Global HR Conference on World Trade and the Impact on International Assignments

1. Global HR Conference on World Trade and the Impact on International Assignments Mexico City September 22,2008 Presenter : Martha Peña Managing Director Chestnut Global Partners de México

2. Agenda • About Chestnut Global Partners de México • Myths about international assignments • IAP Chestnut Global Partners • Outcome data

3. About Chestnut Global Partners • Originally created in 1990 as a division of Chestnut Health Systems • Converted into a subsidiary in 2005 as Chestnut Global Partners, LLC • CGP has grown from being a traditional EAP service provider in the USA to become a lider as an International Employee Assistance Program provider and Proactive International Assistance Programs for expatriates and their family • Chestnut Global Partners de Mexico created in 2006

4. Expatriate Strategy Expatriate:a definitionAny employee or family member temporarily living and working outside of their country of origin for the purposes of leadership development and the sharing of knowledge, culture, technical skills.Chestnut Global Partners refers to these employees as International Service Employees or ISEs.

5. Expatriate Strategy • Expatriate assignments are important, perhaps critical, to achieving global objectives • But. . . they are expensive and contain some risk • We assume ISEs cost 3+ times that of a home-based employee • Actively managing that risk is essential to obtain a ROI

6. Some Myths About International Assignments

7. Myth #1 Most expatriates are selected for assignment because they are high-potential, multicultural employees who perform well during valid selection processes.

8. Myth #2 A “failed” assignment only occurs when an employee is unable to complete his/her job duties.

9. A “failed” expatriate assignment may be viewed as . . . Benefits of an Expat Assignment • Early repatriation of the employee and/or family • A lack of optimal job performance • Severe family distress • Negative interactions between cultures • Turn-over, even after repatriation • Anything that negatively impacts ROI Others: market, community, profession, culture The Enterprise Employees “Impact on our People”

10. Expatriate recall and turnover • 75% of Multinational companies have a expat recall rate greater than 10%. Harzig, 1995. • 22%of U.S. expatriate employees turnover within the first year of repatriation. GMAC GRS – NFTC – SHRM Global, 2003. • 50% turn over within 3 years.Black and Gregersen, 1991.

11. Myth #3 Most failed assignments are due to a lack of job skills, culture shock or inadequate compensation packages.

12. Expat's inability to adjust to cultural environment Other family related problems Lacks skills necessary to conduct business in host country culture Personality or emotional maturity Inability to integrate job expertise with larger responsibilities of assignment Inability to adapt to changing business priorities or organizational realignment Lack of technical competence • 0% • 10% • 20% • 30% • 40% • 50% • 60% • 70% Why do expatriates fail? Spouse/family’s inability to adjust to cultural/physical environment Source: ERC 1993/1996 international Survey of 162 companies

13. Risk factors Reasons for not accepting an overseas assignment Source: Cadden 2006, citing NFTC 1994; GMAC, 2005; Cendant Mobility 2004.

14. Risk factors- China Assignment refusal to China Assignment failure in China Source: Cadden 2006, citing NFTC 1994; GMAC, 2005; Cendant Mobility 2004.

15. Myth #4 High potential employees should be able to handle the stresses of moving abroad. 1-866-CAT-0565

16. Rates of mental health problems U.S. nationals vs. expatriates

17. Myth #5 Most expats are satisfied with the support they received while on assignment 1-866-CAT-0565

18. One half of all expats report their company does not do enough to support their personal needs (National Foreign Trade Council, Cigna, Worldatwork. 2002.) • Less than 20% of companies provide any assistance for the personal needs of the spouse and family(SHRM/Willimatte university study, “Emerging Trends in Global Mobility: An Assignees Perspective. 2004)

19. Reality The best approach to managing risk in international relocation is. . . • Provide competitive compensation packages • Partner with best-in-class relocation vendors • Carefully select expatriates • Provide ample training • Provide supportive programs that address the personal needs of the entire family

20. Were we doing enough? Relocation Vendor Spouse career consultation Destination services Training Family Support • Relocation • Policy • Vendor Mgt. • Exception Mgt. • Spousal career support and resume writing – US Domestic only • Some destination services • Housing • Schooling • Settling- in • Referrals • Orientation to local area • Cultural training • Language Trg • Follow up training • Personal Support • Assessment, counseling, referrals • Proactive outreach and support – pre, during and post assignment Historically, we have not focused heavily on the “softer,” personal side of an ISE assignment. The IAP fills that gap.

21. Pre-implementation of IAP Trends in expat surveys • Considerable dissatisfaction with kids’ education, emotional state, and social relationships • Frequent consideration of early repatriation due to social, emotional and workplace stressors • Strong dissatisfaction with the level support finding healthcare and the level of personal support received

22. About Chestnut Global Partners • U.S.-based EAP since 1983. International since 2000 • Joint venture companies in Brazil, China and Mexico • Contracts in place with over 85 providers and organizations in 100 countries • Now serving nearly a 300,000 individuals in over 85 countries • Caterpillar EAP provider since 2002.

23. Why are traditional EAPs inadequate to serve expatriate populations? • Most EAPs are U.S. centric and do not fully account for local and cultural needs. • Expatriates & families tend not to use traditional EAPs. • Many EAPs are passive • Delivering consistent EAP services globally has proven complicated • Traditional EAP alone is not sufficient to meet the complex needs at each stage of an expatriate assignment.

24. Theory of Expatriate and Spousal Adjustment(adaptation of Caligiuri model) Personality Traits • Cultural Empathy • Open-mindedness • Social Initiative • Flexibility • Emotional Stability Intercultural Adjustment • Psychological Adjustment • Sociocultural Adjustment • Work • Family • Culture Family Characteristics • Family Cohesion • Family Adaptability • Family Communication Work-Life • Expatriate Work Satisfaction • Support from the international company • Other Social Support Networks

25. Delivery Model Options for Expatriate Support • U.S. based telecounseling and online services • Home country professional- periodic expat “check ups” • Placement of home country professional in host-country • Face-to-face with local provider

26. Global PartnershipsMulti-local Approach • Local, in-country providers have an intimate knowledge of the host country • “High touch,” local presence with quick responses • Greater acceptance and integration by local management • Local providers can blend cultural issues with “personal problems” “Think Local Act Local” “Think Global Act Local”

27. Ivory Coast • Jamaica • Japan • Lesotho • Luxembourg • Malaysia • Martinique • Mexico • Netherlands • Nevis/St. Kitts • New Zealand • Nicaragua • Norway • Pakistan • Panama • Papa New Guinea • Paraguay • Peru • Poland • Portugal • Puerto Rico • Russia • Saudi Arabia • Singapore • South Africa • South Korea • Spain • Sri Lanka • St. Lucia • St. Vincent and the Grenadines • Sweden • Switzerland • Taiwan • Thailand • Trinidad and Tobago • Uruguay • United Arab Emirates • United Kingdom/ Northern Ireland • United States • Virgin Islands • Vanuatu • Venezuela • Argentina • Australia • Austria • Bahamas • Bangladesh • Barbados • Belgium • Belize • Bermuda • Bolivia • Brazil • Canada • Cayman Islands • Chile • China • Costa Rica • Curacao • Czech • Denmark • Dominican Republic • Ecuador • El Salvador • Fiji • Finland • France • Germany • Greece • Grenada • Guadeloupe • Guatemala • Guiana • Haiti • Honduras • Hong Kong • Hungary • India • Indonesia • Ireland • Italy CGP Provider Network

28. Case examples • Spouse - isolated and afraid to leave the house in Brazil • Child - not fitting in at school in the U.K. • Expat employee - extramarital affair in China • Expat employee - drinking excessively in Mexico

29. International Assistance Program (IAP) • The IAP model was created jointly by Caterpillar and Chestnut Global Partners • Piloted in 2003-2004. Implemented October 2004 • Goals • Provide confidential, global and culturally relevant personal support for ISEs and families at no charge • Minimize the risks of family adjustment and personal problems • Enhance the ISE experience for the family and those in the company supporting ISEs

30. International Assistance Program (IAP) The IAP is. . . • Confidential • Proactive and strategic • Free of charge to the ISEs • Ultimately voluntary

31. HOME COUNTRY HOST COUNTRY HOME COUNTRY H I G H Emotion & Energy Level L O W Honeymoon Burnout Excitement/anxiety Adjustment/settling in Stages repeat Emotional lifecycle of an expatriate assignment

32. Pre-acceptance consultation: Repatriation outreach and support: Destination outreach: . . . . . . On going outreach and clinical services (counseling and referrals: Pre-departure outreach and counseling Ongoing outreach and support 1 year post repatriation IAP Service Delivery HOME COUNTRY HOST COUNTRY HOME COUNTRY H I G H Emotion & Energy Level L O W Adjustment Stages Over time

33. IAP metrics

34. Phone call E-mail Phone call 11,867 outreach Contacts in 2006 IAP Service Metrics

35. Performance Metrics Proactive outreach dramatically increases utilization Pre departure consultations

36. Performance Metrics Clinical Utilization 13% utilization 8.4% utilization N = 1188 N = 1264

37. Performance metrics: employee vs. family

38. Where are services being provided? Host location of ISEs receiving services CY 2005

39. Where are services being provided? Host location of ISEs receiving services 2005 - 2006

40. Performance metrics: Presenting problem

41. Survey Data Percent reporting dissatisfaction with . . .

42. Survey Data Percent reporting dissatisfaction with . . .

43. Survey Data Percent who have considered early repatriation

44. Survey Data “How has your personal life been affected while living abroad?” Percent reporting a “negative” impact. 49% decrease

45. Survey Data Percentage of ISEs reporting more than 4 days absent “due to a personal or emotional problem.” 39% decrease

46. Programme d’Assistance InternationalFrench Werknemer ondersteuningsprogramAfrikaans Program Bantuan PekerjaMalay Programa Internacional de AssistenciaPortuguese medewerkers ondersteunings- programma or reïntegratietrajectHolland/Dutch Questions? Thank you. psykologisk krisehjælpDanish 雇员协助节目 orYuan Gong Fu Zhu Ji Hua Chinese Programa de Astistencia InternacionalSpanish Program Wspierania PracownikówPolish Mitarbeiter-Beratungs-ProgrammGerman 종업원 지원 프로그램 or Jik Won Ji Won ProgramKorean Programma di Assistenza InternazionaleItalian