Magazine article Management Review

Darned Expensive to Take for Granted

Magazine article Management Review

Darned Expensive to Take for Granted

Article excerpt

Nine out of 10 companies that responded to a recent KPMG Peat Marwick survey agree that it is important to send employees on international assignments and seven out of 10 believe it is important to measure the value of these programs. However, a minuscule 8 percent of respondents said they have a means of calculating the return on investment for their expatriates.

This concern is exacerbated by the high cost of expat assignments. According to the Conference Board, two-thirds of expat assignments cost three or more times the employee's base salary (see chart below).

What's going on here? KPMG theorizes that companies are not measuring ROI because it is a difficult thing to quantitatively measure. "Determining an expatriate's value to the company is not as cut and dry as simply measuring a person's financial return," says Nancy Carter, KPMG's director of international human resources.

"Companies need to assign a quantitative measurement to qualitative factors, which requires them to establish clearly defined, measurable goals for their expatriates," she says.

Other dichotomies in managing expat assignments crop up in the KPMG study. Nine out of 10 respondent firms said it is important for the expat to stay with the company upon his or her return. Yet more than half of these firms begin preparations for repatriation less than 90 days before the expat's return -- if they make plans at all.

U.S. companies are behind their European competitors in developing career goals for their expat employees. According to the Conference Board study, only 38 percent of U.S. expats have a written guarantee of their return position, compared with one-half of U.K. expats and three-quarters of expats from continental Europe (see chart above).

Perhaps these numbers explain why 80 percent of repatriated executives who responded to the Conference Board study believe that their international experience was not valued by their company. In fact, expat managers leave their companies at twice the rate of domestic managers in U.S. firms.

"As restructuring and downsizing apace, companies are increasingly refusing to guarantee expatriates a position upon return," says Stephen Gates, senior research associate at the Conference Board. "Expatriates report that the basic problem with a global assignment is the `out of sight, out of mind' mentality at the home office. …

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