Mitigating People Risk in International Assignments

We have been discussing in recent blogs the often unrecognized business risks that can arise without careful employee management and how these potentially damaging events can be avoided.

I recently participated in a discussion about the reasons for international assignments failing and was struck with how the conversation was conducted in the past rather than oriented to anticipating challenges and planning to avoid assignments going wrong. This blog suggests a model for addressing that.

No one is better placed to identify the upside of a business opportunity than the top team but in the rush to action too little thought is often given to what can go wrong and the resulting damage. So let’s begin there and try and suggest how you might put the opportunity into context.

Unlike a domestic assignment there are many more variables; at home if a senior hire doesn’t work out there are usually others to choose from and the cost while undesirable is not insurmountable. That’s not the case with an international assignment with fewer people wanting to work abroad and able to match the profile you need.  In addition an international venture or expansion is often a major decision and from the perspective of shareholders and customers is not one to be seen to get wrong.

Organizations have typically looked at assignments in terms of their cost; in terms of income statement impact rather than the enterprise value that could be created during and beyond a successful assignment.

Assignment Value

In assessing the real value of failure a reasonable budget should be available for mitigating perceived potential risks. This can only be done when the potential value from getting it right has been articulated.  Frame the purpose of the assignment in terms of value to the corporation over a reasonable time frame. For example assignments can be categorized by overall value to the corporation (Economics of Mobility):

• High Value Objectives (e.g. to open a new market or undertake a major project)

Significant potential for value creation over an extended period and obviously worth investing to limit downside risk.

• Medium Value Objectives (e.g. the transfer of skills, or values to improve engagement)

What are the expected savings or estimated productivity improvements that are likely to flow from this activity. How many employees do you actually have that can fulfill this assignment

• Lower Value Objectives (e.g. service a specific client, gain experience for a bigger opportunity etc)

Client revenue generated should be easy to calculate and international assignments are generally seen as having multiple times the value of domestic training over the same period. Use talent management metrics to value the assignment in terms of reduced recruitment and training for future deployment.

We now have a sense of the value at stake with this assignment and can make informed decisions about what reasonable efforts should be made to ensure its creation. The next step is to identify and anticipate the risks that the assignment will face and what steps can be taken to mitigate them.

Pre-Assignment

All international assignments face similar challenges but their degree and importance needs to be considered in the context of the specific business circumstances related to each assignment. Doing this will lead to determination of their significance and priority.

Some challenges can be identified and assessed prior to the assignment:

• Political – all  assignees represent your company when working in another country. Awareness and respect for locals law, culture and mores will be important but absolutely critical at senior levels when expected to represent your organization with government and commercial leaders
• Values – for an internal candidate to be considered it will be assumed that they exhibit the values and represent the culture of your organization however, a more complex environment will now exist and both current and new employees need assessment. An employee who tries to short cut or avoid immigration, tax, social security, employment or cultural norms will damage your corporate brand
• Leadership – Because Mark did a good job for you in Windsor doesn’t mean the same will apply in Ulan Bator. What’s his record on engagement, managing multicultural, multi -lingual teams, prior international experience etc (and by the way  business travel doesn’t count)
• Family – employers do not usually involve themselves with the home lives of their employees but on assignment there is no choice; too much is at stake; are the family ready for the cultural differences and separation from home and relatives, what is the partner’s work status, do children have special needs, are there any special medical requirements, are pets critical to the family unit, does the candidate or their partner have elderly parents etc.
• Communication – critical to any assignment and getting the job done is clear communication. There may be a common corporate language but is it used and what level of fluency is required by all parties. Will training in a multilingual environment be consideration and is there a shared contextual knowledge and style?

Pre-assignment screening of the potential candidate using various methods and providers will provide indicators of whether further training, acclimatization or preparation is required. This should not be considered a one time event and monitoring will be required. For example families typically go into a black hole three months or so after the novelty of the new location and their new life has started to wear off. Many assignments underperform not because of activity in the workplace but because of unhappiness with home life.

The success of an assignment should not only be measured by whether its planned duration is completed. Performance on the job during assignment may be affected by a variety of factors related to family circumstances and these need to be spotted in order that appropriate support can be provided. While any good employer will attempt to assist an employee with matters affecting performance outside the workplace there is more reason to do so during any international assignment. For one thing there is more at stake but also assignees will tend to be normally high performing individuals. Not assisting to the extent possible will negatively impact engagement and increase dissatisfaction.

Assignment Preparation

Some advance preparation can help avoid other common threats to the success of an assignment:

• Facilities – identifying local providers or suppliers of needed equipment or special services including schools, identified during pre-screening will be of great assistance to a relocating family. Providing access to one or more “advocates” in the employee’s first language during the assignment for any problems that arise e.g. health, legal, personal will also assist before challenges become problems
• Employment Terms – should be designed for the mobile family and not adapted version of the employment arrangements for domestic employees. Benefits and some compensation plans are designed around local tax systems and won’t work abroad, help will be needed with local tax, social security and relocation will require more choices than a domestic move
• Career – employment agreements should be contextualized in terms of how the  assignment has been positioned in terms of value to the employee. For example if this to be a valuable developmental experience do not start an offer with the terms of separation should a position not exist at the end of the assignment. If the assignment is a one-time contract have an end date, if the assignment is indefinite and  the next career move uncertain explain how this will be determined. Be transparent. Talent management considerations should be addressed before the assignment and reflected in the offer and monitored during the assignment. The majority of returning assignees leave their employer shortly after returning home; a significant destruction of value
• Competitiveness – traditional compensation methods maintain home compensation spending power in the host location and retain it as a reference point to facilitate the assignee’s return into the home country organizational structure. Shrinking mobility has meant more competition and compensation needs to recognize local or global expatriate “rates” for the role being performed. This means a clear definition of what competitiveness means for your organization in an international setting
• Timing – attempt to place an end date to all assignments be they long or short. This will focus management attention particularly if aligned with key time sensitive dates e.g. work permit renewal, social security plan participation etc. Don’t omit cross border commuters or even constant business trippers from this due diligence as tax and immigration authorities now impose strict requirements on these arrangements

Of the many variables that may impact the success of an international assignment some can be anticipated through effective pre-assignment screening and other can be assumed to apply to a lesser or greater degree to all assignments. However, the degree that they should be anticipated will depend upon the business goals associated with the assignment. The most important component in managing risk is to anticipate and prepare for the most likely challenges that will have the biggest impact on the success of, or prematurely end an assignment.

All international assignments are accompanied by a significant cost and when they go wrong the cost doubles but of more relevance is the accumulating enterprise value that the right person, fully engaged and not distracted by family or environment challenges, will produce. Assignment risk assessment should be conducted in the context of this potential value and only by doing so will identify the appropriate level and scope of actions needed to reduce the potential of that risk.