In the first of a two-part series, Dr Sue Shortland explains the issues associated with understanding return on investment and the nature and value of performance management processes in the context of global mobility.
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t is generally accepted that the cost of using an international assignee averages around three times the salary of a local person. Given the high cost of deploying international assignees, it is critical that
employers gain a positive return from their investment in global mobility. This means that organisations must engage in performance management (PM) processes to ensure that assignees’ performance is monitored and linked to assignment, team, local business and organisational objectives, and is supported through relevant and necessary training and development interventions. Potentially, the identification of high performance outcomes through PM processes may also be linked to assignment rewards reflecting the value of the assignees’ contribution to organisational global success. While this summary might sound relatively
straightforward, regrettably it is not. The first hurdle that must be overcome concerns how we understand and define return on investment (ROI). Next, there is the need to define what is meant by PM and to consider what it is concerned with in order to determine its scope. In addition, there is the requirement to assess assignee performance against the backdrop of a different societal and organisational culture and in the context of individuals needing to uproot themselves and potentially their families and to link it to measures of success. Then there is the requirement to take forward any actions to improve performance through appropriate training and development and to consider any potential links between PM and pay.
RETURN ON INVESTMENT (ROI) Definitions of return on investment (ROI) vary. Strictly speaking ROI is an accounting term as it refers to profits achieved in relation to investments made. However, this definition only refers to financial performance and does not include non-financial factors. In economics, ROI combines value-based approaches to measure past and future returns, including both financial and non- financial data. In the field of global mobility, there is no universal
definition of ROI. Generally speaking, ROI refers to the accomplishment of assignment objectives at the
expected cost. However, this general understanding is inadequate as a definition as the costs of international mobility need to be identified and explained both financially and non-financially. Financial and non-financial gains and losses are
associated with the investment in people by Human Resources (HR) and Global Mobility professionals. So, for example, the provision of cultural training potentially can be seen as a financial cost but also as a benefit which creates a non-financial gain through improved performance. While poor cross-cultural adjustment can be seen as a loss in terms of productivity, the lack of investment in training has reduced the direct financial expense (course fees) associated with posting an individual abroad. In essence, in order to understand ROI in relation to
global mobility, we need to consider whether the benefit to the organisation outweighs both the financial and non-financial costs of the international assignment.
THE BENEFITS FROM DEPLOYING INTERNATIONAL ASSIGNEES Rather than focussing first of all specifically on individual assignment objectives so as to identify financial gains, we need to begin by understanding what the benefits (or non-financial outcomes) to the organisation actually are in terms of using international assignees more generally. There are a number of acknowledged positive
reasons for deploying international assignees. Generally speaking, organisations expect the use of international assignees to:
• Fill positions: This is an acknowledged benefit when qualified local staff might not be available or specific knowledge transfer to subsidiaries is considered necessary;
• Achieve management development: This is beneficial when the assignment can provide the manager with international experience and development which is of value to the organisation for future tasks in subsidiaries abroad or with the parent company;
• Achieve coordination and control: This provides two principal benefits namely, the socialisation of both assignees and local managers into the corporate culture, and the creation of a verbal information network that links subsidiaries with the headquarters.
“ In the field of global mobility, there is no universal definition of ROI.”
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GLOBAL MOBILITY
ASSIGNEE PERFORMANCE ( PART 1 )
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