Most lack process, integrated databases to do so: Mercer
By OH BOON PING 9 October 2008
A SIGNIFICANT number of companies fail to comprehensively measure costs and returns for staff sent on international assignments, a study by consultancy firm Mercer has found.
Based on a poll of over 200 multinational firms, Mercer found that 44 per cent of the respondents do not measure the benefit of international assignment, while only a small handful of companies (3 per cent) have a process to track the returns of their international assignments.
Said Matthew Hunt, principal in Mercer’s international benefits team: ‘Activities such as measuring the impact of international assignments (by) promotions or salary-increase progression typically require not only a well-established process but also integrated, centralised databases that large companies, by their nature, often lack.’
Factors considered in measuring returns on investments (ROI) typically include rise in business profitability and revenue, development of a pool of skilled, experienced managers, global culture and competencies, and whether expatriates met the assignments’ goals.
In the Asia-Pacific, the two key benefits considered when measuring an international assignment’s ROI are whether the expatriates met the assignment goals; and if it helps to develop a pool of skilled, experienced managers, global culture and competencies.
When it comes to cost estimation, the situation also looks worrying when only 17 per cent of respondents could accurately calculate the cost of their international assignment programme, while only 28 per cent compiled costs data in a central database.
Fortunately, Mercer said, most companies are now taking steps to improve the ROI of international assignments, with 70 per cent reportedly taking measures to improve the clarity and communication of objectives for their expatriates, and over half have improved the international assignees’ selection process.
Some 43 per cent also made progress in improving or reinforcing the follow-up process with expatriates throughout the assignment, and the same proportion of companies has improved post-assignment management. Close to a third of the companies have customised their assignment terms and conditions to better match the assignments type.
Less common tactics are measures such as reducing the number of international assignments by offering alternatives (18 per cent); shortening the length of assignments (16 per cent); cutting the compensation and benefits packages (11 per cent); or encouraging intra-regional transfers whenever possible rather than inter-regional transfers (3 per cent).
The report also highlighted a rise in the number of international assignments since the survey was last carried out in 2005.
More than half of the companies reported an increase in subsidiary-to-subsidiary transfers, while the proportion of female expatriates is also increasing at a rate of about one per cent a year and stood at 14 per cent of the total.
Just over a quarter of companies surveyed foresee an increase in single status assignments - postings in which employees leave their families in their home countries when moving to host countries.
Post assignment, the survey also found that less than half (42 per cent) of the companies guarantee a job to the employee upon repatriation, while 13 per cent guarantee that if they cannot find a suitable position in the home country, they will find one in an alternative location.
On a positive note, three-quarters of the respondents stated that employees with international experience benefit from accelerated promotion but 41 per cent of companies do not know how many employees leave the company within two years of repatriation.
‘Employees with international experience are also more valuable to other employers, so companies need to work harder and offer an attractive career progression to ensure their skills do not end up with a competitor,’ said Mr Hunt. ‘Companies invest time and money in these programmes so measurement is key.’
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Few Firms Measure ROI for Staff Sent Overseas
Most lack process, integrated databases to do so: Mercer
By OH BOON PING
9 October 2008
A SIGNIFICANT number of companies fail to comprehensively measure costs and returns for staff sent on international assignments, a study by consultancy firm Mercer has found.
Based on a poll of over 200 multinational firms, Mercer found that 44 per cent of the respondents do not measure the benefit of international assignment, while only a small handful of companies (3 per cent) have a process to track the returns of their international assignments.
Said Matthew Hunt, principal in Mercer’s international benefits team: ‘Activities such as measuring the impact of international assignments (by) promotions or salary-increase progression typically require not only a well-established process but also integrated, centralised databases that large companies, by their nature, often lack.’
Factors considered in measuring returns on investments (ROI) typically include rise in business profitability and revenue, development of a pool of skilled, experienced managers, global culture and competencies, and whether expatriates met the assignments’ goals.
In the Asia-Pacific, the two key benefits considered when measuring an international assignment’s ROI are whether the expatriates met the assignment goals; and if it helps to develop a pool of skilled, experienced managers, global culture and competencies.
When it comes to cost estimation, the situation also looks worrying when only 17 per cent of respondents could accurately calculate the cost of their international assignment programme, while only 28 per cent compiled costs data in a central database.
Fortunately, Mercer said, most companies are now taking steps to improve the ROI of international assignments, with 70 per cent reportedly taking measures to improve the clarity and communication of objectives for their expatriates, and over half have improved the international assignees’ selection process.
Some 43 per cent also made progress in improving or reinforcing the follow-up process with expatriates throughout the assignment, and the same proportion of companies has improved post-assignment management. Close to a third of the companies have customised their assignment terms and conditions to better match the assignments type.
Less common tactics are measures such as reducing the number of international assignments by offering alternatives (18 per cent); shortening the length of assignments (16 per cent); cutting the compensation and benefits packages (11 per cent); or encouraging intra-regional transfers whenever possible rather than inter-regional transfers (3 per cent).
The report also highlighted a rise in the number of international assignments since the survey was last carried out in 2005.
More than half of the companies reported an increase in subsidiary-to-subsidiary transfers, while the proportion of female expatriates is also increasing at a rate of about one per cent a year and stood at 14 per cent of the total.
Just over a quarter of companies surveyed foresee an increase in single status assignments - postings in which employees leave their families in their home countries when moving to host countries.
Post assignment, the survey also found that less than half (42 per cent) of the companies guarantee a job to the employee upon repatriation, while 13 per cent guarantee that if they cannot find a suitable position in the home country, they will find one in an alternative location.
On a positive note, three-quarters of the respondents stated that employees with international experience benefit from accelerated promotion but 41 per cent of companies do not know how many employees leave the company within two years of repatriation.
‘Employees with international experience are also more valuable to other employers, so companies need to work harder and offer an attractive career progression to ensure their skills do not end up with a competitor,’ said Mr Hunt. ‘Companies invest time and money in these programmes so measurement is key.’
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