The phenomenon of expatriation causes a number of human resource management problems because of companies’ lack of experience and foresight. The cost in economic and human terms shows there is a need for a far more professional approach to the expatriation process. Companies have also become aware of how important this is for a successful globalization strategy, and this has led to a growing interest in understanding its implications for management. IESE’s Anselmo Rubiralta Center for Globalization and Strategy decided to respond to this interest with a study of the expatriation and repatriation practices in 18 multinationals located in Spain.

Two aspects of expatriation are developed in the study. On one hand, a description of the various phases of the process – initiation, development and repatriation; and on the other, an analysis based on four key variables: financial cost, business effectiveness, professional development and personal and family balance. In order to get a complete picture of the process for decision-making purposes, the point of view of HR management and of expatriates themselves were taken into account. The findings of the study are shown below.

Plan Ahead

Moving executives to other countries poses a number of challenges, and the study shows the need for a global perspective to ensure consistent policies. The first step is to identify the main features and objectives of the business plan. The next step is to start the process of selecting the most suitable people for the project and to draw up an attractive financial and professional package (including the job situation after repatriation) to positively motivate the successful candidate. Once the expatriation process is under way, the development of the process, how the person adapts to the situation and the results must all be monitored.

The study shows that to act with adequate planning and consistency, these phases cannot be considered in isolation. Likewise, it is necessary to address all aspects of the process, including financial, professional and personal and family issues. Success will be dependent on the ability to solve problems relating to any of these aspects.

One of the main findings is that current expatriation management focuses mostly on business efficiency and cost effectiveness, virtually excluding personal, professional and family issues from the decision making process. The lack of prior career planning for the individual, as well as the scant importance given to the family, cause significant problems which put the final success of the project at risk. These two deficiencies require the maximum attention of top management. At risk is not only one specific expatriation project, but also the acceptance of other people faced with an international transfer in the future.

Companies turn to expatriation for purely business reasons: business development and transfer of the company’s knowledge and culture. On the other hand, responses from executives indicate that people are motivated above all by personal and professional growth. Financial considerations are secondary in their decision. As regards the duration of the foreign assignment and the job situation on the employee’s return, companies all too often show a serious lack of formal definition and commitment.

A Question of Emotional Balance

It is somewhat surprising that companies explain that expatriate assignments are rejected by executives mainly for family reasons and yet give the least attention to family issues during the planning process. The adaptation of family members to the new country affects expatriates’ emotional balance and consequently their professional performance. In spite of which, the cultural adaptability of the expatriate’s companions, as well as their willingness to relocate, the spouse’s personal situation, and the age of children are not taken into consideration at the time of selection. On the other hand, distance from the parent company for long periods of time can produce a sense of isolation in expatriates. And yet companies do not have formalized policies for communication between international personnel and those at the parent company.

The final phase in the process, repatriation, is the one which poses most problems. Expatriates become accustomed to certain benefits - financial, social (prestige and status) and professional (autonomy and responsibility) - the loss of which is difficult to come to terms with when they return to their home country. After several years of hard work and the occasional sacrifice, repatriates find it difficult to understand why the knowledge they have acquired is not suitably rewarded and utilized. All too often they feel that nobody really knows what to do with them.