Managing Expatriate Risk

1. Managing Expatriate Risk Presented byMercedes Naficy D’AngeloDirector, Business DevelopmentCultural Awareness International 973-538-1765/mdangelo@culturalawareness.comNidiaPeralta, MD, GPHRManager, Workman CompensationGamesa USA, Inc. (215) 710-3170/NPERALTA@gamesacorp.com

2. Gamesa Technology Corporation • Global Headquarters: Spain • 16+ years as world leader in the design, manufacture, installation and maintenance of wind turbine generators. • 7,200 Employees • Global presence: Four continent, 30 countries • North American Headquarters: Pennsylvania • Two USA manufacturing centers • Offshore Wind Technology Center in Chesapeake, VA • Each 2MW Turbine can power up to 600 homes annually!

3. 20+ years of experience providing global performance solutions: cross-cultural training, coaching, competency development and expat destination services Certified Woman and Minority Owned Business Provide Simplicity, Flexibility, and Value with each of our personalized programs and services Develop customized programs to fit our clients’ cultural and business needs Provide global consistency with well-documented, proven resources Offer cost-effective solutions Work closely with IHR and Mobility to facilitate global service delivery About CAI, Inc.

4. Presentation Objectives • Provide a framework for understanding assignment risk • Organizational/business • Individual/family risk • Touch upon challenges that create risk and the cost of risk to key stakeholders • Present a real life case scenario of expatriate physical risk • Review possible IHR strategies for mitigating risk and enhancing assignment success

5. Head Office Local Office IHR

6. Key Stakeholder Issues Head Office/IHR Personal/Family Local/Host Office Meeting the global business imperative Candidate selection Regulatory compliance Cost of the assignment Corporate reputation Safety and security • Cultural fit • Language • Communication • Relationships • Meeting HQ demands vs. local reality • Cultural adaptation • Concerns about children • Spouse’s career • Marital difficulties • Elder parents • Standard of living • Health, safety & security issues

7. Assignment Failure as Risk 2010 Mercer’s Worldwide Policies and Practices Survey – All Respondents

8. Assignment Failure as Risk Top four factors responsible for assignment failure by home region: 2010 Mercer’s Worldwide Policies and Practices Survey – Americas Region

9. Personal and family adjustment Pre-existing behavioral health problems Lack of support network Availability and accessibility of resources Appropriateness/suitability of resources Language and communication challenges Concerns about child, parents and pets left behind Back-to-back assignments or repatriation of emigrants Expat Challenges that Increase Risk

10. On-site failure/early repatriation Inability to attract/retain top performers Loss of time/competitive gain Missed deadlines, quotas, poor teamwork Absenteeism and on-site absenteeism Increase in medical and health care costs Increased short-term and long-term disability claims Reputation – vis-à-vis clients and local marketplace Risks to the Organization

11. Physical Health/Medical Risk Pre-existing or new medical problems can be a significant source of risk for both the company and the expatriate. Potential source of medical problems that can affect the assignment. • Personal Health Issues • Behavioural & Emotional Health Issues • Work injuriesor occupational illness • Automobile accidents • Drug and alcohol abuse • Location specific conditions

12. Personal Health problems Chronic pre-existing conditions Acute – Illness acquired during assignment Illness due to conditions in host country Behavioral/Emotional Health Undisclosed mental health illness Exacerbation of illness Lifestyle Risk Physical and Emotional Health Risk

13. Pressure to meet production goals and customer demands Reactive approach to Health & Safety Lack of training and awareness of work place hazards or at-risk behaviors Taking shortcuts or not following safety procedures (Good Trooper Syndrome) No use or improper use of PPEs Overexertion due to long work hours At risk behaviors due to cultural differences in approach to workplace safety Expat disability Income or profit loss Added workplace pressure and resentment Global Manufacturing Risk Business drivers creating risk: Risks created by the individual Impact of work injury to company or expat Other drivers creating risk: • Language and cultural barriers to safety communication • Differences in local regulations regarding safety

14. Dx: Idiopathic Hypoparathyroidism Unable to perform the job due to physical illness Lack of family support due to distance Difficulty accessing & understanding healthcare & insurance systems. Differences in delivery of care; approach to patient communication and cultural response to illness Expat Medical Case Study • 30 year old, Spanish male on first assignment to USA. • No pre-assignment preparation • Working 14 hr days Parathyroid Gland

15. Development of major depression, fear of death, Feelings of failure and embarrassment Unable to communicate with the family Abandonment of assignment with loss of 60% of contracted income May need to refund the company if assignment not completed Access to care & treatment Differences in approach to healthcare Cost of medical care Work related injuries handled differently than home country Case Study continued…

16. Expatriates: usually key employees; special knowledge/skills could be lost to injuries or illness Possible temporary interruption of production Added stress for other employees and line supervisors Added cost of replacing the employee Effect on financial health* Loss of revenues for the company Loss of income for the employee Decreased potential for wage increases *Average cost of workplace accident= $38,000 National Safety Council Adverse Consequences Created for Key Stakeholders

17. Travel delays Workplace violence Robbery/Theft Physical Assault Rape Kidnapping Extortion Tornado/Hurricane Flood Earthquake Tsunami Volcanic activity Bombing/terrorism Riot/Demonstration Other natural or man made disasters Environmental and Location Risk • Law suits • Fraud • Traffic/pedestrian accident • Fire • Epidemics • Local disease

18. IHR Managing Risk