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Management The reintegration process Credit: Corbis / Xinhua Press / Zhang Jinqiao Diageo’s global expansion into many new global markets has been supported by its detailed expatriate management programme. Global growth Diageo now trades in approximately 180 markets globally, employing a workforce of almost 20,000 people, with dedicated offices in 80 countries. returning to a company where there are fewer senior positions to fill. “Companies send managers on expatriate assignments with the expectation that they will fill another more senior position upon their return,” says Festing. “But with many companies either downsizing or cutting back on expansion plans, there’s often no position available.” Another common problem is that returning executives experience a sense of loss or diminishment. As David Rooney, an Executive Director in Human Resources at Ernst & Young in Frankfurt explains: “Expatriates on assignment away from the headquarters are treated almost regally. The company will often attend to – and pay for – many of their needs, from housing and transportation to their children’s education. Their total reward will typically be higher than in their home country.” Returning executives can feel deflated because there may be a perception that they have less influence than they had overseas. “Expatriates are often big fish in a small pond,” says Rooney. “When they come back, they return to a big pond. They may be a bigger fish than when they departed but, overall, they are often left feeling as though they’ve been demoted.” There are other potential problems. Sometimes an expatriate, away for a long assignment, no longer feels at home upon return. They have established strong connections with the country they have just left. In addition, they may realize that their skills or abilities, no matter how well developed during an offshore assignment, no longer align with the organization’s needs. In these situations, it is unsurprising that these executives will actively Returning executives may feel deflated, perceiving less influence than when abroad seek a way to return to their former standing or location. “They want what they’ve lost and, if the parent company can’t provide such an opportunity, they begin to look elsewhere,” says Rooney. Stemming the loss Addressing the problem starts with the selection process. Companies need to set expectations carefully and ensure that expatriates are aware that there is no guarantee of promotion on return. There should be a similar discussion about compensation. Although an executive may be well 42 T Magazine Issue 07 Ernst & Young
paid while on assignment, they need to understand that the same level of pay is not likely to continue when they return. “It’s vital not to overpromise,” says Festing. “Be honest and explain that this is valuable experience, but it’s only an assignment and there are no guarantees.” By setting expectations in this way, companies are more likely to select the right person for a position. As Rooney explains, the ideal candidate is someone who goes into the assignment for all the right reasons. “If they’re looking for something you can’t provide, they’re not right for the posting.” Companies should ensure that there is a strong channel of communication between their home country office and expatriate. Often, a formal mentoring relationship can be a good way of ensuring that managers do not feel cut off from corporate headquarters. This relationship should be tracked formally and included as an element of performance evaluation for both the mentor and the expatriate. Finally, there should be a formal process that prepares for the expatriate’s return. Preparations should be made well in advance to ensure that the transition is smooth. “You don’t want to wait until they are back before you make plans for their next job or their next assignment,” says Rooney. Many executives returning from secondment complain that their new skills and experience are not sufficiently valued. Companies can avoid this problem by ensuring that the executive’s new role makes use of these new capabilities and experience. It can be a good idea to arrange one or more seminars or talks where the returning expatriate can share their experiences and lessons with others in the company. This not only spreads knowledge, but also gives the executive a sense of accomplishment. The embodiment International experience is crucial for the drinks manufacturer Diageo, which owns a range of globally recognized brands, including Guinness, Smirnoff and Johnnie Walker. At any one time, it has around 400 managers in its “expatriate pool,” who are all gaining overseas experience in order to develop their skills and build long-term careers with the company. This pool includes executives from a wide range of positions. Some are short-term pragmatic assignments, such as bringing specific brewing experience to get a new operation up and running. But most are long-term assignments, lasting two or three years, which tend to be occupied by managers and senior executives who have been selected especially for the role. These assignments have two primary objectives in mind. “One is that we want these executives to get the job done,” says Gareth Williams, Director of Human Resources at Diageo. “But the second objective is to provide these executives with valuable experience that can benefit the company. These are highpotential individuals in whom we’ve chosen to invest because we believe in them.” Executives on secondment at Diageo remain closely connected with head office via a series of formal processes. This involves ongoing discussions about performance in the position, personal growth, challenges and training requirements. “Wherever they are, they are still tracked within our global talent processes,” says Williams. The company also thinks ahead to ensure that the expatriate’s next steps are carefully considered. “Even though the current assignment might not be over for another 12–18 months, we’re already making plans for the next one,” says Williams. But of all the mechanisms that optimize talent development and minimize attrition rates, perhaps the most valuable, according to Williams, is the initial selection process. This requires detailed up-front conversations about every aspect of the candidate’s personality, including their family situation and aspirations. Plan ahead 12–18 months; certainly before the current assignment is over “You need to get an idea of how they might get on in a more developing, as opposed to more developed, country,” says Williams. Finally, it is also very important to nail down the particulars. “We have a conversation where we say: “Here’s your base package. Here’s your expatriate package. Here’s who you will work for and report to. Here’s what we’ll take care of for you and these other areas will be your responsibility,” says Williams. More taxing matters Given current economic conditions, it is not surprising that host nations are becoming more aggressive in their pursuit of expatriate tax revenues. This highlights the importance of being clear with expatriates about responsibilities for different aspects of tax compliance. “Administrations are paying closer attention to due dates – and they’re tougher when deadlines are missed,” says Williams. “We devote a good deal of effort and discipline to make sure our very considerable expatriate programs are meeting their tax obligations.” An investment in talent Executives returning from an international assignment are typically much more valuable than when they left. Yet despite this, there is a high risk of them leaving the company. By being more proactive and, in particular, by applying formal processes, companies can reduce the rate of attrition and thereby improve returns on their investments in human capital. Effectiveness of the organization's repatriation process Good Satisfactory Scope for improvement Ernst & Young Issue 07 T Magazine 43 49% 20% 31% Source: Ernst & Young’s Global Mobility Effectiveness Survey 2011 400 The number of managers that Diageo keeps within its “expatriate pool” at any given time, as part of its skills and careers development.
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