International Humane Resource
Topic 4
Staffing the Multinational Enterprise: Expatriation and Managing Across Borders
Expatriate: A parent country national (PCN) working in foreign subsidiaries of the MNC
for an agreed
period (usually 2-5 years.)
 Three Main Motives for International Transfer/Expatriation
o Fill Positions in countries lacking know-how for knowledge transfer (developing
countries)
o Management Development: International experience of the expat will prepare him/her
for career progression in the organization.
o Organizational Development: Expat enhances communications between HQ and
subsidiary, creating a common corporate culture.
 Expats perform vital roles of:
o Engage in organizational “cultural control” of subsidiaries
 Direct Control: Constituting “mini-headquarters” in the subsidiaries
 Indirect Control: Encouraging adoption of corporate norms and values, based on
“education” and “socialization.”
The Risks of Expatriation and International Staffing Alternatives
Expatriate Failure
Definition: Early return of the expatriate to the home base before the completion of the
agreed term.
 Early return does not always signify failure. Some expatriates complete their tasks
early while others return to take a new position in the firm.
Key reasons for expatriate failure
o Partner dissatisfaction
o Inability to adapt to host environment
o Family concerns
o Poor candidate selection
 Costs of expat failure to the firm:
o Direct costs of expatriate recruitment and training forgone
o “Invisible Cost”: Continuing underperformance as new expatriates start on lower end
of the learning curve.
o Incur costs in continually replacing failed expatriates.
Strategic Alternatives to Expatriation
Types of international assignees:
o Parent Country Nationals
o Host Country Nationals (HCNs)
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Third Country Nationals (TCNs)
International Commuters
Employees on short-term postings
Permanent transferees
International transferees: moving from one subsidiary to another
Immigrants
Returnees
Contract expatriates
Virtual international employees
Companies seek alternatives to expatriation to lower costs
Many used short-term assignments (home country rates are paid with few extras),
localized expatriates (host country rates are paid), and business travel (relocation
unnecessary for the assignee and family.)
Devolving to the Subsidiary
 HCNs – polycentricism
Host Country Managers (HCMs) can contribute invaluable resources of local knowledge to
firms
o Pertaining to socioeconomic, political, and legal circumstances
o Business practices in the host environment
o Provide greater continuity and reliability in subsidiary staffing
 Third Country Nationals (TCNs): Internationally mobile staff whose origins are
neither the home country of their employer nor the country of assignment.
o TCNs can provide an optimal position of technical proficiency and cross-cultural
sensitivity
 Inpatriation : subsidiary manager in the parent HQ for particular period of time
 Gain from this exp. By actual exposure norms, value and state-of-the-art knowledge
in parent
 Establish informal communication network b/w subsidiary and parent
o Boomerangs: Japanese HR term describing Japanese workers who migrated to the
West, returning home with rich knowledge to apply with local awareness for business
effectiveness.
Working across Cultures
Problems related with diversity include:
o Mistrust: Difficulties in understanding culturally distant modes of interaction and
business
o customs (e.g. Individualistic US Managers vs. Collectivist Japanese Managers)
o Stereotyping: Culturally-rooted preconceptions and prejudices concerning
international
o Colleagues.
o Inaccurate communication: Translation problems, definition issues, misinterpretations
of body
o language
o Different perceptions and uses of time: Punctuality, commitment during meetings,
task
o scheduling (e.g. Thai employees vs. German employees)
Multicultural or Diverse team: offer adv. Over homogenous managerial grouping
o Create great number of unique suggestion for innovative or creative ideas
o Need to avoid groupthink
Expatriate Adjustment
 Expatriates experience risk of facing culture shock
 Adjustment: General satisfaction of one’s life to the new environment. Degree of fit
between the expatriate manager and the environment.
 Inadequate adjustment leads to ineffective job performance
 Three Types of Adjustment:
1. Psychological Adjustment: Changes of psychological and emotional states marked by
feelings of well-being and satisfaction.
2. Interaction Adjustment: Changes of the employee’s behavior and attitudes – can “fit in”
and “negotiate” interactive aspects of the new culture.
3. Work Adjustment: Changes in reaction to the new job.
Framework of International Adjustment
o Anticipatory Adjustment: Factors facilitating effective expatriation before
departure.
 Concerned with determination of accurate expectations on the part of expatriates,
 prevents culture shock.
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 International experience of the expatriate
 Organization’s selection criteria for identifying expatriates
 Technical and cross-cultural training of expatriates before sending them overseas.
o In-country Adjustment: Factors relating to work, interaction with HCNs, and coping
with living
conditions that determines expatriate success following arrival at the host country.
 Individual Factors:
 Expatriate’s behavioral characteristics (Relation Skills)
 Self-efficacy: Ability to learn from mistakes and perceive unavoidable failures
 as learning experiences – helpful when expat faces cultural shock.
 Perception Skills
 Job-Related Factors
 Role Clarity
 Role Discretion
 Role Novelty: Newness of tasks
 Role Conflict
 Non-work factors
 Cultural Novelty
 Family, spouse adjustment
Period of Adjustment
 Phase 1: Tourist
o Mixed emotions
o Honeymoon period upon arrival: short-term experience of enchantment
o As realities become apparent, expatriate may experience a downswing mood –
o leading to the crisis phase.
 Phase 2: Crisis
o Determines success or failure of the assignment
o Self-efficacy essential in this stage
 Phase 3: Pulling Up
o Recovery and emotional stabilization (if persisted through Crisis)
 Phase 4: Adjustment
o Healthy recovery and integration into new environment
o Returning home may require expatriate to further adjust
 Criticisms of the model:
o Stereotyping, overgeneralizing, and normalizing adjustment nature
Topic 5
Working across Boarders: The Expatriation Cycle
Expatriate Selection
Criteria in filling expatriate positions:
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Job suitability – relating to the technical expertise of the potential expatriate and his
or her ability to perform job requirements
 Cultural adaptability – there is a growing recognition that employees must be able
to adjust to new and alien job environments while delivering their technical and
managerial expertise
 Desire for foreign assignment (candidate and family) – the willingness of the
potential expatriate to make the necessary effort to adjust needs to be assessed during
the candidate review
 Profiles of successful international assignees – companies and consultancies have
established profiles of successful international assignees that are used for screening
purposes
Such profiles typically include the following factors – experience, education, personal
interests and activities, signs of flexibility, family situation and desire for the
assignment
Equal opportunity issues in expatriate selection
The under-representation of females in expatriate positions represents a fundamental equal
opportunities challenge for the global enterprises in which undertaking an international
assignment is a prerequisite for progression to senior management.
The reasons for poor representation of women in international management groupings are
closely related to broader patterns of discrimination at work which are manifested in the
failure of women to reach the highest management positions or the confinement of women to
lower-status occupations.
Organizational preconceptions
First myth is that women do not wish to undertake international assignments.
Culturally tough - Women may be less prepared than men to accept assignments to
regions.
Second organizational myth is that host-national men would be reluctant to deal with female
expatriates
Organizational policies
Organizations should:
Become more strategic in their planning for international assignments in order to
prevent ad hoc and informal placements that may replicate an existing expatriate profile and
prevent the adoption of alternative approaches
Adopt a sophisticated approach to the determination of criteria for effective
international managers. Competences should be developed and debated in as wide and
diverse a forum as possible
Monitor their selection processes for international management assignments to ensure
access is not unfairly restricted to specific sections of employees
Run selection skills training for all employees involved in selection for international
assignments
Avoid assumptions as to the likely motivation of women to accept oversea
assignments and the likely success rates of women expatriate
Training and development
Orientation of expatriate training programs:
Training should be provided both prior to departure and on arrival in the host
environment
Training in cross-culture proficiency should accompany more job-specific,
technically-oriented material
The training/adjustment needs of spouse/partner (and children) should be
accommodated
Fluency in the host country language is likely to be useful attribute
Two dimensional frameworks: the degree of interaction requires on the host culture
and similarity between the expatriates’ home culture an host culture.
3 levels of training rigour relating to the anticipated degree of integration into the
host environment, as follows:
Lowest level of rigour – information giving – area briefings, cultural
briefings, film/books, use of interpreters
Medium level of rigour – affective approach – cultural assimilator training,
language training, role-playing, critical incidents,
Highest level of rigour – immersion approach – assessment centre, field
experience, simulations, sensitivity training, extensive language training
Knowledge required for international assignees, although these will clearly vary from
assignment to assignment.
Minimum to facilitate adjustment:
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Intercultural business skills
Culture shock management
Lifestyle adjustment
Host-country daily living issues
Local customs and etiquette
Area studies
Repatriation planning
Language learning strategies, both before leaving for the new assignment as well as
after arrival
Pay and Performance Management
Approaches to rewarding international managers
The most widely used method of expatriate compensation is the balance sheet approach. The
key features of the balance sheet approach:
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The basis objective is maintenance of home country living standard plus financial
inducement
Home country pay and benefits are the foundations of this approach
Adjustments are made to the home package to balance additional expenditure in the
host country
Financial incentives are added to make the package attractive
Performance management
The potential benefits associated with expatriate performance management, its adoption on
the ground has been hampered by a variety of factors:
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Choice of evaluator
Communication difficulties between host country appraiser and expatriate
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Parent company ethnocentricism/indifference to international business issues and lack
of understanding of the foreign environment
Inadequate establishment of performance objectives of the foreign operations and
means of recording individual and organizational performance
The following are likely to be pertinent considerations in enhancing practice:
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Review the criteria for expatriate success with reference to the realities of doing
business in the host environment
Include cross-cultural and related factors as necessary competences for many
occupations
Combine parent and local company standards as appropriate
Involve returning expatriates from the country in question in the design and operation
of performance management systems
Maximize sources of information (people and materials) relating to the individual
expatriate in arriving at judgements concerning performance
Repatriation
The final stage of the expatriation cycle is returning to the home environment.
Five categories of repatriate knowledge:
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Market-specific knowledge: the local political, social and economic system,
language and customs
Personal skills: intercultural knowledge, self-confidence, flexibility, tolerance
Job-related management skill: communication, project management, problemsolving
Network knowledge: clients, suppliers,, subsidiary personnel and other expatriates
General management capacity: an enlarged job description, broader job
responsibilities, exposure to other parts of the organization
With an ultimate eye for effective repatriation, incorporating the following activities:
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Pre-departure career discussions
A named contact person at the home country organization
A mentor at the host location
Re-entry counseling
Family repatriation programs
Employee debriefings
Succession planning