Expatriation: Why does it fail?

Did you know that the expatriate failure rate can reach 30% to 50% ?

The failure depends on the length, the timing and the destination of the expatriation.
Those risks can be dramatically reduced using relocation services as Expat US.

Knowing the failure rate of expatriation has become essential for businesses and regarding the costs related to those failures, companies can’t ignore the risks.
Indeed, the loss for the failed expatriation is estimated at about $2 billion / year just in the United States.

 

Main Reasons for Assignment Failure

The main indicators to measure the expatriation failures are:

·         The rate of premature return

·         The under performance of the employee

·         The early withdrawal of employees after their expatriation

 

The state of mind of the employee and its family is an important success factor for the mission.
Almost 60% of the premature returns are due to a bad adaptation of the expatriates themselves or their family. The employee sent abroad has to manage the process of adaptation to the culture of the host
 country but also the adaptation to the host company. 

 

Some features to take into account

The management of the relocation is expensive, but certainly less than an unsuccessful expatriate mission if you omit some parameters. For example an expatriate in the U.S. represents about 3 to 5 times the wage he earns in France.

When expatriation fails, there are many consequences to face. You have to deal with the loss of the immigration charges and obviously the money invested unnecessarily. On top of that you can add the loss of time due to the failure of the expatriation project and also the time needed to find a new candidate. This includes the preparation of this new employee and his family of course. You will have to start from scratch which can be especially annoying if the mission was urgent.

 

Commitment of the companies for the moving of their employees

In one hand, companies do not have direct obligations to participate in the management of the relocation. In the other hand, some of their engagements require them to do so indirectly.
For instance, companies have to protect their employees against any foreseeable risks. According to the law, the company is responsible for any incident. Therefore, it may be better to take over the apartment search, for example, to ensure that no risk weighs on the safety of the employee and its family. Using relocation services as Expat US is the better option to avoid any problems.

 

Expatriation failure: Some figures

According to the survey of 196 HR Managers (NFTC), here are the main causes of expatriation failures*:

 

  • Family unable to adapt to the host location = 30%
  • Employee unable to adapt to the host location = 28%
  • Voluntary termination = 27%
  • Stated objectives of the assignment not met = 26%

*multiple responses possible

 

Skills of the expatriate

Professional dimension of the mission (hard skills) is only one of several reasons of the failure but not the main one. The adaptability of workers (soft skills) are essential, not only for the expatriate but also for its family. All of these skills required have an impact and a cost for companies. According to this study, 46% faced premature return between 2008 and 2009.

 

Return of the expatriate

The cultural shock of return (as know as "Re Entry Shock") must be taken into account, which is very rarely the case. You can see the percentage of employees who leave the company between one and two years after their return from expatriation

 

Percent of assignees leaving in 1-2 Years (in %):

                   2004        2006        2010
   None            23               9             17
   1-25%          
69             78             68
 26-50%            8             13            10
  51-75%           0               0               3
76-100%           0               0               2

 

Mismatch between expatriate and its home company

Expatriated workers, even those who do well overseas, are often dissatisfied with their assignments upon return. They feel that they do not have the opportunity to put what they learned into practice. For this reason, some expatriate former employees decide to leave their companies.

 

Recommendation

As you know now, expatriation is a long and complex process that need to be handle by specialists. Expat US can assist you throughout your project providing you all the services needed for a good relocation. Expat US provides also extra services to make the employee feel supported from the beginning to the end. Our services commit to ensure a client-follow up during the 3 months following the end of the contract with the expatriate. 

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