HR Analytics Case Study: Why Expats Quit – and how to Retain them
The labor market is globalizing at high speed. Students are doing foreign exchanges and internships to boost their CVs, young professionals are eagerly applying for international assignments, virtual teams and frequent, long-distance commuting have become mainstream, and intercultural management experiences are these days a requisite to get ahead in corporate life. In sum, people are more often crossing the national borders of their motherland for work-related purposes.
Within organizations, the use of international assignments has been increasing for quite a while (BGRS, 2010 – 2017). However, this increase is in different types of assignments.
Where traditional assignments used to be planned for the long-term – including elaborate organizational support for the expatriating employee and his/her family – these days, expatriates more often commute frequently between countries or locations, or only stay abroad for short periods of times.
The increasing use of these new types of international assignment are, however, not without consequences. Traditional expatriation was seen as an investment on behalf of the organization in the development of the expatriating employee. However, the current forms of expatriation are more often call for an investment of the employee him- or herself.
Not only are the remunerations and allowances of these new types of assignment often less favorable for the employee, but they may also have negative implications on the work-family and work-life balance of the expatriate’s family (Tahvanainen, Welch, & Worm, 2005).
Issues may arise from the absence of a partner, a broken social network, unmet expectations, and/or cross-cultural challenges. Moreover, organizations frequently forget to plan ahead and arrange a suitable career plan for the expatriated employee, causing a lack of suitable positions and consequences for career and psychological contracts upon return (Pattie, White, & Tansky, 2010).
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From the perspective of evidence-based HRM and HR analytics, I have researched the expatriation process and its implications for several years at multiple global organizations. Here, I would like to take you through the study we conducted at two large multinationals looking at employee retention specifically.
Western multinationals recruit hundreds of trainees straight from university every year, investing considerable time and money in their development in the hope that they may one day form the leadership team of their organization. Some of these trainees receive international assignments early in their career, to really accelerate their development and bind them to the organization.
In literature, nor within these organizations, was there any evidence that these early-career, short-term international assignments were having these esteemed positive effects.
The following demonstrates how we leveraged the organizational databases and statistical modelling to demonstrate the effect of these international assignments on employees’ retention. In the medical world, so-called survival models are often used to statistically establish whether medical treatments help the patient survive.
Fortunately, survival was not in question in these organizations, but the same technique can be applied to assess objectively to what extent “HR treatments” help to retain employees in the organization.
In the HR information systems of these two multinationals, we were able to retrieve granular employee information for a period of seven years (2010 – 2017). Our sample included the early career paths of over 9,000 new young professionals. We had all kinds of HR and personnel information about these individuals, including their gender and age, but also their performance and salaries, as well as all their (international) job moves.
Hence, we could, to a large extent, isolate the effect of international assignments. Our final dataset consisted of over 340,000 rows, recording all the HR data changes that had occurred for our young professionals during their employment.
The survival analyses produced among others the figure below. It depicts, for every length of service (x-axis), the probability that an employee would still be employed in the organization (y-axis). It becomes clear that employee retention is a large problem at the blue organization, with nearly 50% of trainees leaving within the first five years, whereas the red organization seems to have less retention problems.
Potentially, the differences between the organizations can be attributed to their culture and market context. For instance, the sector of the blue organization is characterized by high turnover, with talents frequently moving between competing organizations. In contrast, the sector of the red organization is regarded as one of lifetime employment, with job moves between competitors regarded as inadmissible.
The analyses regarding international assignments demonstrated two other interesting effects.
- First of all, the risk of turnover was four times as low among the internationally assigned expatriates, as compared to their non-assigned peers at home. In this sense, these short-term international assignments seemed to improve the retention of employees.
- Secondly, at one of the two organizations, employees who returned from their short-term assignment (repatriates) were twice as likely to leave as compared to their comparable, non-assigned colleagues. In this sense, repatriated employees were much quicker to look for (better) alternatives than their colleagues who were not assigned. Moreover, much of this repatriate attrition occurred in the very first months after repatriation.
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The above results had multiple implications for these organizations. The blue organization should potentially reconsider whether their considerable investments in talent acquisition and development were indeed paying off, as half of their talents left within a few years.
Fortunately for them, internationally assigning their top talents for short periods of time seemed to improve their retention in both the short and the long term. While talent retention seemed less of an issue at the red organization, this organization could optimize its international assignment and repatriation policies in order to retain their top talents. It seemed as if the international assignments were not helping their talent pipelines.
This HR analytics project turned the data these organizations already collected into insights that sparked a conversation regarding talent programs.
Both organizations used the quantitative insights to sit down with the responsible business, HR, and talent leaders and discuss how to proceed. One of the ideas was to organize focus groups with young expatriates and repatriates in order to uncover the direct drivers of turnover.
Another proposal was a deep dive analysis into among others exit interview texts, to uncover the themes mentioned by surveyed leavers. Additional qualitative insight was going to complement this first quantitative approach to paint a more detailed, full picture.
This way, the organizations could hear firsthand what challenges their employees faced during international assignment.
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