Time away valuable but too much can mean missed opportunities back home
Ambitious employees heading across the border or overseas to take on an assignment, keen to broaden their skills and experience, should take note: Don’t be away too long. There could be a significant downside to relocations — they can slow an executive’s climb to the top, according to a recent study.
“Executives with international assignment experience take longer to reach the top echelon. In fact, the more assignments they have and the longer time they spend outside their home organization, the slower they reach the CEO position. Assignments that started at a later career stage and assignments at an organization other than the CEO’s current employer are especially detrimental to the speed of ascent to the top,” wrote Monika Hamori and Burak Koyunco in Career Advancement in Large Organizations: Do international assignments add value?
Those who embark on fewer assignments, have shorter assignments (one year or so) or stay at company headquarters but periodically visit foreign divisions may reach top positions faster, said the paper, which studied 1,001 CEOs at the 500 largest companies both in Europe and the United States in 2005.
“Although the day may not be far off when experience abroad speeds the way to the top rank, we are definitely not there yet,” said Hamori, a professor at the IE Business School in Madrid, Spain. “Our findings suggest that you advance faster if you are in proximity to the corporate headquarters’ social networks than if you are on assignment abroad.”
The “pessimistic” research can partly be explained by variables taken into account for the study, such as the frequency and size of promotions, benefits for the individual not the corporation, type of employer involved (global exposure and geographic region), career stage and speed of promotion. The study also looks at the number of years between the start of a CEO’s professional career and the year he was appointed CEO.
These are suitable measures “since the speed of ascent to top management positions as well as the frequency and size of promotions after an assignment are key considerations in the minds of expatriates,” said the paper. On average, it took 25 years for the CEOs studied to reach the top, with eight years in foreign assignments.
Career stage can also be an issue, as the earlier an international assignment is taken, the greater its benefits. International experience “gives young professionals an unusually large degree of responsibility that they would not be able to have at the home organization,” wrote Hamori and Koyunco.
However, many corporations with international operations require senior managers and executive staff to take foreign assignments to broaden their horizons and ensure the standardization of management structure and techniques, said Jean-Philippe Brunet, chair of the business immigration and international mobility team at the law firm Ogilvy Renault in Montreal.
“If you don’t go on an international assignment, that might hinder your future with the company,” he said, and sometimes an ambitious individual has nowhere to grow with her employer, so a relocation is the best option.
Much of the process is about maintaining a connection with the home base, so the relocated employee is not “out of sight, out of mind” when it comes to career progression, said Stephen Cryne, president and CEO of the Toronto-based Canadian Employee Relocation Council.
“I can see that working against people,” he said. “It’s maybe not the distinction between the experience that they’re earning and gaining, it’s their lack of exposure to people making decisions in the home country.”
The study highlights the lost opportunities of organizations to capitalize on the rich experience gained from these assignments, said Cryne.
“Often individuals with international experience are overlooked when repatriated and end up taking that experience and key market knowledge to competing organizations,” he said. “One has to wonder, is it because the companies generally don’t take a good approach to repatriation? And if they did, maybe they’d have better CEOs than they do.”
The obstacles posed by a relocation really depend on how the repatriation is treated, said Lisa Rambert, director of business development at Arianne Relocation Canada in Montreal. That comes down to what policies are in place to make the returning employee feel his experience abroad was valued and he hasn’t fallen behind as far as personal contacts, responsibility and status.
“Obviously face time is important and even if you’ve been doing wonders for the company abroad, if there hasn’t been strong communications about your achievements while you’ve been away, you might have a bit of catch-up work to do when you return,” she said. “We’ve relocated CEOs of multinational corporations and the assignment was extremely beneficial to them, very enjoyable and very enriching.”
There are definite upsides to international assignments, said the study, as 32 per cent of CEOs had this kind of experience, indicating it is a requisite to access the CEO post of the largest companies, particularly for newer CEOs. Only seven per cent of the U.S. CEOs in 1993 had international experience, compared with 18 per cent in 1998 and 44 per cent in 2003.
“Our world is a lot more integrated, even in the last five years, so going forward, people with international experience in dealing with multicultural teams, virtual teams from around the world, are going to be in high demand,” said Cryne.
Relocation trends
Employers still focused on cost-containment: Survey
Rising costs for housing and accommodation, along with larger incentives, mean a continued emphasis on cost-containment and organizational control when it comes to relocations, according to the 2009 Employee Relocation Policy Survey from the Canadian Employee Relocation Council (CERC).
“Organizations are tailoring benefits for strategic hires, with greater numbers citing policy exceptions, enhanced relocation benefits and targeted signing bonuses,” said the survey.
With the downturn, companies are being creative, guaranteeing 90 to 95 per cent of the appraised value of a home to the relocating employee and working hard to develop marketing plans to move the homes.
“In a way, they are engaging the employee to share some of the loss on sale and achieve a realistic price for the home,” said Stephen Cryne, president and CEO of CERC. “It’s a struggle, a lot of companies are having to ratchet back assignments.”
The top HR objectives supported by relocation policy are talent acquisition, talent development and employee retention. The most significant factor that will influence a change to policy, cited by 77 per cent of the 98 organizations that participated in the survey, is cost-containment — up from 67 per cent in 2007.
While 86 per cent of organizations track costs, almost three-quarters have no process in place to determine the success or failure of a relocation and only three per cent calculate the return on investment. Part of the challenge is companies don’t track the same costs and different units track costs, so house-hunting trips could be slotted under a relocation benefit program or travel expenses, said Cryne.
A typical relocating employee is male, aged 26 to 40 years old, with a working spouse and an income of $92,592, up from $88,325 in the 2007 survey. The most common reasons for rejecting an assignment are concerns about children, compensation and spousal employment.
Common support services and policies include home-disposal assistance, interim accommodation, cost-of-living allowance, language and cultural training, miscellaneous allowances and tax reimbursement.
