The Impact on Expatiates

January 1, 1999
During an economic downturn, organizations naturally start looking at cost reduction. Many multinationals will begin to repatriate or reduce the number of international assignees.

However, problems abound unless the endeavor is approached thoughtfully. "Companies should take a look at the job and what skills are needed rather than look strictly at numbers," says Ed Butcher, vice president for policy and program design at New York City-based Citibank. "Do a comparison between what it costs to have an expatriate in the position, what it would cost to bring back the expatriate [if prematurely repatriated] and what it would cost to replace that person with a local."

Start here. Many businesses don’t know the true cost of an expatriate and don’t track the precise number of their international assignees. Furthermore, a company’s hybrid workforce (for example, an employee working outside the home country on a local payroll with additional benefits, such as housing or schooling) isn’t tracked at all because it doesn’t come under a formal program. While these individuals may be more expensive than expatriates, they aren’t even considered because no one is watching them.

Next, look at the real costs of a local replacement. Sometimes it’s almost as expensive to hire a local worker as it is to stay with the expat. In a worst-case scenario, two years down the road, the organization realizes that the local populace can’t fill the position and an expatriate is brought back in.

Cutting assignments short sends a terrible message to expatriates. One of their key concerns is what will happen to them down the road. If you suddenly repatriate individuals, it could be more difficult later to send people back again. They may not want to take the risk.

Then, if you don’t have one already, create a staffing plan. "Look at what the job requires versus the expense," says Butcher. "If there’s a downturn, look at your staffing plan to see what jobs are being filled and if there has been a change. If you’ve staffed arbitrarily, you don’t have any focus on who to bring back because everyone seems the same. If you do an appropriate staffing job upfront, you can repatriate more wisely."

Here are some tips:

  • Create a staffing plan that details the skills needed.
  • Don’t lower standards during a downturn. Remember that people are what drive the success of the bsiness.
  • During a crisis, don’t forget the affect on families. Family disruptions and retention of employees long-term will be influenced by the company’s attitude to the entire international assignee population.
  • You send your best employees to help you become and remain successful in a global market. Treat them that way.

Global Workforce, January 1999, Vol. 4, No. 1, p. 10.