Expatriate Managers a Necessary Evil or a Catalyst for Profitable Growth in High-Growth Markets

The number of expatriate managers leading international businesses expansion efforts is at an all time high, yet most business leaders accept building "local" management teams is a must for profitable long-term growth. The days are long gone, and the locations are very few, where the benefits afforded to an expatriate are markedly different from a senior local executive. Yet pay and incentive compensation packages still differs markedly in China, South Asia, Africa, India and Latin America. The argument goes that while expatriate managers remain a readily accessible talent pool, we need to pay the going rate. As a result, businesses and whole industries such as the international hotel management sector have a much larger cost base, which shows no meaningful signs of changing.

My observation is that many of these businesses do an excellent job determining the visible costs of an expatriate manager but very few are able to effectively quantify the value-side of the equation. They look internally (impact on internal competencies), not externally (impact on customers). The reason is that many of those making the determination are ill-equipped to make the judgement (Home Office Management, HR, Expatriate Recruitment professionals). As someone, who has been in an expatriate managerial role on three separate occasions, counselled corporations with over 150,000 expatriates, and been a "sounding board" to countless other Country Presidents, let's consider the following:

Pre-Assignment: "Value-Added" Expatriate Manager in a High- Growth Business.

If an expatriate is sent on assignment to establish an operation in Shanghai, he/she will need to understand the business dynamics to competitively position the firm's products and services in mainland China, expertise to provide the language skills to managers transferring into the country, knowledge to gain the appropriate regulatory approval, inter-personal to help coordinate a diverse team in preparation for the formal launch and local PR, distinct skills to attune the local business to the prevailing culture and contacts to build relationships with local government and business leaders. Take this test with your current and future Expatriate Managers.

To achieve the organisation's desired level of profitable growth, critical improvements need to happen outside the business (valuable offerings launched, attract high-quality buyers, easy to buy, repeat business and referrals exploited etc.). The Expatriate Manager needs specific competencies and passion to perform effectively, ascertain the degree to which they are present and their value to your customers, not the business:

Business Dynamics some most all
Expertise some most all
Knowledge some most all
Inter-personal some most all
Distinct Skills some most all
Contacts some most all

Scoring: How well are your expatriates doing in these areas? If they are uneven, or if "some" is the best you can do, whose responsibility is it? How impressive is that value relative to local managerial alternatives and the profitable growth of the organisation?

During Assignment: Measuring "Value Add" in a High-Growth Business

  1. What is the outcome of the improvement/correction worth to the local business and the entire organisation? If quantitative, what is the amount (increased sales, increased revenue to profit conversion, increased market share etc.)? If qualitative, what are the effects (teamwork, repute, perception and image, morale)? How do your clients describe a successful outcome working with the Expatriate Manager? To what degree are they better off?
  2. What is the expatriate manager's contribution to that outcome? Are they accelerating what would have occurred anyway? Is the outcome dependent on their unique talents? Are they acquiring business, facilitating and/or delivering your products and services to your customers?
  3. What is your current relationship with the Expatriate Managers' clients? Are these long-time clients? Does the increased learning, expertise, experience, repute from their work produce future growth opportunities for the business? Is the work stressful? Are there challenging deadlines?
  4. What are the costs of managing the assignment? Are there significant costs for the family (e.g. dual career, childcare impact)? To what degree is third party (tax, legal, relocation) expertise required to support the assignment? Are there extensive travel requirements?

Post Assignment: Measuring "Value Add" in a High-Growth Business

  1. What has been the Expatriate Manager's contribution and value on the profitable growth of the local organisation's client relationships? For example in an International architects business in China, there may be short-term results achieved for their clients (getting design plans approved by local authorities) and long-term results (actual development fully built and open) that may not happen until several years after the Expatriate Manager has left.
  2. What is the impact on the local and whole organisation in its' key customer markets (brand perception, innovation, attracting local management talent, leadership strength etc.)?
  3. What opportunities have you missed or omitted to move on with Expatriate Manager during the assignment? What was the fear? Are you able to confront that now such that the next person in the role will be even more successful with your clients?
  4. What are the repeat opportunities to deploy that Expatriate Manager and the potential value to the organisation? Those might be more of the same opportunities to deploy the Expatriate Manager's skills to the clients of the local business, alternate opportunities to deploy different skills to those same clients, alternate opportunities to deploy the same skills to those same clients in other parts of the world, or finally alternate opportunities to deploy new skills to new clients in other parts of the business.
  5. When and where do those opportunities present themselves? Are you able to jump on them now or is there some investment of time, money or resource required?
  6. There is no reason on earth why this cannot be measured. It presumes of course that you have the time and inclination to do so, and you don't just leave this to HR.

    To contact us, please telephone: +44 203 440 5072 or email: james@elliceconsulting.com

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