Companies are sending employees overseas again in close to pre-recession numbers. Though the destinations and demographics have changed, some industries have recovered faster than others, and organizations continue to squeeze expat costs.
Overseas assignments increased at 64 percent of companies in 2011, compared with 43 percent the previous year, according to a May Global Relocation Trends survey by Brookfield Global Relocation Services. The Woodridge, Illinois-based employee relocation services provider based its finding on a survey of 123 senior human resources managers and international relocation directors at companies of various sizes based in and out of the United States.
The number of companies reporting a surge in expatriate postings is just shy of 2006’s record high, when 69 percent of companies increased their foreign assignments, according to the survey. “Even though the global recovery is still shaky, especially with what’s going on in Europe, they see it as a business need” to send more people overseas, says Brookfield executive vice president Scott Sullivan, who oversees the annual survey started in 1995.
With the lingering eurozone debt crisis stalling business growth there, companies are instead focusing expat assignments on emerging markets such as Brazil, China, India and Russia, according to the report. In 2011, for the second consecutive year, China was the top emerging market for international assignments. It was also the country most often cited as the biggest challenge for expatriates because of the difficulties they encounter adjusting to the culture, costs and government regulations.
International assignments showed the strongest resurgence in health care and pharmaceutical industries, with 100 percent of companies surveyed sending more people overseas in 2011 than in 2010. Companies in energy, agriculture and chemicals, and construction and engineering also reported substantial increases in expatriate assignments. By contrast, financial services companies led all industries reporting fewer expat assignments last year.
Although overall overseas postings are on the rise, Cornell University’s Chris Collins believes it’s a short-term phenomenon. As companies expand internationally, he expects they’ll cultivate leaders from within the ranks of in-country employees, leading to fewer expatriate assignments in the long run.
“The contradiction to that is that companies are trying to create leaders who can think globally, so they’ll selectively move high potential talent or future leaders into global assignments to give them global exposure,” says Collins, who runs the university’s Center for Advanced Human Resources Studies.
Collins also expects more companies to sign up the best and brightest from emerging regional markets to short-term headquarters assignments to indoctrinate them in corporate culture and expose them to senior leaders and mentors.
One company already living out that trend is Freudenberg-NOK Sealing Technologies. The $1 billion joint venture between German conglomerate Freudenberg & Co. and Japan’s NOK Corp. makes automotive and industrial seals and has 4,700 employees in its Americas division, based in Plymouth, Michigan. This year, FNST has 70 expat employees on assignment, up 33 percent from two years ago, mainly to better cross-pollinate international talent.
A handful of FNST expats are U.S. employees working in Germany, China or other Asian countries. But the majority comes from Brazil, Germany or other regions to temporary posts in the United States to learn the operation’s corporate culture and develop management expertise and international competency, says FNST’s human resources vice president Sarah O’Hare.
She predicts a time when managers will rise through the ranks in emerging markets such as China. But a lot has to happen first, especially there.
“That country is evolving in its management practices but before they can lead our business, we have to help model and set up” our business practices, O’Hare says.
Michelle V. Rafter is a Workforce Management contributing editor. Comment below or email email@example.com.