The Expat Dilemma

Group 8:
Gaurav Goyal
Jade Marcantel
Lauren Saegert
George Stoeckert

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Agenda
I. Background
◦ Key Issues
◦ Main Characters

II. Summary of Main Issues

III. Case Analysis

◦ Answers to Questions

IV. Take-Aways
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Background
Streuvels Chemicals is struggling to streamline and standardize their
large expatriate workforce management program. The HR
department is facing larger numbers of special exemptions of
program policy and large cost overruns.

Anton Danois is a former plant manager and was put in charge of the
Expat program to standardize and streamline process. However, he is
finding that managing expats and their families on assignment is
extremely difficult, and he begins to question the necessity of the
program as a whole.

Ana Lobato is a rising star in the organization and was transferred

from Brazil to Brussels to help open new plants across Eastern
Europe. Her spouse is extremely unhappy and it is forcing her to
evaluate the benefit of continuing her expat assignment.

Overall, the case focuses the pressures and negative consequences

of failed expatriations on the company, the employee, and their
families. The authors are sparking the conversation about the benefit
of expat programs and asking if they are worth the difficulties they
create. 3
Key Characters

 AntonDanois- Former plant general manager

placed in charge of the expat program

 Ana Lobato- Rising star and current

expatriate from Brazil living in Brussels with
her family

 Oswald Lobato- Ana’s husband who can no

longer practice medicine because his
Brazilian medical degree does not allow him
to practice in Brussels

 Maria
Claes- Head of HR and Anton’s direct
manager 4
Summary of Main Issues
StreuvelsChemicals is experiencing cost overruns due to special
exemptions to expatriate policy.
 Policy is vaguely designed to accommodate the special requests of expats and
increase the success rate of their assignment.
 However, it is causing budget overruns and internal conflict

Ana Lobato’s husband is extremely unhappy with her assignment and

is pushing to return to Brazil.
 Oswald was unable to transition to Brussels because his medical license does not
transfer to Brussels. His discontent is forcing Ana to reevaluate her assignment and
possibly her employment status with Streuvels
 Family dissatisfaction is one of the most common reason for failed expat
assignments.

Anton is struggling to manage the program according to Streuvels’s

strategic plan and to find ways to streamline the program without
losing high quality talent.
 However, Anton realizes that corporate culture places a high value on international
assignments and in order to get promote candidates need expat experience.
 This begins to call into question the benefit of that cultural norm and the program
as a whole.
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Q1- Can Anton Keep Ana Happy?
 The short answer is no. Ana suggested that
a pay increase would help; however, that
would not solve the root issue, which is her
husband’s discontent.

 Itis doubtful that any special pay incentives

afforded to Ana and her family to stay in
Brussels would be sufficient enough to keep
Oswald Lobatos content for an additional two
years.

 Anton cannot expect Ana to remain in

Brussels without her family for two years.
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Q2 - What Would You Do if You Were
Anton?
 Anton’s primary goal is to retain Ana at Streuvels.
Holding her to the 3 year commitment would
likely result in loosing Ana to a competitor. Anton
should work to shorten her assignment.

 Approaching Maria for this special request is

unavoidable. Anton should prepare a list of
possible solutions (provided in next slide), work
with Maria to determine the optimal course of
action, and then present Ana with her options.

 Anton can expect pushback from Maria, but

ultimately, Maria (as the HR head) must be
willing to compromise, or they risk losing Ana as
an employee all together.
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Q2 What Would You Do if You Were
Anton? Continued…
Possible Solutions:
Negotiate a shortened assignment in Brussels with a pay
increase. The intent is to keep Ana’s family with her by finding
the right balance of pay incentive and time commitment.

Find an alternative assignment for Ana in another country

where Brazilian medical degrees are recognized or an enticing
job for Oswald is assured. This would allow Ana to get
experience in two countries without her husband having to
sacrifice his career/passions (especially since culture/living in
another country is not an issue for the Lobatos).

Reassign Ana to Brazil as her “home base,” yet place her on 1-

3 month assignments abroad once per year (which she would
do solo). This would allow Oswald to return to medicine in
Brazil, Ana to obtain experience abroad, and the company to
best utilize Ana’s talent on special projects.

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Q3 - What Would You Do if You Were
Ana?
 Anahas a right to assert her value to the
organization and to ask for what her family needs.

 Sheis right to point out that mobility is critical to

her promotability within Streuvels and that she is a
prime candidate/resource for them.

 She should continue to push for either

◦ A reduction in assignment length and/or an increase in pay
to offset the expenses of being the only earner in her
family now and for more assistance for Oswald in finding
work or a social/academic group if they stay in Brussels

◦ Or to return to Brazil (or to Bolivia) where she can restore

her family balance and still be very productive for Streuvels.

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Q4 - What Changes in HR Practices
Would you Recommend?
Assignments must be clearly outlined before an employee
accepts – contracts/agreements should be signed by all
parties involved, if possible. This benefits both the employee
and the Company, to ensure clarity on the assignment
parameters for all.
Assignments of shorter duration and closer proximity to an
employee’s home base should be packaged by HR as “optimal
opportunities” to incent participation in the program.
Provisions
should be made as to pay or to special
accommodations for expats.
Social programs and/or cultural counseling for expats and
their families should be offered on a continual basis while on
assignment.
Information about living abroad and/or immersion training
should be readily available and easy to access at all times.
There are many professional, affordable online services for
this. 10
Research behind our
recommendations:
 Over two thirds of international employers now allow a degree of flexibility
(compared with 50% in 2007) to at least one aspect of their chosen pay
method in order to manage different international mobility objectives and
situations. The areas where changes are more commonly made to
standard policy include:
◦ modifying specific aspects of pay policy either with respect to business objectives,
seniority or the degree of mobility required. This is most commonly cited in the
case of assignment objectives being career development/ talent management and
graduate training (41%)….
◦ accommodating employee’s personal circumstances (e.g. single parents;
unaccompanied assignees; couples working for the same company and expatriated
to the same location). For the latter, for example, the most commonly cited
approach is to provide assignment allowances and benefits (e.g. accommodation,
COLA, mobility incentive allowances) according to family size, assuming just one
working partner.
http://www.eca-international.com/news/articles/7889/Under_pressure__evolving_expatriate_pay_policies_to_meet_increasing_variety#
.VkYP17erTcs
 Company-sponsored internal/external social networks and active communication
plans also play a critical role…. The authors find that organization providing
strong in-country social networks and more satisfied and higher performing
expatriates (Guy, p. 389).
Guy, B. S., & Patton, W. “Managing the Effects of Culture Shock and Sojourner Adjustment on the Expatriate Industrial Sales Force.”
Industrial Marketing Management. 1996. 25(5), 385-393.

 Dickmann’s research also supports organized social networking support for

expatriates. Many of the respondents felt “it was difficult to build local networks
due to the added pressures to perform in order to ‘justify higher costs’ (Dickmann, p.
404).
Dickmann, M., & Harris, H. “Developing Career Capital for Global Careers: The Role of International Assignments.” Journal Of World11
Business. 2005. 40(4), 399-408.
More on typical Expat packages
components:
Base salary - primary component of a package of allowances which are:
◦ Foreign service premium,
◦ Cost-of-living allowance,
◦ Housing and utility allowance,
◦ Basis for in-service benefits and pension contributions.

Foreign Assignment inducement/hardship premium depends on:

◦ Length of assignment,
◦ Actual hardship caused due to transfer or physical risk of the new assigned
country,
◦ Tax paid to foreign governments.

Various allowances are paid to expatriates depending upon the

assignment.
◦ Cost of living allowance (COLA),
◦ Housing and utility allowance
◦ Home leaves and travel allowance (includes flight expenses to home country)
◦ Education allowances for children education (tuition, language class, books,
uniforms etc.)
◦ Relocation allowances (cover shipping, moving, temp living expenses etc.)
◦ Tax Equalization Payments to protect the expatriate from negative tax
consequences.
 Adjusts an employee’s base income so that they will not pay any more or less tax than in the home
country 12
Typical Factors for Expat
Allowances:
Nature of the Employment
◦ Local-to-local:
 Working abroad for a local employer. Local package inline with local employees
◦ Local-to-expat:
 Expats working for a local company abroad likely because of skills and expertise.
 Higher salary than the local workers, more holidays and possibly less working hours.
 Unlikely to receive any kind of expat package aside from relocation costs.
◦ Expat-to-local:
 For people working for an international company, but still on a local contract.
 Many small businesses work like this as they cannot afford the expensive expat
packages
 There will not be much difference to a local contract with a local company

Contract duration and termination notice

◦ Long-term expat packages:
 Large corporations, generous expat package, attract to move overseas
◦ Short-term expat packages:
 Six months or less, w/o holiday entitlement and school fees

Governing Law and Jurisdiction

◦ Contract modified as per local law:
 No standard contract, clauses and inclusions modified according to foreign
jurisdiction
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Scarlett, Robert H and Lawrence E. Koslow, J.D., Ph.D. Global Business. 1999. Gulf Publishing Company.
Other interesting reads/sites
 http://www.ybosson.com/pdf/Summary_report.pdf
 https://expatexplorer.hsbc.com/survey/files/pdfs/ove
rall-reports/2014/HSBC_Expat_Explorer_2014_report.pd
f
 http://www.transitionsabroad.com/listings/living/
 http://smlr.rutgers.edu/assessing-expatriate-success-
beyond-just-being-there
 http://blogs.wsj.com/expat/2015/08/31/is-the-expat-life
-right-for-you-find-out-by-asking-yourself-these-questi
ons/
 ttp://blogs.wsj.com/expat/2015/03/18/divorce-global-st
yle-for-expat-marriages-breaking-up-is-harder-to-do/
 http://blogs.wsj.com/expat/2015/07/06/portrait-of-a-t
railing-spouse-dependent-dejected-and-learning-to-giv
e-herself-some-slack/
 http://www.eca-international.com/news/articles/7889
/Under_pressure__evolving_expatriate_pay_policies_t 14
Take-Aways
Mobility is a necessity in today’s global marketplace.
International companies should work toward robust
programs for their expats if they wish to compete on a
global scale and to retain their best talent.
Mobilityis not “a rationalist’s” domain. Although
overarching expatriate policies must be put into place,
the system must remain flexible enough to meet
employees’ changing needs. It is not a sideshow!
Employees accepting expat assignments face special
challenges and should be accommodated in order to
reduce risk of turnover.
◦ Global assignments amplify the risk of employee turnover, and failed
expatriate assignments are estimated to cost an organization from
$250,000 to $1,000,000 in overall expenses and lost employee
productivity (White, p. 326)
White, D. W., Absher, R. K., & Huggins, K. A. (2011). The Effects of Hardiness and Cultural Distance on Sociocultural
Adaptation in an Expatriate Sales Manager Population. Journal Of Personal Selling & Sales Management, 31(3), 325-
337.
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THANK YOU

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