The State of Expatriates

As record numbers of Americans move abroad to take advantage of emerging markets in Eastern Europe, Asia and Latin America, experts say the role of U.S. expatriates is rapidly changing and with it the global marketplace. A brief look at the experiences of expatriates and their employers:

Numbers:

International assignments, which plummeted during the Persian Gulf War as employers anxiously pulled home expatriates in Saudi Arabia, have increased about 25% since 1990. Currently an estimated 175,000 Americans work and live overseas.

Destinations:

To keep costs down, American managers often hire and train local residents to operate offices in Japan and Europe. But it wasn’t always so: U.S. companies sent many employees to Europe in the 1960s and ‘70s and switched to Japan in the 1980s. Today the focus is on Asian markets and the former communist bloc.

Costs:

The cost of employing expatriates is three to five times that for their statewide counterparts--the company pays housing and education allowances, moving costs and cost-of-living adjustments--depending on where they are spent and the size of their families. A four-year assignment for a single expatriate can cost a company more than $1 million.

Preparation:

About half of U.S. expatriates receive no training before their overseas assignments. As a result, 5% to 15% of expatriates are unsuccessful in business. Failure is expensive: It costs $300,000 to send someone overseas and then turn and around bring them back. This figure doesn’t include “brownouts”--people who stay but are a financial drain on their companies because they underperform. An estimated third of U.S. expatriates are brownouts.

Experiences: Experts agree that the toughest part of an overseas assignment is the move home. In addition to charges that occurred during their absence, employees often find that their companies do not effectively use the knowledge the expatriates gained overseas--further isolating returnees. Because of these factors, one in four expatriates leaves the company within a year after returning. A majority of U.S. expatriates in 12 European countries who participated in a recent study by Manning, Selvage & Lee agreed that they would make changes in business practices in the United States. (See chart) Despite the difficult transitions, U.S. expatriates who responded to the Manning study said they believe American managers are better able to adapt to change than are Europeans in more than half of the following categories:

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Business Area Who is better Americans Europeans Consumer marketing 85% 4% Telecommunications 78 7 Managing short-term change 72 9 Changing economic conditions 62 15 Employee/Labor relations 47 33 Long-term change 35 39 Government-business relations 33 35 Immigration 33 32 International trade 26 49

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(Country stationed in: Percentage of expatriates who would change U.S. business practices)

Belgium: 83%

Netherlands: 76

Scandinavia: 76

Germany: 75

Italy: 67 Britain: 66

France: 65

Ireland: 64

Spain: 44

Researched by JENNIFER OLDHAM / Los Angeles Times

Sources: Manning, Selvage & Lee; Nessa Loewenthal, TransCultural Services; Stewart Black, American Graduate School of International Management; Yoshi Noguchi; Paul Ray Berndtson; wire reports