Research shows that senior leaders with career experience of international assignments deliver better performance. In this blog, Faculty member, Phil Renshaw explains why a global mindset is an asset and how – in the financial sector – companies should think of international assignments as 'real options' in their people.
Employers are increasingly looking for people who have lived and worked abroad because they know a global mindset can improve performance.
My own research – which was supported by a grant from the Henry Grunfeld Foundation – shows how the value of international experiences to your employer can be explained through the application of real options.
Financial options have been used by businesses for about three decades as hedging instruments. A real option is essentially the same thing – except the option is over a non-financial, real, asset.
The real asset can be tangible – entering into a joint venture is a classic example – or intangible, like a person. A real option is not traded on an exchange and does not usually have a simple pricing mechanism or exercise date.
The concept is that organisations should treat international assignments as real options in their people.
When they send you, the asset, overseas, they are paying a premium – the costs to send you, pay you, train you etc – in anticipation of being able to exercise options in the future.
Options they might exercise could include offering you a new role to take advantage of your new skills and global mindset. They might give you new projects to lead, or even a promotion.
Value and risk
Crucially, as with all options, the value increases with uncertainty, and there is lots of uncertainty in an international assignment.
Will you adjust to the new cultures? Will you share your existing knowledge effectively, learn new knowledge, fit in quickly with the new team?
Will your family cope if they come with you? Or if you leave them behind? Will the business you are working with succeed?
For the employer to maximise their value they need to be conscious of these risks and manage them as best they can to get the best value out of you.
And you need to be aware that your employer has these issues to consider and be part of that discussion. You need to be aware that you too hold a real option – over yourself!
After all, you paid a premium to go on the assignment – in time and perhaps by losing contact with existing colleagues and family. And you can decide to exercise your own options, such as leaving your employer if they do not support you as you would like.
Two parties holding options over the same asset is a feature of real assets.
Indeed, there’s a further complexity as the business you are assigned to, may also have a real option over you. After all, if you really impress them, they may offer you a local permanent post.
Something to think about this as you plan your career and consider your – pardon the pun – options. And you might like to consider that Coaching On-the-Go, as you are literally on the go, will probably help you too.
Phil is an expert in the value that organisations derive when they send their employees on international assignment. He teaches Leadership in Financial Services at The London Institute of Banking & Finance, is a coach and leadership development facilitator, and author of Coaching On-the-Go.
See more and contact Phil at the Coaching On-the-Go website
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