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“Expatriation is not an event, it is a process, and this process is hard to manage, especially when there is a lack of global integration”. Critically evaluate this statement addressing all stages of the expatriate management cycle. How can MNEs overcome some of the challenges in managing expatriates?
Questions to answer
1. Critically evaluate this statement addressing all stages of the expatriate management cycle.
2. how can MNEs overcome some of the challenges in managing expatriates?
Key points to be included:
• Stages of the expatriate management cycle
1. Selecting expatriates
Plan the assignment in terms of location, timing and duration based on professional preferences and personal circumstances of the expatriates
Plan the assignment in terms of location, timing and duration based on professional preferences and personal circumstances of the expatriates
Technical competence on the job – this factor is one of the primary determinants of success. The individual is located at some distance from the HQ, often the hub of technical expertise, and cannot consult as readily with his/her peers and superiors on matter related on the job
Personal traits or relational abilities – the crucial element is the ability to live and work with people whose value systems, beliefs, customs, manners and ways of conducting business may greatly differ from one’s own
2. Preparation and orientation
How much cross-cultural training is needed?
• The greater the cultural distance from the host country and the more social interaction involved in the job, the more important this is
• Training about the host culture should be linked to the expatriate’s experience; real-time coaching is beneficial
Is language competence essential?
• Not essential in all assignments, but it helps develop relationships – and the effort shows respect for the local culture
What about the family?
• Family considerations have a critical impact on an individual’s willingness to relocate and on the outcome of this assignment
3. Adjusting to the expatriate role
Three dimensions of the adjustment
• Work, the general environment, interaction with local nationals
• Stages in the adjustment process
o Honeymoon
o Culture shock: depression, anger, frustration – it is the first step towards learning
o Adjustment
o Mastery
o The dual allegiance of Expatriates
4. Managing the performance of expatriates
Who should monitor and evaluate the performance of expatriates?
On what performance factors should an expatriate be evaluated?
What aspects of rewards should be emphasised for expatriates?
5. Compensation and rewards
Going rate approach
• The base salary for international assignees is directly linked to the salary structure of the host country and thus driven by local market rates
Balance sheet approach
• The objective is to equalize the purchasing power of the assignee compared to other employees at comparable position levels at home.
• It provides incentives to compensate for the cost of an international assignment and offset relevant differences between assignment locations
*Companies using the balance sheet approach need to regularly update compensation packages with new data on living costs. They need to respond to unexpected events such as currency devaluation or a stock market crash. From this perspective, going rate approach seems to be more cost-effective than balance sheet approach
6. Repatriation
Most companies lack effective repatriation practices and international career development systems
Most expatriates feel their re-entry position is less challenging and satisfying than their international assignments
Facilitating the repatriation process
• Assign a mentor; regularly inform expatriates about changes in the organisation; back home visits
• Give expatriates project assignments at headquarters; to enable them to cultivate their social capital
• Systematically examine possible re-entry positions for the expatriate at least six months ahead of repatriation
• Provide career counselling and clearly delineate difficulties expected upon return; avoid making false promises
• Bring back expatriates after a 3-4-year assignment (otherwise transfer to local contract)
• Make international assignments an integral part of the career development process
Some of the key challenging facing by expat
1. Inadequate personal support
2. Cultural differences
3. Languages barriers
4. Healthcare
5. Finance management – tax purposes
6. Safety and security
What is global integration?
• Global integration
1. Global cultural integration
To construct organizational identity at the corporate-wide level, corporate values should be shared globally amongst all employees in a company
Examples activities
• Design and delivery of learning program to share corporate values
• Definition and communication of corporate values
• Selective standardization of components of HRM system based on corporate values
o Uses of competency framework based on corporate values as a part of selection criteria for new employee/top talent or an element of performance evaluation system
2. Global workforce integration
To support business growth in foreign markets, workforce pool in a home base as well as host countries should be developed and utilized fully across borders
Examples of activities
• Global assignment across units of organisation
• Construction of globally integrated HR information systems
• Design and implementation of global talent management program
• Selective standardization of components of HRM system to facilitate global staffing
o Standardized grade system and performance management system
3. Global HR capabilities integration
To build HR functional expertise at a minimal level in each subsidiary, basic HRM systems and organisations should be built and connected with each other seamlessly
• Definition of roles and responsibilities of corporate, regional and local HR organisations
