Words from an Expat Researcher: Expat Loyalty Shifting from the Company to the Individual

It is interesting that rather than leaving comments on my blog often people will just contact me directly via email to respond to a blog post. Sometimes the person tells me that the place to leave a comment is difficult to find. Other times it's likely a desire to have a conversation that prompts them to choose email vs. a comment. Whatever the case, I haven't been good about posting comments sent to me directly so that all can benefit. But in this recent case, I feel it's essential that what was shared with me be shared with my expat readership.

In my recent post "Report Shows Impact of Employer's Lack of Expatriate Career Management Support" I shared about a report authored by an expert in international human resources management expert, Yvonne McNulty, entitled, "Measuring Return on Investment in Global Firms". The results of her research included in the report tell us about the ROI of the expatriate assignment from the perspective of the expatriate employee - how its defined, evaluated, and factors that influence it.

 

I mention a few key points in my previous blog post, but wanted to share Yvonne's email with me which highlights some other important ideas in the report, some of which I've highlighted in yellow:    

An important thing this report tells us that expat loyalty is shifting from the company to the individual. This is actually not a new finding in academia – an important research study in 2004 (done by a group of academics in Germany) showed that German and French expats were starting to shift their loyalty from the firm to themselves, with up to 59% thinking about leaving the firm during an assignment. That study found that lack of career planning during repatriation was the major cause of the shift in loyalty. 

The importance of my study is that my sample is global and not limited to one country/region (ie. can be generalized). My findings show that up to 36% of expats globally are thinking or considering leaving their firm during an assignment, so we now have concrete proof of an emerging trend, but the reasons for shift in loyalty in my study extend beyond previous findings. 

For example, we found that lack of career planning before, during and after an assignment contributes to a downward shift in loyalty, based on many expats re-assigning rather than repatriating. In fact, we found that repatriation is not a goal for most expats in the study – so a very important point here is that the heavy focus on repatriation may be misplaced. What we need is a greater focus on mobility as a career, not as a one-off assignment. 

The shift in loyalty is an important issue. It’s always been important for employees, eg. domestic employees, but why it’s important for expats is: 

• you want them to be more loyal because of the increased costs associated with using expats; 
  
• most of what firms need from ROI is long term retention of expats – decreased loyalty jeopardizes that; 
  
• a shift in loyalty means there is a shift in the power base in the expat/employer relationship. The shift in power is where ROI is most affected from a non-financial perspective. 

A few important findings in the report that speak directly to the issue of loyalty and shifting power base: 

• We found that compensation strategy impacts loyalty. The move towards local plus and localisation reduces the incentives for expats to go on assignment, stay on assignment, and/or stay with the firm. It’s a trade-off which I don’t think many firms really understand. Local-plus is a way to ensure cost savings for the firm, but the trade-off is reduced loyalty. The financial bond to the organization is diminished. The problem is that most firms still operate on the basis of believing that financial incentives tie an expat to their firm. Our data shows that it doesn’t. 

• If financial incentives are not the major reason for expats to undertake an assignment, then what is important to them? Personal gains and career development were equal drivers for expatriates. 

• The challenge is that if firms take away the financial incentives, and don’t replace them with what expats want (career development, re-assignment), then there’s a massive void in expectations. And that’s where expats start thinking about leaving the firm and going elsewhere, to a firm which can offer them what they want and meet their expectations.

The biggest problem for firms is the changing nature of expatriation, which they are struggling to understand and keep up with. There’s a whole bunch of competing pressures, and the biggest one is (currently) cost containment. However, the strategies being used to curb costs (and increase ROI financially) in the short term are the very strategies that ultimately reduce ROI in the long–term via retention/attrition. The shift in power is probably the most significant finding from our study.

 

This is incredibly valuable information for companies who send their employees on international assignment. If they want to retain their valuable expatriate employees, they should be listening to what this report is saying.

 

This recognized shift in loyalty is something that we've seen with domestic employees as well.  As the average length of many job assignments is between two and three years, the idea of job security as we know it truly no longer exists.  

 

In today's marketplace, we should all be treating our career like running a business - in the infamous words of Tom Peters, we are all CEOs of Me, Inc.  We may contract out our services for a time to a particular company, but knowing that the "contract's expiry date" is an unknown, we continue working to position ourselves for future opportunities through building our personal brand and our network on- and offline.  With a strong personal brand message and a well-nurtured network, transitions from one "assignment" to another are much smoother and opportunities to consider along the way much more plentiful. 

 

Are you an expatriate struggling with some of the issues mentioned in this report (lack of career support, desire to be reassigned vs repatriated, struggling to secure compensation they are happy with)? What are your thoughts? (Please share your comments below.)

 

Stay tuned for the next blog post, where Yvonne McNulty (author of the report mentioned here) will be sharing more nuggets of wisdom from her years of experience with researching the expatriate experience.

 

Have a great weekend!

Comments

[Miss Footloose]

Most of my adult life I've been an expat living (happily) in a number of exotic locations. As a writer, I have a portable career.

When I started out, moving to a small town in Kenya, there were no expat coaches, no help for relocating, no help to adjust, no help to find a career overseas. Now there is a whole industry, and I find it fascinating.

Fortunately I was/am adventurous and flexible by nature (I am Dutch, and it might be in my genes) so I survived.

My best to all who start a new life and career overseas. Prerequisite number one: A sense of humor.

[Megan]

Hi Miss Footloose,

Thanks for sharing - I hope to see you back and sharing more about your own experiences building your career overseas!

Best wishes - and keep laughing!

Megan