Measuring Benefits of International Assignments a Challenge

A press release said the Mercer study found the majority of respondents cannot accurately measure their ROI, with 71% of companies stating that measuring the financial benefits of international assignments is a challenge. Reasons cited are the lack of appropriate measurement tools, decentralized data, and time constraints.

Only 17% of respondents have reasonably accurate figures to calculate the cost of their international assignment program, and 21% say that they are not in a position to provide any figures. According to Mercer, nearly three-quarters of companies state that their information on assignment costs is dispersed throughout different countries or business units, and only 28% indicate that all costs are compiled in a central database.

A lack of centralized financial control systems and inadequate (or missing) software tools are reported by 46% and 45% of participants, respectively, as the main issues with the measurement of ROI of their international assignment programs. According to the report, 44% of companies do not measure the benefit of international assignment programs, and 28% find it extremely difficult to measure the impact in terms of revenue generated.

The Mercer study found that approximately 60% of respondents felt that they could obtain a fair estimation of the costs of international assignments. The elements most commonly taken into account when projecting the costs are expatriate package costs (salary, premiums, allowances and benefits) and relocation support costs (pre-assignment trip, language training, moving expenses, relocation agency and tax assistance), with 93% and 84% of the companies, respectively, taking these elements into account.

Administration costs linked to the management of expatriate compensation are also considered by 77% of the companies. Some costs incurred, but less typically taken into account, are: the possible departure of the assignee during or after the assignment (37%), the break-up or discontinuity of functioning teams in the home country (13%) and the cost of mentoring programs (4%).

Just over one-quarter of companies could either provide a rough estimation of the benefit of their international assignment program in terms of its revenue impact or provide accurate figures on the benefits generated. Only a handful of companies (3%) report having put in place a process to track the ROI of their international assignments - which implies being able not only to track costs, but also to measure their return, Mercer said.

Benefit elements taken into account in the ROI calculation, according to the report, include: the increase in business profitability and revenue (60%); development of a pool of skilled, experienced managers, global culture and competencies (59%); whether expatriates met the assignments' goals (57%); development of local competencies (56%); and the increase in market share in the host location (40%).

Most companies report they have taken steps to improve the ROI of international assignments. Seven in 10 have taken measures to improve the clarity and communication of objectives for their expatriates, and over half have improved the international assignees' selection process. Forty-three percent have made progress in improving or reinforcing the follow-up process with expatriates throughout the assignment, and the same proportion has improved post-assignment management. Close to one-third of the companies have customized their assignment terms and conditions to better match the assignments type.

Less common tactics are reducing the number of international assignments by privileging alternatives (18%), shortening the length of assignments (16%), reducing the compensation and benefits packages (11%), or encouraging intra-regional transfers whenever possible rather than inter-regional transfers (3%).

Mercer's data showed that less that half (42%) of respondents guarantee a job to the employee upon repatriation, while 13% guarantee that if they cannot find a suitable position in the home country they will find one in an alternative location. In addition, less than half of respondents (44%) take measures to facilitate an expatriate's reintegration, while a third stated that they do provide support.

Three-quarters of the respondents stated that employees with international experience benefit from accelerated promotion, but 41% of companies do not know how many employees leave the company within two years of repatriation.

Rebecca Powers, principal at Mercer, said in the press release: "Since employees with international experience can provide value to other employers, it's essential that companies offer their employees an attractive career progression and ensure their investment doesn't end up with a competitor."

The study report is based on Mercer's 2008 International Assignments Survey which collected data from over 200 multinational firms.

The report can be ordered online at www.imercer.com/ia .