SENDING people on international assignments is always a costly affair. While salaries already make up the single highest cost in the profit- and-loss account of most organisations, the per capita cost for international assignees can easily increase to more than triple the otherwise average cost.
The obvious cost increase comes from travel, housing, living allowances, assignment premiums and other similar direct transfer costs. These transfer costs are easily identified and recognised, but the real cost to the business comes from an unsuccessful assignment.
An unsuccessful assignment can have a much more severe and negative impact on the organisation than anticipated, both from a business and financial perspective and potentially more so the higher the position of the assignee. However, before we look at what the impact of an unsuccessful international assignment is, let us first discuss why organisations send their people on such assignments.
The main reason for an international assignment is to cover business needs which, for a variety of reasons, cannot be filled up locally. It can be for a management, financial, technical or any other short or long- term business reason (for example, to fill a management gap, to control the business from head office, or perhaps to transfer knowledge and implement a corporate business culture). It can also be part of career planning for selected individuals. Typically, assignments are for an initial period of 2-3 years, but are often extended.
The people who go on international assignments have a very important role to play as representatives of the department or office that sponsors the assignment. What needs to be assessed is the individual's ability to blend in with a new environment and culture, and how he or she will be perceived by the 'new' colleagues.
The impact of sending the right or wrong person can be a difference between success and failure for the whole business. Therefore, each assignment needs to be carefully planned and the sponsors need to determine who the best candidate is for the overseas posting.
People on international assignment are often in management, other key roles or middle management positions within the organisation. They typically have job responsibilities which impact the local workforce and affect the work environment. It is therefore essential that the assignees are sensitive to the local culture and social norms. They must also have the right mindset and be interested in cultural novelties.
We have already concluded that sending people abroad is a costly affair, but the long-term impact on the organisation from a financial perspective can be much more far-reaching than the transfer costs.
People who go on assignments are generally more competent within the organisations at the respective hierarchy levels, or are deemed to have the potential to further contribute to the organisation's business in the future. After all, why would organisations otherwise invest in substantially increased costs of sending the people abroad?
Let us explore this example: An employee who has worked for an organisation for five years in a key middle management role is considered to have the potential for promotion in the near future. The employee is sent on assignment abroad for a period of two years to gain experience and to learn more about the organisation's global business.
However, the assignment turns out to be unsuccessful for the organisation, because the assignee resigns upon repatriation.
It is easy to imagine what the cost of replacing the assignee would be, assuming he or she was a well-performing employee who positively contributed to the organisation's business. However, besides the replacement cost, the costs of equipping a new or promoted employee with the knowledge, relationships and understanding of the business the assignee had gained from working both in the home country and the assignment host location will no doubt be significant.
The competence the assignee has gained over the previous seven years cannot be easily replaced. If that competence also includes relationships with customers and other important relationships for the organisation, the resignation could have a severe impact on the business and could lead to interrupted, postponed or even cancelled business opportunities or deals.
Plan and prepare carefully
It is important to carefully plan and prepare for the assignment in advance, and the preparation should involve both the assignee and the company. As there are different purposes for each assignment, the assignment needs to be analysed and decided on a case-by-case basis, to ensure the assignment is matched with the specific business needs.
The focus of a successful assignment starts with the selection process, and the organisation should choose the right person for the assignment and continuously monitor and work with the assignee on his or her business objectives and career planning throughout the full assignment period, with a planned and focused repatriation.
It is extremely important that the assignee feels 'taken care of' during the whole assignment, and that the organisation is genuinely interested in the assignee's personal development during his or her assignment. Surveys have repeatedly shown that many assignees feel 'left out' while they are on assignment and that the home organisation does not really care for them.
As a result, many surveys also show that a relatively high percentage of assignees leave the organisation, either during the assignment or shortly after repatriation.
Organisations will also substantially benefit from developing a fixed, pre-approved and internally agreed international assignment policy for all assignments. Even if the overall responsibility for managing international assignments falls under the HR director, the day-to-day administration is often delegated to an administrative function.
Many organisations also lack policies and procedures which deliver equitable and consistent assignment support to line managements across the organisation. Considering the strategic importance international assignments have on both a long and short term for businesses, the implementation of quality support from HR should be at the top of the priority list.
If well developed, it should deal with all kinds of possible assignment situations which may appear within the organisation and ascertain equity between the employees on international assignment. A properly implemented policy will save the organisation from the frustration and exposure of unappreciated efforts, unnecessary costs, and other negative and avoidable obstacles to a successful assignment.
International assignments are essentially a strategic business activity which should be fully aligned with the business strategy. There should be policies and processes put in place to make sure the organisation stays connected with its assignees during their assignments, and organisations need to work on assuring that the assignees' satisfaction levels are high to secure the assignees' commitment to the organisation, both during and after the completed assignment.
While there may be various reasons why an assignee leaves an organisation, of which many cannot be controlled by the organisation, every resignation means that the investment made in the assignee is lost and it sends the wrong signals within the organisation.
Management should make sure there are adequate policies and procedures in place to properly address all international assignments aspects with full priority, and make it similar to that of other strategic business activities.
This article was first published in The Business Times on May 28, 2008
