Payback agreements are important. But, an employee retention plan is critical.
We’ve talked quite a bit on this blog about payback agreements. Oh, the payback
agreement. We both love it and hate it at the same time. Is it a necessary evil? Perhaps. We certainly don’t believe that companies should spend thousands, if not hundreds of thousands, of dollars on a relocation if there is a risk that the transferee will resign before the contracted period is up. Putting aside financial concerns for just a moment, however, I think we need to take a closer look at why payback agreements are so prevalent (94% of companies require them) and if there is a better, more effective way to ensure that talent stays on board after a transfer or assignment.
If the ultimate goal is to protect the company against financial loss then, by all means, continue with your paybacks agreements and read no further. If, however, the ultimate goal is talent retention, then it may be worthwhile to address retention pitfalls first and punitive measures last.
Of course, there are a number of retention pitfalls when it comes to relocation and assignments. These will probably look familiar to you:
You moved the wrong employee. Some employees are not fit for relocation, period. The reasons may be financial, personal, family-oriented or professional (in the case of a spouse). For this reason, pre-decision assessments are critical for determining if the employee is right for the move. Further, open and frank discussions about the cost of the move, the implications of the move and the expectations after the move will help you assess whether or not your employee is a good candidate. If the employee feels forced to move, or feels unprepared, they will harbor resentment and leave.
There’s no career path. Many companies relocate employees to fill a specific role, but they fail to think long term about the employee’s future within the organization, at origin, destination, or both (if it’s a boomerang move). It is really important that human resources and managers understand the personal goals of the transferee. If the hope is to move up the ladder, then they should map out short and long-term goals to help the employee get there. Remember, your transferee is taking a personal risk by moving. You don’t want them to feel like they are taking a professional risk as well.
Check-in periodically. The majority of the time, transferees will have a new manager in the new location. Recent studies have shown that the #1 reason employees leave a company is a bad boss. If your transferee was a super star at origin, but is now disengaged at destination, you have to be proactive and look at the dynamic between the transferee and the new manager.
No plan for repatriation. Retention rates for global assignees after repatriation can be dismal. Why is this? Well, for one, there may not be a position for your assignee when he or she comes home. This is very frustrating for an assignee who thought he/she was furthering their career by going abroad and expected a higher position upon return. Wouldn’t you leave, too? Understanding that assignees can be gone for a year or more, it pays to take a long-term view of their career path (see above). Prior to the assignment, openly discuss the expectations of both sides, as well as possible career directions your employee can take, during and after the assignment. The more your assignee knows upfront, the better. Surprises are rarely appreciated on top of the anxiety global mobility brings.
Culture shock is a PITA. And culture shock does not just apply to international relocations. When I first moved from New York City to Small Town, Pennsylvania there were definitely moments when I wanted to give up and go “home.” Cultural training is pretty much a no-brainer for international relocations, but it’s more difficult for domestic relocations. While you may not need an entire cultural training program for domestic transferees, it’s a good idea to invest in mentoring programs, buddy systems, corporate sponsored events, social networks and print and eMaterials that can help transferees figure out their new environment.
Incentive to stay? We punish transferees for leaving, but we don’t provide any incentive for them to stay. There was a question about retention bonuses for assignees who remain with their firm after repatriation. I think it’s a great idea. If companies give bonuses for performance, and/or additional benefits that come with tenure at the firm, why not consider a retention bonus for sticking out the transfer. Technically, a successful relocation or assignment should be a performance measure (a smooth transition says a lot about an employee), as well as added tenure. Think about it.
Ultimately, there are many reasons why employee disengage and leave. Some you can prevent, some you can’t. But, before you invest millions of dollars in relocation, it would wise to have a well-rounded plan for increasing retention that goes beyond the punitive payback.