Expats Still Essential, but Recession Changes Their Roles

In 2008, when GMAC Global Relocation Services released its Global Relocation Trends Survey, they found that 68 percent of corporations were ramping up their expatriate assignment efforts.
A lot has changed with the deepening of the recession, right? Wrong, says Scott Sullivan, senior vice president of Global Sales and Marketing for GMAC in their Woodridge, Ill., office. Even though the company has not completed its analysis of its 2009 survey, Sullivan says GMAC has not seen a change in the number of international assignment initiations it receives from clients. They have been watching it closely, too, because it is a contrast to what is happening domestically, where they are seeing clients forecasting a 10 to 20 percent decrease in relocations. Marci Pelzer, senior global communications professional with Manpower Inc. Worldwide, concurs, saying they have not seen a reduction either.
“I’ve been sort of surprised,” says Sullivan. “I can’t believe that ultimately there is not going to be some contraction and some pull-back initiating assignments.” He points to the fact when the United States went through a recession in the early 2000s, there was a reduction in the number of expats, though it quickly lifted back up and grew at a robust rate afterwards.
Signs of Hard Times for ExpatsThe signs are there for a contraction. The global economic recession has caused a number of countries to take a hard look at expats who might be taking jobs away from locals. The Economic Times in India reports that expats executives are being given pink slips because their expertise is not needed during the downturn. The article points to MetLife’s replacement of its CFO with an Indian hire, though Christine Tso, director international for the company’s Media Relations, tells SHRM Online that this was a one-time event and that they are not seeing these changes elsewhere.
Business Intelligence Middle East notes that in Saudi Arabia Muhammad Al-Hamdan, head of the Labour office in the Eastern providence of the country, is telling businesses that they cannot fire Saudi staff; instead, they must fire expatriate staff to provide positions for Saudis.
Cost-Cutting Measures “One of the things we are seeing is that while there are still expat jobs in the Middle East and elsewhere, these jobs are not paying as much as they used to,” says Jim Sillery, principal in the compensation practice at Buck Consultants, LLC, a global HR consulting group.
This change has been part of the aggressive cost containment programs U.S. companies have put in place during the past couple of years to fight off the effects of the economic recession, says Sillery.
The GMAC Relocation survey found that, even in 2007, 58 percent of companies surveyed reported that they were cutting backs on expenses for international assignments in response to economic conditions, and 29 percent of those cutting back – the highest since the survey began tracking this subject -- said they were reducing policy offerings and financial incentives for relocating employees.
In addition, companies are changing how they use expat assignments. While filling a skill gap has been the number one reason for international assignments during the 14 years GMAC has conducted its survey, in the past three to four years the focus has been shifting to using the assignments to build management experience for employees, says Sullivan. It is fast becoming the number one reason.
‘Global Executives’“What we are really seeing,” says Sillery, “is the idea of the traditional expat as sort of a prestigious position.” Those are the expats being repatriated, while a new breed of expats, who call themselves “global executives,” continues to expand.
These are the people who go out into the global market and compete with locals, Sillery explains. Their job market is the world, and they have to demonstrate their own value, which means that they have to be able to compete with the local workers and win.
Not only will they have to accept pay that puts them on par with locals, they might also receive only a one-way ticket there, says Sullivan. “There is no obligation for the company to return you home. If you want to, at some point, apply for a job back home or in Japan, so be it.” These trend setters might find that their assignment includes six months in Europe, six months in Asia and six months in Latin America to enable them to become familiar and accustomed to how business is done around the globe, he says. So, forget shipping household goods and taking their family along.
Are There Jobs at Home?
Some expats are heading home on their own to find better job and economic conditions. This is especially true for employees returning to India, some places in China such as Shenzhen, and much of Middle East where they are still seeing growth in their markets.
The same is not true for expats returning to countries facing significant economic recessions. “Having been an expatriate myself,” says Sullivan, “the last thing I would want to be expecting is my assignment coming to its natural close at this point and time and having to come back to the United States.” And some, like one of Sullivan’s acquaintances in the auto industry, are coming home to find they will be better off going elsewhere. Sullivan’s friend was repatriated back to the United States in 2008 only to be told by his company he should immediately head out to India, where he would have more opportunities.
Global Experience Still Important
The best companies should be taking a hard look at those employees who are coming home – even the traditional expats. One of the biggest mistakes companies made during the dot.com bubble burst, says Sillery, was making across-the-board, deep cuts to the point of being anorexic. Once the economy improved, they didn’t have the bench strength to take advantage of opportunities that came with the recovery. “Companies run the risk of corporate anorexia again,” he says. But the future is in the global market, and companies need to retain people who are going to help them make an impact in that global market. A lot of the people who are being repatriated have the unique advantage of having that global experience and perspective which will be invaluable on the upturn.