The Human Resources Failure in Expatriate Personnel Management - Term Paper Example

INTERNATIONAL HUMAN RESOURCE MANAGEMENT INTERNATIONAL HUMAN RESOURCE MANAGEMENT 1 Fig 1: Expatriated Responsibilities 5 Figure 2: Growth of Expatriates 7 Introduction: Human Resources Management process is made up of a numerous variables that are required in order to build and run a successful commercial venture. This means in essence that a successful human resource management strategy is intrinsic to the successful working of a business. There have been suggestions made by management theorists over the years that no venture that is commercially oriented can taste success in the absence of a carefully devised and implemented plan that assures a high quality where HR maintenance is concerned (Mitchell, 2001). The Human Resource Management function consists of a number of variables and there are in turn numerous factors that are associated with a successful planning and implementing strategy. The HRM function in any given company however would need to follow a set of well defined guidelines, there has to be theoretical backing on any innovation made, no strategy is fool proof given the fact that the variables that the discipline deals with are humans and not machines, behaviors are therefore often spontaneous and highly unpredictable. These are in fact often complex and mostly overlapping. There are a number of approaches that one could apply in the management of human resources in a given company at any given point in time. The need in most cases however is to ensure that a strategic approach is taken to the HRM function. Taking a strategic approach to human resource management would mean that the company has to take decisions regarding its HR functions not in isolation but in the context of the overall culture of the company, the existing system of feedback to and from employees that helps the organization align itself with personal goals and functions (Massy, 1994). A strategic approach also requires that the organization makes an assessment of global and the immediate human resource environment within which the organization is required to function; it also means that an organization has to ensure that the there is in place a system that forecast and readies itself in accordance with the human resource requirements that are most likely to arise (Das and Waqar, 2007). Executive Summary: The challenge of the management of expatriates and repatriates has never been more timely or urgent: globalization has forced expatriation into the corporate agenda, confronting us with an array of questions on HRM strategy and practice (Barauch and Yaltman, 2002). In the face of the effort and the problems, that corporates have faced the world over in the recruitment and the motivation of expatriates it might be easier for one to argue that the very nature of expatriate employment is problematic. The management strategies that govern the over all venture-these include the staffing needs of the company, the recruitment and training of the best employees, ensuring they are high performances, value for money and low rates of attrition. The HRM functions also deal with performance issues, and ensuring that the personnel and management practices conform to various regulations (Carter, 2001). Further an effective HR strategy consists of the management of the approach that is to be taken by the company for employee benefits and compensation, employee records and personnel policies. Usually small businesses (for-profit or nonprofit) have to carry out these activities themselves because they cannot yet afford part- or full-time help. However, they should always ensure that employees have -- and are aware of -- personnel policies, which conform to current regulations. It would therefore be a lot easier to employ nationals in the country where the expansion plans are based, thereby giving more weightage to the argument in favor of outsourcing work and responsibilities. The fact of the matter however remains that in the face of globalization and international corporations that work in many countries around the world; a work culture based without the concept of expatriate employment is completely unfeasible and in fact unthinkable. This therefore poses a certain set of problems for the HR in any given corporate. Fig 1: Expatriated Responsibilities Source: Emerald Essay.com Expatriation has been the norm of corporate management especially in the past decade and half that has been characterized by the forces of globalization. Any given company at any given point in time has tried to expand its reach beyond the borders of its host nation so that it gets access to a large market and in turn gets hold over a larger share o the returns. Figure 1 shows that the contributing factors for an organization’s success: The level of internationalization and the satisfaction quotient translating to performance in case of expatriates. There are those that have adopted the outsourcing mode and those that have stuck to employee expatriation. In both cases a certain level of shift is undeniable and the role of a strong policy based HR decision making process is extremely important. This role goes from recruitment, to decision about salary payments, training, and definition of duties to final repatriation. In this context, the following essay will analyse the HR failure in expatriate personnel management in the light of expatriate employee recruitment and management theories and analyse what went wrong with the FinCorp experiment. The Human Resource Management Function: The human resource management function, as has been stated in the introduction is a multi faceted concept that could find application in the form of many manifestations within a given organization: 1. Ensuring Fairness and Legal Compliance 2. Creation of organizational alignment 3. HR planning for strategic change 4. Job analysis and Competency modeling 5. Recruitment and Retention 6. Selection of employees to fit the job and description 7. Training and development 8. Measurement of performance and providing feedback 9. Compensating Employees 10. using rewards to enhance motivation 11. providing benefits and services and 12. Promotion of Workplace Safety and Health Principles and theories of expatriate employee selection and management: Overview: A strategic approach will also make space for a system that analyses the job functions and does a competency audit of the employees. Beside these, the strategic approach cannot under any circumstances forego the traditional functions that are associated with a successful HR management program of any given firm (Schuller and Jackson, 2007). These would in turn include: 1. Usage of powerful "coaching" questions to help employees attain personal and organizational goals. 2. Usage of competency-based recruitment and selection techniques. 3. Management and motivation of employees by using the basic principles of strategic human resource management. Figure 2: Growth of Expatriates Figure two shows that of the expatriates the senior level transfers are the highest in numbers. The point to be noted here is also that with the ease of internationalization most companies have chosen to go the outsourcing path rather than expatriation. There is a useful study that was carried out recently that suggests that when an expatriate employee arrives in a foreign environment, his/her previous social network is disrupted and consequentially his/her psychological well-being is threatened. The establishment of a personal network in the local environment, however signals the expatriate’s settlement and facilitates the maintenance of his/her psychological and hence at time physiological well-being. The importance of expatriate social network therefore cannot be underestimated. However, expatriate social networks constitute an under-emphasized area of study and often of application in organizations. Studies that empirically set out to analyse the relationship between expatriate personal networks and psychological well-being state that these networks can be characterized in terms of size, diversity, closeness, and frequency. A large diversified and active network can help the expatriate to obtain social resources social resources that will aid him/her in adjusting to the local environment. Networking: There is significant support for the view that expatriate network characteristics have a direct impact on expatriate psychological well-being. The larger the network size, the more diversified the network, the more frequent are the interactions and the consequent betterment in the adjustment factors among the expatriates. Other factors that need to be placed under this discussion as well. The level of adjustment perceivably is usually slower than it is for the ones that have been in the situation for a while longer. This is true given the fact that for newcomers have negative associations with both general as well as interactive adjustment issues and the unwillingness to adjust was usually related negatively to general adjustment. For long stayers on the other hand, psychological barriers were unrelated to all adjustment variables. It has been found that a number of expatriates claiming inability or unwillingness to adjust may have been facing a career plateau in their domestic jobs. Motivating factors: There might be multiples sources of such blockages in a person’s career development goals and their perceived fulfillment. The major factor behind this blockage is usually an absence of motivating factors (Warner, 2005). This can happen by virtue of a number of things, like a perceived absence of a career that in some way involves excitement, satisfaction or personal challenges and the fulfillment of personal and individual goals. It is here the importance of hiring the right people for the right jobs becomes important. It is essential that the expectations that the expatriate has of the chosen job and the chosen place where he/she is supposed to be headed matches up in some manner to the level and character of the job that the person had in mind for him/herself. The recognition of these goals and expectations during, the interview, selection, and recruitment processes is therefore extremely important. Skill Development: In order to remove managerial plateaux, it would be necessary to encourage in some manner, the development of requisite skills as well as redesigning jobs in order to help build intrinsic motivations. Expatriate assignments more often than not consist of considerable learning experiences and extended job responsibilities. Consequentially, it may be speculated that over time expatriates might even be made to feel more motivated and be aware of the fact that they have acquired newer skills and abilities useful for them as professionals in the context of the globalized economies that characterize the world without borders. This might help make adjustments easier, paving the way for better motivating techniques making the job of the Human Resource manager easier in every sense of the term. Dealing with Adjustment issues: The idea essentially is to exploit the standard notion that ‘the appetite grows while eating’. The fact of the matter remains that in the end, if handled in a proper manner, expatriates do not feel the pinch of adjustment issues, based on the condition of training, the surroundings, job profiling, and the levels of motivation and advancement as offered by the profile and the organization. . Polycentric and Ethnocentric: The majority of the work taken up in most international operations is based on the polycentric principle of recruitment (Activities and functions are planned and managed, often by local nationals, on a country-by-country basis). Based on the principle therefore the chief operating factor for most units has to be efficient delegation and supervision functions. As opposed to this when an organization makes use typically of the ethnocentric method of recruitment and task delegation, the effect is that the majority of the onus of success falls on the coordinated working capacity of most units and the kind of adjustment made by the largely expatriated workforce in the new working environment. There is also usually the need for a pre-selection and a post-selection recruitment and training policy. Process of Selection: Ideally, and in theory at least, the process for selection should include not just the domestic track record but also an evaluation of the management and technical skills, language gauging and learning abilities, education, compliance with company regulations, positive attitudes ad an individual willingness to work abroad. There is also the need to make an effort to employ at least in senior managerial positions and positions of power people with prior experience as expatriate employees. HR theory regarding the management of expatriate workers also suggests that attention be paid to creativity and to initiative, the levels of cultural empathy demonstrated by an employee. The emotional stability and the family situations are also of concern while making the choice of who the expatriate candidates would be. Preparation and training: Interestingly enough, in the preparation of expatriate assignments, past research has focused primarily on the selection and cross-cultural preparation of the expatriate managers on foreign assignments. It has in fact generally been the case that the preparation and the training time and effort given on candidate is rudimentary and largely insufficient. There is a large sense of ethnocentrism as far as corporate expansion is concerned with respect to human resource development within a given organization even in the face of globalization the winds. There is usually little or no focus on the development of the host country workforce (HCW) in association with the expatriate management assignment. In the past decade and a half, there have been calls from the international scholarly and theoretical community to MNCs to put of their traditional ethnocentrism and embrace a more polycentric policy. This would mean the build-up of a more competitively viable global orientation by the integration of an international perspective into the human resource management policies being followed. This should in turn be inclusive of all employees and not just from the country of the parent company. As part of the planning and management of the overall expatriate management assignment, HCW members should receive training on alternative characteristics of the home-country culture and by division, of the host company itself. Problems with the FinCorp Plan: The very nature of expansion in case of FinCorp was an issue right at the onset of the campaign to take the organization international, given the fact that at the time of taking this decision only thirty FinCorp employees were based outside UK. The culture of Experience was missing and the overall environment was not suited to the kind of expatriation drive that the corporate chose to undertake. The problems can be identified as being: 1. Despite a stated commitment to the development of the HCWs and their induction in key managerial and top-level positions, there was no real effort made toward the realization of this guarantee. 2. The levels of preparation for the employees was minimal, there was no training and most of them were unaware of their duties once they went to the new country. 3. Complete failure in arranging for dual-couple employees, the policy of arranging jobs for the spouse wherever possible did not work either 4. Selection of expatriates on the basis of willingness and not on adequate suitability, leading to subsequent inadequacy in induction prospects 5. The total irregularity in the policy towards appointments of expatriates. The fact that remunerations were made such a big part of the job attraction was a mistake; the concept of ‘selling’ the job meant there was no real connection of the employee to the job at hand except the pay cheque. 6. Unrealistic job expectations were also bound to crop up given the fact that any given employee would expect a job and subsequent responsibilities in consonance with the pay package being offered. 7. The expatriates had a tough time in meeting any of their expectations of getting any job satisfaction since the returns on prospects had been grossly overstated. 8. There was no real emphasis paid on the differences in the remuneration and the thin line between making this fair, generous and lucrative were blurred. 9. The training and sensitization aspects in lieu of expatriation were badly neglected. The ones being sent abroad had no real clue about the place they were going to or the kind of work that was going to be expected of them once they got there. Recommendations: Change in Management Structure: This needs to be applicable at every stage of the decision making process. The upper echelons of the company’s management group would ideally be responsible for the application of these changes, as the implementation here would require an alteration of the most basic levels of the company strategy (Ref: Problems with FinCorp: 1, 2 and 3). The higher echelons of management are not necessarily aware of the problems that are faced by these employees or the needs of the customers at the day-to-day level. The top down approach to functional and operational management of an organization is some have considered a hierarchical style of decision making that as being autocratic and high handed (Mora G R, 2006). The solution to this problem is simple. The decision making process needs to be made more interactive, diverse and democratic. By allowing for a ‘bottoms up’ process of decision-making and management, not only is the problem of perception dealt with, it will lead to an increased level of employee participation and interaction thereby leading to greater job satisfaction and lesser rates of attrition. Further, it would give the manage met the benefit of access to information related to customer feedback that only the ones dealing with it on a day to day level can provide. Integrate Expatriation with Career Development: This is an HR specific exercise and needs to be carried out once the selection and recruitment process is complete. The training and the career development plan needs to be chalked out by the HR department as a whole and implemented before the recruits are actually expatriated (Refer: Problem 2) The analysis indicates that some 50 per cent of people left the company following the repatriation within a few years after return (Barauch, Steele, and Quantrill, 2002). The experience gained by the company manifests the importance of proper management of the processes of expatriation and in particular repatriation. To attain a successful expatriation and repatriation the management should handle both processes as an integrated part of career management, since expatriation can form a crucial point in the development of a psychological contract between the employee and the company.  The importance of training in a situation where employees need to be expatriated cannot be stressed enough. Training does not would not just help the staff get used to the environment of their destination and help acclimatize them; it would also help the employees understand the exact nature of the roles. Training does not just help in the improvement of requisite skills for the relevant job, it also helps in the preparation of the employee for future responsibilities. Training is an essential aspect of all HRM functions but added to the expatriate job scenario training would require to be intense and periodical. Job rotation and participation in cross-functional or cross-divisional tasks can get rid of the feeling of stagnation and boredom that seems to have set in (Charvatova and Veer, 2006). The idea is to give the employee a new challenge, continuously helping him evolve thereby adding greater value to the organization’s resources with the same amounts of inputs. There is also a certain amount of stress that needs to be laid on promotion from within the organization itself, thereby help remove the feeling of alienation and disillusionment from the staff. Creation of Expatriate policy: This is relevant to the nature of the problem itself and hence needs to be dealt with, by the HR management and the overall corporate management of the company. There has to be in place a HR management policy in line with the overall expansion policy of the company. So the timing for this needs to be right from the inception of the expansion plans to the end of the repatriation process itself (Refer: Expatriation policy problems with FinCorp). It is also very important to have an expatriate policy (Joynt and Morton, 1999). It is now essential to recognize the fact that the vast variety of procedures and expertise that is required for a correct process of relocation and its management do not come under the purview of the traditional methods or concepts of human resource management. The internal management function therefore needs to be better thought out and implemented. Creating a policy for the company’s expatriates would not just help in the set-up of strategies for the maintenance of the workforce; it would also help the organization deal with the extended workload in a better manner. FinCorp had a policy in place, but it was random at worst and ill implemented at best. For a policy to work, the most important part is that the workers to whom it is directed should be able to feel the difference of its implementation. The most important role of policy though is communication. The expatriate must be clear about the support your company is providing. This allows firstly for a point of negotiation but more importantly allows the employee to fully prepare for the aspects of the new assignment that they will need to deal with personally. The result is that all parties are clear from the outset of their responsibilities and can fully prepare for the transition. This opens the way for a successful assignment and avoids any misunderstanding or disgruntled employees. Stress on the development and empowerment of the HWCs: In keeping with the accepted theoretical framework, one could say with some level of authority that the emphasis placed on the overall performance and reliance on expatriates should have been reduced considerably, because added to the costs of training and relocation the costs of repartition would also be high. The best manner to make international operations more cost effective would be to ensure that the HWCs have a more developed and evolved role in the management of business functions, the costs would be considerably less and would help in making FinCorp a truly international organization with an evolved cosmopolitan culture. Betterment of the selection and remuneration structures: The implementation of this would be left to the decision and jurisdiction of the selection team along with the overall management policy about the kind of money that should be offered to expatriates in consequence with their job opportunities. Betterment in selection process and remuneration policy etc need to be even before the first person is interviewed for the job, the policy decisions should be made part of the recruitment process itself (Refer: Problems, 5,6, 7). The selection procedure has to be made more merit and job-suitability based rather than being a process where volunteers are given preference irrespective of qualifications and adaptability. There also needs to be a certain level of transparency within the organization, which would help in the overall better understanding of the job profile and the subsequent responsibilities. The situation demands an application of the mutual investment approach. From the very outset, there has to be a communication of the value of long term loyalty and commitment to not just the task but to the job (Losey et. Al., 2005). Every recruit needs to be made aware of the inducements that are on offer. This can be achieved by following a process initiated by peer recruitment and team based interviews. The idea is to ensure that the new comers fit into the organization and its culture and are not taken just in order to fill a vacant position. This in fact is the sum of the Demming principle. Factors such a spouse receptivity, personal issues like health and language adaptability, barriers of relocation etc all need to be placed under consideration before making a decision about the expatriation of an employee for the process to bear fruit in the form of employee productivity translating into better results for the company. Conclusion: In conclusion therefore it may be reiterated that there are number of factors that the human resource management machinery needs to consider before taking into account the kind of expatriation drive that the company is ready for. Beside this it is important that training and transparency be made part of the policy underlying factors so that the desired goals of expatriation drive. It is also important that the ones being reallocated are given every possible machinery from the company’s existing support system in order to help them adjust. This can take the form of company networks. For this to happen then, there needs to be a certain amount of stress laid on the development of the HWCs in an international context. Finally, the management decisions in the context of the company’s work force need to be equipped to take a bottom’s-up approach rather than a top-down approach to make the process of change and change management within the organization a lot more tangible and democratic. 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