LDU, Middlesex University

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1 International secondments are potentially a valuable tool in today s global economy, but the costs associated with sending an individual abroad can be very high (e.g. Black and Gregersen, 1991). This essay aims to evaluate whether and to what extent organisations can gain a return on their investment when sending an employee on secondment. In particular it focuses on the extent to which knowledge is transferred between offices during a secondment, as well as assessing repatriate motivation and retention after a secondment, in order to assess to what extent the competitive advantage gained justifies the outlay. The essay will begin with a critical evaluation of the literature on the topic of secondments and repatriation. It aims to outline the development of academic theory and research that has been undertaken, in order to provide a suitable context for the evaluation of secondments. The review will start with an overview of the purpose of secondments and the costs of sending an individual on an international assignment, compared with the return on investment. It will then focus on the specific issues of the types of knowledge gained while on secondment, how organisations can capture and share this information, and the barriers to knowledge transfer, including repatriate motivation and career development. The reasons for sending an individual on secondment vary and researchers have outlined different categories of assignment which aim to achieve diverse objectives. Caligiuri (1998) identified four types of assignment: Technical, to fill a technical need, Functional or Tactical, which requires an individual with cross-cultural skills to fill a technical or managerial gap, Developmental or High Potential, to help develop global competencies, and Strategic or Executive, to develop individuals for high-level management positions in the future. However, Dowling and Welch (2004) state that international HRM literature has identified three principal reasons for transferring an employee abroad, which appear to be a similar, but condensed, version of Caligiuri s (1998) categories. These are management development, by helping employees to develop a broader perspective and global awareness, organisation development, by facilitating the transfer of knowledge and practices into different areas, and finally filling a skills gap. Further, Lazarova and Caligiuri (2004, p.351) argue that with the rise of globalisation, international experience is becoming a critical asset for global organisations. They maintain that international assignment experience can potentially create competitive advantage both for individuals and the companies that employ them, as it is rare, valuable and hard to imitate. According to a survey of over 200 companies carried out by PriceWaterhouseCoopers in 2005, participants expected the use of expatriates to continue to grow, due to pressures for internationally mobile staff (International Assignments: Global Policy and Essay Writing Example Essay Can International Secondments be Justified? Page 1

2 Practice Key Trends 2005 cited by Dowling, Festing & Engle, 2008, p88). The research concluded that this can be viewed as evidence of the commitment to international business operations. Therefore, the studies reveal that secondments serve different strategic purposes. Although historically the primary aim may have been to fill a position due to the lack of local expertise, there is now increasing emphasis on the development of global talent and organisations are recognising the role that assignments can play in their overall growth. It is clear that secondments are an important tool in today s global economy and will continue to take place, potentially even increasing in number. Transferring an individual abroad requires a large investment and involves great expense for an organisation, in terms of the remuneration, benefits and relocation support required. Black and Gregersen (1991) calculate that a US multinational spends approximately one million dollars on each expatriate over the duration of an international assignment. However, they also find that most companies get anaemic returns on their expat investments (Black et al., 1999, p.54). Therefore, it could be questioned whether it is worth companies offering their employees the opportunity to undertake an international assignment, particularly as there are cost effective alternatives available, such as virtual team assignments. However, in defence of secondments, several academics (Mendenhall and Oddou, 2000; Caligiuri and Di Santo, 2001; Briscoe and Shuler, 2004) highlight the benefits from the individual s perspective, such as personal and professional growth, cultural awareness, and the development of knowledge and skills which could improve performance in future roles. Mendenall et al (2000, p.131) maintain that the international education that future executives could acquire in these types of assignments cannot be replicated in any classroom. However, it is more difficult to establish the extent to which the company can gain a return on investment (ROI) from the secondment. According to McNulty and Tharenou (2004), ROI should include a cost-benefit analysis of financial and non-financial data, measured against the purpose of the assignment. However, Dowling et al (2008) state that although it is easy to quantify the costs directly associated with the assignment, such as salary, it is hard to place a monetary value on the benefits of a secondment, such as knowledge transfer, relationship building and management development. Further, research has found that another concern for companies to take into consideration is employee attrition. A GMAC Global Relocation Trends survey carried out in 2005 revealed that 21 per cent of expatriates leave during their assignment, 23 per cent leave within one year of return and 20 per cent exit by the second year (Global Relocation Trends: 2005 Survey Report cited by Dowling et al, 2008, p.208). Van der Heijden, Van Engen and Paauwe (2009) highlight that the cost of losing an expatriate is significant, both financially and strategically, as they often Essay Writing Example Essay Can International Secondments be Justified? Page 2

3 understand the workings of local offices and have gained market specific knowledge and skills, which will indirectly provide advantage to competitors, with whom they may find a new job. Consequently it appears that companies need to consider how they can ensure they receive a greater return on their investment, and take action to achieve this. Expatriates often return to their home office with a wealth of knowledge, and this is an asset that companies should capitalize on to enhance their competitive advantage. It is widely recognised that knowledge is a valuable resource and Lazarova and Tarique (2005) assert that transferring knowledge across organisations is critical for the success of global companies operating in worldwide markets. Organisations are increasingly realising that in the knowledge society, expatriates and repatriates become exporters, importers and local traders of expertise and knowledge, the most precious resource of all (Inkson, Arthur, Pringle and Barry, 1997, p.355). Although expatriates were traditionally considered knowledge senders, whose primary role was to teach others, they are also knowledge recipients, and Oddou et al (2009) highlight that international assignments create the opportunity to acquire, create and transfer knowledge. They also claim that the importance of repatriate knowledge transfer has been proven by empirical research and linked to increased innovation (Subramaniam & Venkatraman, 2001), greater diversification (Sambharya, 1996), improved communications between different organisational units (Downes & Thomas, 2000) and better overall corporate financial performance (Carpenter, Sanders & Gregersen, 2001). Berthoin- Antal (2000) believes that expatriates represent a resource for organisational learning, as they have a wider range of experiences and ideas which companies can draw on. Using the concept introduced by Argyris and Schon (1978), she suggests that repatriates can utilize their broadened perspective to stimulate single loop learning, by proposing incremental improvements to the existing ways of doing things, and they can employ their new skills to instigate double-loop learning, by questioning current ways of thinking and developing new ideas. Further, a survey of over 300 repatriates in five Japanese multinational organisations revealed that a high degree of knowledge transfer upon repatriation related positively to high levels of subsequent job motivation and general work performance (Furuya, Stevens, Bird, Oddou and Mendenhall, 2009). This demonstrates that utilizing repatriate knowledge will not only help organisations to remain competitive in today s global economy, but will also potentially increase employee engagement. It is recognised that a secondment results in substantial learning and increased knowledge of international business, but academics have also focused on the characteristics of the knowledge that expatriates gain while abroad. For example, Berthoin-Anthal (2000) interviewed expatriates in Essay Writing Example Essay Can International Secondments be Justified? Page 3

4 two German-based companies in order to explore the potential contributions that they could make on their return home. Her research revealed that repatriates can offer their organisations different types of knowledge, which she defined as Declarative or knowing what, which relates to factual knowledge about the local culture, markets and clients, Procedural or knowing how, as expatriates often improve their communication skills and learn to negotiate more effectively, Conditional or knowing when, which refers to when repatriates should apply their newly developed knowledge, Axiomatic or knowing why, as secondees gain cross-cultural understanding and greater awareness of the business as a whole, and finally Relational or knowing who, as expatriates have the opportunity to network and develop relevant contacts. Fink, Meierewert and Rohr (2005) also classified repatriate knowledge into five similar categories: Market specific knowledge, such as the local system and customs, Personal skills, including flexibility, tolerance and self confidence, Jobrelated management skills, for example communication and problem solving, Network knowledge, and General management capacity, which relates to broader job responsibility and exposure to other parts of the organisation. However, Lazarova and Tarique (2005) believe that companies should primarily focus on two characteristics of international knowledge, namely the extent of tacitness and the extent of specificity. They argue that tacit knowledge is more valuable than explicit knowledge, as it is difficult for other organisations to replicate and is therefore essential for maintaining competitive advantage. However, Berthoin-Antal (2000) has pointed out that tacit knowledge is often difficult to communicate as it is not expressed, and it therefore requires active attention and interaction to draw out its meaning and relevance for the home context. Specificity refers to the applicability of knowledge across different contexts. For example, generic knowledge could be shared by all companies within an industry, whereas specific knowledge is primarily applicable to critical areas of expertise within an organisation. Therefore, organisations need to be aware of the different types of knowledge that expatriates can offer and how it can be of benefit to the company on their return. There has been limited research into the ways in which companies transfer knowledge and learn from their repatriates. Berthoin-Antal (2001, p.62) maintains that unless a conscious effort is made to tap into knowledge of individuals, investments made in their learning will remain under-used. Lazarova and Tarique (2005) suggest that the transfer process should start even before repatriation, by asking expatriates to write reports on what they have learned to codify their knowledge. However, Furuya et al (2009) assert that in the first instance it is essential for repatriates to adjust to their new environment and post-repatriation role, to maximise learning. This idea is supported by Oddou et al (2009), who believe it is easier for repatriates to transfer knowledge after they have undergone the Essay Writing Example Essay Can International Secondments be Justified? Page 4

5 socialisation process, as they often require an adjustment period to become re-accustomed to the norms and values of their home culture. They also point out that the knowledge repatriates have gained is shaped in a foreign environment and is different to the home context. This is an extension of Berthoin-Antal s (2000) theory that knowledge acquired abroad must be adapted so it is useful in the new context. She believes this can be achieved by combining it with knowledge held by others, to create new knowledge which is shared and relevant to the current context. Several organisational practices have been suggested to facilitate knowledge transfer and most agree that interaction with others, such as joint meetings, global teams and person to person contact, is the most effective method of sharing tacit knowledge and converting it to explicit knowledge (Gerybadze, 2004; Holtbrügge and Berg, 2004). Berthoin-Antal (2001) also highlights the role that senior management should play, encouraging repatriates to reflect on what they can offer and ensuring others in the team are aware they have useful knowledge to share. She continues that employees should be held accountable for learning, for example by linking reward systems to knowledge transfer and emphasising the importance of knowledge-sharing in performance evaluation criteria. Additional techniques and organisational practices which aim to capture, share and utilise repatriate knowledge have also been proposed. For example, Lazarova and Tarique (2005) suggest that effective knowledge transfer occurs when there is a fit between individual readiness to transfer knowledge and organisational receptivity to knowledge. They believe that companies need to consider the type of knowledge gained on assignment, evaluate its value and identify mechanisms to capture, retain and integrate this knowledge. For example, they propose that repatriates should be assigned to teams with strategic importance that are involved in cross-national projects in order to capture tacit, specific knowledge, whereas presentations and articles on the intranet would be sufficient to impart less vital knowledge. However, this is simply a theoretical framework which is not based on fact, and empirical studies are needed to confirm whether it would be successful. Oddou et al (2009) also focus on the ability of the home organisation to receive knowledge and the emphasis placed on organisational learning, for example the desire for continuous improvement, openness to new ideas and tolerance of mistakes. However, Berthoin-Antal (2001) has previously pointed out that the motivation of the organisation to receive knowledge can be affected by several variables, including the perceived value of the knowledge, the degree of global mindset and the management style, for example a more collaborative approach would encourage informationsharing and request repatriate input. Berthoin-Antal (2001) also asserts that companies should implement HR practices that combine a unified expatriation and repatriation cycle that explicitly Essay Writing Example Essay Can International Secondments be Justified? Page 5

6 emphasizes knowledge transference at each stage of the process. For example, continual communication while abroad would enable the home Line Manager to understand what the individual was learning and identify issues of interest to the home firm, so the expatriate could investigate and contribute on their return. Despite the ideas suggested above, research has revealed that organisations are not receptive to repatriate knowledge and rarely manage the process consciously. For example, the study conducted by Berthoin-Antal (2001) found that there is a gap between what individuals learn and what their organisations learn. Neither of the two German-based companies attempted to convert the tacit knowledge of their repatriates into explicit knowledge, and initiatives to convert individual learning into organisational learning were driven exclusively by the repatriates themselves. She concluded that barriers to the distribution of knowledge lie in the absence of active interest and processes or structures for the communication of knowledge, more than in the presence of actual impediments (Berthoin-Antal, 2000, p.28). Subsequently, academics have attempted to identify other sources of resistance to knowledge transfer. Lazarova and Tarique (2005) assert that companies need to recognize the effects of trust, as perceived mutual trust affects the sharing and acceptance of information. This idea is consistent with that of Oddou et al (2009), who propose that if a repatriate is considered as an in-group member, rather than an out-group member, they are more likely to be trusted and there is therefore a higher probability of being able to transfer knowledge. They also focus on the re-entry position of repatriates, in particular their power and responsibility. For example, those who possess expert power are in a better position to transfer knowledge and if their role has an international dimension, the knowledge acquired abroad is more likely to be relevant to their everyday work. Similarly, if repatriates are in a senior position, they can use their status power to influence others and develop social networks, which help to facilitate the flow of knowledge. However, these propositions are not based on fact and the variables therefore need to be tested and verified. Berthoin-Antal (2001) also identified organisational politics as a key barrier to knowledge transfer as repatriates are concerned about the reaction from others who may feel threatened by new knowledge and believe it might jeopardize their position. Further, repatriates may be worried that their knowledge would be used to serve the career interests of others, which affects their willingness to contribute to organisational learning. She also draws attention to structural and cultural barriers which can prevent organisational learning, such as an emphasis on rules, formality and hierarchy. Essay Writing Example Essay Can International Secondments be Justified? Page 6

7 An additional source of resistance to knowledge transfer is the motivation of the repatriates themselves. Early repatriate research highlighted the challenges of repatriation and described reverse culture shock, which refers to the gap between repatriates expectations and reality. For example, repatriates are often disappointed that they no longer hold a special status and feel they have less authority and autonomy compared to their assignment (Black, Gregersen and Mendenhall, 1992). Further, a study conducted by Black et al (1992) indicated that fewer than 40% of repatriates had the opportunity to use their international experience and newly developed global skills on their return, as their role had nothing to do with their overseas responsibilities. More recent research (Lazarova and Caligiuri, 2001, p.350) revealed that repatriates describe their repatriation as a haphazard affair, characterized by a lack of coherent HR policies. This frustration can often result in high turnover, which means that valuable knowledge is lost, potentially to a competitor. Consequently many agree that motivation is a key determinant of successful knowledge transfer and Lazarova and Tarique (2005) claim that repatriation motivation to share knowledge is as important as the knowledge itself. They argue that repatriate motivation to contribute to organisational learning is driven by the fit between their career objectives and the development opportunities offered by the organisation. Therefore they believe that organisations should offer incentives to motivate repatriates, such as challenging assignments that provide further international exposure, as well as career development initiatives, including mentoring. A recent study by Oddou et al (2009) concluded that individuals are also more motivated if they are committed to their organisation as a whole. Further, they believe that given the lack of organisational tools for retrieving knowledge in most organisations, some degree of altruism and willingness to make an effort without the expectation of a reward is necessary on the part of repatriates. Organisations therefore need to consider how they can motivate their repatriates, to ensure they are willing to share their knowledge. Repatriate motivation is also often linked to their career development on return to their home office. Several studies have focused on the connection between an international assignment and subsequent career development, and this is believed to have an impact on repatriate motivation and retention. Surveys of expatriates found they had high expectations that a secondment would benefit their careers when they returned home, and this was often a motive for accepting the assignment (Black et al, 1992). For example, in organisations with significant international presence, employees believe that international experience is necessary to be promoted to the top levels of management. However, Dowling and Welch (2004) assert that there is little evidence to demonstrate the link between a secondment and career advancement and some have even highlighted the short-term Essay Writing Example Essay Can International Secondments be Justified? Page 7

8 career setbacks, as an employee can be forgotten while overseas and there is no effort to ensure their international experience fits into their job on return (Suutari and Valimaa, 2002). Early research also indicated that companies were paying too little attention to repatriate career development, which was a key reason why they were failing to retain them (Black et al, 1992; Stahl, Miller and Tung, 2002). However, a more optimistic view has emerged and new evidence suggests that an assignment may enhance expatriate career prospects,although with a focus on career development in general, rather than within the repatriating company. The boundaryless career concept introduced by Arthur and Rousseau (1996) suggests that employees believe they need to be flexible and continually improving their skills in order to develop and sustain their career. Therefore, they are likely to pursue the best opportunities for their own development, which means they may be willing to change companies if it would provide them with a better position and the opportunity to learn. Lazarova and Tarique (2005) assert that individuals can use their international knowledge as leverage to facilitate moves across multiple companies. International experience is often valued in the labour market and can enhance opportunities for career advancement, even if it is not necessarily within the repatriating company. However, a recent study by Van der Heijden et al (2009) contradicts this view and finds that repatriates still value traditional career paths within the boundaries of their home organisation and are not prompted to leave to pursue external career opportunities. The survey found that if repatriates do decide to leave, it is due to internal factors, such as lack of career support. Consequently, those who perceive more career support will perceive more favourable career prospects within the company, and they concluded that career support is the best way to reduce costs associated with repatriate turnover. However, they themselves recognised the limitations of their research, as the main variable concerned expatriates perceptions, making it hard to draw firm conclusions relating to actual career support, career prospects and turnover. It is clear though that organisations need to recognise that employees may be more committed to their own careers, rather than the company, and ensure they provide and communicate career development initiatives that satisfy repatriate career aspirations and encourage them to remain with the firm. In conclusion, this review has demonstrated that secondments are a valuable tool in today s global economy and will continue to take place, to help organisations take advantage of the opportunities created by global markets and transfer their culture and capabilities. However, the costs associated with sending an individual on an international assignment are high and organisations are failing to capitalize on the global knowledge and expertise of returning employees and thus get a full return on their investment. Although failure on assignment is often described as an early return home, it Essay Writing Example Essay Can International Secondments be Justified? Page 8

9 could also be viewed as a failure to use the experience gained abroad after repatriation. Expatriates gain a wealth of knowledge while they are on secondment, ranging from familiarity with the local markets and clients to a greater understanding of the business as a whole. This knowledge has the potential to help organisations enhance their competitive advantage, but it appears that most are failing to capture and share this information with other employees in the home firm. Several barriers prevent knowledge from being transferred, including issues of trust, power and organisational politics, but it also seems that organisations do not have the processes and structures in place to facilitate knowledge transfer and are not always receptive to receiving information. Similarly, the motivation and retention of repatriates plays a key role, as this affects their willingness to share their knowledge and ensures valuable knowledge is not lost to a competitor. Repatriates have high expectations about their career development, to the extent that they would be prepared to change companies, and organisations need to identify how they can retain these individuals. In conclusion therefore, international secondments are very much justifiable, but require the appropriate structures and policies in place to achieve their potential. List of References Arthur, M.B. and Rousseau, D.M. (1996) The Boundaryless Career, A New Employment Principle for a New Organizational Era, Oxford University Press Berthoin Antal, A. (2000) Types of knowledge gained by expatriate managers, Journal of General Management, vol. 26, pp Berthoin Antal, A. (2001) Expatriates Contributions to Organisational Learning, Journal of General Management, vol. 26, pp Black, J.S. and Gergerson, H.B. (1999) The Right Way to Manage Expats, Harvard Business Review, vol. 77, pp52-63 Black, J.S., Gregersen, H.B. and Mendenhall, M.E. (1992) Toward a theoretical framework of repatriation adjustment, Journal of International Business Studies, vol. 16, pp Briscoe, D. and Schuler, R. (2004) International Human Resource Management (2 nd edition), Routledge Essay Writing Example Essay Can International Secondments be Justified? Page 9

10 Dowling, P. and Welch, D. (2004) International Human Resource Management (4 th edition), Thomson Learning Dowling, P., Festing, M. and Engle, A. (2008) International Human Resource Management (5 th edition), Thomson Downes, M. and Thomas, A.S. (1999) Managing overseas assignments to build organisational knowledge, Human Resource Planning, vol. 22, pp Fink, G., Meierewert, S. and Rohr, U. (2005) The Use of Repatriate Knowledge in Organizations, Human Resource Planning, vol. 28, pp Furuya, N., Stevens, Bird, A., Oddou, G. and Mendenhall, M. (2009) Managing the learning and transfer of global management competencies, Journal of International Business Studies, vol. 40, pp Holtbrügge, D. and Berg, N. (2004) Knowledge transfer in multinational corporations, Management International Review, vol. 44, pp Inkson, K., Arthur, M.B., Pringle, J. and Barry, S. (1997) Expatriate assignment versus overseas experience: contrasting models of international human resource development, Journal of World Business, vol. 32, pp Lazarova, M. and Caligiuri, P. (2001) Retaining Repatriates: The Role of Organisational Support Practices, Journal of World Business, vol. 36, pp Lazarova, M. and Caligiuri, P. (2004) Repatriation and knowledge management in Harzing, A-W. and Ruysseveldt, J. (ed.), International Human Resource Management (2 nd edition), SAGE Publications, pp Lazarova, M. and Tarique, I. (2005) Knowledge transfer upon repatriation, Journal of World Business, vol. 40, pp Essay Writing Example Essay Can International Secondments be Justified? Page 10

11 McNulty, Y. and Tharenou, P. (2004) Expatriate Return on Investment, International Studies of Management and Organization, vol. 34, pp Mendenhall, M. and Oddou, G. (2000) Readings and Cases in International Human Resource Management (3 rd edition), South-Western College Publishing Naumann, E. (1992) A Conceptual Model of Expat Turnover, Journal of International Business Studies, vol. 23, pp Oddou, G., Osland, J. and Blakeney, R. (2009) Repatriating knowledge: variables influencing the transfer process, Journal of International Business Studies, vol. 40, pp Paik, Y., Segaud, B. and Malinowski, C. (2002) How to improve repatriation management: are motivations and expectations congruent between the company and expatriates?, International Journal of Manpower, vol. 23, pp Riusala, K. and Smale, A. (2007) Predicting Stickiness Factors in the International Transfer of Knowledge through Expatriates, International Studies of Management and Organization, vol. 37, pp16-44 Riusala, K. and Suutari, V. (2004) International knowledge transfers through expatriates, Thunderbird International Business Review, vol.46, pp Saunders, M., Lewis, P. and Thornhill, A. (2006) Research Methods for Business Students (4 th edition), Prentice Hall Stahl, G.K., Miller, E.L. and Tung, R.L. (2002) Toward the boundaryless career: a closer look at the expatriate career concept and the perceived implications of an international assignment, Journal of World Business, vol. 37, pp Starr, T. (2009) Repatriation and short-term assignments: an exploration into expectations, change and dilemmas, The International Journal of Human Resource Management, vol. 20, pp Essay Writing Example Essay Can International Secondments be Justified? Page 11

12 Stroh, L.K. (1995) Predicting turnover among repatriates: can organisations affect retention rates?, The International Journal of Human Resource Management, vol. 6, pp Stroh, L.K., Gergerson, H.B. and Black, J.S. (2000) Triumphs and Tragedies: Expectations and Commitments upon Repatriation, International Journal of Human Resource Management, vol. 11, pp Suutari, V. and Brewster, C. (2003) Repatriation: Empirical Evidence from a Longitudinal Study of Careers and Expectations among Finnish Expatriates, The International Journal of Human Resource Management, vol. 14, pp Van der Heijden, J., Van Engen, M. and Paauwe, J. (2009) Expatriate career support: predicting expatriate turnover and performance, The International Journal of Human Resource Management, vol. 20, pp Essay Writing Example Essay Can International Secondments be Justified? Page 12