The relocation strategy certainly depends on the culture of the company and nature of business. Setting clear standards, works-flows and communication channels is important as all parties involved (HR, Business Partners, 3rd party vendors, Assignee & dependants) need to know what their responsibility is. The company has to define the key indicators how to measure the success of the relocation strategy. Most organisations seem to be unable to accurately measure or predict the return on investment for staff sent on international assignments. Our analysis of a series of interview conducted with key stakeholders of several multinational organisations let to the following key findings:
- Assignments’ expectations not always clearly set
- No assignment specific objectives set and measured within the performance management process
- No formal repatriation process defined
- Cost reduction initiatives but no benefits measurement - No calculation of ROI on assignments
Based on the findings, we have gained some key insights, which we outline below for organisations to consider in order to be in a position to maximise their ROI on International Assignments:
- Define a global assignment strategy, set objectives and link them to the business strategy. Ensure that there is an agreed and documented business case that defines assignment purpose and objectives
- Provide expatriates with practical guidelines during the whole assignment life cycle and actively promote sharing of experiences among assignees
- Actively manage expatriate performance by keeping a focus on the level of successful achievement of the assignment objective. Involve both the home and the host country in the process, as well as in the development discussions
- Be aware of individual assignees’ needs and facilitate the transition back home by following a standardized repatriation process. Ensure transfer of gained experiences and knowledge
- Track international assignments’ related costs and benefits and benchmark costs internationally, as well as with other organisations
- Introduce ROI measurement: start by defining the assignment objectives and agreeing on quantifiable measurements. Then identify financial and non-financial benefits and costs and link these to the assignment purpose. Identify HR activities that could impact ROI. Conduct the calculation at an appropriate time within the context of the assignment purpose
- Obtain a better understanding of your assignee population. Track for instance the percentage of best performers selected assignments
- Perform a retrospective analysis of each assignment, in which each evaluation area is rated as to the benefit provided, with a direct or indirect ROI impact.
Conclusion: Despite the valuable insights gained during this research, many questions remain. If expatriates do not have a higher contribution to organisational performance, why then the considerable investment in an international assignment?
Is measuring expatriate ROI actually a goal for or the responsibility of the responsible manager in global firms? Would it not be more valuable to assess how global firms evaluate the effective management of intl. assignments and expat careers, in which measuring expatriate ROI may be one important component?
As assignments will continue to increase and costs remain an issue in most organisations, the HR function will be further challenged by stakeholders on the effectiveness of their mobility strategies and processes. Against this background, why not start now to proactively measure and demonstrate a positive financial return on investment or international assignments? This is certainly a challenging task but one that will bring added value to the business and help position HR as a valued business partner.
Emerging trend in international assignments from a ROI perspective:
The main question should not be if a company can determine the value of an expatriate assignment but if an organisation can justify the need for an expatriate. Do expats have a higher contribution to organisational performance? A PWC study totalling 500.000 employees found out that performance did not improve while on assignment.
Even paying more in assignment-related allowanced did not result in better than average performance. Many progressive companies are not looking at ROI, but they approach the concept of value by exercising more control in the selection process and watching the costs of the assignment. This often means being creative and using for instance several extended business trips rather than STA or LTA. Interesting is also growing in measuring the impact of female expatriation with respect to gender diversity, which is based on two strategic considerations. Firstly, female foreign assignments in their role as a female management development practice contribute to higher gender diversity in management ranks. Secondly, an optimum level of gender diversity at managerial level impacts organisational success positively. A ROI calculation can support organisations by measuring the contribution of each gender-aimed practice to organisational performance.