Retaining Repatriates: The Role of Organizational Support Practices

Retaining Repatriates : The Role of Organizational Support Practices Mila Lazarova

Paula Caligiuri

The issue of repatriate turnover continues to be a challenge for many multinational companies today . This article describes several repatriate support practices offered by organizations-and how effective they are at lowering repatriates' turnover intentions . We found that supportive repatriate practices offered by companies improved the repatriates' general perceptions about their companies . Repatriates who were offered more of these supportive practices, and believed that such programs were relevant and important for their successful repatriation, felt as though their company cared about their overall well-being-and ultimately, had a greater desire to remain with the company upon repatriation . These findings were based on a study with 58 expatriates from four North American-based multinational organizations .

ultinational corporations today have recognized the critical role that human resources play in global competitiveness . In particular, a developed pool of global leaders is indispensable for operating successfully outside of the domestic market . multinational companies Many (MNCs) use expatriate assignments as a leadership development tool . These

M

Mila Lazarova, School of Management & Labor Relations, Rutgers University, 200E Janice Levin Building, 94 Rockafeller Road, Piscataway, NJ 08854, USA. Tel: (732) 445-0742; Fax : (732) 4452830 < [email protected] .edu > . Paula Caligiuri, School of Management & Labor Relations, Rutgers University, 200B Janice Levin Building, 94 Rockafeller Road, Piscataway, NJ 08854, USA. Tel: (732) 445-5228; Fax: (732) 445-2830 < [email protected] .edu> .

MNCs often send their managers and executives internationally in an attempt to develop their knowledge of the international economic environment and their ability to work and manage effectively across national borders (Tung, 1998) . Repatriates, who have completed a global assignment, can help establish and expand an MNC's international business because they possess first-hand knowledge of particular cultural contexts, including information about specific markets and customers . Repatriates understand how the company is perceived in another country and are part of a global social network that can advance the company's business around Retaining Repatriates

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the world (Downs & Thomas, 1999) . Repatriates have an irreplaceable role in organizational learning, given that they can accelerate the transfer of knowledge from host countries to headquarters, and vice versa . For these reasons, many companies view their repatriates as an important human capital investment (Caligiun & Lazarova, 2000 ; Downes & Thomas, 1999 ; Tung, 1998) . Despite the strategic and financial importance of repatriates, there is plentiful evidence that MNCs often fail to capitalize on these human investments, because many of their assignees leave the company after the assignment is completed . According to the 1999 Global Relocation Trends Report, 12% of expatriate employees leave within a year of returning and 13% leave within the following year, or a total of 25% within two years after repatriation (Windham International, NFTC, & SHRM, 1999) . Considering the large investment to develop, maintain, and transfer global assignees, losing an employee with valuable expatriate experience is costly and can affect the MNC's bottom line . Moreover, the loss of an internationally proficient employee often indirectly translates into providing advantage to direct competitors, as repatriates are likely to find jobs with competitors, thus providing the competitors with valuable human assets . In addition, high turnover among repatriates compromises the company's ability to recruit future expatriates because it signals to other employees in the company that, despite the stated message to the contrary, international assignments may have a negative impact on one's career 390

Journal of World Business / 36(4) / 389-401

(Downs & Thomas, 1999) . Given this strategic human capital issue, ways to predict repatriate retention and lower their turnover is an important challenge facing organizations today (Black, Gregersen, & Mendenhall, 1992, 1992a ; Gregersen & Black, 1995 ; Stroh, 1995) . The present study will address this challenge by focusing on the repatriate support practices currently offered by organizations-and how effective they are at lowering repatriates' turnover intentions .

PREDICTORS OF REPATRIATE TURNOVER

Previous studies on repatriation have suggested that various factors affect whether expatriates remain with their company upon repatriation . Some of these factors include : being placed in nonchallenging jobs, lack of promotion opportunities, loss of status and autonomy, lack of career planning and counseling, lack of support on behalf of managers and colleagues, and sluggish career advancement (Adler, 1981 ; Abueva, 2000 ; Black et al., 1992) . Of these many factors, it is not, surprising that the most important one is the repatriates' perception of how well the MNCs managed their repatriation process (Feldman & Thompson, 1993) . This suggests that if the potential repatriation problems are considered, and appropriately addressed, by the MNC in advance, repatriate turnover will occur less often (Harvey, 1989) . Thus, the repatriates who perceive that they have more support from their organization will be more committed to that organization-and will be more likely to stay with it after repatriation .

It is important to note that the key issue here is the repatriates' perceptions. While the implementation of a particular repatriation practice is an objective fact (i .e., it is either offered or not), the individual perceptions about the value and usefulness of a given practice are much more subjective . This is an important distinction . In this study we demonstrate that it is the repatriates' subjective perceptions of their organization's support, rather than an objective assessment of whether certain practices exists, that will have the greater influence on whether they will remain with the organization upon repatriation .

PSYCHOLOGICAL CONTRACT AND INTENTIONS TO TURNOVER

It is well understood that repatriates want their companies to value their international experience . As such, repatriates will mentally calculate an equity equation : comparing their perceptions of the rewards and recognition the company has given them for taking the assignment, relative to the sacrifices and contributions they have made for their company during the assignment. In this mental equation, the greater the perceived equity, the greater the likelihood that they will remain with the company upon repatriation . This suggests a type of mental exchange, or psychological contract, between expatriates and their employers . In particular, the psychological contract is defined as an employee's beliefs about the obligations that exist between himself or herself and his or her organization . The psy-

chological contract is based on the employee's overall perceptions of the long-term exchange of fairness with the company, rather than on any specific (and quantifiable) obligation (Rousseau, 1990) . Given the perceived sacrifice involved in relocating one's family to another country for the sake of the company, it makes intuitive sense that the psychological contract would apply to expatriates (Guzzo, Noonan, & Elron, 1994). In a study testing the perceived psychological contract with expatriates, the expatriates rated their general perceptions of their organization's support and judged its sufficiency at providing assistance while they were on assignment. This study found a negative relationship between the perception of the support practices offered to the expatriates and the expatriates' turnover intentions (Guzzo et al ., 1994) . Extending the concept of the psychological contract to repatriates, the present study tests whether repatriates' perceptions of the level of fulfillment of the psychological contract are related to their intentions to turnover . We hypothesize that the more positively repatriates rate their company's support practices (i.e., the more they feel that their psychological contract with the company is fulfilled), the more positively they will rate their general perceptions of organizational support . The perceptions of organizational support will, in turn, be related to repatriates' commitment to the organization-and, more importantly, will affect whether they will remain with their organization upon repatriation (see Figure 1) . Retaining Repat-iates

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Figure 1 Repatriation Support Practices and Repatriate Turnover Intentions .

Repatriation Support Practices

Repatriates' Perceptions of Their Organization's Overall Support

THE REPATRIATES SURVEYED

Repatriates from three U .S .-based and one Canadian-based MNC participated in this study . Two MNCs were from the telecommunications industry, one was from the aerospace industry, and one was from the electrical equipment appliances industry . Overall, 175 repatriates were sent surveys . Fifty-eight re-

Repatriates' Level of Commitment to Their Organization

Repatriates' Intention to Leave (or to Stay with) Their Organization

spondents returned the survey, for a response rate of 33% . Table 1 provides more demographic information about the repatriates in this study . All data were collected by survey questionnaires . At the time of data collection, all of the respondents were still employed by the organization that had repatriated them . The majority of

Table 1 Demographic Profile of the Respondents

39 2

• Gender

• Male (79%), Female (21%)

• Mean age

• 42 .2 years

• Country of origin

• U .S .A. (59 .6%) ; Canada (28 .1%) ; Japan (5 .3%) ; Australia (1 .8%) ; China (1 .8%) ; the Dominican Republic (1 .8%)

• Education

• High School (13%), Bachelor's degree (51 .9%), Master's degree (33 .3%), Ph .D . degree (1 .8%)

• Average tenure with expatriating company • Average length of assignment

• 12 years

• Number of expatriate assignments

• One (65%) ; More than one (35%)

Journal of World Business J 36(4) 1389-401

• 2 .7 years

Table 2 Availability and Perceived Importance of Repatriation Practices Mean Importance Scores

Repatriation Support Practices

Std. Dev .

Average Availability (%) 45 .6

1.

Predeparture briefings on what to expect during repatriation

3 .16

1 .09

2.

Career planning sessions

3 .57

0.75

36 .2

3.

Guarantee/agreement outlining the type of position expatriates will be placed in upon repatriation

3 .28

0.88

23 .2

4.

Mentoring programs while on assignment

2 .96

0.98

19 .3

5.

Reorientation program about the changes in the company

2 .81

1 .07

10 .3

6.

Repatriation training seminars on the emotional response following repatriation

2 .67

1 .07

13 .8

7.

Financial counseling and financial/tax assistance

3 .17

0 .94

36 .8

8.

Lifestyle assistance and counseling on changes likely to occur in expatriates' lifestyles upon return

2 .51

1 .04

17 .9

9.

Continuous communications with the home office

3 .38

0 .81

50 .9

10.

Visible signs that the company values international experience

3.70

0 .50

28 .1

11 .

Communications with the home office about the details of the repatriation process

3 .47

0.68

46 .3

Note: aBased on a scale from (0) not important at all to (4) very important .

the repatriates had returned from their expatriate assignment within the year of the data collection . Those who had had been on multiple expatriate assignments were asked to provide answers to the survey questions based on the last repatriation with their current company . We collected data on the 11 human resource practices most often associated with a successful repatriation program (Caligiuri & Lazarova, 2001) . See Table 2 for a list of these 11 practices . For each practice, we asked the respondents two questions : (1) whether the specific practice was offered to them upon their repatriation, and (2) to what extent they believed each practice was important for their successful repatriation . We used

the repatriates' responses to both questions to create an overall rating of the perceived importance and value of the repatriation support practices they were offered by their companies . (This overall rating represented the extent to which repatriates felt that their psychological contract was fulfilled on behalf of their organization .) Table 2 presents the average importance rating for each practice and the extent to which each practice was available within the participating companies . We also collected data on the repatriates' perceptions of overall organizational support, their organizational commitment, and their intentions to turnover . (See the Appendix for details about these measures and their statistical properties .) Retaining Repatriates

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RESULTS

We tested the model in Figure 1 with structural equation modeling and multiple regression . The results suggest that repatriation support practices are positively related to perceptions of organizational support-which, in turn, are directly associated with repatriates' intentions to stay (or leave) their organizations . This finding suggests that all of the paths in the model were significant, except for path between repatriation support practices and organizational commitment . Thus, we found that the relationship between perceptions of organizational support and turnover intentions is direct . Figure 1 shows our original model that includes organizational commitment and its relevant links with the rest of the model (indicated by dotted lines). It also shows our actual results that suggested a revision in the model (indicated by solid lines) . The Appendix provides details about the statistical analyses conducted .

DISCUSSION AND PRACTICAL IMPLICATIONS

It is clear from this study that repatriation practices offered by organizations are positively associated with repatriates' desire to remain with (or leave) their organizations . In particular, the availability of repatriation practices and their perceived importance for successful repatriation are related to repatriates' perceptions of how much the organization values and supports them . The repatriates who perceive higher levels of organizational support have lower intentions to leave their organiza394


tion. Thus, the way in which repatriation programs affect the repatriates' perceptions of the company should be of particular importance for making decisions regarding which repatriation programs to offer . The effect of organizational commitment was not relevant with this particular sample as a predictor of intention to remain with the organization . This suggests that employees may remain with the MNC only if they feel that the company values and supports them, rather than because of a greater sense of company loyalty or organizational commitment . This finding makes intuitive sense in today's environment of "boundaryless" careers and "boundaryless" organizations- where individuals may manage their careers across a variety of organizations (Tung, 1998 ; Inkson, Arthur, Pringle, & Barry, 1997) . After years of restructuring, reengineering, and outsourcing, companies have shown that the notion of lifetime employment and security belongs to the past. Many employees believe that to develop and sustain their own careers, they need to be self-directing and flexible, constantly learning and upgrading their skills, and ready to change employers whenever that change would land them at a better position with another organization (Rogers, 1995) . In this "boundaryless" context, it is a likely scenario that organizational support of career investment activities through relevant repatriation practices may encourage retention-but without necessarily positively influencing longterm loyalty . Our results indicated that the surbelieved that veyed repatriates

company-wide appreciation of global experience and career planning sessions were the two most important elements in an MNC's repatriation system-and that their lack thereof was likely to generate unfavorable attitudes towards the company, and ultimately, lead to turnover. The verbatim responses of some the repatriates illustrate this point : "Repatriation was a big disappointment . One is forced to fit back as a cog in the wheel . . . . North American management does not know how to exploit the talent developed abroad . Having gained experience is a premium . . . I suspect a lot of the [company's] repatriates will leave within 2 years" (Repatriate after 5 years in India) . "There was no assistance or concern about where I would return to . I think that our corporation can benefit from the experience I gained abroad, but no one asked me for any information . It is as if I never went . It is too bad the company spent all this money and effort for me for 2 years and fails to capitalize on its investment" (Repatriate after 2 years in Turkey) .

These and other comments provided by the participants in the study also suggest evidence for poor integration of the central and the global HR function and a lack of coherent repatriation policies in the MNCs . Some repatriates felt like they were "forgotten by management." Moreover, a large part of them indicated that the main reason why they had a position after return was because of their own contacts and extensive networking . It was unclear from these data whether the repatriates actually believed that the positions that they now held were better (or worse) than the

ones they had before their expatriate assignment . Presumably, those repatriates who believed that they had advanced as a result of taking a global assignment would be more likely to feel supported in their career and, therefore, more likely to stay with the organization . As this and other studies have pointed out, the key to retention after repatriation is creating an environment appreciative of global experience. This means that the MNC must provide support to the expatriate during all stages of the international assignment . Expatriation and repatriation are not two separate processes, but rather expatriation is the initiation, and repatriation is the culmination of the same process . In reality, most activities that ensure high retention after repatriation happen duringrather than after-the expatriate assignment. Constant communication between the home office and the expatriates during the assignment is a critical element of successful repatriation . While still on assignment, the expatriate should be offered extended home visits that are timed with networking activities to help the expatriate maintain high visibility at the office. The expatriate should also be included on e-mail lists, sent all company's newsletters, and actively encouraged to communicate with colleagues and mentors back home . A proactive repatriation system starts with an effort to manage expatriates' expectations even before they leave for assignment . Organizations should make an attempt to detail for the expatriate what to expect while on the assignment and what to expect upon return . To manage these expectations, former reRetaining Repatriates

395

patriates can be asked to brief future expatriates to help reduce the ambiguity of the global assignment . Another recommendation to reduce ambiguity about the expatriates' future is to offer them a written guarantee or repatriation agreement . This repatriation agreement outlines, to the extent possible, the type of position expatriates will be placed in upon return from their global assignment . Career planning is another critical function for retaining repatriates upon repatriation . Before repatriation, MNCs should offer multiple planning sessions to discuss the expatriate's concerns regarding repatriation, such as career objectives. The intention of these careerplanning sessions is to give the expatriate a sense of security regarding his or her future with the company . This planning may utilize the skills of a team, including HR, the sending manager, and the business unit leader . Company-wide circulation of expatriate resumes pinpointing key points from international activities and experience in advance of their repatriation is an example of a program that would help expatriates find appropriate positions upon return (Hauser, 1999) . For some types of assignments, another approach to increase repatriate retention rates would be to shorten the length of the assignment . The shorter the period the expatriate is out of the headquarters, the easier his or her reintegration to home company will be . The effect of difficulties such as prolonged invisibility and continued lack of communication with one's domestic managers and colleagues will be minimized and the interruption of one's domestic 396


track record will be less likely to result in negative career effects . It must be stressed that this will only work for certain types of jobs, because some jobs cannot be accomplished remotely-or in a short period of time . The benefits of instituting shorter assignments should be assessed against the needs of fully completing projects abroad, adequately adjusting to the foreign setting and gaining valuable cross-cultural competencies, and permitting a certain degree of continuity for the host nationals . To help in the personal reintegration upon repatriation, organizations could offer a reorientation program to brief returning expatriates on the changes in the company, such as policies, personnel, strategy . This would be provided immediately upon return from the assignment, when the repatriate returns to work . MNCs should also ensure that the first several weeks after the repatriate returns are relatively "slow" in terms of reduced hours and travel schedules and extended vacation time . Given the pressures of repatriation both at home and at work, it should be recognized that allowing for some "down time" (i .e., without added demands from the organization) may help repatriates' adjustment (Harvey, 1989) .

LIMITATIONS AND FUTURE RESEARCH DIRECTIONS

The limitations of this study, as all studies, should be considered when interpreting its findings . An admitted limitation is that all of our data were collected at one point of time . We believe that perceptions of support precede turnover

intentions-but it may be argued that turnover intentions would precede perceptions of support. The best statement we can make on the basis of our data are that the variables in the model are related . Longitudinal data should be collected to gain assurance that the relationship between the variables is truly causal . In addition, our sample was relatively small, raising the concern of statistical power and making some higherlevel analyses impossible to conduct . Moreover, at the time of our study, all of the repatriates in our sample were still with the companies that had sent them on assignment . This is critical, given that we could not isolate the effect of these repatriate support practices from the other HR practices within the system . For example, if all of those who were repatriated remained, there might have been other supportive practices (other than the repatriation practices) that the company offered which affected retention . We should note, however, that company HR representatives in each of the participating companies all indicated that repatriation had been a concern for them . Because we only studied those repatriates who had remained, we could not investigate whether there were any systematic differences between those who stayed and those who quit . This is an important distinction given that those who have actually left the company have insight into why they left, as opposed to why they might leave . Future studies to obtain data from both groups and compare their responses . Given that there were only four companies in this study, intercompany comparisons could not be conducted . In par-

ticular, we could not investigate whether companies differed on the support they provided to their repatriates on the basis of a variety of organizational characteristics . It may be the case that some companies are more "global" in terms of their mindset, organizational culture, and the structure of their operations . These companies are likely to value expatriate experience more than other companies and provide better support for their repatriate employees upon return . Future studies should collect data from multiple companies and should attempt to determine whether any such patterns exist across different companies . Future studies should also consider other organizational characteristics that may affect the support provided to repatriates upon return, such as organizational age, size, and industry, as well as the quality of the overall HR system of the company . In addition, the repatriates in our sample were predominantly North Americans from MNCs based in the U.S.A. or Canada . It may be the case that the nature of organizational support, how it is perceived, how it is valued, and so forth differ across cultures . Therefore, future research should collect data from larger and nationally diverse samples of repatriates . Another issue to be considered by future studies is whether the organizational support provided to repatriates differs according to the type of global assignment . Caligiuri (1998) has suggested four categories of global assignments: (1) Technical, (2) Developmentall High Potential, (3) Strategic/Executive, and (4) Functional/Tactical . The four proposed types of assignments differ on straRetaining Repatriates

397

tegic purpose, performance objectives, exposure to interaction with the host culture, and length of time spent in the host country . It is likely that company support may differ (and should differ) depending on whether the purpose of an assignment is developing global talent or filling a technical position because of lack of local expertise. Past literature provides ample evidence of the importance of career issues for repatriates (Inkson et al ., 1997 ; Feldman & Thompson, 1993 ; Tung, 1998) . Tung's (1998) study suggests that "boundaryless" careers are becoming the pattern for international assignees-as with other "high demand" professionals (such as, information technology engineers) . A boundaryless career assumes that individuals will move from one company to another to pursue the best opportunities for their own professional development . Recently, authors have suggested that professionals may accept global assignments to gain the additional skills and experience that they perceive to be valuable for their advancement in their career, not in their company (Inkson et al., 1997 ; Tung, 1998) . In this present study, the lack of support for the role of organizational commitment seems to be further signaling this trend-and this is certainly an important topic for future research . It will be especially interesting to explore whether international experience changes employees so that they become more committed to their careers and their own career development, rather than more committed to their organizations . To critically evaluate these ideas, future studies should collect longitudinal data by tracking ex398


patriates throughout and after their global assignments .

CONCLUSION

The context of expatriation and repatriation is changing which creates new implications for HR professionals . With the rise of globalization and the colossal scale of the global economy, international experience is becoming a critical asset for global organizations. International assignment experience is rare, valuable, and hard to imitate . In the right context, it can create competitive advantage-both for the individuals and for the companies that employ them (Carpenter, Sanders, & Gregersen, 2000). To be able to capitalize on their repatriates' skills and knowledge, MNCs need to cultivate a global vision and corporate culture that supports repatriates and values international experience and its contribution to the strategic development of the company . Acknowledgment : A previous version of this manuscript was presented at the 2000 Annual Academy of Management Meeting in Toronto, Canada.

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APPENDIX

Table A1 Measures • Respondents asked if each of the 11 repatriation practices (see Table 2 for a complete list of practices) were available to them (Yes = 1, No = -1) ; • Respondents were asked to rate how important each of the 11 practices were for successful repatriation (Anchors : (4) very important, to (0) not at all important) ;

• Availability of repatriation practices • Perceived importance of repatriation practices • Level of fulfillment of the psychological contracts

• Measured by multiplying the "importance scores" by the "availability scores" . The possible scores on this measure ranged from -44 to 44, and the true range was -44 to 29 ;

• Perceived organizational support'

• Measure suggested by Eisenberger, Hunington, Hutchison, & Sowa (1986) . Sample item : "The organization really cares about my well-being" . Alpha = .96 • Measure suggested by Meyer and Allen (1997) . Sample item : "I feel strong belonging to my organization" . Alpha _ .86 • Based on Wayne, Shore, & Linden (1997) . Sample item : "I do not intend to leave [my companyl in the near future." Alpha = .80 .

• Affective organizational commitment' • Turnover intentions'

Notes :

9ndicated by "Repatriation Support Practices" in Figure 1 . b Likert type scales . Anchors were (1) strongly disagree to (5) strongly agree .

Table A2 Mean, SD, and Bivariate Relationships Among Variables M

SD

1

-1 .30

1 .73

2 . Perceived organizational support

3 .29

.93

.65**

3 . Affective organizational commitment

3 .53

.92

.26

4 . Turnover intentions

2 .13

.87

- .36**

1 . Level of fulfillment of psychological contract

Notes : N

400

= 58 ; **p < .01 .


2

3

52** - .53**

- .43**

Table A3 LISREL Analyses a • The factor loadings for the latent variables were fixed using the reliability of the scales measuring the relevant constructs . The lambdas between the observed and the latent variables were set to equal the square root of the reliability of the respective scale ; • The measurement error in each observed variable was fixed to (1-reliability) multiplied by the variance of the observed measure, that is, (1-reliability)*Variance ; • The correlation matrix was used as an input to the LISREL program ; • For the original model : (2)=7 .84,p < .05

• Root mean square error of approximation (RMSEA) = 0 .226 • Standardized root mean square residual (Standardized RMR) = 0 .106 • Adjusted goodness-of-fit index (AGFI) = 0 .683 Note :

BUsing LISREL 8 .30 (Joreskog & Sorbom,

1999)

statistical package .

Table A4 Exploratory Regression Analyses Steps I and III . Regression of intentions to turnover on level of fulfillment of the psychological contract and POS Model

Model

Variables

B

SE

1

Constant Level of fulfillment of psychological contract

1 .89

.14

2

- .18**

.06

3 .66**

.54

Constant Level of fulfillment of psychological contract

- .02

POS

- .47**

0.76

.14

/3

R2

Adj . R2

- .36**

.13

.28

OR2

~F

.11

.13

8 .36**

.25

.151

1 .24**

- .03

- .50**

Step II . Regression of POS on level of fulfillment of the psychological contract Variable Constant Level of fulfillment of psychological contract Notes :

Baron & Kenny's

(1986)

B

SE

3 .74**

.19

.35**

.06

approach to testing mediation was used

/3

.65**

Adj . R2

.41

F (1,56)

40 .33**

N = 58 ; p < .05*, p < .01 ** .

Retaining Repatriates

401