Strategies for successful repatriation.
Subject:
International business enterprises (Management)
Repatriation (Analysis)
Authors:
Goss, Yvonne
Hynes, Geraldine E.
Pub Date:
01/01/2005
Publication:
Name: Journal of International Business Research Publisher: The DreamCatchers Group, LLC Audience: Academic Format: Magazine/Journal Subject: Business, international Copyright: COPYRIGHT 2005 The DreamCatchers Group, LLC ISSN: 1544-0222
Issue:
Date: Jan, 2005 Source Volume: 4 Source Issue: 1
Topic:
Event Code: 200 Management dynamics Computer Subject: Company business management
Product:
Product Code: 9914202 Market Targeting & Approach; 9920000 Multinational Corporations
Geographic:
Geographic Scope: United States Geographic Code: 1USA United States

Accession Number:
166850566
Full Text:
ABSTRACT

U.S. multinational corporations (MNC) primarily send their best employees on international assignments to grow new markets, maintain existing operations (Windham, 1999), or develop high potential employees who can both contribute to company strategy and craft a global view of the corporation's business (Derr & Oddou, 1991). Over a twenty year period researchers have consistently reported MNC problems with retaining returning employees, especially the high costs of international assignments associated with low retention rates of repatriates. The purpose of this examination is to present strategies for addressing the repatriate attrition problem. The two objectives for this paper are (1) to compile and categorize strategies from corporate and employee perspectives, and (2) to summarize researchers' theories and relate them to actual practice. This approach allows MNC human resources and other executives to customize practices to fit corporate strategic objectives and alleviate low repatriate retention rates.

INTRODUCTION

Multinational corporations (MNC) report problems with retaining employees who are returning to the home company and country from international assignments. These problems apparently arise because human resources departments poorly execute the repatriation process and fail to satisfactorily incorporate employees into the company upon their repatriation. The problems have recurred over a twenty year period with no appreciable change (Goss & Tucker, 2003).

This is an important matter. Over the past thirty years, the business world has expanded operations to a global scale. The trend is expected to continue into the future (Derr & Oddou, 1991), and MNC will require more expatriate employees ("How to Assist," 2001). Management will experience pressure to earn a greater return on investment from the cost of the expatriate assignments.

Companies place employees in foreign assignments for periods of time generally ranging from 3 months to 3 years. These assignments are costly to the corporations, and the investment in individual employees is high (Black & Gregersen, 1999). The problem that many multinational corporations face is the failure to retain employees for more than two years after they return to the home office.

A corporation usually sends employees to an expatriate assignment 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's business (Derr & Oddou, 1991). These employees are involved in the long term global strategy of a company (since they can be available for potential additional international assignments) and for the benefit of the company over the long term. Retaining their services is of great importance.

Problems arise, however, from poor execution of the process by human resources departments and failure to satisfactorily incorporate employees into the company upon their repatriation to the home country. The result is that employees suffer from reverse culture shock while resettling their families. In addition they are dismayed to find that they are not offered a position where they can use the knowledge and contacts gained while on the assignment (Black & Gregersen, 1999). Their dissatisfaction prompts repatriated employees to seek either another foreign assignment or a position where they can use their foreign training and experience. (Ferrar & Hug, 2001; Forster, 1997).

PURPOSE

The purpose of this examination is to review the literature over the past 20 years, identifying strategies for addressing the attrition problem. The two objectives for this paper are (1) to compile and categorize strategies from corporate and employee perspectives, and (2) to summarize researchers' theories and relate them to actual practice.

CORPORATE PERSPECTIVE

The corporate goal is to secure an acceptable return on investment while implementing the company's global strategy. The company's return on investment tends to increase if the company can retain the employees and utilize the experience and knowledge they have gained.

Costs escalate when attrition rates are high. The loss of experienced employees after international assignments results in high training costs for replacements and the loss of return on investment in salaries and benefits paid to the employees while on the assignment (Black & Gregersen, 1999). Global surveys show this to be a growing problem. Companies experiencing more frequent employer changes because of international assignments increased from 20 percent in 1999 to 24 percent in 2001 (Windham, 1996-2001).

The high cost of assignments and the low returns have prompted management and human resources professionals to consider various options for reducing the cost of the international assignments, such as altering the structure and terms of assignments and revising their repatriation policy and practice. The Global survey in 2001 reported that 59 percent of the respondents were seeking alternatives to long term assignments because of the costs involved (Windham, 1996-2001).

Some employers have conducted methodical reviews of all aspects of the company's expatriate program in order to generate a more acceptable return on their investment ("How to Assist," 2001). An example is a review of the structure of assignments. Different methods carry different levels and types of costs. Companies have several options: long term (12 months or more), short term (up to 12 months), commuter, frequent flyers (regular visits to the foreign operation), and virtual (the employees manage their responsibilities remotely from the home country with occasional trips abroad) ("Managing," 2002).

A second example addresses repatriate policy and practice. The Global survey (2001) reported that respondents with programs in place to improve corporate return on investment reviewed their policy and practices and chose to use various recommended methods: better candidate selection, career planning and skill use, communication of objectives, assignment preparation, and program monitoring (Windham, 1996-2001). Career planning, skill use, communication, and assignment preparation are discussed in the next section of this paper.

Black and Gregersen (1999) asserted that successful repatriating companies view foreign assignments over the long term and expect expatriates to generate new knowledge or to acquire leadership skills. They have three common characteristics:

* Focusing on knowledge creation and global leadership development

* Assigning overseas posts to people whose technical skills are matched or exceeded by their cross cultural skills and,

* Ending the expatriate assignment with a deliberate repatriation process.

Derr and Oddou (1991) also identified characteristics and practices of several companies that are recognized in the industry as having successful programs for international assignments. This success is evidenced by their low 5 to 10 percent turnover rate of employees returning from assignments. These companies have three characteristics in common:

* International assignments are developmental.

* The assignments are part of the path leading to top management positions.

* The firms' competitive advantage and ability to sustain growth are partly a function of their international know-how.

It is important to note that these studies share common themes: the importance of employee development, the selection process, and a repatriation process.

Stroh (1995) added that a successful company demonstrates positive corporate values related to the importance of an international assignment. Recommendations include making use of the first hand experience of the returning employees:

* Ask them to assist in formulation of international assignment policy (Stroh, 1995).

* Ask them to help inform and create policies related to the expatriate experience to develop policy based on practical experience.

* Ask them to assist in developing strategies to attract and retain a diverse domestic workforce since they have first hand experience with and an appreciation for diversity. (Stroh, 1995)

* Ask them to serve as mentors for new expatriates (Harvey & Wiese 1998)

Nokia uses international assignments to generate knowledge. The company has a decentralized research and development (R&D) function, 36 centers in 11 countries. Senior executives form teams to generate new ideas and bring these people together in an R&D center for assignments of up to 2 years. Nokia is gaining global market share by rapidly turning new ideas into successful commercial products (Black & Gregersen, 1999).

THEORETICAL EMPLOYEE PERSPECTIVE

Best practice recommendations evolve from a theoretical foundation. If company human resources policy makers know the underlying reasons for successful programs, they can develop policies and practices that successfully mesh company strategy with retention of employees who are the keys to implementation.

In this paper we first discuss the theoretical foundation and present examples of company programs that have successfully retained internationally trained employees upon their return to the home company.

Why do returning employees find it so difficult to adjust to the home company and home country? The difficulty is manifested in resignations by the employees, discontent, and negative effects to the company's international programs. The literature presents generalizations (theories) about human behavior as it relates to international assignments. The theories interrelate and form a cohesive perspective to understand discontent, lack of commitment to the home company, disconnection with home operations, and a long period of adjustment.

We discuss four of these theories, all reflected in recommendations, which provide a basis for proactive program development. The theories are the expectation, reentry systems, equity, and W-curve theories. Each recognizes a facet of the experience of returning after a long absence to one's home country and company.

Expectation Theory

Expectation theory addresses the effectiveness of open and honest communication with the employees. Topics include jobs they can expect on return to the home office as well as the more common psychological and financial transitions. The expectancy value model (Furnham, 1988, as cited in Martin & Harrell, 1996) suggests that the assigned employees have expectations about their eventual return to the home office. Martin and Harrell (1996) asserted that this theory explains much of the employees' dissatisfaction upon return to their home countries. They explain that fulfilled expectations lead to positive evaluation of the repatriation experience, whereas unfulfilled expectations lead to negative evaluation and poor readjustment (Martin & Harrell, 1996).

The expectancy violation theory (Burgoon, 1992, as cited in Martin & Harrell, 1996) states that unfulfilled expectations can be violated either positively or negatively. If things turn out worse than expected, the employees tend to evaluate the experience negatively, while if things turn out better than expected, they evaluate the experience positively. Therefore, Martin and Harrell concluded that it is better to over prepare the employee and set up realistic (probable or worst case)expectations. (Martin & Harrell, 1996). Black (1992) surveyed 174 employees from four MNC and reached the same conclusion. The levels of repatriation general adjustment, from highest to lowest, occurred with over-met expectations, met expectations, and under-met expectations (Black, 1992).

Several recommended strategies emerged from surveys related to this theory: predeparture training, a realistic job preview, and bringing employee expectations in line with company perspective. Carol Jones, of Deloitte & Touche LLP, emphasized "expectation management," which requires the human resources department to be as open and honest as possible with the employees, both at departure and return (Poe, 2000).

The following three surveys illustrate the point that surveys across different employee groups yield similar results. Stroh's research related the degree of commitment to the degree the company met expectations of repatriates.

A second survey by Derr and Oddou (1991) queried 135 repatriates with overseas assignment durations of one or more years. These were high performing employees; their job performance ratings were outstanding to good, with 65 percent in the outstanding to excellent range. The study compared expectations before the assignment with results after the assignment.

Their expectation level before the assignment was high: 70 percent said the assignment was presented as a definite career opportunity, and 83 percent said they interpreted the offer as a career move that would enhance their career opportunities. Only 30 percent had a clear idea of a career path after the assignment.

The response to their return was quite different from their stated expectations:

A third survey by CIGNA, National Foreign Trade Council, and WorldatWork ("Employers," 2001) illustrates the point that employers should be aware of expatriate expectations and provide the support that the employees expect.

According to the CIGNA survey results, two distinct viewpoints of these assignments existed between the corporate human resource executives and the employees who completed the work assignments. For example, the two top ranking reasons for employers to expatriate were specific projects and foreign operations management. Employees, on the other hand, responded to the same question with totally different responses: personal excitement and resume enhancement.

Expectation theory (Stroh et al., 2000) predicts that this causes negative reactions from the employees when they realize that their expectations will not be met.

Reentry Systems Theory

Reentry systems theory, according to Martin and Harrell (1996), concentrates on the importance of communication and contact with the employees before, during and after the assignment. The returning employee learns to adapt through the cycle of stress-adaptation-growth through communication with others in the reentry environment, just as she had adapted on her international assignment.

One indication of noncompliance (maintaining contact) with this suggestion is the result from the Global survey (2001) which reported 42 percent of the surveyed companies had intranet sites with no expatriate section and 91 percent had intranet sites within the company (Windham, 1996-2001). The NFTC survey (2000) found that two-thirds of the responding companies had an intranet, but only 20 percent had an expatriate section. This was alarming since 92 percent of the expatriates said the Internet was critically important to them, and they used it daily ("Employers," 2001). Communication "allows the expatriate to feel a close bond with headquarters regardless of geographical distance" (Czinkota et al., 1989).

Adler's (1981) study pointed out the importance of communicating organizational changes to employees during the international assignments. Referring to expectation theory, employees "who were kept informed regularly while overseas had fewer re-entry surprises and fewer unmet expectations" (p. 350). This contact connected the employee to home office changes (positive and negative) and even negative news, such as reorganizations and lost contracts, thus preventing reentry surprises.

Baughn's study (1991) supports these findings. The study included 226 employees of five multinational firms who had returned to the home company in the U.S. within the previous five years. He found that contact, mentorship, and repatriation support all related to "socialization" upon return. They were "significant predictors." Adler's study (1981) concluded "that the more surprised returnees are by negative changes, the less effective they are on the job" (page 350).

Harvey and Wiese (1998) proposed a mentoring model to provide social support and to manage expectations by communication. The model approaches the reentry problem in three phases:

Examples of Best Practice

Medtronic provides mentors at the vice-presidential level. The mentor helps to set career goals and places the repatriated employee in a job upon return to the home office. The two maintain communication through e-mail, telephone calls, and visits (Klaff, 2002).

Cendant keeps its employees connected through "team huddles." These are groups of employees who work on a particular client. It may be a virtual team, with some members at the home office and some located internationally, but the team is required to keep in touch. The company achieves two goals. It keeps its international assignees in touch and maintains a truly multicultural global work-force team (Poe, 2000).

Equity Theory

Equity theory ties closely with expectation and reentry systems theories. It relates to employee motivation and commitment to the company (Robbins, 2001). Procedural justice refers to the perceived fairness of the process used to determine the distribution of rewards and tends to affect an "employee's organizational commitment, trust in the boss, and intention to quit" (Robbins, 2001, page 170; Stroh, 1995).

Equity theory helps to explain the degree of commitment that returning employees give to the company. If the employees perceive that the company is not treating them fairly in light of their international experience, they tend to feel less committed and are willing to leave the company to work for another. Robbins suggested that company managers should heighten the perception of fairness by openly sharing information on how decisions are made and following consistent and unbiased procedures (Robbins, 2001).

Ericson (1999) concluded that aligning international assignments with employee career paths reduced the effect of the equity/inequity phenomenon. He attempted to predict repatriate turnover as a test of equity theory. The repatriate's perception of equity was positive if company management became actively involved in planning for the employee's next assignment upon return. The international assignment became a stepping stone in a career path. Secondly, management could encourage the positive equity perception by placing the returning employee in a position that utilized the experience and knowledge gained on the assignment (Ericson, 1999). The employees perceived acknowledgement of their experiences and achievements and were more likely to endure the transition from international employee to working within the domestic organization.

Examples of Best Practice

Monsanto starts thinking about the next assignments for returning employees three to six months before they return. First, they (two employees ranked above the employee, with international experience) assess the skills the expatriate has gained and review potential job openings within Monsanto. The expatriate writes a self-assessment and describes his/her career goals. The three people then meet and decide which of the available jobs best fit the expatriate's capabilities and the organization's needs. In the six years since this program's initiation Monsanto dramatically reduced the turnover rate of returning employees. The employees feel treated fairly even if they don't get the job of first choice (Black & Gregersen, 1999).

Honda starts the assignment with clear strategic objectives. Six months before the employee returns, the company starts an active matchmaking process to locate a suitable job for that person. A debriefing interview is conducted upon return to capture lessons learned from the assignment. This is an integrated approach. Turnover rate is less than 5 percent. Its expatriates consistently attain the key strategic objectives established at the beginning of each assignment (Black & Gregersen, 1999).

Royal Dutch Shell has one of the world's largest expatriate workforces. The company enlists resource planners to track workers abroad. Expatriates normally know what their next assignment will be some 3-6 months before they move, and nearly 100 percent of expatriates begin each return assignment with a clear job description. Management returns high potential expatriates to the home office every third assignment to raise their visibility among senior executives. Technical mentors stay abreast of the expatriates' skill levels and arrange for upgrades at RD's training center (Barbian, 2002).

Deloitte & Touche managers discuss, before the employees go abroad, the job each of the company's 200 expatriate employees will take after returning. The employee signs a written commitment letter, which includes a job guarantee at the end of the assignment (Klaff, 2002).

W-Curve Theory

W-Curve theory describes the reentry adjustment, often called reverse culture shock (Czinkota et al., 1989). It emphasizes the common process of initial euphoria, irritation and hostility with cultural differences, adjustment, and reentry to the home country (Martin & Harrell, 1996).

The W-curve is actually two U-curves. The first U-curve occurs when the employee enters the new country for the international assignment. The second U-curve occurs upon return to the home country. The pattern is the same. The reverse culture shock on return is intensified because the employee does not anticipate company, community, and cultural changes during the absence. There are also cases when "reentry may cause a reverse culture shock [if the] adjustment phase [to the foreign location] has been successful, and the return home is not desired" (Czinkota et al., 1989). Adler (1981) noted that the reentry phase is slightly more difficult than the adjustment phase because of employee expectations. Anderson's (1999) survey of ten organizations in Australia yielded this representative comment from a respondent: " ... emotions and feelings associated with culture shock and reverse culture shock need to be known, confronted and helped through if one is to remain effective (p. 15)."

Gail (1996) studied the W-curve and ways to decrease its effect. He concluded that repatriation training reduces the turnover of repatriated executives because they are taught to expect a transition period. His study showed that the mere presence of a repatriation program has more effect on reducing turnover than the contents of the repatriation programs (Gail, 1996). This is an interesting finding. It seems that the attention alone assures returning employees that the company notes their contribution and special circumstance.

Harvey (1989) conducted a study of 175 corporations. He identified four negative elements of reentry: career issues, financial pressures, family problems, and psychological stress. Most of the companies that provided repatriation training covered career path counseling, assistance with relocation, and financial assistance. The softer elements such as family problems and psychological stress were not generally addressed.

Example of Best Practice

Unocal offers all expatriates and their families a day long debriefing program upon return. It focuses on common repatriation difficulties. The company shows videos of past expatriates and families describing difficulties. Then the session turns to live discussions and suggestions on how to cope (Black & Gregersen, 1999).

Summary of Theories

Researchers combined the four theories (expectation theory, reentry systems theory, equity theory, and W-Curve theory) with survey results to propose recommendations for improving the systematic processes and procedures that human resource departments should use in companies with international assignees. The recommendations fall into six categories (Table 1).

CONCLUSIONS AND RECOMMENDATIONS

Management of MNC face challenges in successfully retaining returning employees from international assignments. This paper focuses on corporate and employee perspectives in alleviating the high cost of global programs and low retention rates of returning employees.

At the corporate level, management is responsible for corporate global strategy and can proactively review practices and policies to determine which require change in order to meet objectives. The cost of international strategy is a prime concern. Adjustments to practices related to the selection, development, and repatriation of employees are necessary if the costs associated with attrition are the source of lost return on investment.

This paper highlights four theories--expectation theory, reentry systems theory, equity theory, and W-curve theory--to explain the interaction of company actions with employee expectations, cultural transitions, and level of commitment to the home organization. If the employees know what to expect upon their return to the company, they cope better with the reentry transition. Their commitment to the home organization is strongest if they perceive that company management is implementing a career plan that utilizes the experience and knowledge gained during the international assignment. The company, while always keeping their global strategy in mind, can build a strong bond through contact before, during, and after the assignment.

Multinational corporations that want to compete globally and build a pool of international management expertise are advised to incorporate appropriate features to their management of repatriates. The best performing companies are reaping the benefits of decreasing employee turnover through their success in the global arena. Our findings clearly indicate that companies have plenty of guidance from researchers and actual best practices to implement a successful global strategy. International assignments should be development tools to build the ranks of experienced international managers.

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Stroh, L. K. (1995, May). Predicting turnover among repatriates: can organizations affect retention rates? International Journal of Human Resource Management, 443-457.

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Windham International Global Relocation Trends Survey Report (1996, 1997-98, 1999, 2000, 2001). Retrieved September 23, 2002, from http://www.gmacglobalrelocation.com/surveys.asp
Job performance standards: Employees exhibited more commitment to
   organizations when individuals and firms held similar job
   performance expectations.

   Interpersonal relationships at work: Only 23 percent of returning
   employees experienced positive surprise when their interpersonal
   relationships at work were better than they expected.

   Job discretion: Commitment to the local work unit was highest if
   returning employees found they had more job discretion than they
   expected. Fifty-three percent were negatively surprised. They seemed
   to expect to hold a similar-level position upon return compared with
   significant levels of responsibility and discretion on the
   international assignment (Stroh et al., 2000).


Career considerations: Some were told they had six months to try to
   find a place in the organization, and three left immediately. Of the
   returning employees, 23 percent were promoted and 18 percent were
   demoted. The returning employees reported that 54 percent had a
   specific job waiting for them while less than half (46 percent)
   indicated they had been consulted before returning about the type
   of assignment they would like. Perhaps the most telling result is
   that 87 percent stated the expatriation had helped broaden their
   personal perspective more than it had helped develop their career.

   Job Discretion: Most of the employees who received assignments (60
   percent) reported less job discretion or a position with less
   potential impact on the company (Derr & Oddou, 1991).


Before expatriation

      Affirm the organization's commitment. Provide an "anchor" by
      discussing organization, personnel, and strategic domestic
      situations. This affirmation begins before expatriation and
      continues during and after the assignment.

      Create a formal communication channel. Mentors and key
      individuals provide updates to the employee on changes in
      organization, personnel, and strategic operations in the home
      country.

      Define the role of the mentor during the assignment.

      Discuss advanced planning for return to the home country.

   During expatriation

      Continue the mentor relationship with headquarters.

      Establish a mentor at the foreign location.

      After expatriation

      Facilitate finding a new position in the home company at least
      six months prior to return.

      Provide updates on company changes (power base and relationships
      among key managers) six to nine months before return.

      Provide updates on the community.

      Encourage the repatriate to participate in a mentoring program
      with new expatriate employees.


Yvonne Goss, Sam Houston State University
Geraldine E. Hynes, Sam Houston State University

Table 1: Summary of Recommendations for Successful Repatriation

1       Provide predeparture training: set realistic goals
        (Forster, 1997)

2       Address the culture shock phenomenon (Czinkota et al., 1989)
        Provide training relating to the process of
        reentry (Martin & Harrell, 1996).
        Address financial issues (Martin & Harrell, 1996)

3       Offer a realistic return job preview (Stroh, 1995)

4       Bring employee motivations in line with company
        perspective (Stroh, 1995)

5       Mentor (Harvey & Wiese, 1998)

6       Provide career planning well before the employees
        arrive back at the parent organization; identify
        possible ways to use their new skills (Stroh, 1995)
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