Why is Assignment ROI important now?
High costs make international assignments very visible to the C-suite, especially the CFO. As such, they create a powerful opportunity for HR to take a strategic seat at the table, and require HR to speak the language of finance. How can you successfully manage it, if you can’t measure it, as Peter Drucker so clearly pointed out decades ago? In most companies today, the CFO is bent on cutting assignment costs without a clear view to the expected value and return on the investment (ROI). Consequently, Global Mobility Managers are pressured to cut back through:
- Localizations
- “Lump Sum” (domestic AND international)
- Extended business trips
- Single Status assignments
- “Long-term” assignments of 12 months
- More local hiring
What if we knew the ROI?
If we found that traditional long-term assignments had a better ROI than the shorter alternatives, would executives rethink their assignment strategy? They need to know this!
Would we, as Global Mobility Managers, manage assignments differently if the success criteria were clear? We need to know this!
We believe that assignments would be planned and managed more strategically with ROI a key part of the pre-assignment cost-benefit analysis. Measurable results — once understood — can be attained through goal setting in the pre-assignment phase. Assignment management becomes easier with clear progress monitoring, feedback, and collecting ‘lessons learned’ post-assignment.
Can the ROI actually be done?
ROI is calculated by collecting data on costs, yes, but also by identifying and quantifying critical organizational success factors such as business development goals, transfer of knowledge, and culture. By using financial management analysis, we’ve created an algorithm with nine (9) variables, including Cost, Duration, Impact, Budgets and Productivity.
-a+b((1-i)+(1-e))d+(N)(c)(f)((1-i)+(1-e))d
The Assignment ROI Algorithm is a copyright of Living Abroad LLC (c) 2021
So what?
Assignment ROI is a decision-making and planning tool, allowing Mobility Managers to be more strategic and share a common language with the CFO and the executive team. Once decisions are made about the assignment purpose and duration, the roadmap to success is clearer.
Wouldn’t it be great to have a systematic approach that gives you the strategic leverage you need with your executive team?
For the ROI White Paper or to learn how to bring Assignment ROI into your organization, please contact Michael or Jennifer.
Written by Michael Cadden, MBA, SGMS-T, Managing Director, Living Abroad and Jennifer Green, MBA, SPHR, Managing Principal, Green Global Resources
