The Management of Expatriates

Contents

Introduction

1. Foreword

2. Definitions (Culture, comparison between nations and stereotyping)

3. Culture Shock

4. The mindset and international assignments

Main Part I
A – From first ideas to the solution (Recruitment – foreign assignment)
1. Recruitment and Selection (processes in short overview)
2. Preparation phase - Conditions for a proper entry-phase
3. How to staff the host country facility
4. Host country language – Yes or no?
B – To have success or to fail?
1. Advantages
2. Disadvantages
3. Decision for expatriates
4. Drawbacks
5. Money-problems – The compensation dilemma
6. Failures in Expatriate Management (person-related reasons)
7. What are other reasons leading to failures in international management
8. Inability of Spouse to adjust
9. Comparison (Japan – USA)
10.The dual-career-couple

Main Part II
1.) Global Skills and questions of assignment
2.) The Re-entry Phase
a) Job-related factors
b) Social issues
3.) The foreign assignment cycle
Conclusion
1. Good Expatriates are a prerequisite for the future of Expatriation Management
2. Management summary and last words
Attachments
I) Two case studies (self-developed cases – Thailand)
II) Solution to the cases
III) checklist I (Transfer duties)
IV) checklist II (orientation for assignees)
V) A model of expatriate recruitment
VI) From Departure to new ideas
VII) Glossary for expatriates

Literature

Additional: (including a Web-catalogue)

Introduction

1.) Foreword

Expatriate life in the past has been regarded as luxurious, exciting and dynamic. These perceptions, whether correct or not, have persuaded many people to work for multinational companies (MNC’s). On the one hand, an MNC’s recruitment strategy, however, do not occur in a vacuum and as a consequence changes in the international environment can have an important influence on their desire to employ expatriates. While, on the other hand, the proximity of the home culture and local culture definitely influence how the expatriate family adjust to their assignment abroad. This paper will discuss the advantages as well as the disadvantages of using expatriates for international assignments and it will explain the reasons for the most common failures. In addition, I will summarise the most useful lessons, which an international manager/expatriate has to know before going abroad (e.g. sending, entry, stay and re-entry). Finally, there will be a conclusion in which one can add his or her perception or ideas towards the individual case of assignment (whether it is long-termed or short-termed).

For a start, I will give the reader some definitions, which are important to know when dealing with the subject of foreign assignments. (à to get a short overview one can turn to the attachment-section)

2.) Overview and Definitons:

International Human Resource Management has five main dimensions:

1. The selection and recruitment of qualified individuals capable of furthering organisational aims
2. The training and development of personnel at all levels to maximise organisational performance
3. The assessment of employee-performance to make sure that the aims of the company are realistic and can be fulfilled by the company’s human resource
4. The retention of competent corporate personnel who can continue to facilitate the attainment of all aims (mission, vision, goals) that management are planning to achieve
5. The management of the interface between workforce and management so that the organisational “flow” is given (smoothing organisational belongings).

However, in my paper I want to examine the third main dimension. This paper will point out how important the human factor is inside international management, especially when foreign assignments are concerned. First of all, I will explain the main terms. They are a prerequisite for every sophisticated expatriate:

Culture:

In order to know or imagine what “a culture” includes and what is meant when talking about culture related topics one can think of the following question:

What is culture?

The majority of us will probably claim that culture is just a pattern of a specific accepted behaviour (within the society) or one of the following assumptions (they are only examples among a mass of typical stereotypes to imagine what mankind is trying to find within a culture):

- society’s perception of history
- society’s perception of religion an spirituality
- patterns of accepted behaviour
- accepted value systems

But for my topic we want to accept the following view which is easy to understand: Within each culture of any nation there the following areas are definitely included (more or less – depending on the cultural codex):

Tradition, politics, behaviour, art, literature, music, sports, dialect, traditional costumes, customs, religion, the way of life, different ways of work performance, history.

Within a culture mostly stereotyping takes place and is so to say difficult to avoid (but the good expatriate (compare: Conclusion of this term paper) will avoid the following assumptions (or at least view them with a certain level of objectivity):

What is typical for People from France:

- Xenophobic (dislike of foreigners),
- Sophisticated,
- They love the good life,
- Revolutionary,
- Prefer hedonism,
- Open-minded and unprejudiced – (when thinking of personal relationships).

People from Germany are:

- Disciplined, formal (emotionally cool), very polite, hard working, direct, inflexible,
- completer/finisher (completion of tasks), attention to detail.

People from Great Britain are:

- Politically correct, traditional, polite, conservative, dispassionate,
- sense of humour, tolerant, not very hard working, no attention to detail, patriotic, creative, class-conscious.
People from the States:
- Superficial, flexible, patriotic, multi-cultural,
- technically orientated, arrogant,
- materialistic, prudish, entrepreneurial/capitalistic.

These are only some out of a variety of ‘generalisations’ and the so called ‘stereotyping’. Please note that sometimes it is fun to mention them (in a specific situation, e.g. a dinner after a successful business day with new friend in the foreign country, maybe even to socialise with others). However, when used at the wrong place and wrong time (e.g. an important business meeting in Japan, please compare to my case study) they can break a former good relationship into pieces.

3.) Culture Shock - The Cultural Environment

The term culture shock can be seen as a misinterpreted gap between understanding of a culture and all what surrounds it and the personal attitude towards the new challenges of being in a totally different social surrounding. The following figure gives a further clue:

illustration not visible in this excerpt

The figure above shows that the more negative factors you feel the less probable it is to avoid the culture shock. Therefore culture shock includes all reactions within an individual to drastic change in his or her cultural environment. Just as a person may be psychologically disoriented by a way radically different from one’s own, so too an institution or system may experience organisational shock when subject to a rapid change in its culture. Similarly, mankind is undergoing future shock, as the traditional way of living and working is quickly altered in this post-industrial INFORMATION AGE. Both of the latter are manifestations of mass culture shock.^[1]

This is why most ‘future expatriates’ are eager to get as much as possible information before accepting an foreign assignment. For a proper preparation we decide between short-termed (business trips, between one month and one year), mid-termed (delegation and transfer, between two and five years) and long-termed (permanent, as an expatriate, usually longer than five years) foreign assignments.

4.) The mindset and its linkage to the international assignment

Every modern manager should have a global mindset in order to see things (which he or she is concerned with) in a much broader view.

A mindset is an interlinked set of cultural values, judgements and ways of seeing things. The expatriate has a good deal if he has a vision which he can act out by including his intercultural surrounding. In that way he can avoid stereotyping. The dangers of that the reader will have noticed by enjoying the examples, that were mentioned before.

Main Part I

A) From good ideas to solutions

1.) Recruitment and Selection

Selection and recruitment means preparation for going abroad (handled shortly for the sake of completion)

Because many managers have difficulties in adjusting to foreign locations, it is important to select the right person. Before being recruited to a specific long-term foreign assignment one has to be a prospective applicant for the position. That includes accepting transferring policies and to be interested in an information package (which is mostly compiled by personnel in the host country).

This could be followed by a meeting between the transferee and that person’s spouse and a recently repatriated employee or spouse to explain the emotional issues involved in the move’s early stages.

Other preparations and prerequisites are:

Offering the option of attending a language and orientation program

International courses and much more is possible to prepare the assignment.

What is recruitment?

Recruitment is the process of searching for and finding enough candidates (those with appropriate qualifications and experience) to apply for a particular position so that the organisation has a good choice of applicants at interviews…”^[2]

2.)Preparations - Conditions for a proper entry phase:

However, before there is any recruitment (concerning the foreign assignment) possible the applicant has to fulfil certain selection-criteria:

1. Experience within the company
2. Technical knowledge of the business concerned
3. Knowledge of the language of the host country (proficiency is not necessary but a help)
4. overall experience and education, managerial talent, interest (to work abroad)
5. Initiative, creativity, independence, experience from former assignments (if possible from similar ones)
6. Respect for the culture (traditions...as mentioned before) of the host country
7. personal data (gender, age, stability of marital relationship)
8. Soft skills (communicative ability, maturity, emotional intelligence, how one can adapt to new environments (flexibility, ability to accept changes)
9. Surrounding of candidate (spouse’s and family’s level to adapt to changes).

For both manager and management it is best to make or use specific lists in order to gain a complete check up (examples for lists can be seen in the attachments III and IV).

Now it is important in which way the management solves the question of bringing competence into the management of a foreign subsidiary or in other words:

illustration not visible in this excerpt

The question of competence [Abbildung in dieser Leseprobe nicht enthalten] How can management be sure that the money they invest into expatriation have a return on investment?

Important factors effecting recruitment policy - Can a suitable candidate be found?

The International personnel management has to consider some extra-factors concerning the general staffing policy on filling key positions in the organisation

(ethnocentrism, polycentrism, regiocentrism, geocentrism).

Management also has to consider some constraints placed by the host government and it has the obligation to provide the assignee with a statement of assignment (work contract). This official paper outlines the conditions of employment which both (employee/manager and management/supervisor) have agreed to (beforehand). It is signed by both the employee and host country reporting manager, and should specify amongst others:

- Salary, grade, title and host country reporting manager
- Determination of home country and host country
- Premium and bonuses, assignment premium, hardship- (danger-) premiums, home leave
- Point of origin of assignment, length of assignment
- Pension/social security payments
- Education, authorisation for spouse/children to accompany
- Per diem rate, tax assistance.
- Other points to be included are:

The relocation facts (shipment, storage, costs of quarantine, housing assistance (temporary and long-term) in country of destination),home country housing assistance.

- Repatriation (support).^[3]

3.) How to Staff a Host Country Facility?

The need to have highly qualified people to staff the organisation cannot be overemphasised. Any multinational company (as well as small or medium-sized companies) has to determine its personnel needs, hire people to meet those needs, motivate them to perform well, and upgrade their skills so that they can move to more demanding tasks. But their is a different task level between domestic and international personnel management. Several factors make the management of international human resources different from such management at the domestic level:

- Different labour markets
- International mobility problems
- National management styles and practices
- National orientations
- Strategy and control

The six extra factors when handling the management of expatriates are:

- More HR activities
- The need for a broader perspective
- More involvement in employee’s‘ personal lives
- Change in emphasis as the workforce mix of expatriates and locals varies
- Risk exposure
- More external influences^[4]

Preparing for excellence abroad – Which are the additional HR Activities?

- International taxation
- International relocation and orientation
- Administrative services for expatriates
- Host/government relations
- Language translation service

It is a fact, that all multinational companies are eager to manage expatriates in an effective way. Therefore the competent personnel manager has to know which factors are affecting her or his domestic personnel management as well as the international HRM. In that way the person who is concerned with going abroad is (on the one hand) being prepared well and can (on the other hand) prepare appropriate for her or his assignment. One should remember the following factors:

- The cultural environment
- The industry with which the multinational is primarily involved
- The extent of reliance of the multinational on its own market
- The attitude of Senior Management
It is important to differentiate between managerial grades and labour personnel.

Top manager in subsidiaries usually have broader duties than do managers of similar-sized home-country operations. Corporate managers abroad deal at top levels in many countries and they have to handle complex situations that are in much ways more difficult to solve than the problems in the parent country.

Both managers and employees who are on assignment abroad are experiencing the rigors of foreign travel. Employees or managers are facing difficulties if they have risen entirely through domestic departments. The experience for long-term assignments can be achieved by preliminary visits to the host country. In the case of first time assignments (concerning management trainees) it is a good idea to improve experience by internships.

4.) Host country language – YES or NO?

International communications are more complex and more likely to be misunderstood than domestic ones are. The use of ENGLISH is compulsory and therefore the international language of business. That is because so much international business is conducted by companies from and in English-speaking countries. Furthermore, when people learn a second language, English has become the most common choice worldwide. Last but not least, this is because it is simple to learn.

Nevertheless, a working knowledge of the host country’s language can help transplanted managers of a subsidiary adapt to the country as well as gain acceptance by its people. For example (as in the case from attachment I), a manager will certainly be more accepted when he can speak (and if only some words) Thai.

Words which are important for Thai people are:

Sanuk (Fun), jai dee (good heart), bai dee (healthy).

These are all words which (when used in the right situation) are showing that you have understood a bit of the basics of “Thai Culture and Thai Tradition”. A very important point for Thai people and, in addition, this will bring you forward (whatever your business goal is). In intercultural communication courses this knowledge can be deepened much more. For many multinational companies it is compulsory to be fluent at the language of the host country when thinking of long-term foreign assignments.^[5]

Which foreign language should be learned by a native English speaker or by a German who is proficient in the English language if he or she wants a successful international business career in the twenty-first century? The choice depends largely on where one’s employer does business and on one’s geographic work preference. Nevertheless, one survey of U.S. companies put Spanish clear in front with 44 percent of responses; Japanese followed at 33 percent. These are followed by Chinese, German, French and Russian. However, other European surveys predicted that Japanese, German and Spanish will be the most important languages to be proficient of.^[6]

[...]

^[1] Mead, Richard; International Management, pages 412-417, 2nd edition, 1998.

^[2] Pools, Michael: The Handbook of HRM, 1998.

^[3] please compare to final part of this paper.

^[4] Dowling, Peter et al (1999) – International Human Resource Management –

Managing People in a multinational context.

^[5] Own experience when studying the adverts of various multinational companies concerning foreign assignments.

^[6] Waring, David C., “Doing Business overseas”, found in: International Business, Daniels and Radebaugh, 7th edition, 1998, page 751.