COMMON PROBLEMS ASSOCIATED WITH THE REPATRIATION PROCESS

Yvonne Goss A Study Presented in Partial Fulfillment of Requirements For the Masters of Business Administration Program Sam Houston State University Abstract
U.S. multinational corporations (MNC) assign some of their most qualified employees to international assignments to implement company strategy for foreign operations. A recent survey (2002) by Ernst and Young indicated that eighty percent of respondent companies have concern for the cost of international assignees, though fifty percent cannot identify the cash flow impact of the international assignment programs. There is strong evidence that managements generally do not know why the costs are high and address the symptom rather than the cause. Researchers point to long term, indirect causes which start at the beginning of the international assignment process. Researchers, over a twenty year period, have identified common problems in the majority of surveyed MNC These findings are supported by a large body of information obtained from many MNC s. management representatives and thousands of expatriate responses to questions relating to the employee s relationship to the company, both before the assignment and during the repatriation process to the home company. This review compiles the findings which recur throughout the body of research from 1983 to 2002.

CHAPTER 1 Introduction

PROBLEM STATEMENT The purpose of this study is to discover common problems encountered by the management of U.S. multinational corporations in the repatriation process. OBJECTIVES The objectives of this study are to: 1. Compile and categorize survey results and observations by researchers and practitioners over a 20 year period (1983-2002). 2. Identify predominant problems encountered by the management of U.S. multinational corporations in the repatriation process. NEED FOR STUDY During the review of related literature, it was noted that researchers were publishing consistent results to nearly identical survey questions over a 20 year period. Additionally, no articles or dissertations were found that compiled, tallied, or compared results of research that has been completed on repatriation and costs to the management. Because a majority of the questions asked and answers given are the same or similar and because the questions are asked of the basic same groups of respondents, there is a need for a compilation and categorization of findings to assimilate research in this area. A negative attribute in

repatriation in 1983 is likely to still be a negative in 2002. The fact that the situation has not significantly changed in 20 years also presents a need to discover effects of research findings. DEFINITION OF TERMS The following are terms used throughout this study. 1. Expatriate: An employee who works out of his home country. Webster Dictionary defines expatriate (verb) as s to withdraw (oneself) from one native land . s 2. Repatriation: Permanent return to an employee home country after a working assignment in a foreign country. s Webster Dictionary defines repatriate (verb) as to send back or return to the country of birth, s citizenship, or allegiance. 3. Return on Investment: The benefit derived by the employer as a result of the financial investment in supporting the employee during the foreign assignment. A ratio relating income generated by an investment center to the resources (or the asset base) used to produce that income. The return on investment formula is ROI equals Income divided by assets invested (Barfield, Raiborn & Kinney, 2002, p. 846). 4. Multinational Corporation: The United Nations defines MNC as enterprises which own or control production or service s facilities outside the country in which they are based. (Czinkota et al, 1989, p. 338) CHAPTER 2 Literature Review Corporations are sending their best employees on international assignments to develop new markets, to maintain existing operations (Windham, 1999), or to develop high potential employees who can both contribute to the company strategy and develop a global view of the corporation business (Derr s & Oddou, 1991). A 1989 survey cited by Derr and Oddou indicated that sending high potential employees for exposure to overseas operations had become the third most common reason for transferring personnel overseas (Derr & Oddou, 1991). In 2000, KPMG surveyed the human resource professionals at 300 companies from the Fortune 1000. Half of the responding companies selected their best employees for international assignments (KPMG, 2000). These reasons justify the cost if companies receive a return on the investment. Conversely, the loss of these employees generates higher costs due to the need for hiring and training new employees (Handel, 1999). This literature review revealed recurring concerns related to attrition, costs, strategy, and the reasons returning employees leave their employers. ATTRITION OF EMPLOYEES RETURNING FROM INTERNATIONAL ASSIGNMENTS Attrition refers to the resignation of employees who return from an international assignment. Researchers and management of multinational corporations (MNC) agree that the MNC must develop ways to retain the managers it trains internationally. The attrition rate of employees returning from international assignments is a matter of great concern if the assignment is used for development of high potential employees, meeting immediate project strategic needs, and/or meeting strategic needs by building a pool of employees for international

assignments. Dwyer, of KPMG, stated that although companies are sending their best employees overseas, they do not manage the repatriation process well, leaving many to never capitalize on the return on their investment (Barbian, 2002, p. 42). Black and Gregerson (1999) researched 750 U.S., European, and Japanese companies. Their survey results indicated that one-fourth of those who completed an assignment left their company, often to join a competitor, within one year after repatriation. The turnover rate was double that of managers who did not go abroad. Barbian added that the turnover rate was also double the rate for U.S. domestic managers (Barbian, 2002). As support for this statement (Table 2), the Global survey of MNC reported results for expats s leaving company within two years of return at 26 per cent for 2001 (Windham, 2001). Another survey in 2001 stated that some employers were reporting that 49 percent of the repatriates were leaving the company within two years (Employers, 2001). Black and Gregersen (1991) stated that this high rate of turnover impacts negatively on corporate effectiveness and efficiency by costing organizations in terms of losing a manager with valuable overseas experiences (p. 4). COST MONITORING SYSTEMS Another point of concern was companies had no system in place to monitor the results of its expatriate/repatriate programs. The following is a summary of various survey findings: ? Forty-nine percent of the respondents (MNC management) to the Windham (Global) survey did not know the attrition rate (Windham, 2001). ? Fifty percent (1999) and 32 percent (2000) were unsure of impact of international assignment (Windham, 1996-2001). ? Seventy-eight percent of MNC management respondents did not know the total cost of their International Assignment Program. In fact, only 45% of the companies even responded to the question (Ernst & Young, 2002). ? Eighty-five percent of the MNC responded to the question What is the cash flow impact of the s International Assignment Program on your organization?. Fifty nine percent did not know (Ernst and Young, 2002). COST CONSIDERATIONS OF ASSIGNMENTS The current economic downturn has brought MNC management focus to the cost of overseas assignments. Eighty percent of respondents to the Ernst &Young 2002 survey expressed concern over the cost of international assignees. The Board of Directors, business units, and human resources departments of these companies were all involved in turning focus to the cost (Ernst & Young, 2002). A fully loaded expatriate package including benefits and cost of living adjustments costs anywhere from $300,000 to $1 million annually (Black & Gregerson, 1999). Handel (1999) proposed that replacing an experienced international assignee adds to the cost. For example, if an employee with an annual salary of $125,000 is lost after a two year international assignment ($600,000 per year), the actual loss to the company is the salary plus the cost of the assignment plus another $125,000 to train a replacement, for a total of $1.45 million (Handel, 1999). The likelihood of a negative impact becomes greater because organizations are frequently select a top candidate. Black and Gregerson indicated that only 5 per cent who left the companies in the study were poor performers (Black and Gregerson quoted in Stroh, 1995). Derr and Oddou (1991) reported similar findings with 65 per cent of their survey of returning employees (135) being rated in the outstanding-excellent range on performance evaluations (Derr & Oddou, 1991). In fact, high-potential employees are often sent on international assignments for exposure to overseas operations as part of their

developmental process (Stroh, et al, 2000). However, the career development process malfunctions when future company leaders leave the companies before realizing their potential. Return on investment (ROI) is a financial computation used to determine the cost effectiveness of a strategy. It compares the cost of the strategy with the benefits (e.g. revenue) derived from the expenditure (Barfield, Raiborn & Kinney, 2002). Global corporate respondents reported (Table 3) levels of return ranging from poor to excellent. There was effectively no change between 1999 and 2001 in the poor category (18 percent) . The good to excellent range increased by 11 percent between 1997-2001 (46 percent), and the average range decreased by 10% between 1997 and 2000 (43 percent). Only 13 percent of the respondents had programs to improve return on investment (Windham, 1996-2001), in spite of the fact that 18 percent had reported poor returns. STRATEGIC CONSIDERATIONS OF ASSIGNMENTS Managers of MNC also experience pressure to earn increased return on investment for strategic s purposes. In a newspaper article, an Irish human resource manager expressed his concern with rising costs due to employees returning early from assignments and leaving the company soon after. The author responded by saying that research indicates that in the longer term many organizations will have a need to increase expatriate numbers. At the same time, pressure mounts to yield a greater return on investment from expatriate programs. The companies must find methods to reduce assignment failure and minimize assignment costs (Employers, 2001). However, the Ernst & Young survey revealed a weakness in the long term strategic approach by MNC s. Assignments appear to happen in a reactive mode. When asked how many short term assignments they expected to initiate in 2002 as compared with 2001, over half the respondents did not know. They answered the same question relating to long term assignments with 30 percent still not knowing (Ernst & Young, 2002). The measurement of ROI depends on the company strategy. For example, if employees were s sent abroad to do a particular job, then ROI could be measured by how well they met that responsibility. However, if success were measured by the employees achievements in the home countries (after repatriation) and the continued business performance of the local business, then the ROI needed to be calculated differently (Lundh-Dantzer & Stolz-Loike,M., n.d.: Handel, 1999). David Eaton, president of Eaton Consulting Group in Boston, added: We talking millions of dollars invested, potentially, in one human being who has gone out on re assignment, and the cost of rehiring and retraining if you lose that person is something you can measure. (Barbian, 2002, p.42) It seems reasonable, when the cost of the investment in the employee is so high, to spend the time and money to properly return the employees to the home office (in hopes of retaining the employees). An effective repatriation program costs from $3500 to $10000 per family (Klaff, 2002), only 1 percent of the estimated maximum annual cost. More importantly, long term prospects for maintaining international operations and high potential employee development are critical to global strategy, and some companies intend to build a core of internationally experienced managers (Handel, 1999). Most researchers agree with Forster conclusion: s The research also begs serious questions about the whole rationale underpinning the development of international managers in almost all of these companies. Few, if any, have any coherent idea of what this actually means or what their international work forces will look like in the future. For most, an international manager is little more than a loose description of someone who is potentially or currently abroad on an IA, regardless of the nature or duration of this or with any real sense of using this experience as part of an overall policy of developing international managers. Policy initiatives in this area seem to be

driven entirely by short term (and ad hoc) strategic demands from either senior management or line managers. There seems to be no integration of HRM and long-term strategic planning or consideration of what the potential implications of this are for career planning in the future .Their operations may be becoming more globalized- their staff, overwhelmingly, are not (Forster, 1997, p. 430). Two surveys, 1986 and 1999, illustrate the point that staffs are not becoming more globalized. Respondents reported that the human resources management who had international experience remained unchanged. The response was 10% for 1986 (Korn-Ferry, 1986) and 11% for 1999 (Black and Gregerson, 1999). Black and Gregerson believed the main reason for such poor return is that many executives assume the rules of good business are the same everywhere, are jealous about the high pay of the expatriates, and find it hard to imagine that an employee returning to his home country needs help readjusting after just a few years away (Black and Gregerson, 1999). Attrition also has a negative effect on future assignments and the companies long term strategies. The Windham survey for 2000 reported that management of 93 per cent of the 150 companies participating in the survey had difficulty finding candidates (Windham, 1996-2001). Some employees who completed an international assignment were generally unenthusiastic about accepting overseas postings in the future (Forster, 1997, p. 427). That attitude created reluctance in other employees (Stroh, Brett and Reilly quoted in Stroh, 1995). Yates reported that managers, whether or not they had completed an international assignment, were reluctant to accept assignments because of their perception that these assignments could result in dead-end jobs upon one return (Stroh, 1995). Forster survey question, s s Attitudes towards embarking on future IA s?, received similar responses: 11 percent were extremely or very enthusiastic and 43 percent were extremely or very unenthusiastic. Only 13 percent felt positive about geographical moves in the future, while 44 percent were positive about the prospect of a move to another employer (Forster, 1997). The Windham survey supported these findings: 21 percent of the responding companies had new hires as expatriates in 2000, and the percentage declined to 11 percent in 2001. Expatriates with previous international experience were 47 percent in 2000 but declined to 25 percent in 2001 (Windham, 19962001). According to the Global Relocation Trends Survey Reports, human resource professionals from 150 companies acknowledged their concern, noting their top challenges in 2000 were finding candidates (93 percent) and career management and employee retention (89 percent). The career management category increased an additional 46 percent from 1999 to 2000 (Windham, 1996-2001). REASONS THAT EXPATRIATES AND REPATRIATES LEAVE Researchers approached the problem in a different way. They were searching for the factors that caused the loss of internationally trained personnel. Six primary factors reliably predicted employee turnover upon return from international assignments: financial shock, psychological shock, lack of repatriation training, lack of career development, lack of positive corporate values related to the importance of an overseas assignment in the organization, and perceived impact of corporate turbulence on being able to place repatriates (downsizing). Financial and Psychological Shock Several research surveys identified financial and psychological shock as factors. Both financially and psychologically, the employees found the international position hard to give up. Because of the isolation of the assignment country, they had greater autonomy and authority than similar domestic positions. Reverse culture shock on reentry to the home country proved to be more stressful than entry to

the assignment country. This was primarily a result of erroneously expecting the home company and home country environment to remain the same while they are absent (Czinkota,et al, 1989) . Financial shock affected the employees, particularly with housing and education in the US. This could be so severe that managers decided to seek a change of company so that they could remain on international assignment (Czinkota,et al, 1989). Results were the same for a researcher in the U.K: But, many of these respondents liked their current international assignment so much that they did not want to move from where they were living. The interviews clearly show that many enjoyed such a high quality of life in the international assignment that they were very reluctant to return to the UK particularly as this would mean a drop in salary in many cases. These are, potentially, very worrying findings for companies who want to develop truly international managers from among their UK workforces. Not only are some staff reluctant to return to the UK, but those who reported negative outcomes to an IA were generally unenthusiastic about accepting overseas postings in the future. (Forster, 1997, p. 427) A survey presented in 2001 to National Foreign Trade Council (NFTC) illustrated the pervasiveness of these factors. It found that 77 percent of expatriates said they were more likely to take an international assignment with another employer than a domestic assignment with their current employer, and 87 percent would accept another international assignment with their current employer (Employers, 2001). Lack of Repatriation Training Despite the obvious importance of the assignments, less than half of the executives sent abroad felt the return to the home office was handled well. Two-thirds of these executives felt the process could have been handled much better (Ferrar & Hug, 2001). This matched the response from company management as to whether the repatriation process was successfully handled (35 percent) (KPMG, 2000). Though the companies recognized the need for the international assignment, the supporting human resources system was ineffective in successfully returning an acceptable percentage of the employees to their home companies. The high employee turnover rate was the best indicator of the failure. Harrell (quoted by Martin and Harrell, 1996) noted that repatriation training helped the person to set expectations about social and cultural readjustment challenges (Martin & Harrell, 1996) and thus reduced the reentry culture shock. Repatriation training eliminated the difference in turnover between international assignment executives and domestic counterparts of the same company. The mean turnover for returning executives who did not receive training was higher than for domestic counterparts. There was no apparent correlation between the contents of the programs and turnover. (Gail, 1996) Researchers Malone (1993) and Runzheimer International (Barbian, 2002) asked management about providing repatriation training. There was no change in response. Survey results from 1993 to 2002 remained unchanged at 27 percent. Lack of Career Development Various studies have identified the lack of career development planning as a major predictor for turnover. If reentry was not considered, (quoting Copeland and Griggs), there is a costly brain drain of the corporation international expertise. (Martin & Harrell, 1996) This loss was multiplied when s others saw that international assignments might be risky for one long-term career, and they became s unwilling to go (Martin & Harrell, 1996). The corporation stood to lose valuable individuals who could become members of an international corps of managers (Czinkota et al, 1989). Erikson study indicated a s strong negative relationship between employee career development programs and repatriate turnover and concluded that employee career development programs are definitely an important tool for reducing repatriate turnover (Erikson, 1999). Malone also concluded that the greatest impact on the potential of

the returning employee was the absence of career pathing. Haphazard management of employees could mean loss of employment. This devalued the employee and the employee international experience s because companies were not willing to significantly invest in the future of these individuals by utilizing their knowledge and expertise upon their return to the U.S. (Malone, 1993). Surveys of MNC management over a period from 1986 to 2001 provide insight to management attitude toward career planning for the repatriates. In 1986, 68 percent of surveyed executives indicated that international assignments enhanced promotion (Derr & Oddou, 1991). In 1987, Derr asked executives if an international assignment was essential to training and development of future leaders. Three-fourths (74 percent) of them did not believe it (Derr & Oddou, 1991). Only 25 percent of that group considered international assignment training extremely important to training high potential employees while a third (33 percent) thought it was important but not essential. By 1989 (Derr & Oddou, 1991), half the responding executives perceived no difference in career impact after an international assignment. In 2001, a Windham survey indicated that only 36 percent of those executives thought that international assignments enhance promotion. Lack of Positive Related Corporate Values Management actions reflect its values. Employees are aware if programs are actively supported and rewarded. Repatriates, in a 2001 survey, indicated that their top concerns on return to their home country (U.S.) were (Employers, 2001): ? Recognition for the assignment ? Location of a new job ? Competitive status on the career track ? Salary Forster noted, in 1997 there is also unequivocal evidence that many staff have experienced considerable problems after they have returned to the UK and of less than effective management of repatriation over the last few years (Forster, 1997, p. 427). The author reported on outcomes of repatriation resulting from surveys of repatriates (1995-97) to specify exactly what difficulties they had encountered after starting work back in the UK: Percent ? 63 Career/Employment Status ? 48 Difficulties adapting to life in the UK ? 37 Reduced work status ? 32 Downward career move ? 23 Possessing out-dated work skills ? 18 Adapting to new management styles ? 16 Reduced responsibilities (Forster, 1997) These are clearly similar, even considering that the surveys were done on two continents and about five years apart. A review of various surveys of executives indicates that most companies are not aware of their employeespriorities: ? 2 percent of surveyed companies guaranteed a job on return (Employers, 2001) ? 21 percent implied a job would be available (Employers, 2001) ? 66 to 68 percent provided NO post assignment guarantees (Windham, 1996-2001)

Perceived Impact of Corporate Downsizing Stroh (1995) discussed the extraordinary care a company must employ when placing returning employees in a downsizing phase. This was related to the perceived value the companies placed on the international assignments and the repatriates. CONCLUSION MNC send their best performers and high potential management to international assignments. s These assignments incur high costs and affect implementation of company strategy. Various surveys indicate that attrition of repatriates is an all too common problem which many companies fail to monitor. The current economic downturn has prompted managers to address cost considerations. Most have opted for short term solutions (such as reducing compensation) instead of taking a long term approach in examining strategy and the roots of the attrition problem. Researchers surveyed expatriates and repatriates for a twenty-year period and concluded that there are solutions to the attrition problem. Chapter Three Methods and Procedures The purpose of this study is to discover common problems encountered by the management of U.S. multinational corporations in the repatriation process. The problem statement evolved after review of the work of several researchers whose studies were directed to identification of reasons for the high attrition rate. The secondary sources ranged from 1993 through 2002 with no indication of improvement in the rate of employee loss. Various sources referred to research from 1983 through 2002. This is a secondary research study. The previously published materials included sources in four textbooks, three articles ordered directly from the Harvard Business Review, four surveys, four doctoral dissertations, and several peer reviewed journals. With the exception of the four textbooks, articles and surveys were drawn primarily from the online databases of the Newton Grisham Library (Sam Houston State University). Using keyword searches for repatriation, employee repatriation, returning employees, or repatriation surveys, the articles and dissertation abstracts were located in the LexisNexis Academic database, Wilson Web, and Dissertation Abstracts Online. The author obtained complete copies of the four dissertations, and the search of LexisNexis specified peer-reviewed articles. The four complete surveys originated from Windham, KPMG, PriceWaterhouseCoopers, and Ernst & Young. Global Relocation Trends surveys (1997 through 2001) originated from the Windham International website at www.gmacglobalrelocation.com/surveys.asp. The surveys were available in their entirety as originally issued. For this study, a summary of results by year was prepared to provide a comparative analysis. The KPMG surveys were unavailable in the original issue format. The survey information was summarized in two journal articles in the Financial News and PR Newswire . The PriceWaterhouseCoopers and Ernst & Young surveys were obtained in their entirety. The PriceWaterhouseCoopers survey was published on an internet site specializing in repatriation topics. Ernst & Young directly provided a complete copy of the 2002 survey Managing International Mobility in an Economic Downturn. The Harvard Business Review website provided a list of archived articles, and three articles were selected and purchased directly for download.

Complete copies of four doctoral dissertations were selected from the Dissertations Abstracts Online database and purchased through ProQuest. One journal article from Workforce was taken from the website www.bestofbiz.com, and one chapter from a book entitled Managing a Global Workforce: A Cross Cultural Guide was downloaded from http://hr-esource.com/hresources/sampleChapters/TOC/ccgtoc.htm. The author prepared a comparative Excel worksheet for all survey information identified in all selected articles, dissertations, and surveys. The worksheet grouped similar survey questions and compared results over a period of years. The purpose was to note whether survey results over a period of twenty years indicated a change in management approach to the repatriate attrition problem and whether researchers and surveys noted recurring concerns and issues. Chapter Four Findings The purpose of this study was to discover common problems encountered by managers of U.S. multinational corporations in the repatriation process. Sources of information included internet sites, peer-reviewed journal articles, textbooks, dissertations, and surveys. These provided data on the current attrition situation, cost monitoring systems, cost considerations , strategic considerations, and reliable predicting factors for the high rate of returning employee attrition. Several recurring themes appeared in the research and were related to the objectives of this study. ATTRITION OF EMPLOYEES RETURNING FROM INTERNATIONAL ASSIGNMENTS The attrition rate of employees returning from international assignments is a matter of great concern if the assignment is used for development of high potential employees, meeting immediate project strategic needs, and/or meeting strategic needs by building a pool of employees for international assignments. Dwyer, of KPMG, stated that although companies are sending their best employees overseas, they do not manage the repatriation process well, leaving many to never capitalize on the return on their investment (Barbian, 2002, p. 42). Attrition rates (see Table 2) remained consistent from 1999 through 2002 and ranged from 22 percent through 28 percent for employees leaving within two years of return. One survey reported a higher attrition rate of 40 to 50 percent for employees leaving within three years of return (Barbian, 2002). In 1989, 45 percent of respondents confirmed they had problems retaining employees on reentry from an assignment (Derr & Oddou, 1991). This demonstrated the continuing problem with no appreciable progress noted. COST MONITORING SYSTEMS Another point of concern was many companies had no system in place to monitor the results of its expatriate/repatriate programs. The following is a summary of various survey findings: ? Forty-nine percent of the respondents (MNC management) to the Windham (Global) survey did not know the attrition rate (Windham, 2001). ? Fifty percent (1999) and 32 percent (2000) were unsure of impact of international assignment (Windham, 1996-2001). ? Seventy-eight percent of MNC management respondents did not know the total cost of their International Assignment Program. In fact, only 45% of the companies even responded to the question (Ernst & Young, 2002).

Fifty nine percent did not know the cash flow impact of their international assignment programs(Ernst and Young, 2002). Only 13 percent of the respondents had programs to improve return on investment (Windham, 1996-2001), in spite of the fact that 18 percent had reported poor returns. A KPMG survey of human resource managers from several Fortune 1000 companies revealed that most (76 percent) estimated the cost of the assignment before the employee left, but only 14 percent calculated the actual cost of supporting the employees (KPMG, 2000). In the Windham survey for 2001, almost half (49 per cent) of the respondents did not even know their loss rate of employees returning from assignments (Windham, 1996-2001). COST CONSIDERATIONS OF ASSIGNMENTS The current economic downturn has brought MNC management focus to the cost of overseas assignments. Eighty percent of respondents to the Ernst &Young survey expressed concern over the cost of international assignees. The Board of Directors, business units, and human resources departments of these companies were all involved in turning focus to the cost (Ernst & Young, 2002). The cost of a fully loaded expatriate package including benefits and cost of living adjustments ranged anywhere from $300,000 to $1 million annually (Black & Gregerson, 1999). Replacing an experienced international assignee added to the cost (Handel, 1999). The career development process malfunctioned when future company leaders left the companies before realizing their potential and maximizing the return on investment in their international assignments. The likelihood of a negative impact became greater because organizations frequently selected top candidates. High-potential employees were often sent on international assignments for exposure to overseas operations as part of their developmental process (Stroh, et al, 2000). Return on investment (ROI) is a financial computation used to determine the cost effectiveness of a strategy. It compares the cost of the strategy with the benefits (e.g. revenue) derived from the expenditure (Barfield, Raiborn & Kinney, 2002). ROI levels did not improve between 1996 and 2001. Global corporate respondents reported (Table 3) levels of return ranging from poor to excellent (Windham, 1996-2001). Between 1999 and 2001, 18 percent reported levels of return in the poor range. The good to excellent range increased by 11 percent between 1997-2001 (46 percent), and the average range decreased by 10% between 1997 and 2000 (43 percent). STRATEGIC CONSIDERATIONS OF ASSIGNMENTS Managers of MNC also experienced pressure to earn increased return on investment for s strategic purposes. Researchers found that most companies which sent employees on international assignments were lax in several areas. They often sent employees on assignments with no clear company strategy for how this assignment would benefit the company global business prospects. This led to s uncertainty about how, when, and where to place the employees when the assignment ended and the employees returned to the home office. As pressure mounted during economic downturn to yield a greater return on investment from expatriate programs, strategic needs indicated a long term need to increase in the number of expatriates. The companies must find methods to reduce assignment failure and minimize assignment costs (Employers, 2001). Attrition of these employees also had a negative effect on future assignments. Stroh reported that when returning employees (from international assignments) were unenthusiastic about accepting another international assignment, the attitude spread to other employees. They became reluctant to accept a position, thinking that it could result in dead-end jobs upon return (Stroh, 1995). The Windham survey reported that 93 percent of the 150 companies participating in the survey had difficulty finding candidates

(Windham, 1996-2001). If a company was pursuing a global strategy, this could definitely hinder progress. REASONS THAT EXPATRIATES AND REPATRIATES LEAVE Six primary factors reliably predicted employee turnover upon return from international assignments: financial shock, psychological shock, lack of repatriation training, lack of career development, lack of positive corporate values related to the importance of an overseas assignment in the organization, and perceived impact of corporate downsizing on being able to place repatriates. Financial and Psychological Shock Several research surveys identified financial and psychological shock as factors. Both financially and psychologically, the employees found the international position hard to give up. Financial shock affected the employees, particularly with housing and education in the US. This could be so severe that managers decided to seek a change of company so that they could remain on international assignment (Czinkota,et al, 1989: Forster, 1997). Psychological adjustments were compounded by employees erroneously expecting the home company and home country environment to remain the same while they are absent. Reverse culture shock on reentry to the home country proved to be more stressful than entry to the assignment country. The employees also frequently had to adjust to less independence and responsibility. Because of the isolation of the assignment country, they had greater autonomy and authority than similar domestic positions (Czinkota, et al, 1989). A survey presented in 2001 to NFTC illustrated the pervasiveness of these factors. It found that 77 percent of expatriates said they were more likely to take an international assignment with another employer than a domestic assignment with their current employer, and 87 percent would accept another international assignment with their current employer (Employers, 2001). Lack of Repatriation Training Despite the obvious importance of the assignments, less than half of the executives sent abroad felt the return to the home office was handled well (Ferrar & Hug, 2001). This matched the response from company management as to whether the repatriation process was successfully handled (35 percent) (KPMG, 2000). The high employee turnover rate was the best indicator of the failure. Harrell (quoted by Martin and Harrell, 1996) noted that repatriation training helped the person to set expectations about social and cultural readjustment challenges and thus reduced the reentry culture shock. Repatriation training eliminated the difference in turnover between international assignment executives and domestic counterparts of the same company. The mean turnover for returning executives who did not receive training was higher than for domestic counterparts. There was no apparent correlation between the contents of the programs and turnover. (Gail, 1996) Researchers Malone (1993) and Runzheimer International (Barbian, 2002) asked MNC managers if they provided repatriation training. Survey results from 1993 to 2002 remained unchanged at 27 percent. The survey by Runzheimer International indicated that attrition rates could be substantially reduced by providing formal repatriation programs (Barbian, 2002). Lack of Career Development Various studies have identified the lack of career development planning as a major predictor for turnover. If reentry was not considered, this loss of employees with international experience was multiplied when others saw that international assignments might be risky for one long-term career, and s

they became unwilling to go (Martin & Harrell, 1996). The corporation stood to lose valuable individuals who could become members of an international corps of managers (Czinkota et al, 1989). Surveys of MNC management over a period from 1986 to 2001 provide insight to management attitude toward career planning for the repatriates. Between 1986 and 2001, Derr and Windham reported a decrease from 68 percent to 36 percent of MNC executives who indicated that international assignments enhanced promotion (Derr & Oddou, 1991: Windham, 1996-2001). Lack of Positive Related Corporate Values Management actions reflect its values. Employees are aware if programs are actively supported and rewarded. Repatriates, in a 2001 survey, indicated that their top concerns on return to their home country (U.S.) included (Employers, 2001): ? Recognition for the assignment ? Location of a new job ? Competitive status on the career track ? Salary A review of various surveys of executives indicates that most companies are not aware of their employeespriorities: ? 2 percent of surveyed companies guaranteed a job on return (Employers, 2001) ? 21 percent implied a job would be available (Employers, 2001) ? 66 to 68 percent provided NO post assignment guarantees (Windham, 1996-2001) Malone (1993) concluded that the greatest impact on the potential of the returning employee was the absence of career pathing. Haphazard management of these employees could cause them to leave the company. The employee and the employee international experience were devalued when companies s were not willing to significantly invest in the future of these individuals by utilizing their knowledge and expertise upon their return to the U.S. (Malone, 1993). Perceived Impact of Corporate Downsizing Stroh (1995) discussed the extraordinary care a company must employ when placing returning employees in a downsizing phase when jobs were eliminated. Corporate downsizing was a factor to recon with as it necessitated special attention to placing the returning employees in a shrinking pool of jobs. This was related to the perceived value the companies placed on the international assignments and the repatriates. Chapter Five Conclusions and Recommendations Multinational corporations send their best performers and high potential management to international assignments. These assignments incur high costs and affect implementation of company strategy. Various surveys indicate that attrition of repatriates is an all too common problem which many companies fail to monitor. The current economic downturn has prompted managers to address cost considerations. Most have opted for short term solutions (such as reducing compensation) instead of taking a long term approach in examining strategy and the roots of the attrition problem. Researchers surveyed expatriates and repatriates for a twenty-year period and concluded that there are solutions to the attrition problem. Solutions are found by addressing the causes of attrition, a process which begins before the employee departs for an international assignment.

Table 1. Survey Question: What are the underlying reasons for sending employees on international assignments? Korn/Ferry Windham Windham Ernst & Young 2002e 70% 80% 65% 35% 10% Malone KPMG 2000d 50% 81 & 92% 23% 32%

Survey Source

1989a Best Employees Selected Business & Management Skills Skills Transfer Career Development Only Career Development A Byproduct Career Development & Global Business Strategy #3 of 14 most frequent reason

1993b

1996c

1999c

Note a. From Derr, C.B. & Oddou, G. R. (1991, September). Are US multinationals adequately preparing future American leaders for global competition? International Journal of Human Resource Management, 2 , 227-245. Retrieved October 9, 2002 from http://unx1.shsu.edu:2277/delivery.asp? Note b. From Malone, M.L. (1993). The value of the American expatriate to U.S. multinational corporations (Doctoral dissertation, University of Virginia, 1993). ProQuest Company (UMI No. 9332408) Note c. From Windham International. (1996, 1997-98, 1999, 2000, 2001). Global Relocation Trends Survey Report. Retrieved September 23, 2002, from http://www.gmacglobalrelocation.com/surveys.asp Note d. From Ferrar, L., & Hug, E. (2001, February 12).Preparing for happy returns. The Financial Times (London). p. 16. Retrieved October 9, 2002 from http://unx1.shsu.edu:2067/universe/printdoc 01 Note e. From Ernst & Young (2002). Managing International Mobility in an Economic Downturn. (Available from e-mail snorell@uk.ey.com)

Table 2. Survey Question: Discuss your attrition rates. Moran,Stahl & Bayer Runzheimer Interntl 2002e 5% 22% Black & Gregerson Windham Windham Windham Interntl Resource Journal 2002e 25% 4050% 25% Ericson 1999b

Survey Source

1989a Problems Retaining repats on reentry Employees leaving within one year of return Leaving w/in one year, company with formal repat program Leaving w/in one year, company without formal repat program Employees leaving within two years of return Employees leaving within three years of return Overall rate of leaving after return 45%

1999c

1999d

2000d

2001d

25%

25%

28%

26%

Note a. From Derr, C.B. & Oddou, G. R. (1991, September). Are US multinationals adequately preparing future American leaders for global competition? International Journal of Human Resource Management, 2 , 227-245. Retrieved October 9, 2002 from http://unx1.shsu.edu:2277/delivery.asp? Note b. From Ericson, D. A. (1999). Predicting turnover among repatriates: a test of equity theory (Doctoral dissertation, Nova Southeastern University, 1999). ProQuest Company (UMI No. 9923474) Note c. From Black, J., & Gregersen, H. (1999). The right way to manage expats. Harvard Business Review. March-April 1999, 1-8. Note d. From Windham International. (1996, 1997-98, 1999, 2000, 2001). Global Relocation Trends Survey Report. Retrieved September 23, 2002, from http://www.gmacglobalrelocation.com/surveys.asp Note e. From Barbian, J. (2002, January). Return to sender. Training, 39, 40-43. Retrieved September 15, 2002 from http://unx1.shsu.edu:2234/cgi-bin /webspirs.cgi

Table 3. Survey Question: Estimate of return on investment (percent of respondents) Windham Windham Windham 43% 46% 11% Windham 46% 18% 13%

Survey Source

1997-8 1999 2000 2001 Average Good to Excellent Poor Programs to improve ROI 53% 35% 48% 34% 18%

Note. From Windham International. (1996, 1997-98, 1999, 2000, 2001). Global Relocation Trends Survey Report. Retrieved September 23, 2002, from http://www.gmacglobalrelocation.com/surveys.asp

Bibliography Barbian, J. (2002, January). Return to sender. Training, 39, 40-43. Retrieved September 15, 2002 from http://unx1.shsu.edu:2234/cgi-bin /webspirs.cgi Barfield, J.T., Raiborn, C. A. & Kinney, M. R. (2002). Cost Accounting: Traditions & Innovations. Ohio, Thomson Learning. Baugn, C.C. (1991). Repatriation: work role transitions in organizational theory (Doctoral dissertation, Wayne State University, 1991). ProQuest Company (UMI No. 9215062) Black, J., & Gregersen, H. (1999). The right way to manage expats. Harvard Business Review. MarchApril 1999, 1-8. Bonache,J., Brewster,C. & Suutari, Vesa (2001, January-February). Expatriation: a developing research agenda. Thunderbird International Business Review, 43, 3-20. Retrieved March 7, 2003 from http://users.anet.com/~smcnulty/docs/research.pdf Cigna News Releases (2001, May 23). Experts advise international companies how to capture return on expat investments. Retrieved February 17, 2003, from http://www.cigna.com/expatriates/general/newsroom/news20010523.html Czinkota, M., Rivoli, P., & Ronkainen, I. (1989). International business. Chicago: The Dryden Press. Derr, C.B. & Oddou, G. R. (1991, September). Are US multinationals adequately preparing future American leaders for global competition? International Journal of Human Resource Management, 2 , 227-245. Retrieved October 9, 2002 from http://unx1.shsu.edu:2277/delivery.asp? Egan, M.L., Bendick, M. & Miller,J.J. (2000, May). US firms evaluation of employee credentials in international business. Washington, DC: Bendick and Egan Economic Consultants, Inc. Retrieved on February 7, 2003 from www.bendickegan.com Ernst & Young (2002). Managing International Mobility in an Economic Downturn. (Available from email snorell@uk.ey.com) Employers are missing out on ROI when sending employees on international assignments. (2001, March 26). PR Newswire Association, Inc. Ericson, D. A. (1999). Predicting turnover among repatriates: a test of equity theory (Doctoral dissertation, Nova Southeastern University, 1999). ProQuest Company (UMI No. 9923474) Ferrar, L., & Hug, E. (2001, February 12).Preparing for happy returns. The Financial Times (London). p. 16. Retrieved October 9, 2002 from http://unx1.shsu.edu:2067/universe/printdoc Forster, N. (1997, August).The persistent myth of high expatriate failure rates: a reappraisal. International Journal of Human Resource Management, 8, 414-434. Retrieved October 9, 2002 from http://unx1.shsu.edu:2277/delivery.asp Gail, R.C. (1996).Repatriation adjustment training and its effects on turnover of repatriated executives: an empirical study. Dissertation Abstracts Online. Retrieved November 4, 2002 from http://unx1.shsu.edu:2104/WebZ/FSPage?pagename Handel, J. (1999). Determining ROI of expatriate assignments. American Compensation Association News. 22-25. Retrieved March 7, 2003 from http:// users.anet.com/~smcnulty/academics.html How to assist employees going on overseas postings. (2001, September 23). Sunday Business Post, n.p. Retrieved October 9, 2002 from http://unx1.shsu.edu:2067/universe /printdoc Hunt, J. (2001, July 6). Fewer Criticisms from Abroad. The Financial Times (London), 9. Retrieved October 9, 2002 from http://unx1.shsu.edu:2067/universe /printdoc KPMG survey: Majority of companies select top employees for overseas assignments, however fail to successfully repatriate. (2000, October 25).PR Newswire, Retrieved October 9, 2002 from http://unx1.shsu.edu:2067/universe /printdoc

Klaff, L. (2002, July). The right way to bring expats home. Workforce, 81, 40-44. Retrieved September 15, 2002 from http://unx1.shsu.edu:2234/cgi-bin/webspirs.cgi Lundh-Dantzer, A. & Stolz-Loike,M. (n.d.). Managing a Global Workforce: A Cross-Cultural Guide. Retrieved November 29, 2002, from http://hresource.com/hresources/sampleChapters/ccgSampleChapter.html?productid Malone, M.L. (1993). The value of the American expatriate to U.S. multinational corporations (Doctoral dissertation, University of Virginia, 1993). ProQuest Company (UMI No. 9332408) Managing expatriate employees. (2002, September 15). London Business School Business Information Service, Retrieved September 17, 2002 from www.bestofbiz.com Martin,J.N. & Harrell,T. (1996). Reentry training for Intercultural Sojourners. In D.Landis & R. Bhagat, (Eds.), Handbook of Intercultural Training (pp. 307-322). California: Sage Publications. New study: facing increased uncertainty and volatility on world stage, employees on international assignment often feel left on their own. (2002,May 15). News Aktuell-DPA Firmengruppe OTS Originaltextservice. Retrieved April 6, 2003 from http://unx1.shsu.edu:2067/universe/printdoc Overseas assignments prove key to success. (2002, August 13). Newcastle Chronicle & Journal Ltd The Journal (Newcastle,UK). Retrieved April 6, 2003 from http://unx1.shsu.edu:2067/universe/printdoc Peltonen, T. (1997, February). Facing the rankings from the past: a tournament perspective on repatriate career mobility. International Journal of Human Resource Management, 8, 106-125. Retrieved October 9, 2002 from http://unx1.shsu.edu:2277/delivery.asp?tb Poe, A. (2000, March). Welcome back. HRMagazine, 45,94-96,99,101-5. Retrieved September 15, 2002 from http://unx1.shsu.edu:2234/cgi-bin/webspirs.cgi PriceWaterhouseCoopers (2002). International Assignments Global Policy and Practice Key Trends 2002. Retrieved March 7, 2003 from http://users.anet.com/~smcnulty/docs/pwc2002.pdf Robbins, S.P. (2001). Organizational Behavior. New Jersey: Prentice Hall. Rosenzweig, P.E. (1994). Colgate-Palmolive: Managing International Careers. Harvard Business School. Sievers, C. (1998, March). Work/family: key to a successful assignment. HR Focus, 75, S9-S10. Retrieved September 15, 2002 from http://unx1.shsu.edu:2234/cgi_bin/wibspirs.cgi Steadman, D. (2002, July 21). Return of the native: strategies for hanging on to your job. Sunday Business Group. Retrieved September 15, 2002 from http://unx1.shsu.edu:2067/universe/document?_m Stroh, L. (1995, May). Predicting turnover among repatriates: can organizations affect retention rates? International Journal of Human Resource Management, 6, 443-457. Retrieved October 9, 2002 from http://unx1.shsu.edu:2277/delivery.asp? Stroh, L., Gregersen, H., & Black, J.(2000, August). Triumphs and tragedies: expectations and commitments upon repatriation. International Journal of Human Resource Management. 11, 681698. Retrieved October 9, 2002 from http://unx1.shsu.edu:2277/delivery.asp? Tung, R. (n.d.). The expatriate employee: who, what, and why. Asian Business Consortium Bulletin. Retrieved February 17, 2003 from http://www.sfu.ca/~tung/book%20mark/abcblltin_expat.html Vary, H.M. (1992). Reentry: procedures and strategies necessary to achieve greater capitalization of human assets in international business repatriation (Doctoral dissertation, Iowa State University, 1992). ProQuest Company (UMI No. 9311538) Windham International. (1996, 1997-98, 1999, 2000, 2001). Global Relocation Trends Survey Report. Retrieved September 23, 2002, from http://www.gmacglobalrelocation.com/surveys.asp