Expat assignments on rise in Asia

About 43 per cent of companies across Asia project an increase in cross-border traditional expatriate assignments from now till 2014, and 85 per cent of them are likely to send their staff on international assignments within Asia itself, according to the Talent Mobility Study by global professional services firm Towers Watson and workforce mobility association Worldwide ERC.
Overall, the study shows that 45 per cent of companies worldwide expect an increased volume of cross-border traditional expatriate assignments over the next two years, with 65 per cent of total respondents identifying Asia as the most frequent destination for such assignments.
An overwhelming 85 per cent of Asian companies cite Asia as their primary destination for cross-border assignments. This compares with 58 per cent of US companies and 39 per cent of European companies indicating likewise.
Cathy Loose, director of Benefits & Asia-Pacific Benefits Business Development at Towers Watson comments, “For many years, Asian companies were reluctant to embark on the globalisation journey. Now, armed with strong local currencies and ample credit, and encouraged by Asia’s emergence from the global recession ahead of many developed economies, Asian companies are aggressively entering new markets and becoming global players. However, as a result of their late entry into the globalisation arena, these companies have to compete fiercely against mature American and European multinationals in an already crowded talent market.”
She also notes that Asia’s dominance as a talent mobility destination is a result of the shortage of senior talent in the region. Many multinational companies operating in the Asia-Pacific region have brought in talent from outside of the region to support a long-term strategy of knowledge transfer and local talent development.

--Overseas expansion
Business expansion is the main driver for companies embarking on international assignments, as indicated by 86 per cent of Asian companies, 80 per cent of European companies and 89 per cent of US companies who participated in the study. “As multinational companies continue to focus their growth strategies on Asia, we expect Asia to continue to experience increasing out-bound and in-bound talent mobility over the next few years”, said Loose.
The study also reveals that career development (56 per cent) is the second most important reason for Asian companies to send their employees on international assignments, with knowledge transfer (53 per cent) a close third. For European and U.S. companies however, knowledge transfer (73 per cent and 71 per cent respectively) is by far a more important reason, with career development a distant third (53 per cent and 38 per cent respectively).

--Aligning talent mobility
Strategic talent mobility is critical to companies’ goals of driving growth and gaining market share in emerging markets, and maximising profits and managing costs in mature markets,” says Loose, who highlights the importance of companies to put in place a strategic talent mobility management programme.
“Companies need a consistent and integrated strategy approach to talent mobility. While keeping critical business needs in line of sight, companies also need to emphasise a longer-term focus on integrating their international assignment process with their overall talent management process to ensure a successful return. A succinct and comprehensive talent mobility framework needs to consider pre-deployment, deployment, and post-assignment processes which address candidate selection and staffing, reward strategy, career development, performance management, and overall service delivery.”
The global financial crisis over the past several years has challenged businesses around the world with a triad of competing objectives: first, the imperative for growth through investment in emerging markets; second, the need to manage costs and demonstrate return on investments; and third, the need to be competitive in the talent war.
“Companies need to continue to focus on talent management as a business discipline that facilitates evaluation of their talent profile and develop global mobility programmes and policies that will ensure that their mobility expenditures are appropriate to achieve their strategic growth plans,” says Loose.

--Cost a primary challenge
In the current competitive business landscape, companies have to deal with many challenges associated with talent mobility. The study reveals that the most significant challenge companies from all three regions face is the prohibitive costs of traditional expatriate assignments (69 per cent).  About 67 per cent of Asian companies rank prohibitive costs as the top challenge, followed by cost-of-living allowances/differentials (54 per cent). Other major challenges Asian companies face include compensation issues, education infrastructure in host locations, and high housing costs. European and US companies also cite prohibitive costs as their greatest challenge (79 per cent and 69 per cent respectively), followed by high housing costs (71 per cent and 58 per cent respectively).
Though cost-related challenges are a concern, a majority of companies (60 per cent) are still not comprehensively measuring the returns on investment for international assignments.
Loose said, “In terms of measuring returns on investment, companies, at a minimum, need to make a conscious and consistent effort to measure the success rate of assignments in consideration of some key metrics such as retention and promotion [post-assignment] rates. Companies with concrete data and proven practices can measure a clear outcome and demonstrate a business case to support their strategy and encourage buy-in from key stakeholders.”

--Family situation a key contributing factor to assignment failures
Assignment failures can be attributed to several factors, with the most common reason among Asian companies (53 per cent) being an assignee’s family/personal situation. In comparison, family issues rank second (52 per cent) after job performance issues (69 per cent) for US companies.
Asian-headquartered companies identify the employee’s inability to adapt to the host country’s culture, language barriers and inadequate infrastructure (healthcare/schools) in the host country as significant causes of assignment failures as well.
Despite the family situation being a major factor for assignment failure, it is surprising to note that most companies do not evaluate an employee’s family situation when selecting candidates for international assignments, nor do they often provide support for the family as a means of minimising assignment failures. In fact, only 14 per cent of Asian companies, 15 per cent of US companies, and 27 per cent of European companies take an employee’s family situation into account.
Loose says, “Innovative solutions and approaches need to be introduced to address this lingering challenge as it is not expected to diminish any time soon.  Family network groups, career support beyond cursory job searches, and skill development workshops are some possibilities which companies can explore to provide ongoing support to an assignee’s family members.”
The  latest Talent Mobility Study was carried out between September 2011 and March 2012. Over 100 companies from a wide range of industries took part in the survey which covered seven markets in the Asia-Pacific: China, Hong Kong, India, Japan, Malaysia, Singapore and South Korea.