International experience is crucial for leadership development as businesses expand across the globe, but some international assignments are better career opportunities than others, research suggests.
Swiss and German researchers who studied the career paths of 163 CEOs at some of the largest multinational companies based in Switzerland, the Netherlands, Germany, and the UK found four factors that determined whether international experience accelerated career advancement:
- How long an executive had been on international assignment.
- How far away from corporate headquarters assignments had been.
- What industry the executive worked in.
- How important global expansion was for the business.
The study, by Dimitrios Georgakakis and Winfried Ruigrok of the University of St. Gallen’s Research Institute for International Management and Tobias Dauth, a junior professor at the HHL Leipzig Graduate School of Management, was published April 2016 in the Journal of World Business.
Leadership development at multinationals follows patterns, and employees trying to establish a proven track record need to plan ahead to maximise international career opportunities, said David Wu, CPA, CGMA, an executive recruiter who is CEO and managing partner at GMPTalent International in Shanghai.
“You have to be selective,” Wu said. “You need to go where the business is going.”
Executives who have worked abroad bring with them knowledge of different and new markets, a better understanding of how a multinational company operates, and a global network of contacts. Such executives tend to gain their experience through international assignments coordinated through their company’s global mobility program.
Of about 600 multinationals polled by KPMG in 2015, 81% offered employees short-term assignments, typically defined as lasting less than 12 months. Almost all of the respondents (96%) offered long-term assignments, lasting one to five years, and nearly half (47%) offered permanent transfers, defined as assignments of indefinite length.
Only 12% of the participants in the KPMG survey said controlling costs and assuring an acceptable return on investment from global mobility programs are important. But the findings by Georgakakis, Dauth, and Ruigrok suggest that business objectives, assignment types, and selection may be aligned in more nuanced ways.
The researchers found that executives who acquired a moderate level of international experience got promoted the fastest, because they developed the most vigorous skills, kept connected with key decision-makers at corporate headquarters, and established a global network of contacts in the company. Executives who were mainly located in foreign countries were promoted less quickly than those who spent the majority of their careers in the country where the company was based.
Expatriates typically spend four to five years away from corporate headquarters, Wu said. If they stay on assignment much longer – eight or 10 years – it’s easy to lose touch because management in the corporate executive suite is likely to change over a decade.
Other factors influenced this overall pattern, the researchers found.
Experience in markets far from the company’s home country did not significantly accelerate promotion to the top, but knowledge about markets adjoining the home country did.
What type of company an executive worked for also played a role. International experience resulted in faster career advancement for executives who worked for multinationals that had already invested heavily internationally than for executives who worked for companies with a low degree of internationalisation. Also, the disadvantage of assignments far from corporate headquarters counted less at companies that strongly relied on international expansion to sustain growth and dominate their industry.
The consumer goods industry, for example, is highly international, while the professional services industry tends to be less so, Wu said.
One way to maximise international experience, he said, is to pick assignments to markets that are hubs for a region with growth potential. “Go to strategic markets and gain regional and local-country experience,” he added.
To maximise international experience for leadership development, Wu also suggests suggested employees:
- Assess their willingness to deal with the ambiguity and cultural differences that accompany assignments away from corporate headquarters.
- Determine the professional growth potential of an international assignment and how this growth potential fits their personal professional goals.
- Prioritise international assignments in markets that either generate a substantial portion of the company’s revenue or have significant growth potential.
- Stay in close contact with corporate headquarters while on assignment to explain opportunities and challenges of the assigned market.
—Sabine Vollmer (email@example.com) is a CGMA Magazine senior editor.