use any metrics to track their international assignment programmes. 

The key to changing this is for finance business partners and HR professionals everywhere to work together to develop clear processes, with a common language and a joint understanding of what is a useful metric, or metrics, by which success can be evaluated.

The principles are straightforward. Indeed, there is arguably little new involved. Rather, it’s about challenging the myriad myths that cause people to doubt whether they can determine the return on investment (ROI) of an international assignment. The divide between finance and HR needs to be crossed to improve business outcomes.

Cost over value

Often the business decides it wants to send an individual to an overseas location before involving HR. So actions are driven by specific and immediate business operational needs, with little consideration of strategic issues or career development. Surprisingly, possibly because HR colleagues are the operational experts in this instance, businesses tend not to create a business case assessment including the long-term objectives of all the parties involved: they have decided that ‘sending Sarah’ is the solution, and that HR and finance just need to arrange for her to get there.

Patrick Hepplewhite, head of global mobility at HSBC, acknowledges that despite an excellent reputation for successful international assignments, HSBC has been able to gather relevant global data to assess their impact only in the last few months. This, though, has put a positive spotlight on them. However, even here, the data is mostly cost-based and the HSBC ROI measures are aspirational, although they are at least clearly identified as measures: completion of the international assignment objectives, assignee retention over the medium term, assignee performance ratings and appropriate succession planning.

Unfortunately, while HR and global mobility colleagues generally want to have a discussion about value, they are asked only for cost information. As this is much easier to identify and predict when compared with value parameters, and given that the business appears to have made its decision already, parties continue to talk cost instead of value. This reinforces the perception held by many that the value side of the equation is intangible and too difficult to calculate. People are often heard to say that you cannot calculate the ROI on an international assignment. Finance and HR together need to change this.

Return journey

The term ROI seems to trip many people up. It is perceived as meaning a single number – often a concept based on net present value (NPV). But there are numerous ways to determine ROI, with no single winner-beats-all definition. In a purely financial investment, we would expect to assess various measures such as NPV, cash and payback periods, yet all with a clear understanding of the risk parameters. This approach enables the assessment of intangible items – for example, the political risk in a different country and how it might affect the calculations. In exactly the same way, the ROI of an international assignment should be thought of as a package of metrics referencing the wider context.

In finance any business case evaluation requires expert opinion. After all, basic accountancy teaches that several different values could be put on an office chair, and all would be reasonable. In any business case evaluation, judgments need to be made, and the facts recorded that have led to these, both for audit purposes and to improve future assessments. When implementing new software, for example, a judgment has to be made on how much to spend on training people to make best use of the software. Finance business partners work with colleagues using their experience and challenging questions to find answers to such potentially intangible questions and put a value on them. The same principles apply to international assignments. If part of an international assignment business case is to improve José’s leadership skills, there is a need to record which skills, by when, how they will be assessed and what value this will be judged to have for the organisation.

Expert opinion applies to the cost side too. It is easy to assume that the costs of an international assignment are straightforward. This is not the case given the impact of time, context and intended outcomes. A range of potentially uncertain issues has to be considered, including tax implications (accidentally creating a local domicile for a company is not desirable), cross-cultural training, family support, security and travel risks, and repatriation costs. All involve estimates based on HR’s expert opinion. All should be assessed in relation to the value created by the international assignment.

Tri-party value

So what might the value be? The answers are derived by identifying the objectives of the exercise. This is hardly new, yet it consistently fails to happen in practice. In particular, businesses fail to capture the objectives of all three parties involved – the home business (sending the individual), the individual and the host business (receiving the individual). Once objectives are clarified, owners and accountability can be assigned to determine the overall business case – and track its success.

At its simplest, the value could be revenue and profit generated by a business development manager, or the costs avoided in sending an operations expert to ensure a technical department operates smoothly. In all cases, the value has to be assessed in comparison with the alternative, if there is one, such as hiring a local person. We are in the realm of using expert opinion. This is what finance business partners bring to the game naturally. Working together with HR will do so for international assignments.

Of course, designing metrics that do not relate to the organisation’s broader values does not work for international assignments in the same way as for other investments. Tracking employee retention is not sensible if it is not an organisational driver. Consider the intangible issues, such as greater global process consistency, and then identify tangible or financial proxies for the goals to enable measurement – for example, savings achieved.

The potential to be gained from effective international assignments is huge. While some parties will only ever see the significant costs of international assignment and refuse to support it, positive changes can still be made. The solution lies in the hands of HR and finance professionals coming together to share their expertise to agree their organisation’s specific ROI metrics and the mechanisms through which to capture the relevant data. Establish a process, use shared language and track the outcomes.

International assignments are no different from general business investments. By investing time in discussions, a template for the ROI analysis can be created to guide future calculations. The ROI from the investment of that time ought to be clear.

Phil Renshaw is a research fellow at ifs University College and doctoral researcher specialising in the value and impact of international assignments 

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"People often say you cannot calculate the ROI on an international assignment. Finance and HR together need to change this"

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Managing International Assignments

International assignment management is one of the hardest areas for HR professionals to master—and one of the most costly. The expense of a three-year international assignment can cost millions, yet many organizations fail to get it right. Despite their significant investments in international assignments, companies still report a 42 percent failure rate in these assignments. 1

With so much at risk, global organizations must invest in upfront and ongoing programs that will make international assignments successful. Selecting the right person, preparing the expatriate (expat) and the family, measuring the employee's performance from afar, and repatriating the individual at the end of an assignment require a well-planned, well-managed program. Knowing what to expect from start to finish as well as having some tools to work with can help minimize the risk.

Business Case

As more companies expand globally, they are also increasing international assignments and relying on expatriates to manage their global operations. According to KPMG's 2021 Global Assignment Policies and Practices Survey, all responding multinational organizations offered long-term assignments (typically one to five years), 88 percent offered short-term assignments (typically defined as less than 12 months), and 69 percent offered permanent transfer/indefinite length.

Managing tax and tax compliance, cost containment and managing exceptions remain the three principal challenges in long-term assignment management according to a 2020 Mercer report. 2

Identifying the Need for International Assignment

Typical reasons for an international assignment include the following:

• Filling a need in an existing operation.
• Transferring technology or knowledge to a worksite (or to a client's worksite).
• Developing an individual's career through challenging tasks in an international setting.
• Analyzing the market to see whether the company's products or services will attract clients and users.
• Launching a new product or service.

The goal of the international assignment will determine the assignment's length and help identify potential candidates. See Structuring Expatriate Assignments and the Value of Secondment and Develop Future Leaders with Rotational Programs .

Selection Process

Determining the purpose and goals for an international assignment will help guide the selection process. A technical person may be best suited for transferring technology, whereas a sales executive may be most effective launching a new product or service.

Traditionally, organizations have relied on technical, job-related skills as the main criteria for selecting candidates for overseas assignments, but assessing global mindset is equally, if not more, important for successful assignments. This is especially true given that international assignments are increasingly key components of leadership and employee development.

To a great extent, the success of every expatriate in achieving the company's goals in the host country hinges on that person's ability to influence individuals, groups and organizations that have a different cultural perspective.

Interviews with senior executives from various industries, sponsored by the Worldwide ERC Foundation, reveal that in the compressed time frame of an international assignment, expatriates have little opportunity to learn as they go, so they must be prepared before they arrive. Therefore, employers must ensure that the screening process for potential expatriates includes an assessment of their global mindset.

The research points to three major attributes of successful expatriates:

• Intellectual capital. Knowledge, skills, understanding and cognitive complexity.
• Psychological capital. The ability to function successfully in the host country through internal acceptance of different cultures and a strong desire to learn from new experiences.
• Social capital. The ability to build trusting relationships with local stakeholders, whether they are employees, supply chain partners or customers.

According to Global HR Consultant Caroline Kersten, it is generally understood that global leadership differs significantly from domestic leadership and that, as a result, expatriates need to be equipped with competencies that will help them succeed in an international environment. Commonly accepted global leadership competencies, for both male and female global leaders, include cultural awareness, open-mindedness and flexibility.

In particular, expatriates need to possess a number of vital characteristics to perform successfully on assignment. Among the necessary traits are the following:

• Confidence and self-reliance: independence; perseverance; work ethic.
• Flexibility and problem-solving skills: resilience; adaptability; ability to deal with ambiguity.
• Tolerance and interpersonal skills: social sensitivity; observational capability; listening skills; communication skills.
• Skill at handling and initiating change: personal drivers and anchors; willingness to take risks.

Trends in international assignment show an increase in the younger generation's interest and placement in global assignments. Experts also call for a need to increase female expatriates due to the expected leadership shortage and the value employers find in mixed gender leadership teams. See Viewpoint: How to Break Through the 'Mobility Ceiling' .

Employers can elicit relevant information on assignment successes and challenges by means of targeted interview questions with career expatriates, such as the following:

• How many expatriate assignments have you completed?
• What are the main reasons why you chose to accept your previous expatriate assignments?
• What difficulties did you experience adjusting to previous international assignments? How did you overcome them?
• On your last assignment, what factors made your adjustment to the new environment easier?
• What experiences made interacting with the locals easier?
• Please describe what success or failure means to you when referring to an expatriate assignment.
• Was the success or failure of your assignments measured by your employers? If so, how did they measure it?
• During your last international assignment, do you recall when you realized your situation was a success or a failure? How did you come to that determination?
• Why do you wish to be assigned an international position?

Securing Visas

Once an individual is chosen for an assignment, the organization needs to move quickly to secure the necessary visas. Requirements and processing times vary by country. Employers should start by contacting the host country's consulate or embassy for information on visa requirements. See Websites of U.S. Embassies, Consulates, and Diplomatic Missions .

Following is a list of generic visa types that may be required depending on the nature of business to be conducted in a particular country:

• A work permit authorizes paid employment in a country.
• A work visa authorizes entry into a country to take up paid employment.
• A dependent visa permits family members to accompany or join employees in the country of assignment.
• A multiple-entry visa permits multiple entries into a country.

Preparing for the Assignment

An international assignment agreement that outlines the specifics of the assignment and documents agreement by the employer and the expatriate is necessary. Topics typically covered include:

• Location of the assignment.
• Length of the assignment, including renewal and trial periods, if offered.
• Costs paid by the company (e.g., assignment preparation costs, moving costs for household goods, airfare, housing, school costs, transportation costs while in country, home country visits and security).
• Base salary and any incentives or allowances offered.
• Employee's responsibilities and goals.
• Employment taxes.
• Steps to take in the event the assignment is not working for either the employee or the employer.
• Repatriation.
• Safety and security measures (e.g., emergency evacuation procedures, hazards).

Expatriates may find the reality of foreign housing very different from expectations, particularly in host locations considered to be hardship assignments. Expats will find—depending on the degree of difficulty, hardship or danger—that housing options can range from spacious accommodations in a luxury apartment building to company compounds with dogs and armed guards. See Workers Deal with Affordable Housing Shortages in Dubai and Cairo .

Expats may also have to contend with more mundane housing challenges, such as shortages of suitable housing, faulty structures and unreliable utility services. Analyses of local conditions are available from a variety of sources. For example, Mercer produces Location Evaluation Reports, available for a fee, that evaluate levels of hardship for 14 factors, including housing, in more than 135 locations.

Although many employers acknowledge the necessity for thorough preparation, they often associate this element solely with the assignee, forgetting the other key parties involved in an assignment such as the employee's family, work team and manager.

The expatriate

Consider these points in relation to the assignee:

• Does the employee have a solid grasp of the job to be done and the goals established for that position?
• Does the employee understand the compensation and benefits package?
• Has the employee had access to cultural training and language instruction, no matter how similar the host culture may be?
• Is the employee receiving relocation assistance in connection with the physical move?
• Is there a contact person to whom the employee can go not only in an emergency but also to avoid becoming "out of sight, out of mind"?
• If necessary to accomplish the assigned job duties, has the employee undergone training to get up to speed?
• Has the assignee undergone an assessment of readiness?

To help the expatriate succeed, organizations are advised to invest in cross-cultural training before the relocation. The benefits of receiving such training are that it: 3

• Prepares the individual/family mentally for the move.
• Removes some of the unknown.
• Increases self-awareness and cross-cultural understanding.
• Provides the opportunity to address questions and anxieties in a supportive environment.
• Motivates and excites.
• Reduces stress and provides coping strategies.
• Eases the settling-in process.
• Reduces the chances of relocation failure.

See Helping Expatriate Employees Deal with Culture Shock .

As society has shifted from single- to dual-income households, the priorities of potential expatriates have evolved, as have the policies organizations use to entice employees to assignment locations. In the past, from the candidate's point of view, compensation was the most significant component of the expatriate package. Today more emphasis is on enabling an expatriate's spouse to work. Partner dissatisfaction is a significant contributor to assignment failure. See UAE: Expat Husbands Get New Work Opportunities .

When it comes to international relocation, most organizations deal with children as an afterthought. Factoring employees' children into the relocation equation is key to a successful assignment. Studies show that transferee children who have a difficult time adjusting to the assignment contribute to early returns and unsuccessful completion of international assignments, just as maladjusted spouses do. From school selection to training to repatriation, HR can do a number of things to smooth the transition for children.

Both partners and children must be prepared for relocation abroad. Employers should consider the following:

• Have they been included in discussions about the host location and what they can expect? Foreign context and culture may be more difficult for accompanying family because they will not be participating in the "more secure" environment of the worksite. Does the family have suitable personal characteristics to successfully address the rigors of an international life?
• In addition to dual-career issues, other common concerns include aging parents left behind in the home country and special needs for a child's education. Has the company allowed a forum for the family to discuss these concerns?

The work team

Whether the new expatriate will supervise the existing work team, be a peer, replace a local national or fill a newly created position, has the existing work team been briefed? Plans for a formal introduction of the new expatriate should reflect local culture and may require more research and planning as well as input from the local work team.

The manager/team leader

Questions organization need to consider include the following: Does the manager have the employee's file on hand (e.g., regarding increases, performance evaluations, promotions and problems)? Have the manager and employee engaged in in-depth conversations about the job, the manager's expectations and the employee's expectations?

Mentors play an important role in enhancing a high-performing employee's productivity and in guiding his or her career. In a traditional mentoring relationship, a junior executive has ongoing face-to-face meetings with a senior executive at the corporation to learn the ropes, set goals and gain advice on how to better perform his or her job.

Before technological advances, mentoring programs were limited to those leaders who had the time and experience within the organization's walls to impart advice to a few select people worth that investment. Technology has eliminated those constraints. Today, maintaining a long-distance mentoring relationship through e-mail, telephone and videoconferencing is much easier. And that technology means an employer is not confined to its corporate halls when considering mentor-mentee matches.

The organization

If the company is starting to send more employees abroad, it has to reassess its administrative capabilities. Can existing systems handle complicated tasks, such as currency exchanges and split payrolls, not to mention the additional financial burden of paying allowances, incentives and so on? Often, international assignment leads to outsourcing for global expertise. Payroll, tax, employment law, contractual obligations, among others, warrant an investment in sound professional advice.

Employment Laws

Four major U.S. employment laws have some application abroad for U.S. citizens working in U.S.-based multinationals:

• Title VII of the Civil Rights Act.
• The Age Discrimination in Employment Act (ADEA).
• The Americans with Disabilities Act (ADA).
• The Uniformed Services Employment and Reemployment Rights Act (USERRA).

Title VII, the ADEA and the ADA are the more far-reaching among these, covering all U.S. citizens who are either:

• Employed outside the United States by a U.S. firm.
• Employed outside the United States by a company under the control of a U.S. firm.

USERRA's extraterritoriality applies to veterans and reservists working overseas for the federal government or a firm under U.S. control. See Do laws like the Fair Labor Standards Act and the Family and Medical Leave Act apply to U.S. citizens working in several other countries?

Employers must also be certain to comply with both local employment law in the countries in which they manage assignments and requirements for corporate presence in those countries. See Where can I find international employment law and culture information?

Compensation

Companies take one of the following approaches to establish base salaries for expatriates:

• The home-country-based approach. The objective of a home-based compensation program is to equalize the employee to a standard of living enjoyed in his or her home country. Under this commonly used approach, the employee's base salary is broken down into four general categories: taxes, housing, goods and services, and discretionary income.
• The host-country-based approach. With this approach, the expatriate employee's compensation is based on local national rates. Many companies continue to cover the employee in its defined contribution or defined benefit pension schemes and provide housing allowances.
• The headquarters-based approach. This approach assumes that all assignees, regardless of location, are in one country (i.e., a U.S. company pays all assignees a U.S.-based salary, regardless of geography).
• Balance sheet approach. In this scenario, the compensation is calculated using the home-country-based approach with all allowances, deductions and reimbursements. After the net salary has been determined, it is then converted to the host country's currency. Since one of the primary goals of an international compensation management program is to maintain the expatriate's current standard of living, developing an equitable and functional compensation plan that combines balance and flexibility is extremely challenging for multinational companies. To this end, many companies adopt a balance sheet approach. This approach guarantees that employees in international assignments maintain the same standard of living they enjoyed in their home country. A worksheet lists the costs of major expenses in the home and host countries, and any differences are used to increase or decrease the compensation to keep it in balance.

Some companies also allow expatriates to split payment of their salaries between the host country's and the home country's currencies. The expatriate receives money in the host country's currency for expenses but keeps a percentage of it in the home country currency to safeguard against wild currency fluctuations in either country.

As for handling expatriates taxes, organizations usually take one of four approaches:

• The employee is responsible for his or her own taxes.
• The employer determines tax reimbursement on a case-by-case basis.
• The employer pays the difference between taxes paid in the United States and the host country.
• The employer withholds U.S. taxes and pays foreign taxes.

To prevent an expatriate employee from suffering excess taxation of income by both the U.S. and host countries, many multinational companies implement either a tax equalization or a tax reduction policy for employees on international assignments. Additionally, the United States has entered into  bilateral international social security agreements  with numerous countries, referred to as "totalization agreements," which allow for an exemption of the social security tax in either the home or host country for defined periods of time.

A more thorough discussion of compensation and tax practices for employees on international assignment can be found in SHRM's Designing Global Compensation Systems toolkit.

How do we handle taxes for expatriates?

Can employers pay employees in other countries on the corporate home-country payroll?

Measuring Expatriates' Performance

Failed international assignments can be extremely costly to an organization. There is no universal approach to measuring an expatriate's performance given that specifics related to the job, country, culture and other variables will need to be considered. Employers must identify and communicate clear job expectations and performance indicators very early on in the assignment. A consistent and detailed assessment of an expatriate employee's performance, as well as appraisal of the operation as a whole, is critical to the success of an international assignment. Issues such as the criteria for and timing of performance reviews, raises and bonuses should be discussed and agreed on before the employees are selected and placed on international assignments.

Employees on foreign assignments face a number of issues that domestic employees do not. According to a 2020 Mercer report 4 , difficulty adjusting to the host country, poor candidate selection and spouse or partner's unhappiness are the top three reasons international assignments fail. Obviously, retention of international assignees poses a significant challenge to employers.

Upon completion of an international assignment, retaining the employee in the home country workplace is also challenging. Unfortunately, many employers fail to track retention data of repatriated employees and could benefit from collecting this information and making adjustments to reduce the turnover of employees returning to their home country.

Safety and Security

When faced with accident, injury, sudden illness, a disease outbreak or politically unstable conditions in which personal safety is at risk, expatriate employees and their dependents may require evacuation to the home country or to a third location. To be prepared, HR should have an evacuation plan in place that the expatriate can share with friends, extended family and colleagues both at home and abroad. See Viewpoint: Optimizing Global Mobility's Emergency Response Plans .

Many companies ban travel outside the country in the following circumstances:

• When a travel advisory is issued by the World Health Organization, Centers for Disease Control and Prevention, International SOS or a government agency.
• When a widespread outbreak of a specific disease occurs or if the risk is deemed too high for employees and their well-being is in jeopardy.
• If the country is undergoing civil unrest or war or if an act of terrorism has occurred.
• If local management makes the decision.
• If the employee makes the decision.

Once employees are in place, the decision to evacuate assignees and dependents from a host location is contingent on local conditions and input from either internal sources (local managers, headquarters staff, HR and the assignee) or external sources (an external security or medical firm) or both. In some cases, each host country has its own set of evacuation procedures.

Decision-makers should consider all available and credible advice and initially transport dependents and nonessential personnel out of the host country by the most expeditious form of travel.

Navigating International Crises

How can an organization ensure the safety and security of expatriates and other employees in high-risk areas?

The Disaster Assistance Improvement Program (DAIP)

Repatriation

Ideally, the repatriation process begins before the expatriate leaves his or her home country and continues throughout the international assignment by addressing the following issues.

Career planning. Many managers are responsible for resolving difficult problems abroad and expect that a well-done job will result in promotion on return, regardless of whether the employer had made such a promise. This possibly unfounded assumption can be avoided by straightforward career planning that should occur in advance of the employee's accepting the international assignment. Employees need to know what impact the expatriate assignment will have on their overall advancement in the home office and that the international assignment fits in their career path.

Mentoring. The expatriate should be assigned a home-office mentor. Mentors are responsible for keeping expatriates informed on developments within the company, for keeping the expatriates' names in circulation in the office (to help avoid the out-of-sight, out-of-mind phenomenon) and for seeing to it that expatriates are included in important meetings. Mentors can also assist the expatriate in identifying how the overseas experience can best be used on return. Optimum results are achieved when the mentor role is part of the mentor's formal job duties.

Communication. An effective global communication plan will help expatriates feel connected to the home office and will alert them to changes that occur while they are away. The Internet, e-mail and intranets are inexpensive and easy ways to bring expatriates into the loop and virtual meeting software is readily available for all employers to engage with global employees. In addition, organizations should encourage home-office employees to keep in touch with peers on overseas assignments. Employee newsletters that feature global news and expatriate assignments are also encouraged.

Home visits. Most companies provide expatriates with trips home. Although such trips are intended primarily for personal visits, scheduling time for the expatriate to visit the home office is an effective method of increasing the expatriate's visibility. Having expatriates attend a few important meetings or make a presentation on their international assignment is also a good way to keep them informed and connected.

Preparation to return home. The expatriate should receive plenty of advance notice (some experts recommend up to one year) of when the international assignment will end. This notice will allow the employee time to prepare the family and to prepare for a new position in the home office. Once the employee is notified of the assignment's end, the HR department should begin working with the expatriate to identify suitable positions in the home office. The expatriate should provide the HR department with an updated resume that reflects the duties of the overseas assignment. The employee's overall career plan should be included in discussions with the HR professional.

Interviews. In addition to home leave, organizations may need to provide trips for the employee to interview with prospective managers. The face-to-face interview will allow the expatriate to elaborate on skills and responsibilities obtained while overseas and will help the prospective manager determine if the employee is a good fit. Finding the right position for the expatriate is crucial to retaining the employee. Repatriates who feel that their new skills and knowledge are underutilized may grow frustrated and leave the employer.

Ongoing recognition of contributions. An employer can recognize and appreciate the repatriates' efforts in several ways, including the following:

• Hosting a reception for repatriates to help them reconnect and meet new personnel.
• Soliciting repatriates' help in preparing other employees for expatriation.
• Asking repatriates to deliver a presentation or prepare a report on their overseas assignment.
• Including repatriates on a global task force and asking them for a global perspective on business issues.

Measuring ROI on expatriate assignments can be cumbersome and imprecise. The investment costs of international assignments can vary dramatically and can be difficult to determine. The largest expatriate costs include overall remuneration, housing, cost-of-living allowances (which sometimes include private schooling costs for children) and physical relocation (the movement to the host country of the employee, the employee's possessions and, often, the employee's family).

But wide variations exist in housing expenses. For example, housing costs are sky-high in Tokyo and London, whereas Australia's housing costs are moderate. Another significant cost of expatriate assignments involves smoothing out differences in pay and benefits between one country and another. Such cost differences can be steep and can vary based on factors such as exchange rates (which can be quite volatile) and international tax concerns (which can be extremely complex).

Once an organization has determined the costs of a particular assignment, the second part of the ROI challenge is calculating the return. Although it is relatively straightforward to quantify the value of fixing a production line in Puerto Rico or of implementing an enterprise software application in Asia, the challenge of quantifying the value of providing future executives with cross-cultural perspectives and international leadership experience can be intimidating.

Once an organization determines the key drivers of its expatriate program, HR can begin to define objectives and assess return that can be useful in guiding employees and in making decisions about the costs they incur as expatriates. Different objectives require different levels and lengths of tracking. Leadership development involves a much longer-term value proposition and should include a thorough repatriation plan. By contrast, the ROI of an international assignment that plugs a skills gap is not negatively affected if the expatriate bolts after successfully completing the engagement.

Additional Resources

International Assignment Management: Expatriate Policy and Procedure

Introduction to the Global Human Resources Discipline

1Mulkeen, D. (2017, February 20). How to reduce the risk of international assignment failure. Communicaid. Retrieved from https://www.communicaid.com/cross-cultural-training/blog/reducing-risk-international-assignment-failure/

2Mercer. (2020). Worldwide Survey of International Assignment Policies and Practices. Retrieved from https://mobilityexchange.mercer.com/international-assignments-survey .

3Dickmann, M., & Baruch, Y. (2011). Global careers. New York: Routledge.

4Mercer. (2020). Worldwide Survey of International Assignment Policies and Practices. Retrieved from https://mobilityexchange.mercer.com/international-assignments-survey

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The Value of International Assignees’ Knowledge of Interpersonal Networks: Knowledge of People, Networks and Politics and Knowledge Flows in Multinational Enterprises

• Research Article
• Published: 12 February 2016
• Volume 56 , pages 425–454, ( 2016 )

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• Brendan Boyle 4 ,
• Stephen Nicholas 1 , 2 , 3 , 4 &
• Rebecca Mitchell 4  

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This paper explores the role of international assignments in sharing knowledge across multinational enterprises (MNEs) by examining how international assignees share knowledge of interpersonal networks and, in turn, the impact on knowledge flow in MNEs. We go beyond the extant membership of interpersonal networks metaphor by studying a category of intra-organisational knowledge that facilitates knowledge flows. In doing so, this paper contributes not only to our understanding of the significance of specific kinds of relationships in MNEs but, uniquely, to our understanding of the utility of knowledge of interpersonal networks as a category of intra-organisational knowledge; knowledge of people, networks and politics as well as respective idiosyncrasies and behaviours. The value of international assignees’ knowledge of interpersonal networks is demonstrated with an explanation of how advantages related to time and access to knowledge facilitates a more efficient and effective flow of knowledge across the MNE.

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Size: In a small to medium sized enterprise it may be feasible to maintain personal contacts with the majority of employees in the firm. Firms of less than 1000 employees were excluded from the sample. Length of Service: employee sent on assignment had worked in another unit for a period of time prior to this foreign posting so that he/she would have time to develop such knowledge. The criterion set in this study was a period of 6 months service prior to the foreign posting and at least a corresponding 6 months on assignment to allow for time for such knowledge to be used.

These were the coding labels used in earlier stages of analysis.

Although much of the positive effects of transactive memory is associated with group performance like the efficient recall of knowledge within work groups, the positive effects of transactive memory on work group performances has also been considered in the context of efficient and accurate recognition of where expertise is held in broader organisational groups (Hollingshead 1998a , b ).

Data coded as motivational disposition is distinct for a number of reasons. It includes enhanced access to knowledge in network relationships that are not as close as the work groups and interpersonal relationships analyzed in the literature on transactive memory. The data coded at the node motivational disposition also demonstrates that even in the absence of transactive memory, the most basic associations with the outside network can enhance access to knowledge via the willingness of agents in the outside network to seek out relevant information and share it.

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Tianjin Normal University, Tianjin, People’s Republic of China

Stephen Nicholas

International Business School, Beijing Foreign Studies University, Beijing, People’s Republic of China

Research Institute of International Strategies, Guangdong University of Foreign Studies, Guangzhou, People’s Republic of China

Newcastle Business School, University of Newcastle, Callaghan, NSW, 2308, Australia

Brendan Boyle, Stephen Nicholas & Rebecca Mitchell

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Boyle, B., Nicholas, S. & Mitchell, R. The Value of International Assignees’ Knowledge of Interpersonal Networks: Knowledge of People, Networks and Politics and Knowledge Flows in Multinational Enterprises. Manag Int Rev 56 , 425–454 (2016). https://doi.org/10.1007/s11575-016-0278-7

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Received : 12 February 2014

Revised : 09 October 2015

Accepted : 07 January 2016

Published : 12 February 2016

Issue Date : June 2016

DOI : https://doi.org/10.1007/s11575-016-0278-7

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Top flight talent? The Value of International Assignments

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KEY CONCEPT

What are the factors – at both an individual level and a corporate level – that affect the relationship between international assignment experience and career advancement? Research suggests it is not as easy for leaders to rise to the top if they have been away from head office for too long.

IDEA SUMMARY

International assignments are generally viewed as a positive thing to do, something to aspire to, and given today’s more globalised world, this kind of experience should hasten your progress up the corporate ladder. It may not be as simple as that, according to research from Monika Hamori of IE Business School and Burak Koyuncu of Rouen Business School. Working abroad certainly offers much in the way of new challenges and opportunities, all of which help leaders to become more global in their outlook, but there are downsides, which need to be addressed.

Taking a sample of 1001 chief executives, based in 23 countries and affiliated with the largest corporations in Europe and the US, the research looked at the relationship between the number of assignments, the length of assignment experience, the type of employer, the individual’s career stage at the first assignment, and career advancement – that is, the time it took to be appointed to CEO from the time they took on their first role. (On average, CEOs take about 25 years to reach the top from the beginning of their career.)

The results suggest that international experience can hinder, not help, the path to the top, with those taking up a number of positions abroad and for longer periods taking more time to progress through the organization. Hamori explains: “The study showed that the more assignments you do overseas, the less beneficial it is to your career.”

The research also illustrated how being physically away from corporate headquarters can leave executives feeling isolated and ignored They miss out on chances to develop their skills, they are unaware when new opportunities arise, or worse, they find out too late. “Although there has been an explosion of various virtual ways to keep in touch, including teleconferencing and social media, research suggests that it is still a case of ‘out of sight, out of mind’”, says Hamori.

Taking international positions later on in your career and moving around the globe with different companies also restricts the ascent to CEO level. In other words, assignments at different companies slow down career progression more than assignments at the same company, whereas an international posting at an early stage appears to be beneficial. The sooner you go, the quicker you will rise through the ranks.

BUSINESS APPLICATION

For leaders

From an individual leader’s perspective, the positive aspect of assignments abroad is undeniable but ensure you plan this side of your career properly. Think about it carefully before accepting, and consider whether it is right for YOU. Perhaps equally as broad a career experience is available at central office, where your performance is more easily measured, you can remain ‘close to the action’, visiting foreign divisions of the company if you feel it worthwhile.

Guard against isolation and that feeling of being out of the loop by asking colleagues at home to keep you abreast of corporate news, travel to head office regularly, and encourage personnel to visit you. Use online networking to communicate in a proactive way, thus avoiding the ‘out of sight, out of mind’ issue. You will have to work harder to keep yourself in management’s minds, but it will stand you in good stead on your return.

By far the most important aspect of your decision should focus on your career development. Hamori has some advice: “Before the assignment, you need to ask yourself, ‘Where is this leading me, and what is going to happen to me when I get back?’ ” Ensuring that your organization has a plan for you on your return is just as key as knowing what the assignment is all about.

Hamori emphasises the need to differentiate between the three different types of international assignment: functional – where your work is related to a particular function that needs to be addressed but would not add much to your career plan; strategic – tasks that are vital to headquarters and the company, and therefore better for your development; and management development assignments – where you can learn and amass skills, but the success of the company is also all-important. Clearly for those aspiring to CEO status the latter type of assignment is the one most likely to benefit your ambitious career development plan.

“Expatriate underperformance is a negative driver of post-career development,” says Hamori, “so be realistic about the assignment and whether you can do it successfully. If it is particularly difficult – if the living conditions aren’t good, for example – you don’t want to have to make an early exit.” Which is why you need to find out as much as you can before you accept, including the career advancement opportunities on completion.

For organizations

Manage your top talent by establishing an effective repatriation management programme for when their assignment is over, or you risk losing them to the competition. “These international assignments can enhance the marketability of the executives that perform them,” says Hamori. “They will be more attractive to the external labour market, so make sure that you have the right development interventions for them, in terms of training and promotion.”

You are more likely to keep your globe-trotting leaders if you match your plans for them with their own. Get the details of the assignment drawn up before departure – what the post entails, responsibilities, compensation and benefits, date of return, and what sort of role would be available on repatriation. Provide the sense of direction they require when the assignment is complete.

Career advancement in large organizations in Europe and the United States: do international assignments add value? Monika Hamori & Burak Koyuncu. The International Journal of Human Resource Management (March 2011).

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