Expatriate Management - Essay Example

EXPATRIATE MANAGEMENT. Student’s name Code+ course name Professor’s name University name City, State Date Table of Contents EXPATRIATE MANAGEMENT 3 Executive Summary. 3 INTRODUCTION. 5 Body 7  Expatriate Management Strategy. 7 PRINCIPLES OF EXPATRIATE MANAGEMENT IN MNCs 8 Challenges Faced By MNCs In Introducing Successful Expatriate Management Schemes. 10 Recommendations 12 Conclusion. 13 EXPATRIATE MANAGEMENT Executive Summary. The world has become a global village. All over the world seems to have the same needs satisfied by similar products. As a result, most companies and organizations have started to establish themselves in more than one country, hence, the name multinational corporations. Recent research showed that 80% of midsize and large companies usually send professionals abroad to make their businesses successful. The main reason they do so is to ensure that the companies are competitive in the global market (Doh, Luthans, and Slocum 2016). Further research conducted showed that most companies were not benefiting from their investments in expats. Most expatriates who went to foreign countries returned to their country of origin before the completion of their mission and, claimed that they were dissatisfied with the jobs they were doing. Others claimed to have had a hard time adjusting to the foreign country. Of those who stayed almost a half did not perform as per stipulated assignment. The other half who completed their job resigned to join their competitors. Therefore, there is a need to address these issue considering that expatriation is a must for the success of the multinational corporations. For that reason, it is important for any company planning to go global to have an Expatriate Management Strategy. In this way, the frustrations of the expatriates will be dealt with, and there will be hope that upon completion of the assignment will be successful. Indeed, successful companies are known in general to embrace these practices despite their size and the industry involved. When making the international assignments, the main aim is usually to send people to foreign countries to generate and transfer the knowledge they have in a new branch they have opened in a foreign country(Chang, Gong, and Peng 2012). In other cases, expatriates are sent so that they can develop their leadership skills and become better managers. When choosing the expatriates, companies focus not only on technical skills but also desirable personal traits with an ability to adapt to different cultures. Also, majority companies prefer trustworthy persons whom they are sure that would not have a difficulty repatriating once the assignment comes to an end. All in all, the whole expatriation process is expensive. Those willing to venture into it need to have a strong capital base that will see it through completion. More so, the success will wholly depend on the person chosen for the assignment. Choosing the right person is quite essential for the process to succeed to the end. The person is supposed to be culturally literate, flexible, with excellent communication skills, and a broad-based sociability. Also, the corporations should be willing to handle the challenges that the expatriate and his family might experience while moving countries. They must also provide them with solutions otherwise many will decline a good offer of living abroad if their families are not well taken catered for efficiently. INTRODUCTION. In today’s global marketplace, more and more multinationals are coming up. Most companies’ future goals involve going international as a way of expanding their market and increasing their competitive advantage. Afterward, the idea of expatriates then sets in. Expatriates are the employees or managers sent by their employing companies to other countries to undertake a certain assignment (Dutta, and Beamish 2013). In the host country, they are expected to facilitate communication process between the parent location and the subsidiary of the company. Further, they are projected to widen the market for the organization's products and increase the firm's understanding of international operations. However, these multinationals are faced with problems of managing the expatriates, consequently resulting in losses for failing in planning and managing upcoming challenges. Also, expatriates get exposed to other cultures and other ways of doing business resulting in the organization gaining in the form of more well-rounded experience. Indeed, Multinational Corporations (MNCs) are geographically dispersed and have several branches across various countries (Gupta, and Govindarajan 2012). Expatriate assignments refer to the act of the MNCs sending their employees to the foreign countries for a predetermined period. However, upon completion of the task, they are expected to return to their domestic positions. Globalization has necessitated the act of sending employees on foreign missions. The report will focus on principles of expatriate management in MNCs and the challenges that they face in implementing the strategies. Also, it will try to provide some recommendations that may help the corporations deal with the challenges in the future hence increasing their competitive edges. Body  Expatriate Management Strategy. The expatriate management strategy is divided into four phases namely; Expatriate Selection, Expatriate Training and Development, Expatriate Compensation, and Repatriates retention. In the first phase, the corporation selects those who are fit for the foreign assignment. Further, company management takes them through a series of interviews in both personality and psychological tests(Santoso, and Loosemore 2013). Only the best candidate gets the position. The second stage is the training and development where the qualified candidate attends workshops and seminars. In some companies, they learn a new language so that they can communicate without difficulties in foreign countries. Further, the candidate is familiarized with the foreign culture different to what they are used to which include food, dressing, and overall culture that will change their daily way of life. It is at this period that a detailed plan of the assignment they will undertake and what the organization expects of them is addressed. Warnings of what they will do and what they can not do are then outlined clearly and into details. In the third stage, the organization decides on how they will compensate the expatriate in a way that they will be motivated. Consequently, the organization should be able to balance its returns. Two approaches have been developed to help in determining how companies compensate expatriates. There is the balance sheet method which is the commonly used. It aims at maintaining the expatriate all through the assignment without financial strain and, without interfering an individual’s lifestyle in the home country(Firth, Chen, Kirkman, and Kim 2014). However, under this method, the expatriates salary is matched with the countries of origin’s’, the host – country cost of living are also made. Other organizations may opt to use the going rate approach also known as destination plan. The core of this method is to link the expatriate compensation to the salary structure of the home country. In this way, one is treated as a citizen of the host country. However, most corporations prefer the latter as it is cost effective. The Repatriates retention is the final stage and is very crucial as it offers the repatriating employees proper backing and moral support they need during their return. Indeed, the main aim is to provide a sense of career continuity and illustrates how a company values the expatriate’s assignment. Nevertheless, the expatriate is expected to make some positive changes to the organization and bring forth their findings collected during the given task. This phase comprises two stages; the planning for repatriation that involves developing the principles, and philosophies that will guide the process. However, there is the repatriate agreement which usually indicate the assignment period and details of the return. For most people completion of the mission is accompanied by a rise in position. They may also require re-entry training of which the company must provide for chosen candidates. Finally, the whole repatriation process is evaluated to determine the impact of the entire program. PRINCIPLES OF EXPATRIATE MANAGEMENT IN MNCs Various factors like the cross-culture composition of employees like, communication barriers, different nationalities, little or no personal contact between the managers and the employees of multinational companies make it difficult for managers to manage and handle expatriates. Therefore, an expatriate management strategy is necessary. Formulation and execution of an expatriate plan wholly depend on the principles it is built on. Indeed, the organization using the strategy and how efficient the staff involved should implement the process successfully. The various principles of expatriate management strategies include reliability. The chosen strategy of expatriate management should be sufficiently reliable in that it should be consistent. Also, it must be able to yield satisfactory and repetitive results each time this process implemented. Moreso, the strategy should also be free from random error or failure for desirable results. Indeed, it should be able to deliver the results it was created to provide without fail. Validity is another concept. Indeed, validity is the extent to which a concept corresponds positively to the real world, and satisfies the purpose which it was constructed to serve. Certainly, the expatriate management strategy in implementation should assess all the relevant aspects of the expatriate management and correspond to it accurately. Also, the staff involved should be comfortable deploying and using the strategy in the long term. The strategy, in turn, should be able to serve the purpose efficiently. The utility is the extent to which a commodity or product can be used. The chosen strategy should be usable in that the users involved should be able to use proficiently. The users should also be able to use it effortlessly. Generalizability is another crucial principle in the determination of an expatriate management strategy. Also, it should be efficient and reliable to establish strategy under different conditions, environment, and settings. Generalization could also refer to the degree to which the validity of the chosen approach developed in one context extends to the other setting with little or no change. The policy should be flexible in that it can be accommodated and practiced with no limitations about culture, nationality, legality in all the companies across the world. Cultural Intelligence, also known as CQ should be able to be accommodated in this principle. Different people come from different cultural groups in regional, ethnic, religious, lingual, gender and class. All the above factors contribute significantly to the individual’s view of the world in general behavior, and how they relate to others. Culture intelligence, therefore, refers to the skill of adapting cross-culture through sensing the various available cues at one's exposure to different behaviors across the world. However, different cultural background settings should favor diverse cultures in all the countries involved and also the laws governing the country. Further, Legality is the state of an act or agreement or practice that is inconsistent with the legislation of the state, union or organization involved. The expatriate management strategy chosen should be the legality particularly in the areas of constitutional law, federal statutes, executive orders, and judicial precedent. In this case where multinational companies are involved, legality is of high preference since each of the countries concerned have different laws that govern expatriates. Therefore, the company should consider each country involved and the managers should have a clear understanding of the laws in them. Indeed, the managers should also be acutely aware of the penalties laid down in case they break the law. Challenges Faced By MNCs In Introducing Successful Expatriate Management Schemes. Expatriate management can be very expensive for any corporation. It means that the company will have to cater for all the expenses of the chosen person. They have to give them monetary benefits enough to provide for their cost of living and hardship allowance, non-monetary incentives such as health care, education, and housing allowance. For most companies, this amounts to twice or thrice the gross salary of the citizens. Certainly, most multinational corporations tend to face the challenge of staffing operations abroad. The process of selecting the candidates to be sent to the other country is tedious. Selected candidates must be fully qualified and proficient in their line of duty. More so the employee chosen should possess characteristics such as flexibility and adaptability. They should have basic knowledge of current international activities, politics, stable family relationships, and willingness to adapt to new cultures. The person should also have excellent interpersonal skills such as honesty, tolerance and high level of maturity. Apparently getting an individual who possesses such competencies can be a difficult task. Therefore, companies are forced to administer personality and psychological tests which are expensive and time-consuming. The cost of selecting the wrong person for an international assignment may cost the company four to six times the base salary. Another major challenge that the corporation may face is changing the role of the families of the chosen candidate. Traditionally, the husbands take the international assignments and leave their wives who in most cases is not working to care for the family. In cases where the company moves a whole family to another country, the wife would not have a hard time adapting to the new culture, in fact, she would enjoy more as a result of a change of environment. In today’s world, things are very different. Most families are dual career families, where both the husband and the wife have jobs to maintain(Spiegel 2016). A human resource executive who identifies such a candidate for the assignment may end up having to choose a less qualified person if the individual declines the offer as a result of not wanting to interfere with the spouse’s career. Research carried out by a particular company showed that 88% of the correspondents were not willing to take an overseas task because it would interfere with their spouses’ career. The other reason others were reluctant to take the job was because the work would interfere with their children’s needs both social and educational. Recommendations Since family is a very crucial part in expatriation, multinationals corporations can adopt several policies so that the candidate chosen may not decline the offer. A company can assist the spouse in getting a job or in other cases provide him or her with employment. Others can make an arrangement which puts the spouse on an inactive such that they will maintain their position upon repatriation. The scenario is suitable if the assignment is short term. Other companies may offer to pay a lump sum amount to cover the spouses lost income (Carraher 2013). The money is meant to help the spouse incur expenses during the job search, learning the new language and counseling.in some cases the company will offer to pay for a mortgage for the couple as an of compensating the lost income. However, most companies find it better to have a policy for dual employment of spouses where couple receives one relocation allowance and a Foreign Service premium based on the higher of the two salaries. The final option involves a multinational corporation signing an agreement which allows international transferees for assisting a spouse find a job. Since expatriate assignments are very expensive, Multinational corporations can try to minimize the number of these positions by effectively utilizing host country nationals. As such, the firms can reduce cost and foster better relations with the host country which generally would prefer to employ their countrymen. It is recommendable that companies conduct effective screening on those who must be assigned overseas to reduce performance inefficiency. In today’s world, companies like Honda, General Electric(GE) and Nokia are considered to be among the businesses that have reaped significant benefits from undertaking international assignments seriously. Their CEOs share the sentiments that were it not for the success brought by their expatriates; their companies would not be where they are. Conclusion. Most businesses are going global to widen their market gaps that necessitate the need for sending competent employees to foreign countries. Adapting useful Expatriate Management strategies is the only way the many multinational corporations will become successful, and be listed top of the stock exchange market. The policies should aim at dealing with all the challenges that the expatriates will face during their mission. Otherwise, the assignments may never be completed, and the companies may end up losing most of their investments (McNulty, and Inkson 2013). Using expatriate employees is a real asset, it permits closer control and coordination of international subsidiaries. More so it provides a broader global perspective. It is, therefore, advisable that most companies should adapt the above policies when they want their new branches in other countries to be successful. To capture the futures global market opportunities, small and mediums enterprises should also embrace the challenge. Even if their capital base may not allow it, they can send their employees on short-term missions which take several weeks, but their effect may last a lifetime. Therefore, international assignments are for sure the largest single investment in the executive development of all multinational corporations. Bibliography. Carraher, S.M., 2013, January. PERFORMANCE AND INCOME ACROSS COUNTRIES: A STUDY AMONG ACCOUNTANTS. In Allied Academies International Conference. Academy for Studies in International Business. Chang, Y.Y., Gong, Y. and Peng, M.W., 2012. Expatriate knowledge transfer, subsidiary absorptive capacity, and subsidiary performance. Academy of Management Journal, 55(4), pp.927-948. Doh, J.P., Luthans, F. and Slocum, J., 2016. The world of global business 1965–2015: Perspectives on the 50th-anniversary issue of the Journal of World Business: Introduction to the special issue. Journal of World Business,51(1), pp.1-5. Dutta, D.K. and Beamish, P.W., 2013. 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