Source: The Economist: Schumpeter
Subject: Not-so-happy returns
COMPANIES devote a lot of thought to sending people abroad. They offer foreign postings to their most promising employees. They sweeten the deal with higher salaries and big allowances, and sometimes help to find work for spouses. But when it comes to bringing the employees home, it is a different story. One study suggests that a quarter of firms provide no help for repatriates at all. Many others offer at best a few links to websites.
Big companies are more globalised than ever. So you might think that they would treat staff with foreign experience as particularly important for maintaining their competitive advantage. Yet in practice they neglect such employees, blithely assuming they will soon be back in the swing of head-office life. The cost of this neglect is high. Sebastian Reiche of IESE business school in Spain estimates that anything between 10% and 60% of “repats” quit the company within a couple of years of returning home. Their attrition rate is notably higher than for those not sent abroad.
This represents a squandering of investment, given that expats often cost several times as much as locals to employ. It damages the leadership pipeline. It may discourage high-flyers from taking a foreign posting. Worst of all, it can be a subsidy to rival firms: they end up with the people best placed to bury your company, trained at your expense.
Repats often complain of culture shock: things that once seemed familiar about home can seem strange and parochial. No one in the office wants to hear their war stories about the struggles of working in foreign climes. They find they have lost their niche at headquarters—partly because the balance of power has changed (allies have left and newcomers have greased their way into favour) and partly because they have got used to running their own fief rather than slotting into a hierarchy. Add to this the fact that they have to adjust to a lower standard of living—particularly if they have the misfortune to be moving back to an expensive city like London—and it is a recipe for discontent. One review of the academic literature, by Jan Sebastian Knocke of the University of Erlangen-Nuremberg, notes that “there are signs of repatriation being more difficult than integration into a culturally distant country.”
Most repats would be happy to put up with a bit of culture shock if they came back to a plum job. But most do not. Clare Hughes of PwC, a consulting firm, says that a striking number of them are given no properly defined job. “They wander the corridors or get given ‘projects’,” she says. A 2013 study by Christina Bailey and Lisa Dragoni of Cornell University shows that, far from moving up the hierarchy, the majority of repats return to a job on the same level as the one they had left when going abroad.
A 2011 study by Monika Hamori and Burak Koyuncu of IE, another Spanish business school, casts doubt on the entire idea that a foreign posting is the road to the top. Ms Hamori and Mr Koyuncu studied the CEOs of the 500 biggest European companies and the 500 biggest American ones (the total came to 1,001 because one company had two CEOs), to see what effect being sent abroad had on their careers. They found that the more foreign experience the employees had accumulated—that is, the more foreign postings they had been sent on and the more time they had spent abroad—the longer it had taken to reach the top.
The majority of the 1,001 CEOs—60% in Europe and 76% in the United States—had never had a foreign posting. Of those with foreign experience, more than half were the CEO of a company other than the one that had sent them abroad. So, any doubts employees may have about accepting foreign postings turn out to be well-grounded. Out of sight often does mean out of mind: bosses over-reward the people they meet every day compared with those rarely seen around the office.
Companies’ poor management of foreign transfers extends beyond their blasé treatment of individuals. Firms often justify overseas postings in terms of the circulation of ideas. But repats routinely complain that their bosses ignore the time they have spent abroad. They do not give them jobs that allow them to use their experience, let alone provide them with ways to spread their new insights to other employees. A lot of expensively accumulated global expertise is allowed to moulder away.
Welcome (back) aboard
How can companies improve this dismal record? Half the battle lies in recognising that repatriation is a problem. Bosses need to fight the out-of-sight-out-of-mind problem by making sure that those on foreign assignments have champions back at HQ who look after their interests. They need to pay as much attention to “re-boarding” repats as they do to “on-boarding” new employees: for example, PwC holds cocktail parties at which returning staff can meet each other, and provides them with mentors to help them fit back in. Firms should also find ways to help repats disseminate what they have learned abroad. But some of the onus also lies with the employees themselves. You cannot disappear for a few years and expect to be welcomed back like a hero: you need to keep cultivating your network back home and pestering your allies and mentors to keep your name in the mix.
There are some signs that companies are beginning to recognise that they have a problem—some are even talking about measuring their return on investment for foreign postings and holding senior managers responsible for the loss of repats. But the pace of improvement is glacial. Most CEOs are capable of giving an elegant spiel about how the bulk of the firm’s growth in coming years will come from cities you have never heard of, and how it is being transformed into a “learning machine” that picks up ideas from every corner of the world. That is nothing more than globaloney so long as they continue to spend millions of pounds training high-flyers only to ignore or sideline them when they return to the mothership.