Strategies for successful repatriation.
Goss, Yvonne ; Hynes, Geraldine E.
ABSTRACT
U.S. multinational corporations (MNC) primarily send their best
employees on international assignments to grow new markets, maintain
existing operations (Windham, 1999), or develop high potential employees
who can both contribute to company strategy and craft a global view of
the corporation's business (Derr & Oddou, 1991). Over a twenty
year period researchers have consistently reported MNC problems with
retaining returning employees, especially the high costs of
international assignments associated with low retention rates of
repatriates. The purpose of this examination is to present strategies
for addressing the repatriate attrition problem. The two objectives for
this paper are (1) to compile and categorize strategies from corporate
and employee perspectives, and (2) to summarize researchers'
theories and relate them to actual practice. This approach allows MNC
human resources and other executives to customize practices to fit
corporate strategic objectives and alleviate low repatriate retention
rates.
INTRODUCTION
Multinational corporations (MNC) report problems with retaining
employees who are returning to the home company and country from
international assignments. These problems apparently arise because human
resources departments poorly execute the repatriation process and fail
to satisfactorily incorporate employees into the company upon their
repatriation. The problems have recurred over a twenty year period with
no appreciable change (Goss & Tucker, 2003).
This is an important matter. Over the past thirty years, the
business world has expanded operations to a global scale. The trend is
expected to continue into the future (Derr & Oddou, 1991), and MNC
will require more expatriate employees ("How to Assist,"
2001). Management will experience pressure to earn a greater return on
investment from the cost of the expatriate assignments.
Companies place employees in foreign assignments for periods of
time generally ranging from 3 months to 3 years. These assignments are
costly to the corporations, and the investment in individual employees
is high (Black & Gregersen, 1999). The problem that many
multinational corporations face is the failure to retain employees for
more than two years after they return to the home office.
A corporation usually sends employees to an expatriate assignment
to develop new markets, to maintain existing operations (Windham, 1999),
or to develop high potential employees who can both contribute to the
company strategy and develop a global view of the corporation's
business (Derr & Oddou, 1991). These employees are involved in the
long term global strategy of a company (since they can be available for
potential additional international assignments) and for the benefit of
the company over the long term. Retaining their services is of great
importance.
Problems arise, however, from poor execution of the process by
human resources departments and failure to satisfactorily incorporate
employees into the company upon their repatriation to the home country.
The result is that employees suffer from reverse culture shock while
resettling their families. In addition they are dismayed to find that
they are not offered a position where they can use the knowledge and
contacts gained while on the assignment (Black & Gregersen, 1999).
Their dissatisfaction prompts repatriated employees to seek either
another foreign assignment or a position where they can use their
foreign training and experience. (Ferrar & Hug, 2001; Forster,
1997).
PURPOSE
The purpose of this examination is to review the literature over
the past 20 years, identifying strategies for addressing the attrition
problem. The two objectives for this paper are (1) to compile and
categorize strategies from corporate and employee perspectives, and (2)
to summarize researchers' theories and relate them to actual
practice.
CORPORATE PERSPECTIVE
The corporate goal is to secure an acceptable return on investment
while implementing the company's global strategy. The
company's return on investment tends to increase if the company can
retain the employees and utilize the experience and knowledge they have
gained.
Costs escalate when attrition rates are high. The loss of
experienced employees after international assignments results in high
training costs for replacements and the loss of return on investment in
salaries and benefits paid to the employees while on the assignment
(Black & Gregersen, 1999). Global surveys show this to be a growing
problem. Companies experiencing more frequent employer changes because
of international assignments increased from 20 percent in 1999 to 24
percent in 2001 (Windham, 1996-2001).
The high cost of assignments and the low returns have prompted
management and human resources professionals to consider various options
for reducing the cost of the international assignments, such as altering
the structure and terms of assignments and revising their repatriation
policy and practice. The Global survey in 2001 reported that 59 percent
of the respondents were seeking alternatives to long term assignments
because of the costs involved (Windham, 1996-2001).
Some employers have conducted methodical reviews of all aspects of
the company's expatriate program in order to generate a more
acceptable return on their investment ("How to Assist," 2001).
An example is a review of the structure of assignments. Different
methods carry different levels and types of costs. Companies have
several options: long term (12 months or more), short term (up to 12
months), commuter, frequent flyers (regular visits to the foreign
operation), and virtual (the employees manage their responsibilities
remotely from the home country with occasional trips abroad)
("Managing," 2002).
A second example addresses repatriate policy and practice. The
Global survey (2001) reported that respondents with programs in place to
improve corporate return on investment reviewed their policy and
practices and chose to use various recommended methods: better candidate
selection, career planning and skill use, communication of objectives,
assignment preparation, and program monitoring (Windham, 1996-2001).
Career planning, skill use, communication, and assignment preparation
are discussed in the next section of this paper.
Black and Gregersen (1999) asserted that successful repatriating
companies view foreign assignments over the long term and expect
expatriates to generate new knowledge or to acquire leadership skills.
They have three common characteristics:
* Focusing on knowledge creation and global leadership development
* Assigning overseas posts to people whose technical skills are
matched or exceeded by their cross cultural skills and,
* Ending the expatriate assignment with a deliberate repatriation
process.
Derr and Oddou (1991) also identified characteristics and practices
of several companies that are recognized in the industry as having
successful programs for international assignments. This success is
evidenced by their low 5 to 10 percent turnover rate of employees
returning from assignments. These companies have three characteristics
in common:
* International assignments are developmental.
* The assignments are part of the path leading to top management
positions.
* The firms' competitive advantage and ability to sustain
growth are partly a function of their international know-how.
It is important to note that these studies share common themes: the
importance of employee development, the selection process, and a
repatriation process.
Stroh (1995) added that a successful company demonstrates positive
corporate values related to the importance of an international
assignment. Recommendations include making use of the first hand
experience of the returning employees:
* Ask them to assist in formulation of international assignment
policy (Stroh, 1995).
* Ask them to help inform and create policies related to the
expatriate experience to develop policy based on practical experience.
* Ask them to assist in developing strategies to attract and retain
a diverse domestic workforce since they have first hand experience with
and an appreciation for diversity. (Stroh, 1995)
* Ask them to serve as mentors for new expatriates (Harvey &
Wiese 1998)
Nokia uses international assignments to generate knowledge. The
company has a decentralized research and development (R&D) function,
36 centers in 11 countries. Senior executives form teams to generate new
ideas and bring these people together in an R&D center for
assignments of up to 2 years. Nokia is gaining global market share by
rapidly turning new ideas into successful commercial products (Black
& Gregersen, 1999).
THEORETICAL EMPLOYEE PERSPECTIVE
Best practice recommendations evolve from a theoretical foundation.
If company human resources policy makers know the underlying reasons for
successful programs, they can develop policies and practices that
successfully mesh company strategy with retention of employees who are
the keys to implementation.
In this paper we first discuss the theoretical foundation and
present examples of company programs that have successfully retained
internationally trained employees upon their return to the home company.
Why do returning employees find it so difficult to adjust to the
home company and home country? The difficulty is manifested in
resignations by the employees, discontent, and negative effects to the
company's international programs. The literature presents
generalizations (theories) about human behavior as it relates to
international assignments. The theories interrelate and form a cohesive
perspective to understand discontent, lack of commitment to the home
company, disconnection with home operations, and a long period of
adjustment.
We discuss four of these theories, all reflected in
recommendations, which provide a basis for proactive program
development. The theories are the expectation, reentry systems, equity,
and W-curve theories. Each recognizes a facet of the experience of
returning after a long absence to one's home country and company.
Expectation Theory
Expectation theory addresses the effectiveness of open and honest
communication with the employees. Topics include jobs they can expect on
return to the home office as well as the more common psychological and
financial transitions. The expectancy value model (Furnham, 1988, as
cited in Martin & Harrell, 1996) suggests that the assigned
employees have expectations about their eventual return to the home
office. Martin and Harrell (1996) asserted that this theory explains
much of the employees' dissatisfaction upon return to their home
countries. They explain that fulfilled expectations lead to positive
evaluation of the repatriation experience, whereas unfulfilled
expectations lead to negative evaluation and poor readjustment (Martin
& Harrell, 1996).
The expectancy violation theory (Burgoon, 1992, as cited in Martin
& Harrell, 1996) states that unfulfilled expectations can be
violated either positively or negatively. If things turn out worse than
expected, the employees tend to evaluate the experience negatively,
while if things turn out better than expected, they evaluate the
experience positively. Therefore, Martin and Harrell concluded that it
is better to over prepare the employee and set up realistic (probable or
worst case)expectations. (Martin & Harrell, 1996). Black (1992)
surveyed 174 employees from four MNC and reached the same conclusion.
The levels of repatriation general adjustment, from highest to lowest,
occurred with over-met expectations, met expectations, and under-met
expectations (Black, 1992).
Several recommended strategies emerged from surveys related to this
theory: predeparture training, a realistic job preview, and bringing
employee expectations in line with company perspective. Carol Jones, of
Deloitte & Touche LLP, emphasized "expectation
management," which requires the human resources department to be as
open and honest as possible with the employees, both at departure and
return (Poe, 2000).
The following three surveys illustrate the point that surveys
across different employee groups yield similar results. Stroh's
research related the degree of commitment to the degree the company met
expectations of repatriates.
Job performance standards: Employees exhibited more commitment to
organizations when individuals and firms held similar job
performance expectations.
Interpersonal relationships at work: Only 23 percent of returning
employees experienced positive surprise when their interpersonal
relationships at work were better than they expected.
Job discretion: Commitment to the local work unit was highest if
returning employees found they had more job discretion than they
expected. Fifty-three percent were negatively surprised. They seemed
to expect to hold a similar-level position upon return compared with
significant levels of responsibility and discretion on the
international assignment (Stroh et al., 2000).
A second survey by Derr and Oddou (1991) queried 135 repatriates
with overseas assignment durations of one or more years. These were high
performing employees; their job performance ratings were outstanding to
good, with 65 percent in the outstanding to excellent range. The study
compared expectations before the assignment with results after the
assignment.
Their expectation level before the assignment was high: 70 percent
said the assignment was presented as a definite career opportunity, and
83 percent said they interpreted the offer as a career move that would
enhance their career opportunities. Only 30 percent had a clear idea of
a career path after the assignment.
The response to their return was quite different from their stated
expectations:
Career considerations: Some were told they had six months to try to
find a place in the organization, and three left immediately. Of the
returning employees, 23 percent were promoted and 18 percent were
demoted. The returning employees reported that 54 percent had a
specific job waiting for them while less than half (46 percent)
indicated they had been consulted before returning about the type
of assignment they would like. Perhaps the most telling result is
that 87 percent stated the expatriation had helped broaden their
personal perspective more than it had helped develop their career.
Job Discretion: Most of the employees who received assignments (60
percent) reported less job discretion or a position with less
potential impact on the company (Derr & Oddou, 1991).
A third survey by CIGNA, National Foreign Trade Council, and
WorldatWork ("Employers," 2001) illustrates the point that
employers should be aware of expatriate expectations and provide the
support that the employees expect.
According to the CIGNA survey results, two distinct viewpoints of
these assignments existed between the corporate human resource
executives and the employees who completed the work assignments. For
example, the two top ranking reasons for employers to expatriate were
specific projects and foreign operations management. Employees, on the
other hand, responded to the same question with totally different
responses: personal excitement and resume enhancement.
Expectation theory (Stroh et al., 2000) predicts that this causes
negative reactions from the employees when they realize that their
expectations will not be met.
Reentry Systems Theory
Reentry systems theory, according to Martin and Harrell (1996),
concentrates on the importance of communication and contact with the
employees before, during and after the assignment. The returning
employee learns to adapt through the cycle of stress-adaptation-growth
through communication with others in the reentry environment, just as
she had adapted on her international assignment.
One indication of noncompliance (maintaining contact) with this
suggestion is the result from the Global survey (2001) which reported 42
percent of the surveyed companies had intranet sites with no expatriate
section and 91 percent had intranet sites within the company (Windham,
1996-2001). The NFTC survey (2000) found that two-thirds of the
responding companies had an intranet, but only 20 percent had an
expatriate section. This was alarming since 92 percent of the
expatriates said the Internet was critically important to them, and they
used it daily ("Employers," 2001). Communication "allows
the expatriate to feel a close bond with headquarters regardless of
geographical distance" (Czinkota et al., 1989).
Adler's (1981) study pointed out the importance of
communicating organizational changes to employees during the
international assignments. Referring to expectation theory, employees
"who were kept informed regularly while overseas had fewer re-entry
surprises and fewer unmet expectations" (p. 350). This contact
connected the employee to home office changes (positive and negative)
and even negative news, such as reorganizations and lost contracts, thus
preventing reentry surprises.
Baughn's study (1991) supports these findings. The study
included 226 employees of five multinational firms who had returned to
the home company in the U.S. within the previous five years. He found
that contact, mentorship, and repatriation support all related to
"socialization" upon return. They were "significant
predictors." Adler's study (1981) concluded "that the
more surprised returnees are by negative changes, the less effective
they are on the job" (page 350).
Harvey and Wiese (1998) proposed a mentoring model to provide
social support and to manage expectations by communication. The model
approaches the reentry problem in three phases:
Before expatriation
Affirm the organization's commitment. Provide an "anchor" by
discussing organization, personnel, and strategic domestic
situations. This affirmation begins before expatriation and
continues during and after the assignment.
Create a formal communication channel. Mentors and key
individuals provide updates to the employee on changes in
organization, personnel, and strategic operations in the home
country.
Define the role of the mentor during the assignment.
Discuss advanced planning for return to the home country.
During expatriation
Continue the mentor relationship with headquarters.
Establish a mentor at the foreign location.
After expatriation
Facilitate finding a new position in the home company at least
six months prior to return.
Provide updates on company changes (power base and relationships
among key managers) six to nine months before return.
Provide updates on the community.
Encourage the repatriate to participate in a mentoring program
with new expatriate employees.
Examples of Best Practice
Medtronic provides mentors at the vice-presidential level. The
mentor helps to set career goals and places the repatriated employee in
a job upon return to the home office. The two maintain communication
through e-mail, telephone calls, and visits (Klaff, 2002).
Cendant keeps its employees connected through "team
huddles." These are groups of employees who work on a particular
client. It may be a virtual team, with some members at the home office
and some located internationally, but the team is required to keep in
touch. The company achieves two goals. It keeps its international
assignees in touch and maintains a truly multicultural global work-force
team (Poe, 2000).
Equity Theory
Equity theory ties closely with expectation and reentry systems
theories. It relates to employee motivation and commitment to the
company (Robbins, 2001). Procedural justice refers to the perceived
fairness of the process used to determine the distribution of rewards
and tends to affect an "employee's organizational commitment,
trust in the boss, and intention to quit" (Robbins, 2001, page 170;
Stroh, 1995).
Equity theory helps to explain the degree of commitment that
returning employees give to the company. If the employees perceive that
the company is not treating them fairly in light of their international
experience, they tend to feel less committed and are willing to leave
the company to work for another. Robbins suggested that company managers
should heighten the perception of fairness by openly sharing information
on how decisions are made and following consistent and unbiased
procedures (Robbins, 2001).
Ericson (1999) concluded that aligning international assignments
with employee career paths reduced the effect of the equity/inequity
phenomenon. He attempted to predict repatriate turnover as a test of
equity theory. The repatriate's perception of equity was positive
if company management became actively involved in planning for the
employee's next assignment upon return. The international
assignment became a stepping stone in a career path. Secondly,
management could encourage the positive equity perception by placing the
returning employee in a position that utilized the experience and
knowledge gained on the assignment (Ericson, 1999). The employees
perceived acknowledgement of their experiences and achievements and were
more likely to endure the transition from international employee to
working within the domestic organization.
Examples of Best Practice
Monsanto starts thinking about the next assignments for returning
employees three to six months before they return. First, they (two
employees ranked above the employee, with international experience)
assess the skills the expatriate has gained and review potential job
openings within Monsanto. The expatriate writes a self-assessment and
describes his/her career goals. The three people then meet and decide
which of the available jobs best fit the expatriate's capabilities
and the organization's needs. In the six years since this
program's initiation Monsanto dramatically reduced the turnover
rate of returning employees. The employees feel treated fairly even if
they don't get the job of first choice (Black & Gregersen,
1999).
Honda starts the assignment with clear strategic objectives. Six
months before the employee returns, the company starts an active
matchmaking process to locate a suitable job for that person. A
debriefing interview is conducted upon return to capture lessons learned
from the assignment. This is an integrated approach. Turnover rate is
less than 5 percent. Its expatriates consistently attain the key
strategic objectives established at the beginning of each assignment
(Black & Gregersen, 1999).
Royal Dutch Shell has one of the world's largest expatriate
workforces. The company enlists resource planners to track workers
abroad. Expatriates normally know what their next assignment will be
some 3-6 months before they move, and nearly 100 percent of expatriates
begin each return assignment with a clear job description. Management
returns high potential expatriates to the home office every third
assignment to raise their visibility among senior executives. Technical
mentors stay abreast of the expatriates' skill levels and arrange
for upgrades at RD's training center (Barbian, 2002).
Deloitte & Touche managers discuss, before the employees go
abroad, the job each of the company's 200 expatriate employees will
take after returning. The employee signs a written commitment letter,
which includes a job guarantee at the end of the assignment (Klaff,
2002).
W-Curve Theory
W-Curve theory describes the reentry adjustment, often called
reverse culture shock (Czinkota et al., 1989). It emphasizes the common
process of initial euphoria, irritation and hostility with cultural
differences, adjustment, and reentry to the home country (Martin &
Harrell, 1996).
The W-curve is actually two U-curves. The first U-curve occurs when
the employee enters the new country for the international assignment.
The second U-curve occurs upon return to the home country. The pattern
is the same. The reverse culture shock on return is intensified because
the employee does not anticipate company, community, and cultural
changes during the absence. There are also cases when "reentry may
cause a reverse culture shock [if the] adjustment phase [to the foreign
location] has been successful, and the return home is not desired"
(Czinkota et al., 1989). Adler (1981) noted that the reentry phase is
slightly more difficult than the adjustment phase because of employee
expectations. Anderson's (1999) survey of ten organizations in
Australia yielded this representative comment from a respondent: "
... emotions and feelings associated with culture shock and reverse
culture shock need to be known, confronted and helped through if one is
to remain effective (p. 15)."
Gail (1996) studied the W-curve and ways to decrease its effect. He
concluded that repatriation training reduces the turnover of repatriated
executives because they are taught to expect a transition period. His
study showed that the mere presence of a repatriation program has more
effect on reducing turnover than the contents of the repatriation
programs (Gail, 1996). This is an interesting finding. It seems that the
attention alone assures returning employees that the company notes their
contribution and special circumstance.
Harvey (1989) conducted a study of 175 corporations. He identified
four negative elements of reentry: career issues, financial pressures,
family problems, and psychological stress. Most of the companies that
provided repatriation training covered career path counseling,
assistance with relocation, and financial assistance. The softer
elements such as family problems and psychological stress were not
generally addressed.
Example of Best Practice
Unocal offers all expatriates and their families a day long
debriefing program upon return. It focuses on common repatriation
difficulties. The company shows videos of past expatriates and families
describing difficulties. Then the session turns to live discussions and
suggestions on how to cope (Black & Gregersen, 1999).
Summary of Theories
Researchers combined the four theories (expectation theory, reentry
systems theory, equity theory, and W-Curve theory) with survey results
to propose recommendations for improving the systematic processes and
procedures that human resource departments should use in companies with
international assignees. The recommendations fall into six categories
(Table 1).
CONCLUSIONS AND RECOMMENDATIONS
Management of MNC face challenges in successfully retaining
returning employees from international assignments. This paper focuses
on corporate and employee perspectives in alleviating the high cost of
global programs and low retention rates of returning employees.
At the corporate level, management is responsible for corporate
global strategy and can proactively review practices and policies to
determine which require change in order to meet objectives. The cost of
international strategy is a prime concern. Adjustments to practices
related to the selection, development, and repatriation of employees are
necessary if the costs associated with attrition are the source of lost
return on investment.
This paper highlights four theories--expectation theory, reentry
systems theory, equity theory, and W-curve theory--to explain the
interaction of company actions with employee expectations, cultural
transitions, and level of commitment to the home organization. If the
employees know what to expect upon their return to the company, they
cope better with the reentry transition. Their commitment to the home
organization is strongest if they perceive that company management is
implementing a career plan that utilizes the experience and knowledge
gained during the international assignment. The company, while always
keeping their global strategy in mind, can build a strong bond through
contact before, during, and after the assignment.
Multinational corporations that want to compete globally and build
a pool of international management expertise are advised to incorporate
appropriate features to their management of repatriates. The best
performing companies are reaping the benefits of decreasing employee
turnover through their success in the global arena. Our findings clearly
indicate that companies have plenty of guidance from researchers and
actual best practices to implement a successful global strategy.
International assignments should be development tools to build the ranks
of experienced international managers.
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Yvonne Goss, Sam Houston State University
Geraldine E. Hynes, Sam Houston State University
Table 1: Summary of Recommendations for Successful Repatriation
1 Provide predeparture training: set realistic goals
(Forster, 1997)
2 Address the culture shock phenomenon (Czinkota et al., 1989)
Provide training relating to the process of
reentry (Martin & Harrell, 1996).
Address financial issues (Martin & Harrell, 1996)
3 Offer a realistic return job preview (Stroh, 1995)
4 Bring employee motivations in line with company
perspective (Stroh, 1995)
5 Mentor (Harvey & Wiese, 1998)
6 Provide career planning well before the employees
arrive back at the parent organization; identify
possible ways to use their new skills (Stroh, 1995)