Abroad Assignment Nov 2015 Debate

COMPANIES devote a lot of thought to sending people abroad. They offer foreign postings to their most promising employees. They sweeten the deal with higher salaries and big allowances, and sometimes help to find work for spouses. But when it comes to bringing the employees home, it is a different story. One study suggests that a quarter of firms provide no help for repatriates at all. Many others offer at best a few links to websites.

Big companies are more globalised than ever. So you might think that they would treat staff with foreign experience as particularly important for maintaining their competitive advantage. Yet in practice they neglect such employees, blithely assuming they will soon be back in the swing of head-office life. The cost of this neglect is high. Sebastian Reiche of IESE business school in Spain estimates that anything between 10% and 60% of “repats” quit the company within a couple of years of returning home. Their attrition rate is notably higher than for those not sent abroad.

This represents a squandering of investment, given that expats often cost several times as much as locals to employ. It damages the leadership pipeline. It may discourage high-flyers from taking a foreign posting. Worst of all, it can be a subsidy to rival firms: they end up with the people best placed to bury your company, trained at your expense.

Repats often complain of culture shock: things that once seemed familiar about home can seem strange and parochial. No one in the office wants to hear their war stories about the struggles of working in foreign climes. They find they have lost their niche at headquarters—partly because the balance of power has changed (allies have left and newcomers have greased their way into favour) and partly because they have got used to running their own fief rather than slotting into a hierarchy. Add to this the fact that they have to adjust to a lower standard of living—particularly if they have the misfortune to be moving back to an expensive city like London—and it is a recipe for discontent. One review of the academic literature, by Jan Sebastian Knocke of the University of Erlangen-Nuremberg, notes that “there are signs of repatriation being more difficult than integration into a culturally distant country.”

Most repats would be happy to put up with a bit of culture shock if they came back to a plum job. But most do not. Clare Hughes of PwC, a consulting firm, says that a striking number of them are given no properly defined job. “They wander the corridors or get given ‘projects’,” she says. A 2013 study by Christina Bailey and Lisa Dragoni of Cornell University shows that, far from moving up the hierarchy, the majority of repats return to a job on the same level as the one they had left when going abroad.

A 2011 study by Monika Hamori and Burak Koyuncu of IE, another Spanish business school, casts doubt on the entire idea that a foreign posting is the road to the top. Ms Hamori and Mr Koyuncu studied the CEOs of the 500 biggest European companies and the 500 biggest American ones (the total came to 1,001 because one company had two CEOs), to see what effect being sent abroad had on their careers. They found that the more foreign experience the employees had accumulated—that is, the more foreign postings they had been sent on and the more time they had spent abroad—the longer it had taken to reach the top.

The majority of the 1,001 CEOs—60% in Europe and 76% in the United States—had never had a foreign posting. Of those with foreign experience, more than half were the CEO of a company other than the one that had sent them abroad. So, any doubts employees may have about accepting foreign postings turn out to be well-grounded. Out of sight often does mean out of mind: bosses over-reward the people they meet every day compared with those rarely seen around the office.   

Companies’ poor management of foreign transfers extends beyond their blasé treatment of individuals. Firms often justify overseas postings in terms of the circulation of ideas. But repats routinely complain that their bosses ignore the time they have spent abroad. They do not give them jobs that allow them to use their experience, let alone provide them with ways to spread their new insights to other employees. A lot of expensively accumulated global expertise is allowed to moulder away.

Welcome (back) aboard

How can companies improve this dismal record? Half the battle lies in recognising that repatriation is a problem. Bosses need to fight the out-of-sight-out-of-mind problem by making sure that those on foreign assignments have champions back at HQ who look after their interests. They need to pay as much attention to “re-boarding” repats as they do to “on-boarding” new employees: for example, PwC holds cocktail parties at which returning staff can meet each other, and provides them with mentors to help them fit back in. Firms should also find ways to help repats disseminate what they have learned abroad. But some of the onus also lies with the employees themselves. You cannot disappear for a few years and expect to be welcomed back like a hero: you need to keep cultivating your network back home and pestering your allies and mentors to keep your name in the mix.

There are some signs that companies are beginning to recognise that they have a problem—some are even talking about measuring their return on investment for foreign postings and holding senior managers responsible for the loss of repats. But the pace of improvement is glacial. Most CEOs are capable of giving an elegant spiel about how the bulk of the firm’s growth in coming years will come from cities you have never heard of, and how it is being transformed into a “learning machine” that picks up ideas from every corner of the world. That is nothing more than globaloney so long as they continue to spend millions of pounds training high-flyers only to ignore or sideline them when they return to the mothership.

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Donald Trump speaks on the USS Iowa in San Pedro, Los Angeles, California, September 15, 2015. REUTERS/Lucy Nicholson

Donald Trump could be the only presidential candidate talking sense about for the American military’s budget. That should scare everyone.

“I’m gonna build a military that’s gonna be much stronger than it is right now,” the real- estate-mogul-turned-tautological-demagogue said on Meet the Press. “It’s gonna be so strong, nobody’s gonna mess with us. But you know what? We can do it for a lot less.”

He’s right.

U.S. military spending is out of control. The Defense Department budget for 2016 is $573 billion. President Barack Obama’s 2017 proposal ups it to $582 billion. By comparison, China spent around $145 billion and Russia around $40 billion in 2015. Moscow would have spent more, but the falling price of oil, sanctions and the ensuing economic crisis stayed its hand.

The engine and tail section of a Lockheed Martin F-35 Lightning II fighter jet in its hanger at Patuxent River Naval Air Station in Maryland, October 28, 2015. REUTERS/Gary Cameron

As Trump has pointed out many times, Washington can build and maintain an amazing military arsenal for a fraction of what it’s paying now. He’s also right about one of the causes of the bloated budget: expensive prestige weapons systems such as the Littoral Combat Ship and the F-35 Joint Strike Fighter.

The much-maligned F-35 will cost at least $1.5 trillion during the 55 years that its manufacturer, Lockheed Martin, expects it to be flying. That number is up $500 billion from the original high estimate. But with a long list of problems plaguing the stealth fighter, that price will most likely grow.

“I hear stories,” Trump said in a speech before the New Hampshire primary, “like they’re ordering missiles they don’t want because of politics, because of special interests, because the company that makes the missiles is a contributor.”

America’s defense is crucial. But something is wrong when Washington is spending almost five times as much as its rivals and throwing away billions on untested weapon systems. Most of the other presidential hopefuls agree. “We can’t just pour vast sums back into the Pentagon,” Senator Ted Cruz (R-Tex.) said during a campaign stop in South Carolina.

Cruz promised to rein in the military, audit the Pentagon and figure out why it’s spending so much cash. Then he promised to add 125,000 troops to the Army, 177 ships to the Navy and expand the Air Force by 20 percent.

Cruz wouldn’t put a price tag on these additions. But his plan would likely up the annual defense budget by tens of billions of dollars – if not hundreds of billions. One military expert, Benjamin Friedman of the CATO Institute, estimated that the Cruz plan would cost roughly $2.6 trillion over the next eight years.

Ballistic-missile-launching submarines aren’t cheap, for example, and Cruz wants 12 of them. “If you think it’s too expensive to defend this nation,” Cruz said, “try not defending it.”

Senator Marco Rubio speaks during a campaign stop at the U.S. Space and Rocket Center in Huntsville, Alabama, February 27, 2016. REUTERS/Harrison McClary

He’s not alone. Senator Marco Rubio (R-Fla.) wants to revitalize the Navy, double down on the troubled F-35 and develop a new amphibious assault vehicle. Former Florida Governor Jeb Bush, like Cruz, wanted to reform military spending while increasing the Pentagon budget by $1 trillion over the next 10 years.

Ohio Governor John Kasich might be expected to have a more reasonable stance. After all, he sat on the House Armed Services Committee for almost 18 years, where he slashed budgets and challenged wasteful Pentagon projects.

But that past is a liability for him. The Super PAC that backed Bush funded a string of attack ads accusing Kasich of going soft on defense. Not wanting to appear weak, the governor now talks about increasing defense spending by $102 billion a year.

Even the Democrats are in on the game. Former Secretary of State Hillary Clinton has yet to propose a military budget, but she has long pledged strong support for the troops. Meanwhile, she is calling for an independent commissioner to audit the Pentagon for waste, fraud and abuse – the usual suspects.

Senator Bernie Sanders (I-Vt.) is one candidate who has a clear record in terms of the Pentagon budget. He wants to reduce the U.S. nuclear arsenal and has long supported a 50 percent cut in defense spending.

A Lockheed Martin F-35B Lightning II joint strike fighter flies toward its new home at Eglin Air Force Base, Florida, January 11, 2011. REUTERS/U.S. Air Force/Staff Sgt. Joely Santiago/Handout

At the same time, however, Sanders seems to tolerate the $1.5-trillion albatross, the F-35. Which makes sense if you consider that Vermont could lose a lot of jobs if the F-35 disappeared. Sanders persuaded the jet’s manufacturer to put a research center in Vermont and bring 18 jets to the state National Guard.

Sanders has a history of protecting military contractors — if they bring jobs to his state. When he was mayor of Burlington in the 1980s, he pushed its police force to arrest nonviolent protesters at a local General Electric plant. The factory produced Gatling guns and also was one of the largest employers in the area.

Yet, Sanders ideological beliefs can sometimes color his views. He was chairman of the Senate Veterans Affairs Committee in 2014 as scandal swept the Department of Veterans Affairs. Even as many VA supporters called for reforms, Sanders defended the hospital system because he felt conservatives were attacking a major government social-welfare agency.

He still defends his stewardship of the committee. “When I was chairman, what we did is pass a $15-billion piece of legislation,” Sanders said during a recent debate with Clinton. “We went further than any time in recent history in improving the healthcare of the men and women in this country who put their lives on the line to defend us.”

In the age of terrorism and Islamic State bombers, the prevailing political wisdom holds that appearing soft on defense can lose a candidate the general election. For many of the 2016 presidential candidates, looking strong means spending a ton of cash. Even if you’re from the party that holds fiscal responsibility as its cornerstone.

But Trump doesn’t care about any of that. In speech after speech, he has called out politicians and defense contractors for colluding to build costly weapons systems at the price of national security.

During a radio program last October, for example, Trump called out the trouble-ridden F-35. “[Test pilots are] saying it doesn’t perform as well as our existing equipment, which is much less expensive,” Trump said. “So when I hear that, immediately I say we have to do something, because you know, they’re spending billions.”

Like so many Trump plans, the specifics are hazy. But on this issue, he’s got the right idea.

In a political climate full of fear of foreign threats and gung-ho about the military, it could take a populist strongman like Trump to deliver the harsh truth: When it comes to the military, the United States can do so much more with so much less.

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