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The decline of the traditional expat?

The evolution of global communications and technology was predicted by many to reduce the need for expatriates, with the expectation that many future operations would be managed remotely. The reality has proved very different.

Various studies indicate that the number of expatriates has continued to grow over the last 20 years. In this article, we look at the extent to which the traditional expatriate socio-demographic profile and remuneration package have changed during this time, and what the typical assignment of the future might look like.

Who is the traditional expat?
What is the current expat profile?
The typical ‘expat’ employee of the last century:
 
•    Male
•    Aged 35 – 50
•    Western European/North American
•    Accompanied by a wife and children
•    One-off 3 year assignment
•    Managing a local operation
Today:
 
•    Male
•    Aged 35 – 50
•    Now as likely to be Asian as Western
•    Accompanied/unaccompanied
•    Likely to be short-term, commuter or long-term
•    Managing a local operation/career development

What’s changed?

Over the last 20 years we have seen continuous growth in the number of employees sent on assignment. On average, well over 50% of companies have increased the number of assignments in any given year.1 Although there have been numerous economic shocks such as the Asian financial crisis of 1998, the economic downturn following September 11th and the global recession of 2008, that have slowed the growth of expatriate numbers, the effects have proved temporary. The decreases predicted by companies at the time rarely occurred to the extent forecast and have all been followed by a return to significant increases in expatriate numbers.

Chart showing changes in expat numbers vs global GDP 2
 

As well as the total number of expatriates increasing we have seen that there is growing complexity in terms of the number of home and host countries involved in an assignment, with expatriation from Asia driving a lot of the overall growth in numbers. The proportion of companies expatriating more than one nationality has gradually increased from an average of around 70% in the 1990s to around 90% since 2010, with over 50% of expatriating companies now managing employees from more than six different countries.

One of the main ways companies are responding to this increased diversity is by using different salary or policy approaches, depending on the circumstances. The percentage of companies now using more than one policy has increased from 11% in 2001 to 26% today. This increase also reflects the impetus to cut costs and use the most appropriate policy for the individual and assignment involved (while still being able to avoid the use of too many exceptions). This responsive approach should also put those companies in a better position to be able to deal with expatriate demographic variations in the future.

Unfortunately, the proportion of female assignees doesn’t reflect the diversity seen in the general workforce, although numbers have increased from 7% in 1994 to 12% in 2001. Since then, they have only increased by a negligible amount. The percentage of companies who have specific initiatives to encourage female assignees has decreased from 14% in 2004 to just 2% today, with most companies commenting that they continue to treat male and female employees equally. Although this may be the intention, it is evident that this is not reflected in the actual numbers of assignees. Clearly if companies do wish to increase their available talent pool, to include more women may require a more concerted effort.

We have also seen little change in the age profile of an assignee over the last 20 years. It is perhaps inevitable that younger employees are less likely to be considered for assignments while the experience required to manage a local operation is so fundamental to the assignment success (90% of companies stated this to be at least one of the purposes of assignments). Although career development has increased in importance it is often seen as an additional benefit to the assignment rather than the driving force behind it.

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The impact on policy

So far we’ve seen that despite the best intentions of many companies there are still a lot of similarities between the typical expat of today and those of the past, although the overall numbers and the diversity of home and host countries have significantly increased.

A substantial change that we have seen has been the increased use of alternatives to the long-term assignment. In 2008, nearly two thirds of international assignments consisted of long-term assignments (greater than one year, typically around three years). In 2014, that figure fell to just over half and is predicted to fall to just 45% in 2017.

For around the last ten years companies have been predicting that their assignment pattern will change to ‘multiple assignments throughout a career’, although very few have reported that this is actually happening. There are clearly signs that companies would like to change from the traditional ‘one-assignment in a career’ model but, so far, there has been limited success.

However, shorter-term assignments of 1-6 months are becoming more prevalent, now making up over 20% of all assignments. In fact, these assignment types have several advantages that may be helping companies overcome the barriers that have been preventing the diversity of assignees from increasing. They lend themselves well to career development moves and can therefore certainly help companies with their goal of sending employees on multiple assignments and targeting younger employees.

Changes in international assignment type

Short-term assignments, however, can be expensive and may require more efficient planning and tracking, both for the success of the assignment and also in compliancy terms. Short-term assignments should only be used where they are appropriate to achieve the aims of the assignment.


The impact on the expat

As well as the impact these changes have had at company level it is important to consider the effects on employees too.

Short-term assignments have often been used as an alternative to longer-term assignments where there has been a reluctance for the whole family to relocate. The impact on the family may, in fact, be greater if there is an increasing shift to short-term assignments throughout an employee’s career.

Frequent relocation can make it harder for employees and their families to settle into a host-country. Therefore, this type of assignment may be more appealing to single or younger employees. This disruption can also have a significant impact on family life while adversely affecting the employee’s performance during the assignment. This highlights the importance of considering both the operation’s objectives and the needs of the employee when planning the assignment.

What caused these changes?

Generally speaking, globalisation has been the key driver behind the changes. The dynamic growth achieved in developing countries, as many developed economies slow, has seen companies actively seeking new markets. In addition, there is a growing appreciation that a broad pool of talent is key to successful global operations, encouraging companies to look beyond the traditional employee and assignment pattern.

Technology has also had a significant impact. Despite not delivering the changes some people had predicted, it continues to have a big impact as communications enhancements make it easier to work in remote locations. At the same time cheaper, faster and more reliable transport links have made short-term and commuter assignments, as well as business trips, much more viable. The availability of information and data has also made it much easier to explore new markets with the internet’s unrivalled growth having a major impact on this.

What does the future hold for global mobility?

It is clear that sending employees to work overseas is more popular than ever before. While many companies try to diversify their pool of assignees along with their fields of operation, barriers still remain that are limiting progress.

Overall, it is clearly important for companies to see the assignment cycle in the wider context. By ensuring that the goals of future assignments are clearly identified, companies can tailor policy to complement the growing expatriate community in the increasing number of locations that they operate in. While organisations have the desire to diversify their international assignees’ socio-demographic profiles, they are evidently still some distance from achieving expatriate gender equality and enabling mobility for a wider pool of employees.

Managing Mobility Survey 2016

Later this year we will also be writing a report on the main findings from our Managing Mobility Survey 2016. This will provide new insights into many of the issues and trends mentioned in this article.

Please look out in the Events section of our website for upcoming presentations and webinars on the Managing Mobility Survey 2016.

Sources

1 Unless otherwise indicated, data in this article has been taken from ECA’s Managing Mobility and Expatriate Salary Management Surveys 1994-2015 and the Managing Variety Survey 2014.
2 Global GDP data from World Bank.


Further reading

Expatriate packages – are you getting yours right?

Managing short-term assignments

How relocation provision affects assignment success

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