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Managing International Assignments

International assignment management is one of the hardest areas for HR professionals to master—and one of the most costly. The expense of a three-year international assignment can cost millions, yet many organizations fail to get it right. Despite their significant investments in international assignments, companies still report a 42 percent failure rate in these assignments. 1

With so much at risk, global organizations must invest in upfront and ongoing programs that will make international assignments successful. Selecting the right person, preparing the expatriate (expat) and the family, measuring the employee's performance from afar, and repatriating the individual at the end of an assignment require a well-planned, well-managed program. Knowing what to expect from start to finish as well as having some tools to work with can help minimize the risk.

Business Case

As more companies expand globally, they are also increasing international assignments and relying on expatriates to manage their global operations. According to KPMG's 2021 Global Assignment Policies and Practices Survey, all responding multinational organizations offered long-term assignments (typically one to five years), 88 percent offered short-term assignments (typically defined as less than 12 months), and 69 percent offered permanent transfer/indefinite length.

Managing tax and tax compliance, cost containment and managing exceptions remain the three principal challenges in long-term assignment management according to a 2020 Mercer report. 2

Identifying the Need for International Assignment

Typical reasons for an international assignment include the following:

• Filling a need in an existing operation.
• Transferring technology or knowledge to a worksite (or to a client's worksite).
• Developing an individual's career through challenging tasks in an international setting.
• Analyzing the market to see whether the company's products or services will attract clients and users.
• Launching a new product or service.

The goal of the international assignment will determine the assignment's length and help identify potential candidates. See Structuring Expatriate Assignments and the Value of Secondment and Develop Future Leaders with Rotational Programs .

Selection Process

Determining the purpose and goals for an international assignment will help guide the selection process. A technical person may be best suited for transferring technology, whereas a sales executive may be most effective launching a new product or service.

Traditionally, organizations have relied on technical, job-related skills as the main criteria for selecting candidates for overseas assignments, but assessing global mindset is equally, if not more, important for successful assignments. This is especially true given that international assignments are increasingly key components of leadership and employee development.

To a great extent, the success of every expatriate in achieving the company's goals in the host country hinges on that person's ability to influence individuals, groups and organizations that have a different cultural perspective.

Interviews with senior executives from various industries, sponsored by the Worldwide ERC Foundation, reveal that in the compressed time frame of an international assignment, expatriates have little opportunity to learn as they go, so they must be prepared before they arrive. Therefore, employers must ensure that the screening process for potential expatriates includes an assessment of their global mindset.

The research points to three major attributes of successful expatriates:

• Intellectual capital. Knowledge, skills, understanding and cognitive complexity.
• Psychological capital. The ability to function successfully in the host country through internal acceptance of different cultures and a strong desire to learn from new experiences.
• Social capital. The ability to build trusting relationships with local stakeholders, whether they are employees, supply chain partners or customers.

According to Global HR Consultant Caroline Kersten, it is generally understood that global leadership differs significantly from domestic leadership and that, as a result, expatriates need to be equipped with competencies that will help them succeed in an international environment. Commonly accepted global leadership competencies, for both male and female global leaders, include cultural awareness, open-mindedness and flexibility.

In particular, expatriates need to possess a number of vital characteristics to perform successfully on assignment. Among the necessary traits are the following:

• Confidence and self-reliance: independence; perseverance; work ethic.
• Flexibility and problem-solving skills: resilience; adaptability; ability to deal with ambiguity.
• Tolerance and interpersonal skills: social sensitivity; observational capability; listening skills; communication skills.
• Skill at handling and initiating change: personal drivers and anchors; willingness to take risks.

Trends in international assignment show an increase in the younger generation's interest and placement in global assignments. Experts also call for a need to increase female expatriates due to the expected leadership shortage and the value employers find in mixed gender leadership teams. See Viewpoint: How to Break Through the 'Mobility Ceiling' .

Employers can elicit relevant information on assignment successes and challenges by means of targeted interview questions with career expatriates, such as the following:

• How many expatriate assignments have you completed?
• What are the main reasons why you chose to accept your previous expatriate assignments?
• What difficulties did you experience adjusting to previous international assignments? How did you overcome them?
• On your last assignment, what factors made your adjustment to the new environment easier?
• What experiences made interacting with the locals easier?
• Please describe what success or failure means to you when referring to an expatriate assignment.
• Was the success or failure of your assignments measured by your employers? If so, how did they measure it?
• During your last international assignment, do you recall when you realized your situation was a success or a failure? How did you come to that determination?
• Why do you wish to be assigned an international position?

Securing Visas

Once an individual is chosen for an assignment, the organization needs to move quickly to secure the necessary visas. Requirements and processing times vary by country. Employers should start by contacting the host country's consulate or embassy for information on visa requirements. See Websites of U.S. Embassies, Consulates, and Diplomatic Missions .

Following is a list of generic visa types that may be required depending on the nature of business to be conducted in a particular country:

• A work permit authorizes paid employment in a country.
• A work visa authorizes entry into a country to take up paid employment.
• A dependent visa permits family members to accompany or join employees in the country of assignment.
• A multiple-entry visa permits multiple entries into a country.

Preparing for the Assignment

An international assignment agreement that outlines the specifics of the assignment and documents agreement by the employer and the expatriate is necessary. Topics typically covered include:

• Location of the assignment.
• Length of the assignment, including renewal and trial periods, if offered.
• Costs paid by the company (e.g., assignment preparation costs, moving costs for household goods, airfare, housing, school costs, transportation costs while in country, home country visits and security).
• Base salary and any incentives or allowances offered.
• Employee's responsibilities and goals.
• Employment taxes.
• Steps to take in the event the assignment is not working for either the employee or the employer.
• Repatriation.
• Safety and security measures (e.g., emergency evacuation procedures, hazards).

Expatriates may find the reality of foreign housing very different from expectations, particularly in host locations considered to be hardship assignments. Expats will find—depending on the degree of difficulty, hardship or danger—that housing options can range from spacious accommodations in a luxury apartment building to company compounds with dogs and armed guards. See Workers Deal with Affordable Housing Shortages in Dubai and Cairo .

Expats may also have to contend with more mundane housing challenges, such as shortages of suitable housing, faulty structures and unreliable utility services. Analyses of local conditions are available from a variety of sources. For example, Mercer produces Location Evaluation Reports, available for a fee, that evaluate levels of hardship for 14 factors, including housing, in more than 135 locations.

Although many employers acknowledge the necessity for thorough preparation, they often associate this element solely with the assignee, forgetting the other key parties involved in an assignment such as the employee's family, work team and manager.

The expatriate

Consider these points in relation to the assignee:

• Does the employee have a solid grasp of the job to be done and the goals established for that position?
• Does the employee understand the compensation and benefits package?
• Has the employee had access to cultural training and language instruction, no matter how similar the host culture may be?
• Is the employee receiving relocation assistance in connection with the physical move?
• Is there a contact person to whom the employee can go not only in an emergency but also to avoid becoming "out of sight, out of mind"?
• If necessary to accomplish the assigned job duties, has the employee undergone training to get up to speed?
• Has the assignee undergone an assessment of readiness?

To help the expatriate succeed, organizations are advised to invest in cross-cultural training before the relocation. The benefits of receiving such training are that it: 3

• Prepares the individual/family mentally for the move.
• Removes some of the unknown.
• Increases self-awareness and cross-cultural understanding.
• Provides the opportunity to address questions and anxieties in a supportive environment.
• Motivates and excites.
• Reduces stress and provides coping strategies.
• Eases the settling-in process.
• Reduces the chances of relocation failure.

See Helping Expatriate Employees Deal with Culture Shock .

As society has shifted from single- to dual-income households, the priorities of potential expatriates have evolved, as have the policies organizations use to entice employees to assignment locations. In the past, from the candidate's point of view, compensation was the most significant component of the expatriate package. Today more emphasis is on enabling an expatriate's spouse to work. Partner dissatisfaction is a significant contributor to assignment failure. See UAE: Expat Husbands Get New Work Opportunities .

When it comes to international relocation, most organizations deal with children as an afterthought. Factoring employees' children into the relocation equation is key to a successful assignment. Studies show that transferee children who have a difficult time adjusting to the assignment contribute to early returns and unsuccessful completion of international assignments, just as maladjusted spouses do. From school selection to training to repatriation, HR can do a number of things to smooth the transition for children.

Both partners and children must be prepared for relocation abroad. Employers should consider the following:

• Have they been included in discussions about the host location and what they can expect? Foreign context and culture may be more difficult for accompanying family because they will not be participating in the "more secure" environment of the worksite. Does the family have suitable personal characteristics to successfully address the rigors of an international life?
• In addition to dual-career issues, other common concerns include aging parents left behind in the home country and special needs for a child's education. Has the company allowed a forum for the family to discuss these concerns?

The work team

Whether the new expatriate will supervise the existing work team, be a peer, replace a local national or fill a newly created position, has the existing work team been briefed? Plans for a formal introduction of the new expatriate should reflect local culture and may require more research and planning as well as input from the local work team.

The manager/team leader

Questions organization need to consider include the following: Does the manager have the employee's file on hand (e.g., regarding increases, performance evaluations, promotions and problems)? Have the manager and employee engaged in in-depth conversations about the job, the manager's expectations and the employee's expectations?

Mentors play an important role in enhancing a high-performing employee's productivity and in guiding his or her career. In a traditional mentoring relationship, a junior executive has ongoing face-to-face meetings with a senior executive at the corporation to learn the ropes, set goals and gain advice on how to better perform his or her job.

Before technological advances, mentoring programs were limited to those leaders who had the time and experience within the organization's walls to impart advice to a few select people worth that investment. Technology has eliminated those constraints. Today, maintaining a long-distance mentoring relationship through e-mail, telephone and videoconferencing is much easier. And that technology means an employer is not confined to its corporate halls when considering mentor-mentee matches.

The organization

If the company is starting to send more employees abroad, it has to reassess its administrative capabilities. Can existing systems handle complicated tasks, such as currency exchanges and split payrolls, not to mention the additional financial burden of paying allowances, incentives and so on? Often, international assignment leads to outsourcing for global expertise. Payroll, tax, employment law, contractual obligations, among others, warrant an investment in sound professional advice.

Employment Laws

Four major U.S. employment laws have some application abroad for U.S. citizens working in U.S.-based multinationals:

• Title VII of the Civil Rights Act.
• The Age Discrimination in Employment Act (ADEA).
• The Americans with Disabilities Act (ADA).
• The Uniformed Services Employment and Reemployment Rights Act (USERRA).

Title VII, the ADEA and the ADA are the more far-reaching among these, covering all U.S. citizens who are either:

• Employed outside the United States by a U.S. firm.
• Employed outside the United States by a company under the control of a U.S. firm.

USERRA's extraterritoriality applies to veterans and reservists working overseas for the federal government or a firm under U.S. control. See Do laws like the Fair Labor Standards Act and the Family and Medical Leave Act apply to U.S. citizens working in several other countries?

Employers must also be certain to comply with both local employment law in the countries in which they manage assignments and requirements for corporate presence in those countries. See Where can I find international employment law and culture information?

Compensation

Companies take one of the following approaches to establish base salaries for expatriates:

• The home-country-based approach. The objective of a home-based compensation program is to equalize the employee to a standard of living enjoyed in his or her home country. Under this commonly used approach, the employee's base salary is broken down into four general categories: taxes, housing, goods and services, and discretionary income.
• The host-country-based approach. With this approach, the expatriate employee's compensation is based on local national rates. Many companies continue to cover the employee in its defined contribution or defined benefit pension schemes and provide housing allowances.
• The headquarters-based approach. This approach assumes that all assignees, regardless of location, are in one country (i.e., a U.S. company pays all assignees a U.S.-based salary, regardless of geography).
• Balance sheet approach. In this scenario, the compensation is calculated using the home-country-based approach with all allowances, deductions and reimbursements. After the net salary has been determined, it is then converted to the host country's currency. Since one of the primary goals of an international compensation management program is to maintain the expatriate's current standard of living, developing an equitable and functional compensation plan that combines balance and flexibility is extremely challenging for multinational companies. To this end, many companies adopt a balance sheet approach. This approach guarantees that employees in international assignments maintain the same standard of living they enjoyed in their home country. A worksheet lists the costs of major expenses in the home and host countries, and any differences are used to increase or decrease the compensation to keep it in balance.

Some companies also allow expatriates to split payment of their salaries between the host country's and the home country's currencies. The expatriate receives money in the host country's currency for expenses but keeps a percentage of it in the home country currency to safeguard against wild currency fluctuations in either country.

As for handling expatriates taxes, organizations usually take one of four approaches:

• The employee is responsible for his or her own taxes.
• The employer determines tax reimbursement on a case-by-case basis.
• The employer pays the difference between taxes paid in the United States and the host country.
• The employer withholds U.S. taxes and pays foreign taxes.

To prevent an expatriate employee from suffering excess taxation of income by both the U.S. and host countries, many multinational companies implement either a tax equalization or a tax reduction policy for employees on international assignments. Additionally, the United States has entered into  bilateral international social security agreements  with numerous countries, referred to as "totalization agreements," which allow for an exemption of the social security tax in either the home or host country for defined periods of time.

A more thorough discussion of compensation and tax practices for employees on international assignment can be found in SHRM's Designing Global Compensation Systems toolkit.

How do we handle taxes for expatriates?

Can employers pay employees in other countries on the corporate home-country payroll?

Measuring Expatriates' Performance

Failed international assignments can be extremely costly to an organization. There is no universal approach to measuring an expatriate's performance given that specifics related to the job, country, culture and other variables will need to be considered. Employers must identify and communicate clear job expectations and performance indicators very early on in the assignment. A consistent and detailed assessment of an expatriate employee's performance, as well as appraisal of the operation as a whole, is critical to the success of an international assignment. Issues such as the criteria for and timing of performance reviews, raises and bonuses should be discussed and agreed on before the employees are selected and placed on international assignments.

Employees on foreign assignments face a number of issues that domestic employees do not. According to a 2020 Mercer report 4 , difficulty adjusting to the host country, poor candidate selection and spouse or partner's unhappiness are the top three reasons international assignments fail. Obviously, retention of international assignees poses a significant challenge to employers.

Upon completion of an international assignment, retaining the employee in the home country workplace is also challenging. Unfortunately, many employers fail to track retention data of repatriated employees and could benefit from collecting this information and making adjustments to reduce the turnover of employees returning to their home country.

Safety and Security

When faced with accident, injury, sudden illness, a disease outbreak or politically unstable conditions in which personal safety is at risk, expatriate employees and their dependents may require evacuation to the home country or to a third location. To be prepared, HR should have an evacuation plan in place that the expatriate can share with friends, extended family and colleagues both at home and abroad. See Viewpoint: Optimizing Global Mobility's Emergency Response Plans .

Many companies ban travel outside the country in the following circumstances:

• When a travel advisory is issued by the World Health Organization, Centers for Disease Control and Prevention, International SOS or a government agency.
• When a widespread outbreak of a specific disease occurs or if the risk is deemed too high for employees and their well-being is in jeopardy.
• If the country is undergoing civil unrest or war or if an act of terrorism has occurred.
• If local management makes the decision.
• If the employee makes the decision.

Once employees are in place, the decision to evacuate assignees and dependents from a host location is contingent on local conditions and input from either internal sources (local managers, headquarters staff, HR and the assignee) or external sources (an external security or medical firm) or both. In some cases, each host country has its own set of evacuation procedures.

Decision-makers should consider all available and credible advice and initially transport dependents and nonessential personnel out of the host country by the most expeditious form of travel.

Navigating International Crises

How can an organization ensure the safety and security of expatriates and other employees in high-risk areas?

The Disaster Assistance Improvement Program (DAIP)

Repatriation

Ideally, the repatriation process begins before the expatriate leaves his or her home country and continues throughout the international assignment by addressing the following issues.

Career planning. Many managers are responsible for resolving difficult problems abroad and expect that a well-done job will result in promotion on return, regardless of whether the employer had made such a promise. This possibly unfounded assumption can be avoided by straightforward career planning that should occur in advance of the employee's accepting the international assignment. Employees need to know what impact the expatriate assignment will have on their overall advancement in the home office and that the international assignment fits in their career path.

Mentoring. The expatriate should be assigned a home-office mentor. Mentors are responsible for keeping expatriates informed on developments within the company, for keeping the expatriates' names in circulation in the office (to help avoid the out-of-sight, out-of-mind phenomenon) and for seeing to it that expatriates are included in important meetings. Mentors can also assist the expatriate in identifying how the overseas experience can best be used on return. Optimum results are achieved when the mentor role is part of the mentor's formal job duties.

Communication. An effective global communication plan will help expatriates feel connected to the home office and will alert them to changes that occur while they are away. The Internet, e-mail and intranets are inexpensive and easy ways to bring expatriates into the loop and virtual meeting software is readily available for all employers to engage with global employees. In addition, organizations should encourage home-office employees to keep in touch with peers on overseas assignments. Employee newsletters that feature global news and expatriate assignments are also encouraged.

Home visits. Most companies provide expatriates with trips home. Although such trips are intended primarily for personal visits, scheduling time for the expatriate to visit the home office is an effective method of increasing the expatriate's visibility. Having expatriates attend a few important meetings or make a presentation on their international assignment is also a good way to keep them informed and connected.

Preparation to return home. The expatriate should receive plenty of advance notice (some experts recommend up to one year) of when the international assignment will end. This notice will allow the employee time to prepare the family and to prepare for a new position in the home office. Once the employee is notified of the assignment's end, the HR department should begin working with the expatriate to identify suitable positions in the home office. The expatriate should provide the HR department with an updated resume that reflects the duties of the overseas assignment. The employee's overall career plan should be included in discussions with the HR professional.

Interviews. In addition to home leave, organizations may need to provide trips for the employee to interview with prospective managers. The face-to-face interview will allow the expatriate to elaborate on skills and responsibilities obtained while overseas and will help the prospective manager determine if the employee is a good fit. Finding the right position for the expatriate is crucial to retaining the employee. Repatriates who feel that their new skills and knowledge are underutilized may grow frustrated and leave the employer.

Ongoing recognition of contributions. An employer can recognize and appreciate the repatriates' efforts in several ways, including the following:

• Hosting a reception for repatriates to help them reconnect and meet new personnel.
• Soliciting repatriates' help in preparing other employees for expatriation.
• Asking repatriates to deliver a presentation or prepare a report on their overseas assignment.
• Including repatriates on a global task force and asking them for a global perspective on business issues.

Measuring ROI on expatriate assignments can be cumbersome and imprecise. The investment costs of international assignments can vary dramatically and can be difficult to determine. The largest expatriate costs include overall remuneration, housing, cost-of-living allowances (which sometimes include private schooling costs for children) and physical relocation (the movement to the host country of the employee, the employee's possessions and, often, the employee's family).

But wide variations exist in housing expenses. For example, housing costs are sky-high in Tokyo and London, whereas Australia's housing costs are moderate. Another significant cost of expatriate assignments involves smoothing out differences in pay and benefits between one country and another. Such cost differences can be steep and can vary based on factors such as exchange rates (which can be quite volatile) and international tax concerns (which can be extremely complex).

Once an organization has determined the costs of a particular assignment, the second part of the ROI challenge is calculating the return. Although it is relatively straightforward to quantify the value of fixing a production line in Puerto Rico or of implementing an enterprise software application in Asia, the challenge of quantifying the value of providing future executives with cross-cultural perspectives and international leadership experience can be intimidating.

Once an organization determines the key drivers of its expatriate program, HR can begin to define objectives and assess return that can be useful in guiding employees and in making decisions about the costs they incur as expatriates. Different objectives require different levels and lengths of tracking. Leadership development involves a much longer-term value proposition and should include a thorough repatriation plan. By contrast, the ROI of an international assignment that plugs a skills gap is not negatively affected if the expatriate bolts after successfully completing the engagement.

Additional Resources

International Assignment Management: Expatriate Policy and Procedure

Introduction to the Global Human Resources Discipline

1Mulkeen, D. (2017, February 20). How to reduce the risk of international assignment failure. Communicaid. Retrieved from https://www.communicaid.com/cross-cultural-training/blog/reducing-risk-international-assignment-failure/

2Mercer. (2020). Worldwide Survey of International Assignment Policies and Practices. Retrieved from https://mobilityexchange.mercer.com/international-assignments-survey .

3Dickmann, M., & Baruch, Y. (2011). Global careers. New York: Routledge.

4Mercer. (2020). Worldwide Survey of International Assignment Policies and Practices. Retrieved from https://mobilityexchange.mercer.com/international-assignments-survey

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8 Tips for Preparing Expatriates for Foreign Assignments

Preparing expatriates for foreign assignments is a crucial undertaking for either expansion processes or short-term business travel. The challenge here is to ensure that the employees chosen to go work abroad do so successfully. Much of that effort will be produced by them, but even more important is for the wider company to provide support.

When moving and managing assets - in this case, your talented employees - you want to make sure that all that time and effort isn’t for nothing. You want to make sure the move is compliant and that workflows shared by your team and the expatriate employee are streamlined. 

So what do you need to focus on? Here are eight tips for preparing expatriates for foreign assignments in a successful mobility project. 

• Pre-Move Training
• Sourcing Immigration Support
• Ensure Continued Communication
• Provide Support On The Ground
• Undertake Project Alignment Meetings
• Invest in Knowledge Management
• Provide Home and Host Sponsorship
• Take Into Account Domestic Duties

1. Pre-Move Training

Preparation for expatriation is of utmost importance. This training needs to be well-researched, taking into consideration the potential challenges that employees and mobility teams might face. For example, identify:

Your potential challenges : For example, a specific country could require a specific tax set up for expatriates or business travelers. You’ll have to research the requirements that apply to your expatriation.

Strategies that help you deal with these issues: Some global organizations work with Professional Employer Organizations (PEO) in order to maintain compliance and work in line with cultural requirements. This is one potential solution that you might find appealing.

Areas for cultural training : Cultural expectations can be radically different in one country compared to another - while this may seem like the last thing to focus on, it’s worth spending time looking into cultural differences, just so no accidental faux pas are made.

The overarching goals of the assignment : An expatriation depends on all stakeholders having visibility and an understanding of the reasons for it. 

Local language training : Even if the host country has a good rate of use for your language, it’s worth helping your employee get to grips with the basics.

2. Sourcing Immigration Support

Immigration and the requirements therein are obviously crucial. Border controls, regulatory environments and immigration law are therefore all things to contend with. Now, these can be daunting and confusing, but it’s imperative to fully prepare for them, as they’re some of the first barriers to overcoming when expatriating an employee for foreign assignments. 

You need to make sure that you’re expatriation is in line with national and international immigration policy for both your home and host country. Similarly, visas and short-term or permanent residency applications need to be sent off for. Without these, alongside a considered approach towards global immigration , your overseas assignment won’t be able to continue. 

3. Ensure Continued Communication

Without communication, there’s no expansion. Home and host teams need to be on top of carrying out frequent communications, so that data is acted upon and problems can be solved collaboratively.

Assignees need to be proactive in this and so too do home teams. Communication allows organizations to leverage what’s being learned and respond actively to specific events. On top of that, communication needs to be structured so the learnings and updates shared are easily tracked. Monthly meetings and weekly check-ins are good places to start. 

4. Provide Support On The Ground

Alongside frequent communication, on-ground support also needs to be offered. This is a job for HR teams, who can help expats and their families (if applicable) adapt to their new surroundings. This kind of support covers:

• Finding accommodation.
• Creating bank accounts and setting up payroll in line with host-country regulations ( This is another obligation that a PEO can support you with ).
• Providing health insurance.
• Enrolling children in school (if applicable).
• Preparing accurate taxation processes.

Taxation is one thing to be aware of, as getting the process wrong can result in legal ramifications. Again, this is something a PEO can help support , as they can act as local Employers of Record, managing and deducting taxation at source - making sure your expatriate assignment is compliant in terms of taxation. 

5. Undertake Project Alignment Meetings

Once the critical information regarding the expatriate employee’s assignment, residency, taxation and other requirements has been exchanged with the relevant stakeholders and/or authorities, it’s time for a project alignment meeting.

This meeting should be held between the employee, a host manager or host team and home team. In it, you should identify the potential causes of friction for the assignment and work to strategize mitigation techniques. Similarly, go over mutual expectations held by the home and host team so that visibility and transparency are also captured. 

Overall, you’ll want to firmly pin down issues that may affect:

• Data collection.
• Reporting strategies.

6. Invest in Knowledge Management

Any assignment knowledge generated needs to be properly disseminated to the relevant parties, quickly and efficiently. These lessons are not only worthwhile for future expatriates, but for the wider company itself and how it approaches global marketplaces. 

When we ensure that learning is absorbed and spread across the whole enterprise, we help to reduce mistakes and delays in the future.

7. Provide Home and Host Sponsorship

As we’ve briefly discussed, having home and host teams managing the expatriate are important, but let’s cover that more in-depth. 

Communication via email isn’t the best way to manage a remote employee. To make sure the expat doesn’t feel cut off from home office processes, create teams or ‘sponsors’ that oversee the experience and work of the employee. 

Whether they be points of contact or mentors, these individuals (or wider teams) help to anchor an expat employee to the work in the home country, keeping them updated on any new developments. Both sides help to co-manage and resolve problems when they arise.

Sponsor individuals within the home country are best suited if they too have had experiences with expatriation, because a lot of this management is about empathy - not just looking for hitting the next performance goal. Expatriation is a difficult process, especially if the host country is a radically different place.

8. Take Into Account Domestic Duties

Another tip for preparing expatriates for overseas assignments is to make sure their family is supported.

Some expatriate employees have children and spouses, which sometimes do make an overseas assignment a lot more complex. These difficulties are usually hard to spot, as many employees will be reluctant to share them with employees, due to the size of the project and the personal nature of these difficulties.

It can be the case that the people most likely to be able to help are the last to know, so this is another thing that good communication can help with. From the home country team’s point-of-view, they need to inquire regularly about how the domestic side of the project is going. 

It needs to be made clear that any issues in regards to this need to be made known, but also that no judgment will arise from those issues being aired. Expatriation is a tough process for a family and businesses need to be supportive. This kind of transparency will dramatically help the overseas assignment. 

To discover more about overseas assignments and expansion, we’ve created a fantastic foundational guide that will help you when strategizing your next moves, be they domestic or international. 

The Guide to Global Expansion

There’s a lot of different info out there on the web about taking your business abroad - or even just sending an employee overseas. To help cut through the noise, our detailed guide will help your business’ journey to expansion.

Inside, you’ll discover more on expansion methods, the crucial considerations and further information on PEO. Just click the link below to get your copy.

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Expatriate Management (Best Practice Tips)

• Anne Morris
• 11 April 2020

IN THIS SECTION

Managing expatriates is a multi-stage process, where each stage can be crucial to the overall success of an overseas assignment for your business, as well as the individual assignee, on both a personal and professional basis.

The following guide looks at best practice for employers when deploying individuals overseas, including some important practical tips for expatriate management, from preparation through to repatriation.

Preparing expatriates for an overseas assignment

The management of overseas assignments can be a complex process for employers and HR personnel to get right, especially when trying to balance the cost of an assignment within the shifting demands of the global business environment against the individual needs of the expatriate.

By thoroughly preparing in advance of the assignment, and by properly investing in the necessary processes from the outset, you can help to minimise wasted expenditure and unnecessary costs at a later date. This can also help to avoid any loss of revenue, and even the potential loss of top global talent from within your organisation, resulting from a failed assignment.

The level of preparation required in the expatriate management process can vary depending on the nature and length of the overseas assignment, the location of the assignment, the number of assignees involved and the individual personal circumstances of each assignee.

In broad terms, however, your pre-assignment expatriate management process should include the following.

A comprehensive assessment of the nature and length of the overseas assignment needed to meet your business objectives, having regard to the flexibility offered by various different types of assignment, from business trips to permanent relocation. This process should also be carried out in the context of any prospective candidates, their level of experience and their personal circumstances. For the novice expatriate, the option of commuter and short-term assignments may be a sensible starting point.

The provision of an adequate compensation package to adequately incentivise prospective overseas assignees, attracting the best available candidates. This should include a suitable salary that matches or exceeds the typical salary that an employee would get paid in their home country for doing the same job, together with relocation costs and a cost of living allowance to reflect any additional daily expenditure in the host location.

Implement a thorough selection and vetting procedure for prospective assignees, ensuring they are suitably qualified and capable of undertaking the assignment in question. Each assignment will present its own unique challenges and demands, so you will need to match the right person to the job, having regard to the individual needs of the assignee in the context of the specific assignment and host location. This could include formal and informal assessments of their capabilities, career aspirations, physical and mental wellbeing, and whether they are emotionally equipped to withstand any cultural adjustment.

A full assessment of any travel and legal risks prior to deployment tailored to the specific assignment, the host destination and the individual assignee(s), ensuring that you fully research the country and region in which the assignee will be working. You should also keep abreast of any imminent changes that may affect the assignment or assignee prior to their deployment.

A pre-deployment programme of training and education for overseas assignees and their families, where applicable, about the host destination. This could include cross-cultural training and language classes, as well practical information about the region or city in terms of transport, education, recreation, healthcare services, and any safety and security issues. For those travelling to high-risk destinations this should also include security briefings and training on hostile environment awareness.

Supporting expatriates during an overseas assignment

Even with thorough preparation prior to the start of an overseas assignment and through to deployment, the provision of ongoing support for an expatriate during the lifecycle of their assignment can be key to its’ overall success.

A human-centric approach should be taken to expatriate management, where absent the right personal and professional support for your overseas assignees and their families whilst abroad, this could seriously affect the outcome.

The level of support required can again vary depending on the nature and length of the overseas assignment, its’ location t, the number of assignees involved and the personal circumstances of each assignee.

In broad terms, however, your active-assignment expatriate management process should include the following:

The provision of an ongoing benefit and support program to help assignees and their families integrate into their host destination. This could include local support, where you could consider outsourcing this role to a specialist who can help novice expats to settle into their new surroundings and signpost them to different services. You should also provide key HR contacts back home to address any personal or professional problems, or in the event of an emergency.

Ensure a positive employee experience, where psychological wellbeing and happiness while on an overseas assignment is strongly linked to expatriate success. This could include the use of informal introductions, employee-centric activities and social networking events on the assignee’s arrival in the host destination to help them integrate with their new work colleagues and other ex-pat families within your organisation.

Maintaining regular contact with your overseas assignees, ensuring effective coordination between management and HR, as well as any local support team in the host destination. Through clear communication you can help to pre-empt any problems that may lead to job dissatisfaction or difficulties with cultural integration. This can also help assignees to keep abreast of any workplace changes and not feel disconnected or isolated.

The provision of quality healthcare for maintaining the physical and mental health of your employees and their families. You should ensure that you opt for an international health insurance plan that offers the assistance and protection your assignee’s may need, including access to a 24-hour helpline that can be used to answer any medical or security questions, or facilitate the provision of emergency assistance, at a time when an assignee’s usual points of contact would not be available.

Remain fully informed of any risk factors that may impact on the assignment, where even relatively safe destinations can quickly become high-risk regions due to health, safety, security, political or social reasons. You should also be able to effectively communicate any such changes and important information to assignees working remotely, especially in relation to health and safety.

The effective use of technology, including data and analytics tools to make informed management decisions in respect of overseas assignments, from cost control to key performance indicators. Further, by providing overseas assignees with the right equipment and devices to do their job can help to maximise productivity, monitor their progress and even measure the assignee experience. This should include the provision of secure wireless networks, good connectivity and up-to-date software.

Making provision for expatriates following an overseas assignment

Having successfully completed an overseas assignment, this is not the end of the process for either you or the expatriate. The repatriation process, even though this is the last step in the expatriation lifecycle, can be just as challenging as the deployment process. In many cases this will involve a process of practical, mental and emotional readjustment for the assignee, as well as their families.

The level of support required for expatriates following an overseas assignment can vary depending on how long an assignee has spent abroad, the extent of any family ties back home and the nature of any role that they will be returning to.

In broad terms, however, your post-assignment expatriate management process should include the following:

The provision of an adequate repatriation package to adequately incentivise overseas assignees to return home to work for your organisation. This should include the potential for career progression or a suitably senior role to return to home to, ensuring that you retain your top talent and benefit from their overseas experience.

The provision of other initiatives to alleviate the risk of losing key employees, including a suitable relocation package following a long-term overseas assignment to enable an employee to easily move back to the UK. The issue of costs must always be balanced against the need to retain talent to ensure the continuity and success of your business for the future. Given their international experience, expatriates are open to being headhunted by your competitors, so the cost of financial incentives must be weighed against the risk of losing them altogether.

The use of debriefing interviews to capture lessons learned from the overseas assignment, making the most of any invaluable insight and new industry knowledge the assignee has gained from their experience abroad. This will help you to develop your business back in the UK and stay ahead of your competitors. This will also give you the opportunity to explore any career aspirations and potential options available to your assignee, as well as the possibility of any future overseas assignments.

Practical tips for effective expatriate management

Although statistically there can be a high failure rate for overseas assignments, the risk of an unsuccessful assignment can be minimised by applying the following practical tips to the expatriate management process:

• Carefully consider the assignment in the context of your business goals, including the nature of the assignment and number of assignees needed Offer adequate compensation packages to attract the best available candidates, including relocation and costs of living allowances.
• Implement a thorough selection and vetting procedure for prospective assignees, ensuring they are suitably qualified and capable of undertaking the assignment in question in the host destination.
• Thoroughly research the host destination for any travel and security risks, keeping abreast of any imminent changes that may affect the assignment or assignee.
• Thoroughly prepare your assignee for deployment through a programme of pre-deployment training, including their families where applicable Invest in an ongoing benefit and support program to help assignees and their families integrate into their host destination.
• Encourage a positive employee experience through the use of informal introductions with ex-pat families, employee-centric activities and social networking events on the assignee’s arrival in the host destination.
• Maintain regular contact with your overseas assignee to help pre-empt any problems and avoid any feelings of isolation.
• Remain up-to-date with any changes in the host destination that may affect the assignment or assignee.
• Provide adequate healthcare, including access to a 24-hour helpline and the provision of emergency assistance where needed.
• Provide adequate equipment and up-to-date ways of increasing productivity, monitoring performance and staying connected.
• Provide adequate repatriation packages to incentivise assignees to return to work for you, including the potential for career progression or a suitably senior role, as well as any necessary relocation package.
• Utilise debriefing interviews to capture lessons learned from the overseas assignment and explore potential career options available to the expatriate, including the possibility of further overseas assignments.

Need assistance?

Seeking expert advice in expatriate management is often money well spent. The cost of sending employees abroad can already be significant, but the risk of losing that investment through either a failed assignment or loss of the assignee altogether from within your organisation should be weighed in the balance.

Getting it right can result in an increase in revenue, the retention of talent and the ability to repeat the process successfully time and time again.

DavidsonMorris are employer solutions lawyers with specialist experience in global mobility and supporting businesses with their international workforce needs. For advice and help with your expat management, speak to us .

Expatriate  management  FAQs

What is expatriate in hrm.

Expatriate in Human Resource Management (HRM), commonly shortened to expat, is someone living in a country different to their own for the purposes of undertaking a short or long-term overseas work assignment. This can include employees sent to manage a new office or set up a new location.

How do you manage an expatriate employee?

Managing an expatriate employee is a multi-stage process, where each stage can be crucial to the overall success of an overseas assignment for both your business and the individual assignee. Effective expatriate management should run throughout the lifecycle of an assignment, from pre-deployment preparation through to repatriation when the employee returns back home.

How do you manage expatriate failure?

In instances where an expatriate is inadequately prepared for a short or long-term overseas assignment, or where the language and cultural differences cannot be overcome, this can often lead to early repatriation. By providing support on a personal and professional level both prior to, during and after the assignment, the risk of expatriate failure can be minimised.

Last updated: 11 April 2020

About DavidsonMorris

As employer solutions lawyers, DavidsonMorris offers a complete and cost-effective capability to meet employers’ needs across UK immigration and employment law, HR and global mobility .

Led by Anne Morris, one of the UK’s preeminent immigration lawyers, and with rankings in The Legal 500 and Chambers & Partners , we’re a multi-disciplinary team helping organisations to meet their people objectives, while reducing legal risk and nurturing workforce relations.

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Managing International Assignments: Compensation Approaches

A new international assignment landscape is challenging traditional compensation approaches

For many years, expatriate compensation has been focused on a dilemma: having assignees on expensive home-based expatriate package versus localization - which is about replacing expatriates with locals or at least transition expatriates from an expatriate package to a local salary. Many predicted that the traditional home-based balance sheet approach would gradually disappear. The predictions of the demise of the typical expatriate approach have been greatly exaggerated. We are witnessing the emergence of new compensation challenges instead, due to the complexity of having to manage multiple types of assignments and assignee categories.

The home-based approach still retains its utility for certain kinds of moves (e.g. business-critical assignments or moves to hardship locations). Local strategies are becoming more common but, due to the difficulty of applying them consistently in all transfer destinations, they are used only in some cases (moves between similar countries, developmental moves) and take multiple forms as “purely local” or local-plus approaches. Additional approaches like international compensation structures have emerged to address issues of global nomads.

The challenge for HR managers is, therefore, not so much to find the best approach applicable for all assignments as to deal with individual assignment complexity, envisage greater mobility policy segmentation and, if relevant for the company, map each compensation approach to a particular assignment in a consistent way.

The increasingly complex international assignment landscape: One size does not fit all anymore

Expatriates vs. Locals

One size fits all?

Let's localize assignees as soon as possible!

Expatriates

Rise of the third-country nationals

Need to add a cost efficient category for junior employees/developmental moves?

Traditional expatriates

Global nomads

Permanent transfers

Employee-initiated moves

Local or local plus?

Foreigners hired locally

Commuters (cross-border or regional

Multiple types of short-term/project/rotational assignments

Increasing number of home locations

Reviewing international assignment approaches in three steps:

Step 1: Understand the options available

Approaches linked to the host country (local or local-plus)

While these approaches sound logical and natural (when relocating assignees to a new country, they will be paid according to the local salary structure in that destination country) their practical implementation is often tricky. Few employees accept a salary decrease when moving to a low-paying country. It is often difficult to reintegrate assignees relocated to a high-paying country into their original salary structure due to their inflated base salary.

The host approach was historically not the most common for assignees on long-term assignments. However, we have witnessed a growing interest in recent years in host-based approaches – either a host approach or local-plus approach (host salary plus selected benefits or premiums) – as companies are trying to contain costs and as significant salary increases in many emerging markets make host strategies more attractive.

Approaches linked to the home country ("balance sheets")

Home-based approaches have been traditionally the most commonly used to compensate international assignees. Assignees on a home-based approach retain their home-country salary and receive a suite of allowances and premiums designed to cover the costs linked to expatriation. The equalization logic behind the balance sheet approach (no gain/no loss) encourages mobility by removing obstacles. Retaining the home-country salary facilitates repatriation. The balance sheet approach can, however, be costly. Many companies either look for alternatives or try to reduce the benefits and premiums included for less significant moves.

Other Solutions

Hybrid approaches attempt to combine the advantages of the home and host-based approaches. These often mean running a balance sheet calculation and comparing the results with the host market salary to determine what solution would make sense. A hybrid approach can work well for a small assignee population but it can generate inconsistencies when companies expand globally, and the assignee population grows significantly.

Finally, some companies rely on international compensation structures that do not use the host and the home structures at all. These might utilize the average salary in a selected group of high-paying countries where the companies operate. This approach facilitates mobility for global nomads and highly mobile employees. It is, however, often very expensive and doesn’t solve all assignment-related issues (e.g., currency issues, pension, taxation). It is typically used in specific industry sectors (e.g., energy and engineering) and for a few assignees (top level managers and global nomads.)

Step 2: Assessing assignment patterNs and business objectives

Assignment patterns

Are assignees moving between countries with similar salary levels, which would make the use of local or local plus easier or, on the contrary, are expatriates sent to host countries with different pay and benefits structures (low-paying to high-paying, or high-paying to low-paying country moves)? Are moves for a fixed duration – e.g., assignments lasting one to five years – or will the company rely on permanent transfers with no guarantee of repatriation?

Assignee Population

Are assignees coming mainly from the headquarter countries (typical for early stages of globalization) or is the number of third-country nationals already significant? A growing number of multinational companies report that the number of moves between emerging markets (“lateral moves”) is catching up with or exceeding the number from the headquarters, prompting a review of compensation approaches.

Are some assignees becoming true global nomads who move from country to country without returning home during their career? Employees, and especially the younger generations, are becoming much more mobile, but only a minority would be global nomads. These assignees are usually top-level managers, experts with unique skills, or globally mobile talent sourced from small or emerging countries where the absence of career opportunities perspective would preclude repatriation perspectives.

Company's philosophy and sector

Some industry sectors like services and finances relocate employees between major regional and financial hubs which facilitate the use of local approach, whereas energy and engineering companies transferred employees to hardship locations are a key feature of the business – and requires comprehensive expatriation packages often based on balance sheets and international salary structures.

Step 3: Assess segmentation needs

An increasing number of companies rely on expatriate policy segmentation to reconcile the cost control versus international expansion dilemma – how to have the same number of assignments or more without increasing the budget dedicated to international mobility. Segmentation means reallocating part of the budget to business critical assignees and limits the costs of non-essential moves.

Some of the commonly used assignment categories include strategic moves (business-critical), developmental moves (which benefit both the company and the employee), and self-requested move (requested by the employee but not essential to the business).

A consistent policy segmentation approach allows HR teams to present business cases or assignment options to management and provide a clearer understanding of the cost and business implications of relocation for different assignees.

It could also help manage exceptions into a well-defined framework based on a consistent talent management approach, as opposed to ad hoc deals.

Example of segmented compensation approach: the four-box model

Want to learn more about Expatriate Compensation Approaches?

Make sure to download our free guide to understanding compensation strategies

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Sustainable Expatriate Management: Rethinking International Assignments

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This article explores the concept of sustainable expatriate management, which incorporates environmental, social, and economic factors, and how it can be implemented in a corporate context. We argue that with increasing societal and environmental issues, it is crucial to revisit the overall global philosophy and policies, including the expatriate life cycle. We apply the UN Sustainable Development Goals (SDGs) framework to examine how businesses can remodel their practices to become more resilient. Furthermore, based on a systematic literature review, we identified gaps in research on the integration of environmental factors into sustainable expatriate management. Lastly, this article presents a model for understanding the three layers of sustainability in expatriate management, which can assist practitioners in identifying blind spots and material topics.

Introduction

According to Ghauri, Strange and Cooke (2021) , the global business environment has improved awareness of sustainability as a ‘new reality’. Furthermore, addressing the UN Sustainable Development Goals (SDGs) in a corporate context is becoming increasingly popular (Liou & Rao-Nicholson , 2021; Montiel , Cuervo-Cazurra , Park , Antolín-López , & Husted , 2021; van Tulder , Rodrigues , Mirza , & Sexsmith , 2021) . Although “sustainable” and “green” global mobility are widely discussed concepts, they have not yet been widely integrated into sustainable expatriate management.

However, due to its nature, expatriate management is exposed to various societal and environmental issues that are forcing the field to move towards more sustainability-oriented practices. This implies that decision- and policy-makers should revisit the overall global philosophy, including policies and practices. Therefore, stakeholders should reevaluate topics like business trip policies, health, and equality, as well as other facets of the international assignment cycle (Fan , Zhu , Huang , & Kumar , 2021) . Consequently, in this paper, we will outline how practitioners can rethink expatriate management using a sustainable development lens and how this shift in perspective provides fertile ground to redesign the expatriate life cycle.

Inspired by the “strong sustainability” or embedded systems view (Giddings , Hopwood , & O’Brien , 2002) , we define sustainable expatriate management as any employee-related cross-border (work) activity, which, by its design, considers planetary and societal boundaries and acknowledges the embeddedness of economic impacts within this larger framework (see Figure 1 for clarification).

Source: Own illustration based on Giddings et al. (2002) , p. 192.

Theoretical Framework: Sustainable Development Goals

According to Finaccord’s (2019) latest research, in 2017, there were 66.2 million expatriates working abroad globally, and forecasts for 2021 expect 87.5 million in total. Therefore, this topic affects a relatively large amount of people moving across borders. Nowadays, increasing environmental, social, and economic crises are challenging global business practices. According to the World Economic Forum Global Risks Report, the risks that are most likely and will have the most impact are predominantly environmental risks (e.g., climate action failure, human environmental damage, biodiversity loss, natural degradation, extreme weather, natural resources crises) (World Economic Forum , 2022) . These are expected to affect multinational enterprises’ (MNEs) activities on a global scale.

As the complex, or so-called wicked, problems of our time are interconnected, it is crucial to avoid a siloed perspective of these risk categories. Therefore, we provide a holistic, SDG-focused perspective that addresses the question of how MNEs’ business practices need to be remodeled to become more resilient. We view business sustainability in terms of environmental, social, and economic systems and consequently apply the UN Sustainable Development Goals “wedding cake” framework (Stockholm Resilience Centre , 2018) . This model implies that the environmental, social, and economic layers are interdependent, as well as their respective sublevel SDGs, as indicated in Figure 2 .

Source: Own illustration based on Stockholm Resilience Centre , 2018

Based on Figure 2 , the biosphere/environment represents the foundation of economies and societies and, therefore, the general context in which all other SDGs must be placed. Society cannot survive without the environment, which is why society must pay attention to resources and the preservation of habitats. Such a conceptualization adopts an integrated and interconnected view of social, economic, and ecological development to ensure the future viability of the planet and its living species.

Three Layers of Sustainability in Expatriate Management: Identifying Blind Spots

Based on a systematic literature review of 238 articles clustered according to the 17 Sustainable Development Goals and their respective layers, environment/biosphere, society, and economy, it is evident that research in this field has been increasing in recent years. Furthermore, it shows that the expatriate management literature is dominated by social issues (80%), followed by economic literature (19%), and work that focuses on the environment/biosphere (1%) (Ommen , Schmitz , & Karlshaus , 2022) . Considering that expatriate management is a part of international HRM literature, it is unsurprising that the social category dominates; however given the growing importance of the climate crisis discourse, it is surprising that this has not yet been addressed in research and practice.

This social literature is dominated by articles addressing SDG 5 “Gender Equality” and SDG 3 “Good Health and Well-being” as well as limited literature focused on SDG 16 “Peace, Justice, Strong Institutions”. In the economic category, the literature most often addresses SDG 10 “Reduced Inequalities” and SDG 8 “Decent Work and Economic Growth”, followed by SDG 17 “Partnership for the Goals” as an overarching category. Finally, the ecological category is only represented in one article addressing SDG 13 “Climate Action”, which has only recently been published (Ommen et al. , 2022) (see Table 1 for an overview).

Source: Own illustration; for a full list of references, see Ommen et al. , 2022 , and the Appendix to the article. *“–” indicates SDG cases for which blind spots were not identified in this study

What Is Material for Sustainability in Expatriate Management?

In the sustainability reporting discourse, understanding materiality (i.e., identifying elements of utmost importance to a company’s sustainability challenges) has become increasingly important as part of the international ESG factors: environment, society, and governance. Furthermore, organizations attribute different levels of importance to specific environmental or social factors based on the sectors they operate in.

Considering the essential or material topics, MNEs need to first reduce or avoid their negative impacts (e.g., CO 2 emissions etc.) and also increase their positive impacts (e.g., fostering intercultural ties). By doing so, MNEs can significantly reduce the respective risks to which they are exposed.

The emission of greenhouse gases (GHG) is among expatriate management’s negative material environmental impacts, due to flights, shipments, hotel stays, and local transportation (SDG 13). These also include water and land use due to construction activities (SDG 6, 15), and waste management that should be reconsidered from an environmental perspective.

From a social perspective, negative impacts on equal opportunities can be caused by disparities in pay and promotion opportunities (SDG 5), working conditions, and health issues related to increasing travel activities and continuous readjustment (SDG 3). Furthermore, expatriates working in hostile environments or dangerous locations need adequate protection mechanisms and respective codes of conduct (SDG 16). Finally, integration into local communities during long-term stays might become relevant for some expatriates and their families (SDG 11).

From an economic perspective, a positive impact could be generated by supporting the local economy (SDG 8). However, negative impacts can arise through unequal opportunities because of the different treatment of expatriates and locals (SDG 10). To reduce this, companies should ensure responsible local consumption and circular use of respective household appliances or furniture in apartments (SDG 12).

In sum, MNEs should consider the following Sustainable Development Goals to reduce their negative impact and increase their positive impact:

Environmental : SDG 13 Climate Action

Social : SDG 3 Good Health and Well-being, SDG 5 Gender Equality, SDG 16 Peace, Justice and Strong Institutions, SDG 11 Sustainable Cities and Communities

Economic : SDG 8 Decent Work and Economic Growth, SDG 10 Reduced Inequalities, SDG 12 Responsible Consumption and Production

Sustainable Expatriate Management: Actionable Recommendations

The above discussion suggests that companies can derive a specific prioritized agenda. Inspired by the SDG Compass (Global Reporting Initiative , United Nations Global Compact , & WBCSD , 2015) , we advance these considerations by sharing how MNEs can best address the SDGs in sustainable expatriate management. For an overview of selected ideas for each of the SDGs, please also see Table 2 .

Source: Own illustration; based on selected measures of the SDG Compass Business Indicators; Note: Not all themes will apply to all types of MNEs or all sectors equally. As expatriates are usually relatively privileged, we suggest that they should use their privileged status to support disadvantaged groups and individuals to meet SDGs.

Defining Priorities

First, each of the material topics needs to be evaluated for each company. Certain topics may be more or less relevant in a corporate context, depending on the respective sector. Taking the example of GHG emissions (SDG 13), most emissions come from consultants on regular short-term assignments or business commuting trips if the company is in the service delivery sector. Therefore, these emissions play a more significant role for the company.

In terms of gender equality (SDG 5), a company should first investigate the share of women in their overall assignee population, including management positions. Based on a materiality matrix approach, respective stakeholders should evaluate their priorities alongside considering the judgment of material topics to attain a holistic perspective. By taking this approach for all topics associated with each SDG, MNEs can prioritize different materiality topics.

Setting Strategic Goals

To transform international assignments at the company level, MNEs need strategic concepts, including tools, to impact the defined materiality topics discussed above. There are different levers available to create change, including international assignment policy, processes, and culture. A policy can be designed so that assignees are nudged to not take air shipments, which cause significant GHG emissions (SDG 13). Further, by working with stakeholders across the supply chain, MNEs should implement key performance indicators (KPIs) to reduce negative impacts. To be effective, these should align with scientific facts and goals, such as the Paris Agreement’s target of limiting warming to 1.5°C.

Integrating the Goals

After defining their strategy and goals, MNEs should next address their implementation needs. This should particularly consider the sustainable consumption of mobility-related benefits (SDG 12), where there may need to be a mindset shift. Therefore, in the preparation phase, assignees need to be made aware of their choices. To do this effectively, departments taking care of international assignments may need to be trained on related topics while they consult assignees. Besides policy changes, MNEs should also implement profound changes, for example in terms of gender equality (SDG 5). Managers should be aware of equal selection principles and provide women with support mechanisms to ensure equity if they become the main caregiver for their children.

Measuring and Evaluating

Finally, MNEs need to track whether the implemented measures have been effective. This means measuring an international assignment program’s GHG emissions (SDG 13), environmental impact, gender share (SDG 5), and other measures. If the result does not meet the initial targets, the previous phases (strategy development, implementation) should be analyzed to see if adjustments are necessary. To better integrate the respective measurement indicators with those already existing in the corporate context, the SDG Compass website provides respective input categorized by SDG: https://sdgcompass.org/business-indicators/ .

Although there is awareness of pressing contemporary challenges in the field of expatriate management, action is still needed to decrease the negative impact on society, the economy, and the environment. Many concepts aim to address sustainability across borders. However, research has not yet produced a hands-on and integrated SDG framework for expatriate management. In this work, we aim to inspire and motivate practitioners to take action and further their sustainability ambitions. Although our paper is labeled rethinking expatriate management, the challenges outlined equally apply to inpatriates, repatriates, and other forms of cross-border assignments.

Companies need to be more aware of the environmental and social impacts of their programs and need to monitor processes to increase transparency across their vast service portfolios and associated supply chains. This is not only necessary because of sustainability but also to comply with legislative requirements (e.g., EU Taxonomy). However, corporate departments dealing with international assignments are not facing these challenges alone. They need to form partnerships (SDG 17) and collaborate with their vendors and internal stakeholders (enabling functions, corporate sustainability, procurements, etc.) to drive the much-needed change toward sustainable development.

About the Authors

Marina A. Schmitz serves as a Researcher and Lecturer at the Coca-Cola Chair of Sustainable Development at IEDC-Bled School of Management in Bled, Slovenia as well as CSR Expert/Senior Consultant at Polymundo AG in Heilbronn, Germany. She has worked as a Lecturer, Research Associate, and Project Manager at the Center for Advanced Sustainable Management (CASM) at the CBS International Business School in Cologne and the Chair of HRM and Asian Business at University of Goettingen. Enno Ommen is working in Bayer AG’s Sustainability Excellence Office at CropScience Division. He had previously worked in the area of Global Mobility for about 10 years, which equipped him with profound knowledge in the field of expatriate management. He studied International Business (BA) at CBS International Business School and International Human Resource Management (MSc) at Manchester Business School. Further, as one of Bayer AG’s Sustainability Champions, Enno is supporting the sustainable transformation of the company. Anja Karlshaus studied at the University of Cologne, Santa Clara University (USA), and the European Business School. In 2009, she took over the HRM professorship at CBS International Business School, later assumed the role of dean of the Business Administration faculty, before being appointed president. Moreover, she was previously employed at Dresdner Bank, Allianz and Commerzbank – being now member of various committees (Chamber of Industry and Commerce, City of Cologne, State of NRW). She researches sustainability, diversity, and agile HR.

Submitted : September 30, 2022 EDT

Accepted : April 06, 2023 EDT

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Enhancing expatriates’ assignments success: the relationships between cultural intelligence, cross-cultural adaptation and performance

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• Published: 20 July 2020
• Volume 41 , pages 4291–4311, ( 2022 )

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• Ilaria Setti 1 ,
• Valentina Sommovigo   ORCID: orcid.org/0000-0001-9273-5706 1 &
• Piergiorgio Argentero 1  

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Today’s increasingly global marketplace is resulting in more organizations sending employees to work outside their home countries as expatriates. Consequently, identifying factors influencing expatriates’ cross-cultural adjustment at work and performance has become an increasingly important issue for both researchers and firms. Drawing on Kim et al. ( 2008 ), this study examines the critical elements to expatriate success, which are the relationships between cultural intelligence, cross-cultural adjustment at work, and assignment-specific performance. One-hundred and fifty-one expatriates working within the energy sector, who were mainly located in the Middle East completed questionnaires, investigating: cultural intelligence ( Cultural Intelligence Scale ), cross-cultural adjustment ( Expatriate Adjustment Scale ), performance (Expatriate Contextual/Managerial Performance Skills ), cultural distance (Kogut and Singh’ index), length of staying in the host country and international work experience. Findings indicated that the four cultural intelligence components were directly and indirectly (through cross-cultural adjustment at work) associated with performance. The positive relationship between motivational cultural intelligence and cross-cultural adjustment at work was stronger when cultural distance was low, when expatriates were at the beginning of a new international assignment, and when they had lower experience. Organizations can greatly benefit from hiring cross-culturally intelligent expatriates for international assignments, providing their employees with pre-departure training programs aimed at increasing cultural intelligence, and giving them organizational resources and logistical help to support them.

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Introduction

As globalization of trade encourages multinational corporations (MNCs) to operate in different geographic environments (Sambasivan et al. 2013 ), talent mobility has become one of the key channels through which to develop global organizations’ competitive advantages (Tarique and Schuler 2010 ). This requires the presence of a cross-culturally competent workforce that can manage overseas subsidiaries and liaise with foreign affiliates (Froese and Peltokorpi 2011 ). In this context, expatriates are considered as invaluable assets by MNCs (Wu and Ang 2011 ). Consequently, there have been numerous calls in psychology (e.g., Mol et al. 2005 ) for more research aimed at identifying the psychological factors driving expatriates’ cross-cultural adjustment and performance.

In this context, cultural intelligence (CQ) represents an interesting variable since it is a malleable capability which can be developed through cross-cultural experiences (Chao et al. 2017 ) and specific trainings (Leung et al. 2014 ). CQ is defined as “an individual’s competence to function and manage effectively in culturally diverse settings” (Ang and Van Dyne 2008 , p. 3). CQ is conceptualized as a multidimensional construct which includes four main components: metacognitive CQ (i.e., cultural awareness), cognitive CQ (i.e., cultural knowledge), motivational CQ (i.e., motivation and self-efficacy in functioning in diverse cultural settings), and behavioural CQ (i.e., adoption of appropriate behaviours during cross-cultural interactions). Scholars have called for more research on the CQ dimensions (Ang et al. 2011 ) as the four CQ components have been differently associated with specific intercultural effectiveness outcomes (see Rockstuhl and Van Dyne 2018 for a review).

This study responds to this call by analysing the relationships between specific CQ dimensions, cross-cultural adjustment (CCA; i.e., psychological comfort in a foreign country; Black and Gregersen 1999 ) at work and assignment-specific performance. This latter construct, which refers to the ability to accomplish certain assignment specific tasks (e.g., replacement planning; Caligiuri 1997 ), was chosen in this paper as main dependent variable because successfully executing assignment-specific duties is frequently the main constituent of success, which is evaluated by the home office (Earley and Ang 2003 ). Aside from performance, this study focused on work CCA, namely the extent to which expatriates become psychologically comfortable handling assignment duties and meeting performance expectations (Chen et al. 2010 ; Shaffer et al. 2006 ). Work CCA is one of the three dimensions of CCA, together with general (i.e., general living conditions) and interaction (i.e., interactions with locals) components (Black et al. 1991 ). This paper concentrated on work CCA as it is more predictive of performance than the other CCA dimensions (Chew et al. 2019 ).

The role of overall CQ as a meaningful antecedent of overall CCA (e.g., Chen et al. 2014 ; Rockstuhl and Van Dyne 2018 ) and job performance (e.g., Malek and Budhwar 2013 ; Ramalu et al. 2012 ) has been identified, whereas the literature on the role of the four CQ facets in facilitating work CCA is less consistent (e.g., Ott and Michailova 2018a , 2018b ). The literature on the effect of CQ on performance indicates an intricate association between the variables, the relevance of the specific CQ dimensions, and the role of work CCA in this association (ibidem). Thus, while some researchers found a direct positive CQ-performance association (e.g., Chen et al. 2011 ; Lee et al. 2013 ), there is also evidence that the impact of CQ on performance may be mediated by work CCA (e.g., Jyoti and Kour 2017a , 2017b ; Lee et al. 2013 ).

Additionally, a closer look to the literature on the boundary conditions under which specific CQ dimensions may enhance work CCA and, in turn, assignment-specific performance reveal numerous gaps. To fil this gap, this study aimed to analyse how and when specific CQ facets were more - or less - likely to facilitate assignment-specific performance. To this end, this paper concentrated on cultural distance (CD, i.e., the extent to which the culture of destination differs from expatriates’ home country on various values; Shenkar 2001 ), length of stay in the host country and work international experience. Indeed, although some studies analysed the moderating role of CD in the relationships between various individual features and outcomes in the expatriation area (e.g., Chen et al. 2010 ; Zhang 2013 ), the research on the effect of CD on the association between CQ dimensions and work CCA remains limited. Moreover, even though some studies demonstrated that the length of residence in the local country influenced both CQ (e.g., Li et al. 2013 ) and CCA (e.g., Ramalu et al. 2010 ), no previous research, to the best of our knowledge, has investigated the enhancing effect of length of stay on the association between specific CQ assets and work CCA. Furthermore, though some investigations showed that work experience played a moderating role in the CQ-CCA relationship (e.g., Lee and Sukoco 2010 ; Jyoti and Kour 2017a , 2017b ), no study, to our knowledge, has considered the moderated mediated effect of the four CQ dimensions and work experience - through work CCA - on assignment-specific performance.

Therefore, our research questions are as follows: do the four CQ dimensions directly and indirectly, through work CCA, impact on assignment-specific performance? And what are the effects of CD, length of stay in the host country and previous international experience with regard to this? In answering these questions, this paper drew on Kim et al. ( 2008 ) which presented, for the first time, propositions that delineated the relationships between CQ, CCA and performance analysing them together, so that scholars and practitioners could reach a better understanding of each of these. The authors proposed that overall CQ – conceptualized as the result of its four components – would be directly and indirectly, through each of the three dimensions of CCA, associated with overall performance. Additionally, the authors suggested that the CQ-CCA relationship would be positively moderated by CD, so that such relationship would be stronger when CD would be greater.

The main contribution of the present work is to extend this model by analysing whether specific dimensions of CQ – rather than overall CQ - were related to assignment-specific performance – rather than overall performance. Moreover, this research moves an important step forward in the expatriate literature as it identifies, beyond CD – as proposed by the model - other understudied boundary conditions for CQ effects (i.e., work experience and length of stay in the host country).

In doing so, the study was undertaken on the relatively under-investigated population of expatriates working within the energy sector in the Middle East for several reasons. First, some Middle East countries, such as the United Arab Emirates (UAE), have experienced unprecedented growth over the past years (Bealer and Bhanugopan 2014 ). Second, such nations remain relevant economic hubs in the Middle Eastern region, that attract numerous expatriates from Western countries (ibidem), especially within the energy sector (Finaccord 2018 ). For instance, in 2017 Saudi Arabia hosted the largest number of expatriates, whereas in the UAE expatriates constituted the 87.8% of the total population (ibidem). Nevertheless, only a few studies have concentrated on this population. Third, since most of our research respondents were from Latin America, the subsequent national cultural dissimilarities were likely to result in significant CCA difficulties. Thereby, we contribute to literature surrounding organizational behaviour and psychology as well as international human resource management.

In the next section, we provide theoretical arguments for the reasons why each of the four CQ dimensions might be uniquely posited to contribute to expatriates’ assignment-specific performance and work CCA. We describe each component in more detail, and we give rationale for the mediating role of work CCA. Subsequently, we present conceptual logic for our proposed effects of CD, length of stay in the host country and international work experience in the association between specific CQ components and work CCA. After that, we present the sample investigated and the methodology adopted. Then, we report the results and discuss our findings. Finally, we present theoretical and managerial implications, limitations, and suggestions for future research as well as conclusion.

The Relationship between CQ Dimensions and Expatriates’ Assignment-Specific Performance

The construct of CQ attracted ever-increasing attention since other existing formulations of intelligence, such as emotional intelligence (EQ) or social intelligence (SI), do not provide a comprehensive explanation in culturally diverse situations (Groves and Feyerherm 2011 ). Indeed, both EQ and SI are culture bound, such that although these two forms of intelligence may enable individuals to better understand social situations, this does not turn automatically into successful CCA (Caputo et al. 2018 ). Thus, individuals who have high EQ and SI in one culture may not easily adapt to cross-cultural interactions due to misinterpretations of culture-specific situational cues. Conversely, CQ is culture free and regards a general array of abilities particularly relevant on settings characterized by cultural diversity.

Drawing on Kim et al. ( 2008 ), CQ is related to expatriates’ performance, such that culturally intelligent expatriates may successfully function across cultural settings. We present below conceptual logic for our proposed relationships for each of the CQ dimensions with performance, describing each component in more detail.

Meta-cognitive CQ refers to an individual’s level of conscious cultural awareness of - and control over - cognitions during cross-cultural interactions. Self-awareness and cognitive flexibility can promote expatriates’ performance by facilitating their understanding of culturally appropriate role expectations (Ang et al. 2007 ). Indeed, individuals high in meta-cognitive CQ are better at adjusting their existing knowledge to meet changing environmental demands (ibidem). Thus, they can compensate for cognitive capability when previously acquired knowledge is unreliable, avoiding potential problems. Additionally, in unpredictable situations, their meta-cognitive skills provide them with a means by which supplement the lack of overt cues (Fernandez-Duque et al. 2000 ). This may stimulate the adoption of effective solutions to perform well (Tobias and Everson 2002 ). Meta-cognitive CQ may also facilitate expatriates’ performance by enhancing intercultural creative collaboration (Chua et al. 2012 ), conflict management (Caputo et al. 2018 ), decision-making and task performance (Ang et al. 2007 ) as well as knowledge transfer from headquarters to subsidiaries (Vlajčić et al. 2019 ). Thus, we expected the following:

Hypothesis 1a: meta-cognitive CQ will be positively related to assignment-specific performance.

Cognitive CQ refers to an individual’s general knowledge of norms, practices, and conventions in foreign countries gained from personal experiences and education (Ang et al. 2007 ). Expatriates high in cognitive CQ possess sophisticated mental maps of culture, which allow them to anticipate similarities and differences across cultures (Brislin et al. 2006 ). As a result, they may perform well in foreign workplaces because their in-depth knowledge about diverse cultures enables them to reach a greater understanding of cultural expectations. Additionally, such knowledge leads them to adopt culturally appropriate behaviours by facilitating decision-making, cultural judgment (Ang et al. 2007 ), intercultural negotiation (Groves et al. 2015 ), conflict management (Caputo et al. 2018 ) and knowledge transfer from headquarters to subsidiaries (Vlajčić et al. 2019 ). Thereby, we expected the following:

Hypothesis 1b: cognitive CQ will be positively related to assignment-specific performance.

Motivational CQ refers to individual’s ability to direct attention to understand cultural diversity and maintain energy concentrated on learning about - and operating in - new cultural settings, even when situations are challenging (Ang et al. 2007 ). Expatriates high in motivational CQ are motivated intrinsically and by their efficient beliefs of adaptive capabilities to interact with colleagues from different backgrounds (Templer et al. 2006 ). As a result, they may direct their energy toward learning role expectations, positively coping with problems, and striving to address challenges. Motivational CQ may also facilitate expatriates’ performance by easing intercultural collaboration and negotiation (Chua et al. 2012 ), communication effectiveness (Presbitero and Quita 2017 ), integrative information behaviours (Imai and Gelfand 2010 ), and conflict management (Caputo et al. 2018 ). Therefore, we formulated the following hypothesis:

Hypothesis 1c: motivational CQ will be positively related to assignment-specific performance.

Behavioural CQ reflects the individual’s ability to communicate in a culturally sensitive way and exhibit culturally appropriate (verbal and non-verbal) behaviours when interacting with people from other cultures (Ang et al. 2007 ). This involves having a wide repertoire of overt behavioural responses which fits to a variety of cross-cultural situations, in addition to using culturally appropriate words, body language and conversation style (ibidem). Expatriates high in behavioural CQ can choose appropriate verbal and physical actions when interacting with locals (Ang and Van Dyne 2008 ). This behavioural flexibility may help them to enact culturally appropriate role-related behaviours and meet assignment-specific expectations (ibidem). This may reduce miscommunications and enhance performance (Ng et al. 2012 ; Rose et al. 2010 ). Accordingly, behavioural flexibility was positively related to task performance within intercultural environments (e.g., Chen et al. 2011 ), conflict management (Caputo et al. 2018 ), and intercultural negotiation effectiveness (Groves et al. 2015 ). Then, we hypothesized the following:

Hypothesis 1d: behavioural CQ will be positively related to assignment-specific performance.

The Relationship between CQ Dimensions and Expatriate Adjustment at Work

In line with Kim et al. ( 2008 ), culturally intelligent individuals are better able to adjust to the host country because they are more likely to gain appropriate emotional and informational support through interactions with locals. Then, CQ represents an important factor driving expatriate CCA which may explain individual dissimilarities in adapting to foreign contexts. We provide below theoretical arguments for the reasons why each of the CQ facets might be uniquely positioned to contribute to work CCA.

To date, relatively little research has been conducted to analyse the relationship between meta-cognitive CQ and work CCA, producing mixed results. Indeed, whereas some investigations have found that meta-cognitive CQ exerts a positive influence on work CCA (e.g., Lin et al. 2012 ; Guðmundsdóttir 2015 ), other studies have revealed a nonsignificant effect (e.g., Jyoti and Kour 2015 ; Jyoti et al. 2015 ). Expatriates high in meta-cognitive CQ tend to reflect on cultural dissimilarities before a cross-cultural interaction and develop action plans for how they will interact with locals. This planning prompts cultural learning, problem-solving and interactions with host colleagues, which may reduce uncertainties related to expatriation and, then, facilitate work CCA (Earley and Ang 2003 ; Earley et al. 2006 ). Thus, we proposed the following hypothesis:

Hypothesis 2a: metacognitive CQ will be positively related to work CCA.

Whereas some studies have identified a positive influence of cognitive CQ on work CCA (e.g., Konanahalli et al. 2014 ), other investigations revealed a non-significant association between the two constructs (e.g., Jyoti and Kour 2015 ). Expatriates high in cognitive CQ have a greater understanding of cross-cultural differences (Brislin et al. 2006 ): they are better able to use their cultural knowledge in making decisions and thinking strategically to overcome transition problems. This, in turn, may improve their ability to adjust to the new workplace (Van Dyne et al. 2012 ). Thus, we expected the following:

Hypothesis 2b: cognitive CQ will be positively related to work CCA.

Expatriates high in motivational CQ are more psychologically prepared to adjust to the work demands expected in culturally diverse workplaces (Chen et al. 2010 ). Thus, they have confidence in their capabilities and intrinsic motivation to adjust to new workplaces (Palthe 2004 ) and display newly learn behaviours (Black et al. 1991 ). This may stimulate their involvement in culturally different modes of working and the accomplishment of their assignment objectives (Lin et al. 2012 ). Accordingly, empirical evidence supported that motivational CQ is positively associated with expatriates’ work CCA (Jyoti and Kour 2015 ; Jyoti et al. 2015 ). Thus, we predicted the following:

Hypothesis 2c: motivational CQ will be positively related to work CCA.

Whereas some studies have revealed that behavioural CQ was non-significantly (e.g., Huff et al. 2014 ; Konanahalli et al. 2014 ) or negatively (e.g., Guðmundsdóttir 2015 ; Malek and Budhwar 2013 ) related to work CCA, other investigations have found a positive association between the two constructs (e.g., Ng et al. 2012 ; Ramalu et al. 2011 ). Expatriates with greater behavioural CQ can use culturally appropriate expressions in communication, in addition to flexibly adapting their behaviour to create comfort zones for the other individual(s) involved in cross-cultural encounters (Earley and Peterson 2004 ). The ability to make such adaptations is likely to result in better work CCA because it facilitates communication with host colleagues, reducing the risk of cross-cultural misunderstandings (Ang et al. 2007 ). Therefore, we hypothesized the following:

Hypothesis 2d: behavioural CQ will be positively related to work CCA.

The Relationship between Expatriates’ Work CCA and Assignment-Specific Performance

When expatriates can successfully adjust to the work domain, they are less stressed and, then, have more personal resources to invest in job duties. In this case, they are likely to feel themselves as culturally competent and build closer relationships with local colleagues (Lee and Sukoco 2010 ; Chen et al. 2010 ). As a result, expatriates who are culturally adjusted to their new workplaces are more likely to perform well on their international assignments than those who are unable to adjust well (Lee and Kartika 2014 ; Wu and Ang 2011 ). Therefore, we expected the following:

Hypothesis 3: work CCA will be positively related to assignment-specific performance.

The Mediating Role of Work CCA

Prior research suggested that CCA might mediate the association between CQ and performance (Kim and Slocum 2008 ; Wang and Takeuchi 2007 ). Despite this development, the empirical evidence on the role played by work CCA in mediating the relationship between specific CQ dimensions and assignment-related tasks has been relatively limited in the expatriate literature, requiring further research (e.g., Jyoti and Kour 2015 ; Lee et al. 2014 ). Kim et al. ( 2008 ) proposed that CQ may work through work CCA to affect expatriate performance as the extent to which expatriates are able to successfully adapt to a new work setting may impact on individual work outcomes. They argued that “a smooth transition across work assignments is critical to an expatriate’s success because the work-role that is executed in the host country may be quite unfamiliar, even though the task is the same as it was in their home country, due to different cultural contexts” (ibidem, p. 76). Therefore, expatriates who have greater CQ are more likely to successfully adjust to their new work setting which, in turn, will enable them to reach high levels of performance. Overall, relevant intercultural skills, such as abilities to revise cultural assumptions (meta-cognitive CQ), elaborate sophisticated metal maps about cultures (cognitive CQ), channel one’s own energies toward functioning (motivational CQ) and exhibit appropriate actions (behavioural CQ) in culturally diverse settings, are all factors which are expected to decrease the misunderstandings in role expectations and facilitate interactions with local colleagues (Ramalu et al. 2012 ). As a result, culturally intelligent expatriates, who are better able to cope with stress related to uncertainties (Sambasivan et al. 2017 ), may more easily feel comfortable in any cultural setting they are working in. Then, work CCA holds the potential to be a proximal intercultural effectiveness outcome which may partially mediate the effects of the four CQ dimensions on more distal effectiveness outcomes, such as assignment specific performance. Hence:

Hypothesis 4: work CCA will mediate the relationship between specific dimensions of CQ (Hp4a: meta-cognitive CQ, Hp4b: cognitive CQ, Hp4c: motivational CQ, Hp4d: behavioural CQ) and assignment-specific performance.

The Moderating Role of Cultural Distance

The individual’s capability to successfully adjust abroad is related to the novelty of the foreign culture. A large difference between the country of origin and the destination requires more transitions, which results in more adjustment difficulties than in a country with a similar culture (Bhaskar-Shrinivas et al. 2005 ). Said differently, adjustment is more challenging when the host country is more culturally distant (Wang and Varma 2019 ). In this context, individual differences may become particularly salient. Indeed, prior investigations revealed that CD moderates the relationship between individual characteristics and various outcomes in the expatriation field, such as effectiveness (Chen et al. 2010 ), adjustment (Zhang 2013 ), and intention to work abroad (Remhof et al. 2013 ). Among individual characteristics, CQ seems to be a variable highly likely to interact with CD on work CCA because of its relevance on settings characterized by cultural diversity. In line with Kim et al. ( 2008 ), “as CD increases, it is expected that CQ would become more, rather than less, critical to expatriates’ adjustment and success” (Kim et al. 2008 , p. 78). Accordingly, CD strengthens the CQ-CCA association since the greater cultural challenges inherent in more culturally distant settings demand more cross-cultural competencies. In this context, those with greater CQ may be better equipped to overcome such challenges and, then, better able to adjust and perform well than those with lower CQ. Thus, we expected the following:

Hypothesis 5: CD will strength the relationship between CQ, in all its dimensions (Hp5a: metacognitive CQ, Hp5b: cognitive CQ, Hp5c: motivational CQ, Hp5d: behavioural CQ), and work CCA, such that the positive effect of CQ dimensions through work CCA on assignment-specific performance will be stronger when the home-host CD will be greater.

The Moderating Role of Length of Residence in the Host Country

Previous investigations on CCA have showed that length of residence in the host country influences CCA (e.g., Li et al. 2013 ; Ramalu et al. 2010 ). According to the U-Curve of CCA framework (Black and Mendenhall 1991 ), the first twelve months in a foreign country are characterized by frustration as the newcomer must deal with living in the host country on a daily basis, overcoming the so-called “cultural shock stage”. CQ may become critical to overcome such highly challenging period because culturally intelligent expatriates can more easily use their cultural knowledge and develop action plans to solve transition problems (meta-cognitive and cognitive CQ; Earley et al. 2006 ). In addition, CQ may be salient because it drives expatriates to establish relationships with local colleagues and vicariously learn about appropriate behaviours (motivational CQ; Mendenhall and Oddou 1985 ). This may lead them to make appropriate behavioural adaptations (behavioural CQ). Thereby, expatriates high in CQ are more likely to learn quickly appropriate behaviours, which may decrease the anxiety related to not knowing how to behave in an unfamiliar environment. As a result, the time required to reach the adjustment stage may be shortened. Additionally, the longer the time spent in the host country, the greater the opportunities to build support systems, reach greater cultural knowledge, and become more efficacious in interacting with locals. This suggests that motivational CQ might be more critical in the initial stages of the adjustment process when individuals have to deal with daily challenges. Thus, we expected the following:

Hypothesis 6: the length of residence in the host country will moderate the relationship between CQ, in all its dimensions (Hp6a: metacognitive CQ, Hp6b: cognitive CQ, Hp6c: motivational CQ, Hp6d: behavioural CQ) and work CCA, such that the positive effect of CQ dimensions through work CCA on assignment-specific performance will be stronger when the length of residence will be lower.

The Moderating Role of International Work Experience

Culturally intelligent expatriates having longer experience of working abroad through vicarious learning can more easily make anticipatory adjustments to the new work setting before they ever experience it (Black et al. 1991 ). In this sense, they may benefit from prior international work experience because they can utilize it as an important source of information which facilitates the formation of realistic work expectations and accurate anticipatory work behavioural adaptations (Church 1982 ). Indeed, expatriates with greater CQ will be more likely to acquire more accurate information from their previous experience as, for instance, they will think critically about cultural knowledge and monitor the quality of that knowledge (Ang et al. 2007 ). This may increase attention and retention processes, leading them to make anticipatory adjustments in behaviours, which would turn out to be appropriate in the host workplace. This means that they will learn lessons from their prior experience and form comprehensive cognitive schemata, which will be useful to predict consequences across a variety of future situations (Takeuchi et al. 2005 ). As a result, prior experience will help expatriates with greater CQ to effectively handle future cross-cultural situations (Lee and Sukoco 2010 ; Shannon and Begley 2008 ). This will decrease the uncertainty and, therefore facilitate, the adjustment process (Black et al. 1991 ), leading to a better performance (Jyoti and Kour 2017a , 2017b ). Conversely, expatriates with lower CQ will be less likely to take advantage from their prior experience as the content of the information will be inaccurate and, then, their actual reproduction of the anticipatorily determined behaviours will prove to be inappropriate in the new workplace (Black et al. 1991 ). Furthermore, although some studies showed that prior experience had an enhancing effect on the CQ-CCA relationship (Lee 2010 ; Lee and Sukoco 2010 ; Jyoti and Kour 2017a , 2017b ), the research has not been consistently supportive (Vlajčić et al. 2019 ). Further to this, research analysing whether prior experience might exert an enhancing effect on the association between the four CQ dimensions and specific domains, such as work CCA, is still limited (Kusumoto 2014 ). Thus, we examined whether prior experience would strengthen the CQ- work CCA relationship, expecting the following:

Hypothesis 7: international work experience will moderate the relationship between CQ, in its dimensions (Hp7a: metacognitive, Hp7b: cognitive, Hp7c: motivational, Hp7d: behavioural), and work CCA, such that the culturally intelligent expatriates with greater experience will adapt more easily to the host workplace and, then, perform more effectively than those with lower experience.

As a conceptual framework, Fig.  1 illustrates our proposed model, incorporating our hypothesized relationships.

Proposed model regarding the relationships between the four components of cultural intelligence (CQ) and assignment-specific performance as well as the moderating role of cultural distance (CD), length of stay in the host country (LoS) and previous international work experience (WEX) in the association between CQ components and cross-cultural adaptation at work (work CCA)

Participants and Procedure

Our research sample consists of employees who were working in a company in the oil and gas industry with an extensive portfolio of projects around the world. Expatriates’ contacts details were gathered from organizational databases. Questionnaires were administrated in English (see Appendix 1 ), the official working language in the company, through a Web-based solution (i.e., mails and online questionnaires). Once respondents voluntarily agreed to participate, we obtained informed consent from them and ensured them the anonymity and confidentiality of their responses. Data were collected in the period between March and May 2018. In total, we contacted four hundred ninety-four expatriates. Of them, one hundred sixty-eight employees completed the survey (34% response rate). We excluded eight participants working in their home country and nine participants because they did not complete at least the 60 % of the survey. The descriptive statistics of the remaining participants ( N  = 151) are reported in Table 1 .

Most of research participants were Latin American expatriates assigned to Middle East countries. The Middle East, especially the Muslim and Arab countries of Sud Arabia, Oman and the UAE, represents a hot spot for international assignments (Raghu and Sartawi 2012 ). For instance, according to the data provided by the World Bank, the UAE’s population in 2020 is 9.89 million of whose the 88.52% is constituted by expatriates and immigrants (GMI 2020 ). Arab countries have practices and habits that contrast with those of the Latin American nations. Since the UAE’s culture is masculine in nature, a Latin American expatriate might have difficulties to adjust to a 100% male environment where there is a dress code for men as well (Konanahalli et al. 2012 ). Additionally, during the holy month of Ramadan the Muslim colleagues observe Ramadan fasting rules, which will require Latin Americans to be respectful of such religious observances (ibidem). According to GLOBE Project’s studies on cultural dimensions (House et al. 2004 ), the Middle East cultural cluster is characterized by high scores on collectivism, average scores on assertiveness, human orientation, institutional collectivism, performance orientation and power distance, while for future-orientation, gender egalitarianism and uncertainty avoidance the scores are low (for a detailed description of each cultural dimension see at the following link: https://globeproject.com/study_2004_2007 ). Although similar for some dimensions, the Middle East cluster differs from the Latin American cluster most significantly on the values of institutional collectivism, performance orientation and gender egalitarianism. These differences might translate in striking contrasts in terms of decision making, negotiation, conflict management, leadership styles and so on (e.g., Caputo et al. 2018 ; Caputo et al. 2019 ). In sum, it is likely that Latin American expatriates working in an Arab country will experience significant national cultural dissimilarities, which might lead them to adjustment difficulties.

CQ was assessed by The Cultural Intelligence Scale (Ang et al. 2007 ) which comprises four sub-scales: meta-cognitive CQ (four items, e.g. “I check the accuracy of my cultural knowledge as I interact with people from different cultures”, α =  .81 ) ; cognitive CQ (six items, e.g., “ I know the rules for expressing non-verbal behaviour in other cultures”, α =  .83); motivational CQ (five items, e.g., “ I enjoy interacting with people from different cultures”, α =  .89 ) ; behavioural CQ (five items, e.g., “ I change my verbal behaviour when a cross-cultural interaction requires it”, α =  .84 ) . This robust and reliable scale has been utilized by previous studies (e.g., Gozzoli and Gazzaroli 2018 ), confirming the existence of four specific CQ dimensions. Participants indicated how much they agreed with each statement concerning their cultural abilities on a seven-point Likert-type scale (1 =  strongly disagree 7 =  strongly agree ), where higher scores indicated higher CQ levels.

Work CCA was measured using three items from the Expatriate Adjustment Scale (Black and Stephens 1989 ). Participants rated their adjustment (e.g., “ How adjusted are you to performance standards and expectations in your job? ”, α =  .89) on a seven-point Likert-type scale (1 =  very unadjusted 7 =  very adjusted ), where greater scores indicated greater work CCA. This measure has been consistently validated by previous studies on expatriates (e.g., Bhaskar-Shrinivas et al. 2005 ) confirming its construct validity among culturally different samples.

Assignment-specific performance was evaluated through five items from the Expatriate Contextual/Managerial Performance Skills (Caligiuri 1997 ). Participants were asked to rate their perceived ability in each of the job performance items (e.g., “ Your effectiveness at transferring information across strategic units (e.g., from the host country to headquarters) ”, α =  .73) on a five-point Likert-type scale (1 =  poor 5 =  outstanding ) , where greater scores indicated greater performance.

CD between expatriates’ home country and host country was computed through the index of Kogut and Singh ( 1988 ) in combination with Hofstede’s ( 2001 ) country-specific scores (i.e., power distance, individualism, masculinity, and uncertainty avoidance), consistent with prior studies (e.g., Ng et al. 2019 ).

Length of residence in the host country was measured in months in line with previous researchers (e.g., Chen et al. 2014 ). Participants indicated the period in the current country of destination in months (i.e., How long have you been working in your current country of residence? ).

International work experience was assessed in years, according to previous studies (e.g., Jyoti and Kour 2017a , b ). Respondents indicated how many years they had been working internationally (i.e., How many years had you spent working abroad before this assignment? ).

Control variables . We controlled for marital status (1 = single, 2 = engaged) and education level (1 = high-school, 2 = degree) because previous studies showed that work-family conflict - that is more likely to occur for married expatriates; Kupka and Cathro 2007 - and education level (e.g., Moon et al. 2012 ) may influence CCA; thereby, potentially affecting performance. Furthermore, we controlled for gender (1 = male, 2 = female) and age since prior investigations (e.g., Li et al. 2016 ; Vlajčić et al. 2019 ) have revealed contrasting results about the impact of age and gender on CQ and CCA. Additionally, we recognized that pre-departure cross-cultural training (i.e., Did you have any cross-cultural training before departure? 1 = yes, 2 = no) might be associated with CCA as some studies showed that expatriates who received cross-cultural pre-departure training were more likely to successfully adjust to the host environment (e.g., Evans 2012 ). Since previous studies found that length of stay in the host country and international work experience could affect both CQ (e.g., Wang et al. 2017 ; Moon et al. 2012 ) and CCA (e.g., Ramalu et al. 2010 ; Lee and Kartika 2014 ), we considered the role of these constructs as control variables. Moreover, we acknowledged that CD might impact on CCA, such that the greater the CD, the greater the adjustment difficulties (e.g., Wang and Varma 2019 ). None of the control variables significantly correlated with - or had any significant impact on - the variables of interest within our models, which is why we decided to exclude them from all subsequent analyses and present models without these controls. This is in line with recommended practices (Aguinis and Vandenberg 2014 ).

Descriptive Analyses

We conducted descriptive statistics and correlations among the study variables using SPSS version 20 (Morgan et al. 2012 ). The four CQ dimensions were significantly and positively correlated with each other and with both work CCA and performance (see Table 2 ). The average inter-item correlations between CQ and outcomes was .24, suggesting that items did contain sufficiently unique variance to not be isomorphic with each other (Piedmont 2014 ).

Confirmatory Factor Analyses and Assessment of Common Method Bias

Firstly, using Mplus Version 7 (Muthén and Muthén 1998-2012 ), a confirmatory factor analysis (CFA) with the maximum likelihood method was carried out to examine the factor structure of the study variables. Results from CFA revealed that the six-factor model (i.e., four CQ dimensions, work CCA, performance) outperformed all the alternative models (χ 2 [335] = 782.70, CFI = .78, TLI = .76, RMSEA = .09, SRMR = .10). However, to obtain a satisfactory fit (χ 2 [330] = 221.59, CFI = .90, TLI = .90, RMSEA = .06, SRMR = .07), it was necessary to take into account the high correlation existing among some items (see Table   3 ). The resulting models were built considering the modification indices which were used in this satisfactory model. Moreover, to control for common method bias, an unmeasured latent method factor was added to the hypothesized CFA model and allowed manifest indicators to load on their respective latent constructs as well as on the method factor (Podsakoff et al. 2012 ). Results indicated that the hypothesized six-factor model yielded a better fit to the data after inclusion of the method factor (Δ χ 2 [302] = 480.28, RMSEA = .06, SRMR = .06, CFI = .91, TLI = .90). The method factor explained only 24% of the variance in the items, which is below the average amount of method variance (25%) reported in self-reported research (Podsakoff et al. 2012 ). Accordingly, common method bias does not appear to have a substantial impact on the present study. Finally, a second order CFA was tested, confirming that CQ loaded into its respective four sub-dimensions (χ 2 [327] = 505.460, CFI = .91, TLI = .90, RMSEA = .06, SRMR = .07).

Hypotheses Testing

Given our relatively small sample size, the Partial Least Squares (PLS) method, which is a variance-based structural equation modelling, was considered as particularly appropriate to simultaneously test whether each of the four CQ dimensions were related to performance directly and indirectly, as mediated by work CCA. Partial least squares structural equation modelling (PLS-SEM) represents a multivariate modelling technique suitable for the analysis of multiple dependent and independent latent constructs (Mathwick et al. 2008 ). This technique computes relationships between all variables simultaneously and does not necessitate multivariate normality (Zhou et al. 2012 ). Since CQ includes four components, a hierarchical component model (HCM) was created to assess the mediation model (Lohmoller 1989 ). This allowed us to reduce the number of associations in the model, making the model more parsimonious and resistant to collinearity problems (Hair et al. 2017 ). PLS-SEM methodology, utilizing a HCM, enables to examine each component of CQ independently through a higher-order construct that, by theoretical classification of HCM modelling, is a full mediator (Hair et al. 2017 ) in the process of direct and indirect associations between each component of CQ and performance. Using PLS-SEM, it is possible to evaluate each dimension separately, in addition to providing a diverse theoretical explanation for each dimension (Ott and Michailova 2018a , 2018b ). The repeated indicator approach was utilized in a reflective-formative type of HCM using SmartPLS v. 3.2.6. (Ringle et al. 2017 ) to further confirm the measurement model which was previously tested. This model comprises six reflective constructs and one second-order construct which contains latent variable scores for the four dimensions of CQ (a similar methodological approach was also taken by Vlajčić et al. 2019 ). All the items showed statistically significant and satisfactory loadings values (> 0.7; de Pablo González et al. 2014 ). The composite reliabilities of all seven constructs were acceptable as values were above 0.80 and below 0.95 (Nunnally and Bernstein 1994 ; see Table 2 ). The convergence validity was acceptable as all the average variance extracted (AVE) values were above the recommended value of 0.5 (Hair et al. 2010 ). Discriminant validity of our constructs was further confirmed as correlations between each pair of latent constructs do not exceed the square root of each construct’s AVE (Fornell and Larcker 1981 ), apart from the second-order formative construct (CQ-HCM) and the latent constructs it includes, as anticipated by Hair et al. ( 2017 ). These results further confirmed the discriminant validity of our constructs of interest.

Subsequently, the structural model was evaluated using a bootstrapping procedure (10,000 sub-samples; Hernández-Perlines et al. 2016 ). Structural coefficients presented in the PLS model (see Table 4 ) indicated that the dimensions of meta-cognitive ( β  = .10, t  = 4.13, p  < .001), cognitive ( β  = .12, t  = 3.58, p  < .001), motivational ( β  = .15, t  = 4.12, p  < .001), and behavioural ( β  = .12, t  = 3.68, p  < .001) CQ were directly and positively associated with performance. Thereby, Hypotheses 1a , 1b , 1c and 1d were confirmed. Additionally, the dimensions of meta-cognitive ( β  = .11, t  = 3.39, p  < .001), cognitive ( β  = .13, t  = 4.79, p  < .001), motivational ( β  = .17, t  = 4.30, p  < .001), and behavioural ( β  = .13, t  = 4.18, p  < .001) CQ were directly and positively related to work CCA. Thereby, Hypotheses 2a , 2b , 2c and 2d were confirmed. Work CCA ( β  = .19, t  = 1.96, p  < .05) was positively related to performance (see Fig.  2 ). Thereby, Hypothesis 3 was supported. Results from mediation models indicated that work CCA partially mediated the associations between meta-cognitive ( β  = .02, t  = 1.65, p  < .05), cognitive ( β  = .03, t  = 1.83, p  < .05), motivational ( β  = .03, t  = 1.84, p  < .05), and behavioural ( β  = .02, t  = 1.85, p  < .05) CQ and assignment specific performance. Therefore, Hypotheses 4a , 4b , 4c and 4d were confirmed. Moreover, our analysis of the structural model also includes the R 2 and Q 2 as indexes of model consistency and predictive relevance. The indicators of consistency were appropriate, even if CQ and its dimensions explained a weak amount of variation in the constructs of interest (R 2 (CCA) = .26; R 2 (performance) = .25). The predictive relevance of the indicators (Q 2 (CCA) = .70; Q 2 (performance) = .35) were in the large effect size range (Neter et al. 1990 ).

Results from models analysing the mediating effect of work CCA in the relationships between each of CQ dimension and assignment-specific performance

Further, we tested whether the strength of the relationship between CQ and performance through work CCA was conditional on the value of our expected moderators. To this end, we conducted moderated mediation models for each of the CQ dimensions using Mplus Version 7. CD weakened the relationship between motivational CQ and work CCA (β = −.06, p  < .05), but no significant interaction terms were revealed for the other CQ dimensions. Then, Hypotheses 5a , 5b and 5d were not supported. The moderated mediation effect of the interaction of motivational CQ and CD through work CCA on performance was significant (see Table 5 ). However, contrary to what expected based on Hypothesis 5c , results indicated that CD weakened the positive relationship between motivational CQ and work CCA, such that the relationship was stronger when CD was low and weaker when CD was high (β = .14, p  < .05 for low CD, β = .12, p < .05 for moderate CD, β = .11, p < .05 for high CD).

Length of residence in the host country weakened the positive association between motivational CQ and work CCA (β = −.19, p  < .01). The moderated mediation effect of motivational CQ and time of residence in the host country through work CCA on performance was particularly significant for expatriates who had been working in the host country for a shorter time (β = .44, p  < .05), but, even if it was still significant, the enhancing effect of length of residence in the host region on the motivational CQ-work CCA relationship decreased with the passage of time (β = .37, p < .05 and β = .31, p < .05; for those working in the foreign country for an average and a longer period of time, respectively; see Table 5 ). Thereby, Hypothesis 6c was supported, whereas Hypotheses 6a , 6b and 6d were rejected.

Experience moderated the relationship between motivational CQ and work CCA (β = −.35, p  < .01), but not the associations between the other CQ dimensions. However, contrary to what expected based on Hypothesis 7c , the moderated mediation effect of motivational CQ and experience through work CCA on performance was stronger for expatriates who had lower international work experience (β = .47, p  < .05) than for those who had moderate (β = .36, p < .05) or longer (β = .24, p < .05) experience (see Table 5 ). Therefore, Hypotheses 7a , 7b and 7d were rejected and Hypothesis 7c was not confirmed given that the direction was opposed to what expected.

The validity of the hypothesized models was assessed by comparing each of them (i.e., in terms of BIC and AIC comparative indices) with three competing models, as described in detail in Table 6 . The models with motivational CQ were the better-fitting models compared to those which included other CQ dimensions as antecedents.

Several findings emerged from this research which make a meaningful contribution to the existing literature on expatriates (see Fig.  3 for an overview of the confirmed hypotheses).

Model representing the hypotheses which were confirmed

First, each of the four CQ components were related to assignment-specific performance, both directly and indirectly, as partially mediated by work CCA. Then, culturally intelligent expatriates are likely to minimize cultural blunders and meet role expectations which, in turn, reduces the likelihood of misunderstandings, increasing performance (Moynihan et al. 2006 ). Moreover, they can successfully adjust to the host workplace, which enables them to channel their energies to improve their performance in assignment-specific tasks (Malek and Budhwar 2013 ; Shaffer et al. 2006 ).

Second, contrary to what expected based on Kim et al. ( 2008 ), CD is more likely to attenuate, rather than amplify, the positive effect of motivational CQ on work CCA in less culturally distant settings, such that the culturally intelligent expatriates are more likely to adjust to the host workplace and, then, perform well when CD is low. A plausible explanation is that when expatriates are confronted with more culturally different workplaces, their motivational CQ might not be sufficient to overcome the challenges posed by more complex assignments due to the greater cultural unfamiliarity (Chen et al. 2010 ; Vlajčić et al. 2018 ; Wang and Varma 2019 ).

Third, the length of residence in the host country weakens the positive relationship between motivational CQ and work CCA, such that motivational CQ is particularly salient when expatriates are in the initial stages of the adjustment process. Said differently, the greater the initial level of motivational CQ, the shorter the time required to adjust to the host country. Therefore, even if motivational CQ facilitates work CCA at any time, expatriates who are at the beginning of their assignment are likely to benefit more from motivational CQ than those who are in the host region from a longer time (Firth et al. 2014 ). Even if they were confronted with failures in their attempts of reproducing the new behaviours, cross-culturally motivated expatriates would be likely to persist at trying to imitate such behaviours longer than those with lower motivational CQ (Bandura 2002 ). This will increase the chances of receiving feedbacks, which will result in displaying appropriate behaviours; thereby, facilitating their adjustment to the new workplace and, then, their performance.

Fourth, motivational CQ is more salient for expatriates who are on their first assignment than for those who have longer experience in international assignments. Even if they have limited experience, the cross-culturally motivated expatriates tend to be more self-confident about their ability to interact with culturally diverse colleagues. They are also more willing to learn about unfamiliar cultures and experiment themselves in imitating culturally appropriate behaviours. Said differently, motivational CQ may counterbalance expatriates’ lack of experience, enabling them to adjust to the host workplace and, then, perform well.

Theoretical Implications

This research has several key contributions to expatriate literature. Firstly, this study extends Kim et al. ( 2008 ) by investigating whether specific CQ dimensions were associated with performance directly and indirectly, as mediated by work CCA. Additionally, by identifying, beyond CD, length of stay in the host country and work experience as boundary conditions for CQ effects, this research helps explain the mixed findings obtained in prior investigations on CQ.

Secondly, this study provides further evidence for the differential role of CQ dimensions (e.g., Rockstuhl and Van Dyne 2018 ) by testing mediating and moderating mechanisms which explain how and when each CQ facet is more - or less - likely to facilitate work CCA and performance.

Thirdly, our findings add to a growing body of literature on expatriate adjustment (e.g., Chew et al. 2019 ; Bhaskar-Shrinivas et al. 2005 ) by confirming the key role of work CCA, which represents a primary factor of interest to MNCs as it is crucial for assignment-specific performance.

Fourthly, this study deepens our understanding of boundary conditions for CQ effects by showing that, of the four CQ factors, only motivational CQ was qualified by CD, length of stay and experience. On the one hand, this suggests that cognitive, metacognitive, and behavioural CQ dimensions had a positive influence on work CCA and, then, assignment-specific performance, regardless of CD, length of stay and experience. In the absence of moderation from such factors, we can confirm that, even if expatriates are on their first assignment, at the beginning of their assignment or assigned to a highly culturally diverse country, a prediction of their success can be based on cognitive, metacognitive and behavioural CQ dimensions. Such dimensions can be particularly useful in promoting performance, since the demanding work setting entails high degrees of culture-related cognitive processing, cultural awareness, and behavioural flexibility to enable for efficient problem solving (Stahl et al. 2009 ). On the other hand, this allows to consider the boundary conditions that provide insights into when motivational CQ has a stronger influence on work CCA and, then, assignment-specific performance. Even motivational CQ is a relevant skill for expatriates at any time of their assignment, expatriates benefited more from motivational CQ when they were working in the host country for a shorter period or when they had lower experience. Motivational CQ plays a peculiar role which differentiates this dimension from the others. Indeed, culturally motivated expatriates are driven to prove themselves in a large quantity of intercultural work situations (Ng et al. 2019 ), despite the challenges experienced at the beginning of a novel assignment. Furthermore, motivational CQ may compensate the lack of work experience by strengthening use of skills and resilience in the face of cultural difficulties (Bandura 2002 ). However, the positive effect of motivational CQ on CCA is necessary yet not sufficient for overcoming the challenges posed by more culturally distant workplaces, as such environments demand less familiar task requirements from expatriates. This makes the effort arouse by motivational CQ less relevant (Chen et al. 2010 ). Overall, this study adds substantially to our understanding of how motivation-related processes may contribute uniquely to expatriate effectiveness.

Practical Implications

The current study has practical implications for MNCs and international human resource management. Firstly, the finding that all CQ dimensions are related to expatriates’ performance suggests that recruiters should select and hire culturally intelligent candidates for international assignments. By evaluating applicants’ CQ and by emphasizing CQ as a critical credential that candidates – especially those with lower international experience - should have, HR representatives can select the most suitable candidates, assigning more cross-culturally motivated expatriates to foreign assignments, if possible, in less culturally distant countries.

Secondly, organizations should provide expatriates with pre-departure training programs aimed at increasing their CQ. For instance, training can offer several scenarios for work so that expatriates may be adequately prepared to comprehend and master different situations (e.g., cultural habits) when facing problems in the host country (Lin et al. 2012 ). Since our findings suggest that motivational CQ is particularly relevant to work CCA, training programs could include a module on motivational CQ (Earley and Peterson 2004 ). For example, training based on dramaturgical exercises, including role plays and simulations about intercultural interactions could be useful tools to build efficacy regarding cross-cultural challenges (ibidem). Furthermore, managers should consider fostering expatriates’ motivation prior to their assignments by emphasizing benefits related to international assignments (e.g., opportunity to develop global career competencies or monetary incentives; Hajro et al. 2017 ) and by stimulating their curiosity about diverse cultures.

Thirdly, considering the mediating role of work CCA in the relationship between CQ and performance, interventions should be implemented to enable expatriates – especially those who are on their first assignment or at the beginning of a new assignment – to receive organizational social support (i.e., from both home and host-country managers and peers) and logistical help (e.g., housing, schooling) to facilitate reaching the adjustment stage (Bhaskar-Shrinivas et al. 2005 ). For instance, companies could consider arranging informal gatherings to help workers build strong bonds with local colleagues and assigning newcomers to experienced mentors (Chen et al. 2010 ). Moreover, MNCs should develop appropriate performance management systems for expatriates and expatriate-host country nationals interaction mechanisms to facilitate work CCA (Wang and Varma 2019 ).

Limitations and Suggestions for Future Research

This research suffers from some limitations which may give venues for future research.

Some concerns regard the cross-sectional design of our study and the exclusive use of self-reported measures. To decrease the risk of common method bias, we followed Podsakoff et al.’ ( 2012 ) recommendations regarding questionnaire design. Additionally, we used the unmeasured method factor technique, showing that common method variance was not a major issue. Future studies should focus on non-same-source outcomes, collect data from multiple sources (e.g., interviews, observations of actual behaviours, performance ratings from supervisors), adopt a longitudinal design and analyse CQ at the team level (Ott and Michailova 2018a , 2018b ).

Since most of research participants were men, and gender has been previously found to affect the levels of performance among expatriates (e.g., Ramalu et al. 2012 ), this might have partially influenced our findings. However, the gender distribution in our sample is highly representative of expatriate workforce in the analysed sector. Future studies should control for other variables (e.g., openness to experience, having family accompanying in the host country).

A further limitation is related to the fact that possible selection bias due to the voluntary participation into the research cannot be ruled out. It is possible that those who experienced successful CCA experiences were more motivated to respond and, as such, are overrepresented.

Since majority of respondents were from Latin America, and cultural orientation has been revealed to impact differing coping styles, such as conflict management and negotiation styles (e.g., Caputo et al. 2018 ; Caputo et al. 2019 ), this might have partially affected our results. Therefore, more research on larger sample sizes is needed to investigate how the effect of CQ on expatriate performance might vary as a function of individual’s cultural values.

As the nature of global work assignment is expanding beyond the traditional expatriation (e.g., frequent international business travel; Shaffer et al. 2012 ), future studies should investigate the relationships between specific CQ dimensions, work CCA and performance by comparing expatriates employed in different international work arrangements and by collecting data also on international skilled migrants (Hajro et al. 2019 ).

Since CQ, EQ and SI are distinct but overlapping constructs which have been found to positively interact with each other (Crowne 2013 ), future investigations should analyse associations at the subcomponent level of CQ, EQ and SI to identify how specific dimensions of each may affect expatriate performance when the three forms of intelligence are examined together.

Future studies should also analyse conditions under which higher motivational CQ levels might undermine expatriate effectiveness (e.g., through complacency; Chen et al. 2010 ), including situations characterized by ambiguous tasks (e.g., Schmidt and DeShon 2010 ).

Finally, it would be especially important to detect further contextual variables (e.g., group climate, performance management practices; Chen et al. 2010 ; Wang and Varma 2019 ) that may facilitate expatriate performance, either directly or through interactions with specific CQ dimensions.

Even though the current cross-sectional study relied only on self-report measures, it was conducted on the relatively under-investigated population of expatriates working within the energy sector in the Middle East and it addressed some gaps in the literature by disentangling the complex relationship between CQ, CCA and performance. To this end, we tested mediating and moderating mechanisms which explain how and when specific CQ facets were more - or less - likely to facilitate assignment-specific performance. Each CQ dimension had a differential role in contributing to assignment-specific performance, directly and through work CCA. Conversely, of the four CQ factors, only motivational CQ was qualified by CD, length of stay and international work experience. Our findings indicated that motivational CQ was particularly salient in overcoming work CCA difficulties for expatriates who were at the beginning of their international assignment and who had lower experience. Moreover, motivational CQ related more positively to expatriate work CCA in less culturally distant countries. We conclude with the hope that our theoretical contributions will stimulate additional multilevel and longitudinal research on factors influencing work CCA and performance to gather further knowledge about cross-cultural management.

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Appendix 1: Measurements

Demographic items.

Thank you for participating in this study. Please pay close attention to each question provided and answer each question as honestly as possible by placing a mark in the provided space. Please take care in filling out this form.

1. Gender (Please Check One): [] Male [] Female.

2. Age (in years): ______.

3. Marital status (Please Check One): [] Single [] Married.

4. Education status (Please Check One): [] High school [] Degree.

5. Role (Please Check One):

[] 1. Administrative.

[] 2. Technical.

[] 3. Executive.

[] 4. Other.

6. How many years have you spent working abroad before this assignment: ______.

7. How many months have you been working in your current country of assignment? ______.

8. Did you have any cross-cultural training (any training that prepared you for relocation) before departure? (Please Check One): [] Yes [] No.

9. What is your country of origin? ______.

10. In which country are you currently living? ______

Cultural intelligence

Read each statement and select the response that best describes your capabilities.

Select the answer that BEST describes you AS YOU REALLY ARE .

1: Strongly disagree 2: Disagree 3: Somewhat disagree 4: Neither agree nor disagree 5: Somewhat disagree 6: Agree 7: Strongly Agree.

Cross-cultural adjustment at work

Please indicate how well adjusted (how comfortable) you are with each of the following aspects of living in your current city of residence. Use the following scale:

1: Very unadjusted 2: Unadjusted 3: Somewhat unadjusted 4: Neutral 5: Somewhat adjusted 6: Adjusted 7: Very adjusted.

• Assignment-specific performance

Please rate your level of work performance to the factors listed below using the following scale:

1: Poor 2: Below Average 3: Average 4: Above Average 5: Outstanding.

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Setti, I., Sommovigo, V. & Argentero, P. Enhancing expatriates’ assignments success: the relationships between cultural intelligence, cross-cultural adaptation and performance. Curr Psychol 41 , 4291–4311 (2022). https://doi.org/10.1007/s12144-020-00931-w

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How Companies Can Manage Overseas Assignments

Offering employees and families better support can lower the rate of failed international assignments.

Companies around the world send employees on international assignments typically for three to five years. According to Worldwide ERC, the cost of doing so can be over $1 million per person. Despite the cost, companies report a 42 percent failure rate in these assignments. What's wrong? Many companies are not adequately preparing employees or their families for life and work overseas.

Expatriates, those living outside of their native country, may receive support through their company upon departure, but many do not receive sufficient support once they arrive in their new location. The lack of familiarity and sudden increase of uncertainty can cause a high level of emotional distress on a family, which in turn can have a detrimental effect on an employee's performance. Here's how companies can do a better job managing overseas assignments .

[See: 25 Best Jobs That Don't Require a College Degree .]

Select Employees Carefully. If a person has been successful in their home country role, that does not necessarily translate into high performance overseas. It's important to take into account soft skills that point to likelihood of success in a totally new environment. These are flexibility, self-reliance, tolerance and the ability to handle change and ambiguity. In other words, you need to make sure your employee is independent and can get along well in unusual circumstances and with diverse groups of people.

Prepare for Departure. Where companies often fall short is in the preparation of employees and their families for an overseas assignment. According to Naomi Hattaway, founder of the I Am a Triangle online support community for those who have lived in other cultures and countries, employees who move overseas are often provided with housing search assistance, cultural training and language classes. However, as companies pare down budgets, many of these programs are the first to be cut. These services are often offered only for a short time before or at the start of an assignment. At that point, Hattaway says, everything is so up in the air because you aren't yet settled in a house nor do you have your belongings. As a result, the value provided by these services is short term.

Intercultural and language training are two important ways companies can help both employees and their families start off on the right foot. However, preparation support is frequently provided through print or video cultural seminars and resources and offer little to no in-person interaction. Therefore, Hattaway says that individuals needing additional help are unlikely to receive it.

[See: Tips for Surviving a Career Transition .]

When employees move abroad with their families, the adaptation process is more complex because of added pressures such as a spouse's or partner's career, children's schooling and relatives back at home. Many assignments fail not because of an employee's poor performance , but because of family issues. Setting expectations of the new country and culture from the beginning can help decrease some of the anxiety that comes with moving overseas.

Offer Ongoing Support. Hattaway states that employee assistance programs do not usually cover pre-assignment needs nor do they assess whether families are prepared for a future assignment. These programs are often billed as providing psychological assistance to the employee and family members, and often are only provided on an emergency basis. Proactive, ongoing support versus reactive actions by employers would increase the success rate of expatriate assignments.

While talks about mental health have grown since companies are more aware of the risks of overwork and burnout, there is still a stigma attached to depression worldwide. When you add the stresses of living outside your native country, it creates an endless cycle. Who do you confide in? According to Hattaway, because those who tend to move abroad have thick skins, employees and family members may hide mental illness, which can come to light when it's too late. It is also very difficult to impossible in many countries to find psychologists and psychiatrists, not to mention those who can speak English or your native language. Therefore, companies need to invest more resources into mental health support for those moving overseas as well as into activities that increase well-being for employees and their families. This may mean designing team-building activities for an employee's new team to help them build credibility. For a family, this could be hosting gatherings where local and expatriate families get together to socialize or work on a community project.

[See: The 25 Best Social Services Jobs of 2017 .]

Prepare for Repatriation. Unfortunately, Hattaway says there is little to no support when an employee is preparing to return and returns to their home country. This is especially true if someone is returning from a failed assignment. Expatriates need advance notice of up to a year when their international assignment is slated to end. This gives an employee and their family sufficient time to prepare for a new position at home. The human resources department can work with the employee to identify suitable positions and discuss their overall career goals. Companies can also offer support for families as they prepare children for new schools, find a new home and for partners and spouses who plan to continue their career back home.

While supporting an expatriate and his or her family on an overseas assignment is costly, the price of a high rate of failed international assignments drives those costs even higher. It's imperative for companies to offer employees and their families assistance to help them succeed in their new environment.

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Resources for International Citizens and Expatriates

• Expatriate Selection: Lessons From the U.S. Peace Corps

“Ask not what your country can do for you, ask what you can do for your country.” – President John F. Kennedy, 1961 Inaugural Address

On March 1, 1961, John F. Kennedy created the US Peace Corps. In August of that year, the first 52 Peace Corps volunteers arrived on the shores of Ghana. Today’s 4,000 or so annual volunteers are a devoted and skilled bunch of mostly early career professionals. Yet those first volunteers were among the nation’s best and brightest, all graduates of Harvard, Yale, or Princeton at the behest of Ghanian President Kwame Nkrumah.

Despite their credentials and commitment, it wasn’t long before issues arose. Perhaps most infamously, an early volunteer to Nigeria wrote a letter home describing the state of living conditions as squalid, horrifying and primitive. Intercepted by the local postal service, it was soon on the front page of major Nigerian newspapers, sparking outrage among the populace.

In my Peace Corps assignment to Central Asia’s Kyrgyz Republic, roughly one-third of the assignees departed prior to the end of their 27-month assignments (including yours truly, who resigned early in favor of a local faculty position in order to research governmental corruption without tainting US-Kyrgyz relations). To help improve the fit between volunteers and host countries, the Peace Corps is among the earliest known organizations to perform psychological assessments on applicants interested in volunteering abroad. The results of this early experiment were reportedly mixed. However, psychological assessments have improved with time and are now a recognized best practice to use in expatriate selection for organizations staffing international offices.

The expatriate selection process can be complicated. At its best, it involves many stakeholders, including managers, HR staff, and host country professionals, each of whom has input on what is relevant to the determination. What are the key questions they should ask, and what steps can organizations take to prepare the employees they choose for international assignments?

Expatriate Selection: Who Chooses?

At its best, expatriate selection is a collaborative effort. Participants include management, HR professionals, and host-country recipients, each of whom has a particular (if at times overlapping) role to play. Host country staff are primarily responsible for assessing technical skills. They answer the question: can this candidate complete the required tasks?

While this is a crucial question, it is not the only question. Unfortunately, scholars have for decades documented that technical competence regularly overshadows other issues of concern. What other factors should companies consider in selecting expatriates?

Other key elements include whether the expat candidate has the cultural and social skills to succeed in the new assignment. Family questions may also be relevant. HR and host country managers should have an expansive role to better assess these variables.

A significant barrier to expatriate success is cultural distance. This measures how different the host country’s culture is from the home country. A forthcoming article will discuss this in more detail, but for now, know that cultural differences may present themselves in many ways. And for the home country staff, these differences may not be obvious.

Host country staff, however, may shed light on which cultural practices most challenge foreign national workers. These may be language or communication differences, social norms, or business practices. The deeper the differences, the more important it is that the chosen expatriate brings prior international experience to the job. In addition, host country staff may coordinate with HR and home country staff to assist in the expatriate selection and identify which foreign nationals most flourish amidst these cultural differences.

Furthermore, HR staff may spearhead those pre-departure psychological assessments that the US Peace Corps popularized so many years ago. These practices are among the most important – but least understood – of all selection practices.

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Also Read: Resources & Articles for Expats

“Grit: The Power of Passion and Perseverance”

Grit. It’s a topic popularized by Wharton Professor Angela Duckworth in her book Grit: The Power of Passion and Perseverance . Grit is the ability to remain committed to long-term goals despite challenges, sometimes for years at a time. As Duckworth revealed in a series of groundbreaking studies, grit may be the single most important variable for employee success. More so than skills. More so than intelligence.

And for the expat, grit may be even more important than among domestic employees. An individual accepting an international assignment is taking a leap of faith. No matter how much support is received – and later articles review exactly what kind of support expatriates tend to need and want – the expatriate will inevitably face challenges.

These challenges may be from work styles or relationships with co-workers or supervisors, challenges for the family in adjusting, or social setbacks. Consider the ongoing Covid pandemic and the upheaval this caused for expatriates. New concerns sprouted about healthcare, travel restrictions and closing borders, and social isolation in countries where restaurants and other public venues closed en masse .

Selecting for grit – and yes, there are surveys that do just this – is, therefore, one of the key psychological variables that organizations should look at when assessing expatriate candidates. What else?

What Factors Should Companies Consider for Expatriate Selection?

The so-called Big Five Personality traits are openness to experience, conscientiousness, extraversion/introversion, agreeableness, and neuroticism. They are among the most important and best understood of the many personality traits which make up an individual’s character. (An easy trick to remember the Big Five? Take the first letter of each trait. It spells “OCEAN”). Put simply, if you understand where someone falls on each of these traits, you can predict a lot about their attitudes and behaviors in life and work.

Extraversion

Extraversion measures sociability and leads to expat success. Studies show that extroverts are less likely to quit their jobs, while supervisors rate them higher in performance. Extraversion also correlates with ambition, which also leads to higher job performance.

However, don’t take these studies to mean that organizations should exclude introverts from international assignments. After all, they represent around 50% of the population. And as Susan Cain documents in her well-researched book, Quiet , introverts also offer employers valuable skills.

Consequently, this is more about understanding in which positions each can flourish. For instance, extroverts are well-positioned to handle international assignments that require regular contact with the local population. By contrast, introverts do well when given space for their creative and thoughtful juices to flow and when they have quiet workspaces far away from daily chaos. In addition, introverts may require more organizational support in terms of socialization and integration with host country nationals.

Openness to Experience

Another trait predicting expatriate success is openness to experience. These individuals seek out novelty and adventure. They’re more likely to try different foods, listen to new music, and support cultural activities. They are, in turn, primed for positive attitudes when it comes to embracing the changes and opportunities of a new national culture.

Indeed, studies show that expatriates high in openness to experience tend to perform at higher levels. In one study, higher-performing expatriates were more likely to report that they took the international position for the love of travel and the opportunity for new experiences. Furthermore, these individuals tend to gain more value from their interactions with host country nationals – enthusiastically soaking up information and using it to improve their day-to-day performance. Finally, spouses high in openness to experience adjust better, as well.

Neuroticism and Conscientiousness

Organizations may also seek expatriates that are low in neuroticism and high in conscientiousness. Neurotic types tend to struggle with ambiguous and stressful environments, with which, as we know, foreign assignments are rife. Finally, conscientiousness measures dependability and diligence and is related to grit. It predicts higher job performance for both domestic and international workers.

Click here for a survey that measures each of these so-called “Big Five” personality traits. In addition, companies can customize open-ended interview-style questions to assess where expat candidates fall on each of these traits.

Expatriate Preparation: How To Prepare Employees for International Assignment

Your expatriate selection process is complete, now what?

Expatriate research reports that the most important pre-departure expatriate preparation involves a series of in-depth training sessions. There are many types of training for expatriates. The primary categories are area studies, cultural practices, language training, sensitivity training, and field experience.

At the most basic level, expats must understand practical living conditions. Can they drink the water? Where do they go for medical treatment or for groceries? And what are the best neighborhoods to live in?

Expatriate Training

In addition, training for accompanying family members is key. This means including spouses and even children in some training sessions and providing families with information about schooling for children and spousal employment.

Finally, expatriate training should include business-relevant matters, such as local business laws and relationships with local partners. Expatriates should, furthermore, be clear about their job expectations, their performance management systems, and their compensation policies.

In addition to training, the company often undertakes other concrete activities on behalf of the international assignee. This includes visas and other bureaucratic support, which can be a byzantine nightmare for the uninitiated employee.

Studies also show that expatriates are grateful for long lead times before departure. Rushed assignments such as those with two months’ notice or less prove troublesome in terms of selling a house, buying or renting a new one, changing schools, and organizing a move (and to another country, at that).

The US Peace Corps learned some lessons the hard way but responded by putting more effort into their selection policies. In so doing, they – and all organizations following suit – give those selected the best chance of succeeding in even the most challenging environments. When paired with pre-departure and training preparations, your expatriates will arrive in their host countries with every possible advantage.

Related Articles

• Culture Shock: What It Is and How HR Can Help
• Understanding and Preventing Expat Failure
• The 5 Best Countries to Work in for Expats

About the Author

Dr. Thomas J. Bussen, with a Doctorate of Business Administration, JD, and MBA, is an Assistant Teaching Professor at Miami University’s Farmer School of Business, and a former professor at the African Leadership University and the American University of Central Asia.  He is the author of several books, including  Shaping the Global Leader  and  Compliance Management: A How-to Guide . His latest book,  Enlightened Self-Interest: Individualism, Community and the Common Good , makes the case for a more inclusive and equitable professional mindset and is expected for release in 2023 with Georgetown University Press.

Sources and Further Reading

Anderson, B. A. (2001). Expatriate management: An Australian tri‐sector comparative study.  Thunderbird International Business Review ,  43 (1), 33-52.

Harris, H., & Brewster, C. (2002). An integrative framework for pre-departure preparation.  International Human Resource Management: A European Perspective ,  224 .

Hung-Wen, L. (2007). Factors that influence expatriate failure: An interview study.  International Journal of Management ,  24 (3), 403.

Lin, C. Y. Y., Lu, T. C., & Lin, H. W. (2012). A different perspective of expatriate management. Human Resource Management Review, 22(3), 189-207.

Mesmer-Magnus, J. R., & Viswesvaran, C. (2007). Expatriate management: A review and directions for research in expatriate selection, training, and repatriation.  Handbook of research in international human resource management , 197-220.

Our Most Famous and Infamous RPCV . Peace Corps Worldwide.

Suutari, V., & Brewster, C. (2001). Expatriate management practices and perceived relevance: Evidence from Finnish expatriates.  Personnel Review .

Wang, C. H., & Varma, A. (2019). Cultural distance and expatriate failure rates: the moderating role of expatriate management practices.  The International Journal of Human Resource Management ,  30 (15), 2211-2230. – see page 2213 for an overview of the selection process.

Zeitlin, Arnold (1986). First Group of Peace Corps Volunteers Marking 25th Anniversary. AP News.

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Managing Expatriates on International Assignments

Related Papers

International Business

Marie-France Waxin

International managers constitute valuable resources that organizations do not always use to the best of their potential. Further, senior managers assigned to positions in foreign subsidiaries do not always live up to their bosses’ expectations. When they succeed in their international assignments, they often leave the organization upon returning to their country of origin. Organizations can reverse this trend by encouraging managers’ international mobility, through better planning of assignments, better recruitment and selection practices for international assignments, better pre-departure preparation, better performance management, and better management of the return of their international managers. The following challenges are associated with the strategic management of international assignments: • Assigning the right kind of international manager to the right position, at the right time • Designing international HR practices for balancing generic and local needs on the one hand, and control, coordination, and autonomy needs on the other • Establishing balance between global competitiveness and reactiveness to the local environment’s peculiarities • Identifying the needs for international personnel with a high degree of precision • Strategic management of international assignments and of international personnel at the lowest cost: what type of international employee must be chosen, and to fulfill which position? Which type of contract must be drafted? In the following sections, we will first look at the different approaches to international staffing, the reasons for using international assignments, and the different types of international employees. Then, we will propose a model for the strategic management of international assignments. Finally, we will look at the role played by women in the global arena.

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QUEST JOURNALS

IHRM is set of organizational activities aimed at effectively managing and directing human resources/labour towards achieving organizational goals. Typical functions performed by HRM staff would be recruitment, selection, training and development, performance appraisal, dismissal, managing promotions and so on. IHRM can be defined as set of activities aimed managing organizational human resources at international level to achieve organizational objectives and achieve competitive advantage over competitors at national and international level. IHRM includes typical HRM functions such as recruitment, selection, training and development, performance appraisal and dismissal done at international level and additional activities such as global skills management, expatriate management and so on. In simple terms, IHRM is concerned about managing human resources at Multinational Companies (MNC) and it involves managing 03 types of employees namely,

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Making Your Expat Assignment Easier on Your Family

• Katia Vlachos

When temporary relocations fail, it’s seldom about the work.

Where do expats go wrong? About 80% move with a partner or family, and it’s often the inability of those people to acclimate to the new environment that causes assignments to fail. Before accepting a temporary reassignment to another country, involve your partner or family in the decision and anticipate the changes it will mean. Prepare for the move well in advance, and discuss the tradeoffs of the choices you’ll need to make. Be particularly sensitive to the possibility that your transition experience may differ from theirs.

As companies expand globally, executives are increasingly being tapped for expatriate assignments. The idea is to spread talent, expertise, and knowledge from headquarters to foreign offices, and vice versa. But these are costly moves — $311,000 per year, according to a  report by PwC and the Cranfield School of Management — and many fail to generate a return on investment. Studies show that an estimated 6%–10% of such assignments are terminated early, while an unknown but sizable percentage involve unnecessary struggle and underperformance.

• Katia Vlachos is a public policy analyst, researcher and writer on cross-cultural transitions and expatriate life. She has a Ph.D. in policy analysis from the RAND Corporation.  

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International Assignments: Managing Benefits and Taxes for Expatriate Employees

Written on February 28, 2019

Given the complexity of the U.S. tax code and the myriad regulations related to ERISA plans, managing benefits for domestic employees is a complicated undertaking. But managing benefits for employees who your U.S. company sends to work overseas—known as expatriates, or expats—adds several layers of complexity.

As globalization continues to be a defining characteristic of the economy, many U.S. companies are finding opportunities to grow abroad. But before their employees ever step on foreign soil, employers need to learn about the various taxes other governments may impose on benefits and compensation and think through the various questions that go into developing a sound policy for managing benefits for expatriate employees. Employers also need to help their employees understand what the foreign assignment means to them with respect to taxes and benefits.

Understand the Basics of Expatriate Taxation

For purposes of this article, an expatriate is a U.S. citizen or green card holder who is sent by their U.S. employer to work at a branch or other linked organization in a foreign country. Assignment duration may vary anywhere from six months to several years. Employees must obtain a work visa, and—depending upon the host country—may be eligible for certain benefits offered by that country while working abroad.

U.S. citizens, green card holders, and their employers need to understand that expatriates will still have an income tax liability and income tax return filing obligation at home regardless of where they work globally. The United States is unusual in this regard with respect to taxing their citizens and permanent residents (green card holders) who are living and working abroad; many foreign governments allow their citizens to fall under the host country’s tax code when working abroad and home country taxation is often suspended until the individual returns to their home country.

The United States’ unusual approach, however, doesn’t mean that U.S. expatriates will always face double taxation. The U.S. tax code looks to offset this, at least partially, by allowing certain foreign tax credits and/or the foreign earned income exclusion. Employers take these credits, the foreign earned income exclusion, and the foreign country’s tax policies into consideration when developing the compensation package for the employee.

In addition to understanding how the U.S. will tax the expatriate’s foreign compensation and benefits, employers also need to understand how the host country will tax this income. Almost every country requires some kind of tax to be paid by foreign workers. While taxation of salary and bonuses may be relatively straightforward, things can get quite complicated when it comes to how benefits—such as retirement matching contributions or profit sharing—are taxed.

Consider Your Options for Making Expatriates Whole

Employers need to study foreign countries’ tax laws and be aware of each country’s nuances so a fair, balanced and competitive compensation package is developed. The good news is that employers have flexibility in navigating these issues and developing their policies.

The first option is to do nothing. Sometimes, in this scenario, the expatriate is responsible for the taxes and other costs incurred while working in the host country. A more common strategy is to equalize the tax burden on the employee. This is a tax-neutral policy, often referred to as tax equalization, where the employee is no worse or better off while working abroad. In this case, the goal of the compensation package is to keep employees whole—which means maintaining roughly the same financial standards they would have experienced at home.

Beware Double Taxation of Retirement Benefits

Expatriates are allowed to participate in U.S.-based retirement plans while working abroad. They can contribute pre-tax dollars to their traditional 401(k) plans, and employers can offer a match to the employee deferral. Unfortunately, many foreign countries consider the deferral to be taxable income.

What’s more, the employer contribution may be considered regular income subject to foreign taxes as well. In this case, the employee is double taxed: first by the host country for the “income” sent to the retirement plan, and then by the United States when it’s time for the participant to withdraw assets. (Double taxation may also happen in a Roth situation, where participants pay taxes up front when making the deferral.)

In these situations, employers will need to decide whether expatriates should be excluded from the plan and possibly compensated outside of the benefit to avoid the double taxation—or utilize a tax equalization policy where the expatriate is made whole. The latter approach would be in keeping with the U.S. system, in which qualified retirement plan contributions are only taxed once when the employee takes a distribution from the plan at or after retirement.

Insight: Take a “No Surprises” Approach to Your Expatriate Benefit Policy  The goal of any expatriate compensation package should be to ensure that neither the employee nor the company encounter any surprises. To achieve this, employers need to think through many issues well before sending an employee abroad.

The first issue is to decide whether or how to make employees whole. After that major issue is resolved, employers need to focus on finer points such as evaluating foreign tax policies, reviewing plan documents to determine eligibility and analyzing foreign tax credit structures to maximize value.

It’s also important to have strong communication strategies and resources for employees. A solid two-way communication plan aids expatriates in clearly understanding what they will be receiving and responsible for, and offering them access to experts who can help them feel that they are not alone in navigating the oftentimes complex tax structures in host countries.

Employees working at different companies often compare notes about their employer’s compensation policy for expatriates with other expatriates they meet abroad, so understand that there are competitive reasons for developing a fair, robust approach.

When sending employees abroad, employers have a lot to manage from a benefits perspective, between adequately rewarding employees, understanding individual countries’ tax rules, filing the appropriate forms in the foreign jurisdictions and keeping costs under control.

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