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Companies Weigh the Cost of Prepping Expats

Many are bypassing pre-location cultural counseling. Instead, they opt for intervention in case of a crisis.

January 30, 2004
Related Topics: Relocation Services, Expatriate Management, Relocation Management, HR & Business Administration

A valued executive is posted overseas. He moves to his new assignment with his family. He settles into his office and reports back to headquarters that he’s enjoying the challenge of his career. But behind his façade, everything is crumbling. The employees reporting to him speak English, but he can’t motivate them or even make them understand their duties. His wife, isolated and unemployable, is miserable. His kids are falling behind at school. Finally, word gets back that he’s floundering. His superiors pull the proper levers, and he and his family are provided with training and counseling in the necessary coping skills. The executive pulls out of his tailspin, his family starts to enjoy the expatriate lifestyle, and his company saves the hundreds of thousands of dollars it would have cost to replace him.

    If this sounds familiar, it’s because it’s a rough composite of thousands of sales pitches delivered by a bewildering array of companies in the employee-relocation business. These organizations specialize in preparing and/or rescuing transplanted employees. But as corporate budgets tighten, the emphasis has subtly shifted from carefully preparing executives and their families before they go abroad to providing on-site remedies, if needed, after they’ve set up residence. The average cost for this service is $3,000 per employee per year. Amidst the cacophony of companies competing for this business, however, it’s difficult to decide what specific on-site services, if any, international employees actually need.

    Objective advice is hard to come by. Deniz Ones, a professor at the University of Minnesota who specializes in international cross-cultural industrial and organizational psychology, says there has been no research on the effect of on-site training on either job performance or personal satisfaction. "The only research that I’m aware of was done on pre-departure cross-cultural training. It shows that the people being transferred adjust better and feel more personally satisfied, but the weakest effect is on job performance."

    Companies in the global relocation business have a tough time negotiating the tricky intersection of bottom-line business and "soft" services, too. The number of international employee relocations per year, which includes American expatriates going abroad and non-American "inpats" relocating to the United States, is 394,000 and rising, the Employee Relocation Council reports. The average cost of transporting one family to an overseas assignment is $300,000, says Laura Herring, CEO of The Impact Group, a St. Louis firm that specializes in employee relocation. Approximately one in 20 transferees utilizes on-site services, notes her client Greg Kirkwood, corporate relocation and expatriation manager for the French conglomerate Saint-Gobain. Even though the cost of a failed relocation might be more than a million dollars, Herring says, many other client companies are reluctant to increase their up-front costs with add-on options that anyone in the front office might think frivolous.

    "Our ideal is to counsel employees before they leave, so they’ll have some expectation of what’s going to happen to them," Herring says. "And some of the time that happens." But often her first contact with her global clients comes when there’s a problem. "It’s when their executive is faltering. We call these jobs ‘Employee on Fire.’"

No time for preparation
    International flame-outs do not surprise David Martin, professor of management and human resources management at the Kogod School of Business at American University in Washington, D.C. Martin says that the trend in these frenetic times is toward one-year assignments rather than the more typical two- or three-year assignments that executives were given 10 years ago. "They’re too busy training their replacement before they leave to get ready for their own assignment," Martin says. "When they go abroad, they get their orientation from the person they’re replacing."

    With all this frenetic movement, there are bound to be profit-threatening problems, and relocation companies are glad to talk about them. On the inpat side, they cite instances of foreign nationals being overwhelmed by the necessity of doing business in their second or third language and the cultural hurdles they encounter in the United States. Steve Conway, senior vice president for global mobility services at

    Executive Relocation Corp. in St. Louis, describes a client that moved a Mexican employee several hundred miles to its Texas headquarters, reasoning that he needed no special preparation "because everyone in Texas speaks Spanish." But the employee’s pregnant wife could not communicate with her American pediatrician, Conway says, and the employee was on the verge of resigning. His relocation company stepped in and connected her with a Spanish-speaking doctor.

    The Impact Group salvaged an assignment when the children of a Canadian Muslim employee, transferred to a small Southern city soon after 9/11, were subjected to bigoted remarks at their local public school. Impact’s counselors found a private school where tolerance was enforced and introduced the family to members of the local Muslim community.

    Americans abroad have their own set of problems. Stéphane Brahy, director of intercultural management training for Cendant Mobility in Danbury, Connecticut, says that they often find their managerial techniques ineffective in an international setting. "It’s as if a door you’ve always used just isn’t there anymore," Brahy says. An example he gives is the man whose European aides remained silent during a presentation as he used erroneous information, then notified him of his mistake after the meeting. He thought his people had let him down, but business in Europe is much more hierarchical, and no one points out a boss’s mistake in public. Cendant arranged for private coaching in local business etiquette.

    On the family side, relocation specialists cope constantly with the "trailing spouse" problem, helping American wives and husbands who have put their careers on hold find productive activity, perhaps volunteer work, to keep their frustrations at bay. Pre-existing health matters present other problems. For instance, German medical professionals do not recognize the existence of attention deficit disorder and will not prescribe drugs for American children previously diagnosed with it. Rensia Melles, director of clinical products, global services, for the Toronto company FGI, says, "In cases like these we will work with the family and see if they want to address the problem in the German system or have us locate a provider in Europe who’ll continue the previous therapy."

No guidebook
    On-site international counseling certainly has its corporate proponents. "I’m a strong believer in the [on-site counseling] package," Kirkwood says. He adds that he feels constant pressure to cut the service, but he has resisted successfully. "For a couple thousand dollars per family, I see it as a very good insurance policy."

    Others disagree. Imran Qureshi, office practice leader for the international consulting practice of Watson Wyatt in Chicago, is a Briton who worked here as an inpat before settling in the United States seven years ago. He says that the best resource for newly arrived transferees is the community of fellow expatriate countrymen. Visiting the local embassy or consulate can be valuable, too. "You’re much more likely to express your problems and fears to someone with the same culture and background, rather than a stranger," Qureshi says.

    To make matters more confusing, some on-site international training is conducted by large relocation companies that offer services such as house hunting, visa application and international tax preparation. There are also single-purpose companies that specialize only in counseling. Sometimes the larger relocation companies that offer this service are actually subcontracting it to the specialists. Some companies offer their counseling services through consultants located in the destination countries. Others conduct counseling with full-time employees who contact clients by phone from headquarters. Some large corporations like AT&T and Shell handle their transplants’ problems in-house. Others, such as General Motors, provide no such services.

    David Martin of American University says, a bit wistfully, that companies should just send their employees to their new countries 30 days before their assignments start. "That will give them all the time they need to get acclimated," Martin says. Lowell Williams, a former director of international relocation for Gulf Aquitaine who is now a vice president and leader of the human resources practice at the consulting firm EquaTerra, advocates a harder-edged approach. "I know those big relocation companies make their money on real estate commissions," he says. His recommendation: get the counseling package thrown in for free, or go elsewhere.

Workforce Management, February 2004, pp. 60-63 -- Subscribe Now!

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