Experts Advise International Companies How to Capture Return on Expatriate Investments

"Companies have to spend a little more to take good care of expatriates, but it's a drop in the bucket compared to losing good people, "Virginia Hollis, vice president, Cigna International Expatriate Benefits (CIEB), said here this week at the annual meeting of WorldatWork.

The recommendations were developed by Hollis together with Anne Ruddy, CEO of WorldatWork, and William Sheridan, senior director, National Foreign Trade Council, based in part on the finding of their unique research conducted with expatriate employees and their employers earlier this year. Explaining the importance of the 5 C's, Hollis said that sending an employee on a three-year international assignment can cost $1 million or more.

"Employers often select high potential employees for such assignments because of the value of international experience - for both employer and employee - in an increasingly global economy."
Once on assignment, Hollis said, many expatriates face unexpected challenges both in daily living and in business activities. "Research sponsored by the three organizations documents those employees often lack necessary preparation, assistance while on assignment and appropriate support for repatriation," she said. "The costly bottom line: nearly half (49 percent) of expatriates leave their company within two years of assignment."

The challenge, Hollis said, is best described by contrasting how well employers think they are preparing, supporting and welcoming back their expatriates and what those expatriates themselves think. Hollis provided the following summary of the 5C's:

"People take international assignments primarily for two reasons, adventure and advancement," Hollis said. "The culture and compensation recommendations make sure expatriates don't feel isolated or financially pinched so they can meet their personal goals for an international experience. Coordination addresses not only the international experience, but also the return home. Those who are left in limbo about when, where or even if they will have their next assignment won't feel valued, much less advanced."

The final two C's - communication and career - are closely linked, according to Hollis. Establish strong lines of communication between corporate and local human resources staff and the expatriates, and use those lines of communication to check on the experience and career expectations and opportunities, she recommended.

Detailed Recommendations:

1. Culture:

2. Compensation:

3. Coordination:

4. Communication:

5. Career:

Expatriates on the Rise

Numerous trends are converging to promote economic globalization -communication; technology; travel; a worldwide trend toward
democratization, capitalism and open trade; and the fall of the Iron Curtain. According to the National Foreign Trade Council (NFTC), in recent years we have witnessed additions to global trade mechanisms, such as the World Trade Organization's formation and regional agreements like the European Union, MERCURSUR andNAFTA. Bilateral and multilateral agreements have proliferated in every region of the world. Cross-border joint ventures continue to rise, and not just from the U.S. outward, but also within other regions and into the U.S.

In response, industry sectors that previously were not engaged internationally now are active, according to the NFTC. These include telecommunications, information technology, power and utilities, and insurance. For instance, power and utility providers help developing countries privatize and upgrade national systems in developing countries.

Employers choose expatriation rather than hiring local for several reasons. They include: a global hunt for talent; a short supply of talent in new markets; the need to establish a business presence; promoting firm-wide, global mindset; representation following a cross-border merger, acquisition or joint venture; helping recruit, orient and train new employees; and, transferring corporate values or promoting diversity.

NTFC's research indicates that the total cost to an employer of sending an experienced employee on a three-year assignment can easily total $1 million (for an employee with a base salary of $75,000 - $100,000). Additional overhead expenses may include:

About the Sponsors

WorldatWork, formerly the American Compensation Association, is a
46-year-old global not-for-profit professional association dedicated to knowledge leadership in disciplines associated with attracting, retaining and motivating employees. More than 26,000 human resources professionals, consultants, educators and others are members of the association.

WorldatWork emphasizes total rewards, specifically focusing on compensation and benefits, as well as other components of the work experience such as work/life balance, recognition, culture, professional development and work environment issues.

The NFTC was founded in 1914 to work on behalf of member U.S. companies (now numbering more than 550) to expand exports, protect U.S. foreign investment, enhance the competitiveness and profitability of U.S. industry and promote and maintain a fair and equitable trading system. NFTC members represent 70 percent of all U.S. non-agricultural exports and 70 percent of U.S. private foreign investment.

CIGNA International, the global business division of CIGNA Corporation, sells life, accident and health insurance and employee benefits - including health care and pensions, in major markets around the world. CIEB is the expatriate benefits arm of CIGNA International. CIGNA International works with more than 125,000 expatriate employees around the world.

*To request a survey brochure (or order a full survey at Dollars 120), contact: Sharon Moore, CIGNA International Expatriate Benefits (CIEB), P.O. Box 15050, Wilmington, DE 19850-5050; e-mail: sharon.moore3@cigna.com