A new study conducted by Mercer Consultancy, into the cost versus the return on investment for companies sending workers abroad, reveals that many companies can’t really define or quantify either the value of having staff relocate or the cost of expatriating staff abroad for that matter.
Analysis of the survey shows just how complex it is to calculate cost alone – and when it comes to determining the return on the investment, it is even more intangible a figure to try and conjure from random figures!
So this really begs the question, what’s the point and the cost of working abroad for companies and for individuals? Is it worth taking an assignment abroad when some employees complain that it’s a case of ‘out of sight out of mind’ for them as soon as they have left their old office behind? Let’s take a closer look…
First things first, there has to be some value placed on expatriating staff to work abroad for at least a fixed period of time, because according to the survey by Mercer, companies have significantly increased the numbers or staff members that they have sent abroad since 2006. For the year 2005/2006 the 250 companies surveyed for this annual ‘Benefits Survey for Expatriates and Globally Mobile Employees’ reported that they had expatriated 50,000 staff. For the 2008/2009 report, this figure has almost doubled to 94,000. This proves that a) companies are more willing to consider expatriate postings and b) that the postings must be deemed important enough to warrant whatever the cost is.
In trying to determine the cost of a relocation, a company can of course look at physical figures relating to flights, removals, school costs and housing – but for someone about to be relocated abroad, the cost is harder to calculate. Sure, the company is footing most of the bill, but what about if your spouse has to leave their job, what about the costs you may incur relating to your current abode and also the cost in terms of small incidental figures, from getting passports for all the family to having you pets inoculated against any diseases they are required to be protected from in order to travel with you.
Whilst each of these sums of money incurred by the individual being expatriated may be relatively small, they can soon add up and can leave a would-be expat thinking carefully about what the value is going to be for them of this new opportunity to work abroad. When it comes to calculating the value from the company’s point of view, or determining the return on investment, almost three quarters of all companies surveyed advised that it was very difficult to do. And according to a Mercer spokesperson: “As of yet, I don’t think I’ve seen a company [measure ROI for a relocation assignment] well.”
If an individual is opening up a new sales office abroad then of course a company can look at their relocation with relation to the amount of new business that office generates, but for the vast majority of staff the relocation is more about getting to know more about the global operations of the business and garnering knowledge and experience. This is not quantifiable! And for the individual, it is also not quantifiable – but for the individual, at least they can decide for themselves what benefit the relocation should have for the advancement of their career.
In fact, it is really important for a company and an individual to look at the assignment from the same point of view – i.e., from the point of view that it is a single assignment within the broader framework of a relatively specific career planning opportunity. By defining knowledge goals and experience targets for the individual, the company and the individual can ensure that it is not a case of ‘out of sight out of mind.’ The individual will have reporting requirements, and their old office should be actively engaged with the progress of the assignment. Only in this way can it be made sure that the cost of the assignment is far overshadowed in a positive way by the value of the placement for the individual in question and the ongoing development and enhancement of the company.