EXPATRIATE RETURN ON INVESTMENT

Abstract

[Extract] Clearly, obtaining a return on investment from long-term assignments is important. First, cost-reduction is one of the reasons MNCs use alternatives to xpatriation, including virtual team assignments and tele-working, short-term assignments, business trips, cross-border commuting, inter-regional travel, frequent flying, rotational assignments and host country nationals (HCNs) (Cendant, 2002; GMAC Global Relocation Services, National Foreign Trade Council, and SHRM Global Forum, 2001; GMAC et al., 2002; KPMG, 2003; PricewaterhouseCoopers, 2000, 2001). Yet MNCs still continue to use expatriate assignments (Mercer Human Resource Consulting, 2003; PricewaterhouseCoopers, 2002). Second, determining a return on investment is necessary to justify the continued use of long-term assignments. As Bonache, Brewster, and Suutari (2001) asserted, cost-effective alternatives are often available. Third, the continued reporting of expatriate assignment failures, with 44% of MNCs reporting failures in the Asia Pacific region and 63% reporting failures in Europe (Cendant, 2001), seems to indicate that the direct and non-direct costs associated with expatriation are substantial. It highlights the need to understand the return on investment from international assignments.