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Special Report on Globalization: The Globe-Trotters

December 15, 2010
Related Topics: Repatriation, Relocation Services, Expatriate Management, Global Business Issues, Relocation Management, Workforce Planning, Tools
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When Ford Motor Co. approached engineer Juan De Peña about an overseas assignment, it wasn't for a traditional expatriate stint of three to five years. The auto company was preparing to introduce a new version of its Fiesta model in Mexico, and it selected De Peña to update the assembly plant, hire and train a local workforce and launch the car, all within 13 months.
  
  The condensed assignment allowed Ford to relocate the launch manager without extended costs related to housing, home visits, quality-of-life premiums and other expat perks. Although De Peña brought along his wife and toddler, there were no education costs. And as an added bonus, De Peña is a Spanish speaker so the company did not have to pay for language lessons.
  “The pace was intense and extremely challenging, in a good way,” says De Peña, who has been with the Dearborn, Michigan-based automaker for 16 years. But the short-term assignment had perks for him, too. Rather than worrying about renting out his house, he paid a neighbor's son to mow the grass and shovel the snow. An administrative assistant picked up his mail and sent it to him in batches. He worked long days and weekends and finished the assignment ahead of schedule in 11 months, turning the refurbished plant over to a local team with an engineering staff of roughly 40 before he returned to Michigan in August.
“With the global nature of our economy, we have to stay competitive,” De Peña says. “If it makes sense for the company to move talent around in these short-term assignments, and it works for the employee in terms of the stage of life they are in, then it can be a great experience with pluses for both sides.”
Compact international assignments like De Peña's are part of a larger trend among multinationals to craft smarter, leaner policies for global mobility. The recession has forced companies to cut costs at a time when they also must become more competitive in international markets. “The sudden reduction of cash tends to get people's attention,” says Rebecca Powers, a principal consultant on global compensation and mobility at Mercer, the human resources consulting firm. “Companies have been forced to sit down and really think about why they are where they are, what their goals are internationally and what are the best, most cost-effective ways to achieve those goals.”
A growing number of companies are shortening international assignments, sending more junior employees with more specific skills abroad, and offering packages that are carefully designed to reduce expenses and better fit long-term goals. A study on international assignments that Mercer released in June showed that 59 percent of the 220 firms surveyed had revised their policies for international assignments between 2007 and 2009. About half of respondents reported moving to more short-term assignments. “Historically, companies have handled global mobility in a knee-jerk fashion—‘We need someone in Shanghai; let's see who's willing to go,' ” says Margery Marshall, president of Vandover, an employee transition support company based in St. Louis. “Not a lot of planning went into the job itself or the fit of the employee, and more and more companies are trying to move away from that.”
A global resource management study by Ernst & Young released in May found that nearly two-thirds of the 347 respondents said their organizations lacked standard policies for managing the careers of employees on international assignments. The same study showed that only 37 percent of companies integrated management of international employees across the enterprise, allowing for better cost tracking and career development. And 30 percent revisited expatriate policies to reduce costs.
Most companies aren't eliminating standard features of global relocation packages such as housing assistance and education for children, cuts that would be deal breakers for many prospective assignees. But employers are seeking ways to make those benefits less expensive, such as reducing housing benefits and cost-of-living allowances and sending employees without school-age children.
Two years ago, for example, Ford revamped its global housing policy, eliminating an option for international employees to sell their homes to the company for assessed value. It was a nice perk for many expats who, before the change, were expected to contribute toward their international housing costs. But because the decline in the housing market has been particularly steep in Michigan, it left Ford with a growing inventory of homes it couldn't sell. Under the new policy, the company covers all housing costs for expats, but offers no assistance for the homes employees leave behind.
Companies are focusing more strategically on who gets which assignment and for how long. Although traditional assignments of three to five years are still the most common, more companies are sending employees abroad for one to three years. Assignments of less than one year can be even more cost effective because they do not require a full change in residency and can typically be managed without the costly relocation of a whole family. American multinationals are also making better use of intraregional assignments because moving a trained expert from London to Moscow or from Hong Kong to Shanghai is generally cheaper than relocating an employee from the U.S.
“Strategic fit” and “talent development” are becoming key buzzwords for global workforce policies. For many companies, global personnel management and talent development have traditionally been separate, siloed business functions. But more employers are integrating the two and crafting career development plans for valued employees earlier in their careers to match the global goals of the company.

In 2008, for example, Stryker Corp., a Kalamazoo, Michigan-based medical technology company, restructured its global mobility program to better align it with talent management. In the past two years, the company has expanded its travel and home-leave policies, for instance, to address employee needs related to elder care and child custody arrangements. It also has instituted a tiered international policy with different compensation and benefit plans to address both short-term assignments and early-career expats.
Stryker also requires a candidate assessment for all potential overseas employees and their spouses or partners. A clinical psychologist conducts a one-day review to observe cognitive, social and cultural readiness for the overseas assignment for which an employee has been selected.
“An international assignment can cost three to five times an employee's annual base salary,” says Sharon Byrnes, Stryker's director of international assignments. “If a company is willing to make that investment, we want to make sure we perform due diligence upfront to understand and prepare for all aspects of the investment.”

Karen Horan, Ford's manager of international service and relocation, says the company's global mobility strategy is tightly aligned with the One Ford mission, which Ford president and CEO Alan Mulally instituted to streamline operations and which is widely credited by industry analysts with helping Ford avoid the financial implosion that hit General Motors Corp. and Chrysler Group two years ago. Ford now has 875 expat employees in a mix of short- and long-term assignments. International assignments have two principal drivers, Horan says, filling a skill gap and developing valued talent.
Offering some support 
Another facet of smarter expat policies is more structured support for families. Industry studies cite spouse/partner issues as the No. 1 reason employees turn down overseas assignments, as well as a major reason for failed, shortened or unsatisfactory stints abroad. With dual-income families now the norm and with the growth in assignments to BRIC countries (Brazil, Russia, India and China), which can pose challenging cultural adjustments, companies are paying more attention to families and work-life issues.
“With old expat packages, spouses wanted help staying active because it was important to them to have something to do,” says Alain Verstandig, founder and managing director of Net Expat, a company with regional headquarters in Atlanta, Brussels and Hong Kong that offers assessment, training and coaching to international employees and their partners. “Today, many couples have no choice but for both to work, and these dual-income families have transformed approaches to mobility planning.”
When Eunice Latty's husband, Pierre, was transferred from Paris to Montreal by the French energy company Areva T&D (now Alstom Grid), she was worried about losing her income and career momentum. Areva provided spousal consulting services through Net Expat and matched Eunice with a professional counselor soon after the couple arrived in Montreal last February. The consultant helped Eunice with everything from reworking her résumé for the local market to understanding cultural differences in business norms. In less than four months, Eunice landed a full-time job as a procurement manager with a distribution company, a job she says she would not have found so quickly, if at all, without the spousal assistance provided in her husband's relocation package.
“It's important for me to have my own income,” she says. “And psychologically it was important for me, too. I know no one and have no family in Montreal. So having a job gives me my own thing to do and provides balance for my life, so we can both benefit professionally from this experience.”
Addressing the career needs of spouses is even a concern when both work for the same company. Ford engineer Ron Smith entered discussions about a job in China five years ago, but at the time there was no job for his wife, Nancy, also a longtime engineer with Ford. The job talks fizzled before Nancy was forced to make the tough decision about whether to take a leave of absence for her husband's potential opportunity. But in February, Ford approached the Smiths about China again—this time with job offers for both.
The Smiths are scheduled to start their dual international service assignment this month at Ford's 6,000-worker manufacturing facility in Chongqing, a metropolis in southwestern China along the Yangtze River that is one of the world's fastest-growing urban centers. Nancy Smith will become a product development manager for chassis engineering, and Ron Smith will become the vehicle team manager, responsible for quality of all outgoing cars.
The timing worked out well this time for both the Smiths and Ford. The couple's sons are adults now. One is a senior at Michigan State University and one is pursuing law school. Moving without children in the equation is logistically easier for the couple and less expensive for the company. The biggest consideration for the Smiths was moving their cat, Snap, and large dog, a vizsla named Rock. Cartus Corp., a relocation company that works with Ford, arranged transport of the pets through Animals Away, a pet relocation service, so that the pets wouldn't have to be quarantined upon arrival.

“I wouldn't have even realized that I needed to ask about quarantine without the relocation experts,” Nancy Smith says. In a city bursting with new high-rises, the relocation team also helped the couple find a single-family villa for $4,200 a month (including furnishings, taxes and management fees) with a small yard about the size of a one-car garage so their dog can roam around. With most of the big logistical concerns taken care of, the couple devoted the months before their move to intensive Mandarin classes several hours each week with individual private tutors.
While companies are getting smarter about managing global assignments, they may be thinking less about what to do with expats when they come home. In the Ernst & Young study, 47 percent of respondents reported doing little to help returning expatriates reintegrate into the organization. Only 42 percent of the companies in the Mercer study guarantee international assignees a job upon repatriation.
De Peña, however, says he had a smooth transition back to Ford headquarters this fall after his whirlwind assignment in Mexico. He is now program manager and assistant chief engineer for Fiesta for all of North America. And he is weighing another global assignment next year in Europe, perhaps for a year and a half. That slightly longer assignment, he says, should give him a bit of free time for weekend getaways and more sightseeing. “I've been very fortunate,” De Peña says, “to have the chance for another assignment so soon.”
Workforce Management, December 2010, p. 32-34, 36, 38 -- Subscribe Now!

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