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Use Technology To Manage Your Expats

December 1, 1995
Related Topics: Featured Article, Technology
Michael Merrill eats at his desk a lot these days. With more than 500 expatriates in 18 international locations under his wing-about 400 of whom can switch locations in a given year-his hands are full. Merrill, international personnel director for New York City-based Goldman Sachs & Co., isn't alone. Human resources executives like Merrill, responsible for expatriate administration, face many hurdles. Among them: recruitment, relocation, cultural adaptation, compensation, taxation, communication and repatriation. All this on top of the regular roles expected of a human resources executive.

Merrill and others also face unique financial challenges. Some experts estimate the cost of sending representatives across the globe is several times higher than for a locally-based employee. Careful planning is essential to ensure the benefits of sending an executive overseas justify the expense. Hence, information technology may be a salve that helps soothe the pain. Whether it's used for global orientation, training, financial planning or just plain communication, technology can make expatriate administration a more efficient work experience.

Combine the human factor with technology.
Computers aren't a miracle drug. They're effective only if your strategy simultaneously addresses the human element. Global HR managers must first ask the right questions. "Too often expatriate assignments are unsuccessful because [HR doesn't] zero in on the right things," says Calvin Reynolds, senior counselor at New York City-based Organization Resources Counselors.

Reynolds says that for an expatriate assignment to succeed, the company really needs to look at core competencies and language skills, but must also carefully evaluate whether the expatriate has the essential interpersonal skills and actually wants to go.

Merrill agrees. "Managers tend to have an idealized view of expatriate assignments," he says. "They don't realize expatriates usually make sacrifices, particularly if they have families." Technology, therefore, can play a role in easing this transition. A growing number of companies are entering the field of cross-cultural training. For example, ITAP International-a Princeton, New Jersey-based firm that specializes in consulting, training and developing products for expats-is introducing a series of interactive diskettes to help employees and their families prepare for relocation. Working with the diskettes, expatriates can explore the history, culture and business protocols of the 10 largest emerging global markets: China, India, South Korea, Indonesia, Mexico, Brazil, Argentina, Turkey, Poland and South Africa.

"Interactive disks allow expatriates to absorb the information at their own pace and seek answers to the questions relevant to them at the time," says Kathy Mendes, ITAP international director of marketing. To complement the technology, ITAP also offers the KIT™-a package containing maps, books, articles, safety tips and health profiles of the destination country.

Chicago-based Bennett Associates is another cross-cultural training firm. It uses videoconferencing as one element in its training programs. Within its training rooms, expatriates can meet local experts in the destination country. Heidi O'Gorman, director, business development, says this method gives the potential expatriate a unique perspective: "Teleconferencing works well because the person converses with someone who's actually working and living in the country," she says.

However, O'Gorman is quick to point out that technology is only one element in the training process. "Technology is excellent for research and for connecting people around the globe, but the trainer-participant relationship is vital to cross-cultural training. There's no substitute for face-to-face interaction."

Ensure careful financial planning.
Beyond the cultural factors, technology is a vital component in forecasting overall costs, keeping records and projecting tax adjustments. Goldman Sachs' international personnel group uses an internally developed modeling tool to determine whether a manager can afford to send an employee to another country. The system translates factors such as current salary, estimated total compensation, family size, tax status, nationality and destination into a series of projections: pay, allowances, housing, education and home leave. The end result is a clear picture of net pay to the employee and net cost to the firm.

"Members of our group can sit down with an employee to discuss his or her questions and concerns, and walk through the various what if scenarios. This use of technology allows us to be clear and accurate up front, to reduce uncertainty so no uncomfortable and costly surprises emerge later on," says Merrill.

Goldman Sachs also uses its technology system for ongoing budget projections. Every financial quarter, it feeds expatriates' data through the model to help managers forecast the cost of keeping each person in the host country. Technology also allows controllers to account for international expenses accurately. At year-end, HR can translate the projections into actual figures for the subsequent year.

By being able to estimate and monitor international costs, the firm can do a better job at containing and reducing expenses. Goldman Sachs estimates its international per capita expatriate costs to be among the lowest in the industry for a full-service expatriate program. Clearly, technology allows the firm to develop and experiment with cheaper alternative expatriate programs. The company's approach has evolved over decades-from the manual administration of 45 employees to an advanced system for more than 10 times as many expatriates.

Keep employees in touch with home.
While technology plays a key role in administrating expatriates, it's also an important communication tool. Electronic mail, voicemail, videoconferencing, online newsletters and shared data bases are among the ways global employees remain linked to their home country and colleagues. "Communication is critical with expatriates, not only for ongoing information-sharing, but also so the person doesn't feel out of place when [he or she] repatriates," says O'Gorman. "So much can change in a couple of years."

According to Reynolds, some employees who expatriate go native-that is, they make a significant effort to integrate themselves into the local culture of the host country. Then when their international assignments end, they tend to have more difficulty than others in repatriating effectively. He says in many cases, these individuals feel rejected by the people at home.

"Too often, organizations forget about their expatriate audience in terms of communication," says Reynolds. "Companies need to make more of an effort to share information about finances, new programs and other activities so it's not as much of a culture shock for expatriates when they return."

E-mail is perhaps the most important tool because it facilitates communication where time zones may prevent real-time discussion. Because many expatriates are highly mobile, E-mail is one of the more efficient means of access. E-mail enables companies to send expats clear reports and calculations quickly and in a high-quality format. Mendes also says electronic communication can help employees adjust to their new surroundings by providing a channel to seek feedback on cultural issues. ITAP International encourages its clients to contact headquarters by E-mail, to ask any questions they have as they settle in.

Do it yourself-or outsource?
Reynolds says given the relatively small number of expatriates in most organizations, developing an in-house system may not be a viable option. "You would need to make too many compromises because every employee and every country is different. You could very easily spend more money designing a system than it's worth," he says.

Instead, companies may decide to purchase a system designed by one of the major accounting firms. Ernst & Young, for example, offers its Global Expatriate Management System-EY/GEMS™. "More information is required in the expatriate arena than for domestic operations," says Jay Levine, director, tax software solutions for Ernst & Young. "A separate system allows you to monitor all this information without clogging your domestic systems with several extra fields."

According to Reynolds, one key consideration in selecting an offsite system should be ensuring it effectively can be integrated with your existing human resources systems. The danger in pulling expatriates out of the main system is the expatriates may not receive their paychecks. A successful approach will marry onsite and outsourced systems to ensure the executive is included in the most basic payroll functions.

A full-scale centralized system costs roughly between $70,000 and $100,000. Levine says many companies consider this expenditure a good investment, particularly since cutbacks in HR have forced departments to become more efficient. Moreover, Levine says few organizations have the knowledge base to handle the sophisticated tax planning capability an accounting firm's system can offer.

In terms of the future, one might question how much technology will replace the expatriate's role. Merrill believes as technology evolves, some-but not all-roles filled by expatriates will become less necessary. "If we can do the same things with technology that an expatriate currently does, then we can avoid the costs of international travel and placement," he says.

Adds Reynolds: "Technology such as videoconferencing will facilitate communication and make visits less frequent, but for starting up manufacturing sites and establishing relationships, someone must still physically be there."

So how can we expect expatriate administration to change in response to the global marketplace? Merrill says: "The conditions under which we send someone-and the approaches we use for compensation and other matters-will continue to be complex. We will need sophisticated regionalized systems with more flexibility." And in the meantime, Merrill will continue to eat lunch at his desk.

Personnel Journal, December 1995, Vol. 74, No. 12, pp. 113-117.

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