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Assignments abroad still retard ascent to corner office, study finds

August 1, 2009

For more information, contact: Benjamin Haimowitz, HHaimowitz@aol.com

The percentage of CEOs with overseas experience has more than doubled in the past decade, annual surveys conducted by a leading U.S. search firm reveal.  Does this trend mean that positions abroad are now the fast route to the top of big corporations?
 
Quite the contrary, according to a study presented at the annual meeting of the Academy of Management (Chicago, Aug. 9-11). Notwithstanding the rich experience that foreign postings provide, they not only are no express ticket to the corner office but actually slow progress down, the new research finds, based on an analysis of the careers of the CEOs of the thousand largest companies in the U.S. and Europe.
 
In the words of the study, "The results show that executives with international assignment experience take longer to reach the top echelon. In fact, the more assignments they have and the longer time they spend outside their home organization, the slower they reach the CEO position. Assignments that started at a later career stage and assignments at an organization other than the CEO's current employer are especially detrimental to the speed of ascent to the top."
 
"Although the day may not be far off when experience abroad speeds the way to the top rank, we are definitely not there yet," comments Monika Hamori of the IE Business School in Madrid, Spain, who carried out the study with her IE colleague Burak Koyuncu. "Our findings suggest that you advance faster if you are in proximity to the corporate headquarter's social networks than if you are on assignment abroad.  With only a few exceptions, like Nokia, the foreign divisions of companies still often represent the periphery, places far from resources and information available at corporate headquarters."
 
Her advice to those intent on experience abroad and getting to the top fast: "Do it for a year or two, do it when you're young, and don't switch companies when you get back."
 
The professors' sample consisted of the current CEOs of the 500 largest corporations in the US (the S&P 500) and in Europe (the Financial Times Europe 500). For each chief they collected data on the start and conclusion of each international assignment, its location, and the name of the company where the executive was employed at the time. Assignments were counted as separate if any one of three conditions held: different geographic location, different employer, or different time frame. Not counted was the management of a foreign subsidiary from corporate headquarters or assignments that lasted only a few weeks or a few months. Time to top was the number of years between the start of the chiefs' professional careers and the year in which they were appointed CEOs.
 
The CEOs in the sample took, on average, 25 years from the start of their careers to get to the top, spent eight years in foreign assignments, and had 1.7 such posts. About 32 percent of the sample had had international assignments, about 60 percent of which took place in different companies from the one the CEOs now head, even though such assignments slowed down their ascent more than foreign positions held in their current company did.
 
While short assignments abroad are more conducive to a speedy rise than long ones, they are probably not in the interest of employers, the professors contend, since they do not provide the opportunity for expatriates to be integrated into the foreign unit. "For this reason," they write, "organizations should support executives who go on longer assignments by investing in employee career planning and providing suitable assignments upon repatriation." Noting that previous research has revealed that about half of repatriates leave their companies within two years of returning home, the authors urge that "the effective career management of repatriates can create a win-win situation for both organizations and individuals, while repatriate turnover harms both parties."
 
The study, entitled "Career advancements in large organizations: Do international assignments add value?" was among several thousand research reports at the Academy of Management meeting, held in Chicago from August 9 to 11th.  Founded in 1936, the Academy is the largest organization in the world devoted to management research and teaching. It has about 19,000 members in 102 countries, including about 11,000 in the United States. This year's annual meeting drew more than 9,000 scholars and practitioners for sessions on a host of subjects relating to business strategy, corporate organization and investment, the workplace, technology development, and other management-related topics.  
Media Coverage:
Business Week. Why that plum job abroad could be a rotten move. (Monday, August 24, 2009).
Human Resource Executive Online. Delaying advancement. (Wednesday, September 02, 2009).
Reuters. Foreign jobs slow corporate climb, study says. (Tuesday, August 11, 2009).
SHRM Online. Study: C-suite eludes returning expats. (Friday, August 21, 2009).

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