South-Western - Management  
Evaluating Return on Expatriates
Topic Globalization of Human Resources
Key Words Expatriates, Return on Investment
News Story

Companies that want to grow globally often invest heavily in expatriate assignments for their high potential leaders to help them to meet their goals. These assignments can be very expensive, usually costing three to five times the assignees' host country salary per year. Yet, many businesses are not tracking their return on the investment they are making with these assignments. Admittedly, ROI for these assignments can be difficult to compute, since the costs can be complex to determine.

Costs are just part of the equation for determining a company's return on investment. The value is not just in keeping costs down, but in determining what the objectives of an expatriate assignment are for the company, and if those objectives are met through the experience. The Expatriate Technology Forum (ETF) has developed an "assignment value model" that describes six drivers of international assignments.

  1. technical skill needed
  2. knowledge transfer
  3. management development
  4. renewal
  5. governance and control
  6. organizational need
The key is to send people overseas with real assignments and objectives to meet, not just to get a checkmark on their resumes. Given the difficult nature of tracking true expenses and the value of a leadership development experience, companies may not get an accurate ROI on every expatriate assignment when they first begin the task of measuring it. However, they will gain value from going through the exercise, even if it is just to make them more aware of the costs and gains that make up their international assignments.

Questions
1.

What is the value for a company of going through the exercise of determining the ROI for their international assignments?

2.

Pick three of the six ETF drivers of international assignments and explain how a worker from the U.S. could achieve the stated objective in a foreign country.

Source "Evaluating Return on Expatriates" HR Magazine, March, 2005, pp. 61-65.
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