It 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.

Research has also increasingly highlighted the role of international assignees as knowledge agents between their home and host units. Here, there are two key benefits to organisations:

• Assignees acquire an understanding of the company’s global organisation and the corporate culture at the HQ, factual knowledge about the assignment culture, and culture-specific repertoires and can deliver value to the organisation through these;
• Assignees share relevant knowledge that helps to streamline cross-unit processes, creates common corporate practices and routines, and/or increases the chances of subsidiary survival, for example, through the provision of local acquisition experience or product development know-how.

On the whole, the benefits associated with using international assignees such as those listed above are primarily non-financial in the sense that it is potentially very difficult to place an exact figure on their expected financial return.Turning to specific individual assignment objectives, here there is the opportunity for organisations to set financial targets for their international assignees which can be clearly measured. These might include, for example, sales targets or percentage increases in subsidiary profits. However, many international roles are not specifically linked to financial returns.As we can see it is difficult to measure both financial and non-financial gains to fulfil this side of the ROI equation. And at this point we not even tried to link these data to assignee performance.

Costs and losses

Turning to the costs and losses side of the ROI equation, organisations do typically run cost projections to determine the financial costs of the assignment packages being offered. These include issues that go beyond salary to include other items in the allowances and benefits package (housing and children’s education support, cost of living payments, relocation costs, family support expenses, tax equalisation, visa fees, and so on).Going beyond the remuneration package, the costs/losses associated with assignment planning, assignee selection, training, programme administration, PM, repatriation and post-assignment retention should also be included to gain a fuller picture.Once again we face the problem of identifying and measuring losses that cannot be directly identified and/or valued financially. For example, assignees typically undergo culture shock during the early stages of their assignments. This can result in lowered productivity which will impact on their performance and potentially also on that of their direct reports and perhaps even more widely within their work group or department. Placing a value on this is extremely difficult. The inability of the family to adjust and settle in can have a negative effect on assignees’ performance even if they themselves have settled relatively well.Once again this leads us to question, given the difficulty in identifying and valuing losses in the ROI equation, whether we can attempt to measure these and relate them to PM or whether there is greater merit in assessing performance against expectations as to what constitutes assignment success. Either way, we need to establish a framework for understanding PM.

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Read related articles

• Assessing assignee performance in a global context: factors influencing high performance and employer actions
• Outsourcing in the global mobility world
• Interview with Sofia Oragano, Senior Director of International Sales at Synergy
• The shape of mobility to come: strategy, technology, and leadership in a disrupted world
• The evolving role of global mobility: from back office to strategic business partner

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Performance management (PM)

PM is a strategic and integrated approach that aims to deliver sustained organisational success. Its strategic focus is represented by linking the improvement of the capabilities and performance of individuals and teams to longer-term organisational goals set within the context of the internal and external business environment.PM should be both vertically and horizontally integrated within the organisation. Vertical integration links business, individual and team objectives. Horizontal or functional integration links different parts of the organisation. Integration also links organisational and individual and team development and may also include reward, aiming to achieve a coherent approach to people management and development. Integration of individual and organisational needs is also addressed by PM.

Coverage of PM

PM is concerned with performance improvement – both what is achieved and how this takes place. Its function is to achieve organisational, individual and team effectiveness. In particular, PM is concerned with people development. PM involves planning for future success. This involves defining expectations within business plans and individual and team objectives.PM addresses outputs (achieving results), outcomes (impact on performance), processes (how results and competencies are achieved), and inputs (the competencies of individuals and teams). To achieve these, there has to be monitoring, review and measurement so that there is a basis for action to progress towards stated objectives.PM involves continuous development and improvement and the creation of a learning culture for organisations, individuals and teams. It provides a framework for integrating learning and development in the workplace to facilitate learning from challenges and successes on a day-to-day basis.Communication is a critical element of PM. It aims to create a climate of continuing dialogue between managers, individuals and teams to articulate expectations, share organisational information to ensure mutual understanding of the objectives that are aligned with strategic goals. Communication also underpins the framework for people management and development. PM aims to satisfy the needs and expectations of all the organisation’s stakeholders such that employees contribute to the development of their own objectives and to development plans for their teams.PM concerns ethical actions, with processes ensuring respect for individuals and mutual respect. There should be procedural fairness and transparency.The scope of PM covers managing the organisation within the context of the business. This involves everyone. Hence, responsibility for PM is shared between managers, individuals and teams. All are held jointly accountable for results, agreeing actions to be taken and how these will be carried out, and for monitoring performance. In essence, PM is a holistic approach concerning everyone in the organisation.

Performance appraisal (PA)

At this point it is worth drawing a distinction between the two concepts of PM and performance appraisal (PA).While there are some similarities between PM and PA, there are also a number of significant differences. For example, although PM and PA apply to all staff, PM involves continuous review with one or more formal reviews whereas PA is typically a more discrete event, usually conducted annually. PM places its emphasis on integrating business, individual and team objectives whereas PA is typically based upon individual objectives.PM often involves a joint and flexible process where documentation is often minimised. In PA, the process is typically top-down and ratings are applied; paperwork can be complex and the system is far less flexible. PM focuses on competency requirements as well as quantifiable measures whereas PA may include some qualitative performance indicators but tends to have a stronger focus on quantifiable outcomes. In PM there is less likely to be a direct link to pay compared with PA where a pay linkage is more common.It is therefore important to be sure of the approach being used to monitor, review and assess assignee performance. PAs are likely to be used but these will form only part of a wider approach to managing performance as part of a more holistic PM system. It might be more appropriate to link PAs to ROI but, given its wider and more holistic remit, linking PM to ROI is likely to prove more difficult. Notwithstanding this, given the senior and more strategic roles played by international assignees, it should be recognised that PA, while valid in its own right, is less applicable as a measure of organisational contribution and competency development than PM.

Assessing assignee performance in the global context

In order to assess international assignees’ performance in a global context, it is important to take into consideration the specific factors that can affect the achievement of outputs and outcomes as well as the processes that influence these and the competencies of individuals themselves. Communications in the foreign environment also need to be considered, alongside other relevant factors that play a role in the design and delivery of PM. To try to link assignee performance to ROI, the wide range of issues that comprise people management of globally mobile individuals need to be considered.In the second part of this series, we will examine a number of factors that can influence assignees’ performance as well as identifying some pertinent measures of ROI and go on to consider employer interventions that can help to improve assignee performance and, aligned with PM principles, its impact on teams and the organisation as a whole.

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