Best Practices in Managing and Retaining Indian and Chinese Returnees

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1 OCTOBER 2010 Best Practices in Managing and Retaining Indian and Chinese Returnees As multinational companies business strategies continue to target the critical markets of China and India, the war for talent continues to increase within these countries. Every human resources executive is focused on one business imperative: to find the right person, for the right job, at the right time. Business growth in these countries requires seasoned leadership that can successfully execute the company strategy in uncertain market conditions. Both India and China are now faced with crippling shortages of talent that can take advantage of the emerging opportunities and build a sustainable business for the future. Despite the fact that both countries are producing hundreds of thousands of graduates annually, these graduates have rarely had the exposure to a broad-based analytical education or Western business practices. Others, particularly in China, may not necessarily possess the English language skills required to work in a multinational company. Historically, most multinational companies operating in these countries relied heavily on foreign, often Western, assignees to bridge the leadership gap. Although this approach has been moderately successful, major cross-cultural and language differences coupled with the high cost of supporting these assignments have resulted in organizations re-visiting the cost/value equation. A major trend that has emerged over the past three years is the focus on recruiting and relocating Chinese and Indian returnees as an alternative talent source. A returnee to these countries would be defined as an Indian or Chinese native who was born in that country, left to live and work or study overseas for an extensive period of time, and who has returned to his or her home country to work on a permanent or long-term basis. Seasoned Indian and Chinese returnees who have the requisite business competencies and experience may be willing to return to India or China, but only on their terms. The business case for the returnee Companies that send Chinese or Indian returnees back to China or India most often cite the following as the principal reasons: Easy adaptation to local culture. Companies believe that returnees will have a higher likelihood of success because the re-adjustment process is much less intensive. They may fluently speak the language and be perceived as more familiar with the local culture. Appropriate skills and knowledge. Many Chinese and Indian returnees have received advanced education/work experience in a developed Western culture. They are familiar with Western business practices and may have the bicultural skills to balance the cultural requirements of their headquarters country as well as their country of origin. Lower cost of relocation. Indian and Chinese nationals living abroad are more willing to consider returning to their home countries because of the greater opportunities there than in most Western countries. Since they are returning to their home locations on a long-term/permanent basis, there is an assumption that the returnee will accept a fully localized relocation package, thereby providing the company with considerable cost savings. Page 1 of Cartus Corporation. All rights reserved. Cartus and the Cartus logo are pending or registered trademarks of Cartus Corporation

2 Personal motivators for returnees An unprecedented number of Indian and Chinese nationals who are studying and working abroad are willing (or are actively seeking) to return to their home countries. A survey entitled America s Loss is the World s Gain, conducted by the Ewing Marion Kauffman Foundation in March 2009, provided valuable insights into the backgrounds and motivations of 1,203 Indian and Chinese nationals returning to their home country from the U.S. It included the following: Highly educated workforce. The average age was 30 for Indian returnees and 33 for Chinese. They were highly educated, with advanced degrees in management, technology, or science. Fifty-one percent of the Chinese held master's degrees, and 41% had PhDs. Sixty-six percent of the Indians held a master's degree, and 12.1% had PhDs. Better prospects at home. Eighty-seven percent of Chinese and 79% of Indians said a strong factor in their original decision to return home was the growing demand for their skills in their home countries. Their instincts generally proved right; significant numbers moved up the organization chart, and their pay and prospects increased as well. Among Indians, the percentage of respondents holding senior management positions increased from 10% in the U.S. to 44% in India, and among Chinese, it increased from 9% in the U.S. to 36% in China. Family and home matters. Friends and family played an equally strong role for 88% of Indians and 77% of Chinese. Care for aging parents was considered by 89% of Indians and 79% of Chinese to be much better in their home countries. Nearly 80% of Indians and 67% of Chinese said family values were better in their home countries. Challenges in attracting and retaining returnees Success in attracting, managing, and retaining returnees has been mixed. Many corporations have discovered that the challenges of managing returnees can be categorized in one of the following ways: The dramatic relocation-related cost savings they anticipated do not materialize; The return on investment (ROI) anticipated in recruiting/relocating the returnee is not achieved; or, Retaining the successful returnee is very challenging. Understanding these challenges in more detail can provide valuable insights on best practices in managing this hybrid group. Experienced Indian and Chinese returnees who have the requisite business competencies and experience may be willing to return to India or China, but only on their terms. They are fully aware of the value of their capabilities in the local marketplace and want this reflected in their financial packages. If they have been away from India or China for a long time, their attitude to moving back may be more mercenary in nature. They may perceive these locations as hardship postings and are seeking to return on full international assignment packages. Some of their concerns may be fully valid, since they are related to the unique complexities they face in their relocation, including the following: Education During traditional international assignments, children often adapt more easily than their parents. In the case of returnees, however, children often have more difficulty adjusting to a country to which they are ethnically connected but not culturally familiar with. Even though children look like they are Indian or Chinese, they often do not speak the local dialect, especially in India, and they also have very different expectations of their school, the role of their teachers, etc. Page 2 of 5

3 Education (cont d) In one client s case, an 8-year-old child of an assignee who relocated back to India was not as respectful of his teacher as was expected. During his time in the U.S., he was taught to have a close partnership with the teacher, to ask questions, and to be in charge of his own learning. The educational styles in his new school in India were drastically different, and consequently, a lot of adjustments were necessary for everyone. For all of these reasons, most returning assignees prefer their children to go to international schools, despite the expense to the company. It is no wonder, then, that considering these family challenges, some returnees choose to keep their family back home, while the assignee returns to work in the country of origin. Attitudes of local nationals Returnees are not always warmly welcomed by the local nationals with whom they work. Returnees might sense some animosity from local nationals, especially if the returnees have not stayed connected with their country of origin, family obligations, or cultural requirements. An us versus them mentality may exist on either or both sides, and the frosty reception sometimes given to returnees is in sharp contrast to the warm reception given to traditional assignees from other countries. Cultural adaptation Any tension between local nationals and returnees can also be attributed to their different cultural behaviors and expectations. Despite having been born, raised, and educated in India or China, many returnees have never actually worked there. After completing their higher education outside of India, their first work experience was in their host country, so they adopted business behaviors and management expectations of the host, rather than of their home, country. For traditional assignees, differences in culture are routinely attributed to their different cultural backgrounds and are easily forgiven; but in the case of returnees, such lapses are less easily excused. It actually may be unrealistic for a corporation to expect returnees to easily adapt to a local lifestyle in India or China. If the individual and their family have been away for a long time (and in most cases, they have been), the lifestyle in their home countries may prove very challenging. Concerns of pollution, noise, inability to speak the local dialect, and inability of the spouse to find paid employment can all contribute to severe reverse culture shock being experienced by the whole family. Other considerations Given the immense diversity within both India and China, companies need to consider where returnees are being repatriated to; i.e., is someone from Guangzhou going to be as effective in Beijing as someone who is originally from Beijing? The same is true in India; given the vast differences within that country s provinces, someone from the South might be as culturally different from someone from Mumbai as they both are from someone who comes from Chicago. Given the above-mentioned challenges that returnees face when relocating back to their country of origin, companies need to consider very carefully to which host city returnees are sent and whether the new host city makes good sense, based on their city of origin. Page 3 of 5

4 Successful management practices Enlarge the talent pool from which you fish Companies need to focus on increasing the potential pool of talent from which they select candidates. Selection of a candidate for a role in India/China should be made strategically (the right person, with the right skills and competencies) rather than tactically (based on nationality). This process may be timeconsuming but is likely to provide long-term success. Returnee positions should be advertised across the company to allow talent to express an interest. Use projects to test the waters It is important to assess a candidate s ability to develop relationships and engage staff in India/China before you move them there. Allocating them to a project that requires frequent business travel to the location in question allows you to assess their business and cross-cultural competencies before making a final decision to relocate them there. This intermediate step also allows the candidate to assess whether they are likely to be happy and/or successful in that location. Assess your candidates before you send them Companies need to examine what the driving factors were that encouraged the employee to relocate from his or her home country in the first place. For those who moved internationally to further their education or career opportunities, the return back home might be seen as the next logical step. But the next assignment back home needs to be seen as a promotional opportunity for the assignee one that takes advantage of all their skills and education. If the move is seen by the employee or their peers and family as a step backwards, then the move and their assignment will have greater challenges. For those who relocated out of their home country for personal reasons, such as to provide greater opportunities to their children, relocating back to their country of origin will prove even more difficult. To discern the fundamental motivations behind an assignment, Cartus recommends a thorough assessment and selection process, in which the candidates and their families are assessed based on their cultural readiness, not just their technical expertise. Cross-cultural or repatriation integration training Repatriation integration training for the family is an important step in minimizing the impact of reverse culture shock. This training provides the family with important information on the things that have changed since they left, and it is an essential component of increasing the chance of a successful repatriation. Page 4 of 5

5 Cross-cultural or repatriation integration training (cont d) If a family is being relocated to a city other than their original home city, has been away from the home location for a longer time, or includes family members who have never lived in India or China, then we recommend a complete cross-cultural training program focused on Living and Working Effectively with Chinese Nationals. This customized course ensures that the concerns and priorities of the family are understood and addressed as necessary. As an example, a client requested that Cartus provide a repatriation program for an Indian couple who were returning to their country of origin after 10 years in the U.S. When the couple was contacted by Cartus to conduct the needs assessment to customize their training, the assignee requested that they participate in a cross-cultural training program instead of a repatriation program. Even though they were being relocated back to their country of origin, instead of focusing on their repatriation, they wanted to look at India as an entirely new country altogether, given the immense change that has occurred during the years that they were away. Offer a retention bonus for key talent Experienced talent, including returnees, are actively being pursued by both multinational companies and local Indian and Chinese companies that are going global. This increase in demand has resulted in an increase in turnover rates. China s sustained economic growth and rapid integration with the world economy have created favorable conditions for central and local governments to attract global talent. China is now able to offer globally competitive packages and better career prospects to overseas Chinese whose climb up the corporate ladder had previously been blocked by the racial-based glass ceiling. Though most overseas returnees prefer to work for multinational corporations, it is worth noting that in China, state-owned enterprises (SOEs) are now able to offer attractive packages, thus providing more competition to Western multinational companies in the area of talent retention. Given the intense competition for top talent, corporations are well advised to include a significant retention bonus or other financial incentive to keep returnees for a key period of time. This can be payable over a fixed period and may or may not be tied to performance criteria. Funding of other financial incentives, such as MBAs or education for the accompanying spouse, is also a good way to retain key staff. Offer flexible support Every assignee is different, especially if they are returnees, so it is critical for companies to understand the specific needs of each candidate and their family and take that into account when preparing a relocation support package. For example, failing to provide international education support may be a deal-breaker for some families. Although returnees face unique challenges when they return to their country of origin, they do have significant advantages over traditional assignees. Whereas traditional assignees are on assignment for three to five years, at considerable expense, returnees have a much longer-term commitment to returning to their home country. Given the importance and value that a long-term commitment has in countries like India and China, the additional cost required to ensure a smooth transition results in an immediate and lasting return on investment. Mobility Management Outsourcing Consulting Intercultural & Language Training TouchPoint Cartus Corporation All rights reserved. Cartus and the Cartus logo are pending or registered trademarks of Cartus Corporation. Page 5 of 5