Benefits and Limitations of Using Expatriate Managers and Professionals - Coursework Example

Benefits and limitations of using expatriate managers and professionals Name: Professor: Institution: Course: Date: 1.0 Introduction According to Gong, (2003 p256) an expatriate employee or professional is an employee who has been sent by their employer to go and work in another foreign country. The company that has sent the employee is known as the parent company while the foreign country that he has been sent to is known as the host country. For instance, if General Motors decided to send one of its managers to go and oversee a new project in Brazil, the manager is referred to as an expatriate manager. General motor in this case is the host country while Brazil is the host country. Many companies are sending their employees to officially supervise their operations abroad. In fact, demand for competent expatriate managers is likely to increase as more and more firms face global competition. There is need for companies to understand the complex relationships between staffing and expected outcomes and how these relations can change over time. This essay will focus on the benefits and limitations of using expatriate managers and professionals in the developing countries. 2.0 Managing international subsidiaries According to Delios &Bjorkman,(2000 p283 )When a company decides to go international, it can apply any one of the three approaches to manage the subsidiaries as well as its staff. The first approach is known as ethnocentric. Under this arrangement, the company appoints most of its staff from the parent country. The headquarters from the parent country usually make the main decisions and the workers from the parent country are the ones who handle the main business of the company. The subsidiary company usually follows the Human Resource Management policies of the home company. The other approach is polycentric approach where each subsidiary of the parent company manages its operations locally. A local employee or professional is in charge of the subsidiary and the subsidiary company follows the Human Resource Management Policies that are developed locally. The last approach is known as Geocentric where the firm applies global integrated business strategy to manage the subsidiary as well as its staff. Expatriate managers and professional fall under ethnocentric (Punnett, 2004 p107). . 3.0 Benefits of using expatriates to staff subsidiary companies There are several benefits that can be derived from using expatriates. To begin with, it is a good way to get employees where the local employees do not qualify. A company in a developed country may wish to expand its operations to the developing countries. However, due to the low education levels in the developing countries, it may not be possible to get qualified managers and employees to get the job done. In this case, expatriates become a better option to staff the subsidiary company. Another reason why parent companies use expatriates to staff the subsidiaries is ease of access to the expatriate’s qualifications when there is need to assign them some tasks. The parent company is already familiar with the profiles of the expatriate employees and therefore when there are some assignments to be conducted in the developing countries, the parent country knows exactly who to assign which task (Schuler, Budhwar, and Florkowski,2004 p 77) . Use of expatriates in developing countries exposes the managers and the other expatriate employees to other cultures. This is beneficial to the employees as they are in a position to work with people of a different culture from their parent company’s culture. When managers and professionals take expatriate assignments in the developing countries, they are exposed to cultures of the developing countries and different ways of conducting business. This in turn results to the company gaining through having a team of employees who have a well rounded experience. Sending expatriates to subsidiary companies in the developing countries will enable the company to have closer control or coordination of the subsidiary companies. Expatriates also make communication and coordination easy between the parent company and the distant subsidiary companies in the developing countries. The main ideas to why companies send expatriate managers to subsidiary companies in the developing countries is because it provides them with a great opportunity to manage from a global perspective and hence enables the company to learn and develop a global mindset (Stroh, Varma, &. Valy-Durbin 2000 p249) . 4.0 Limitations of expatriates There are several limitations that make expatriates to be unsuccessful. To begin with, the expatriate employees find it difficult adapting to differences and culture between the host country and that of the developing country. In some cases, the expatriates find it even more frustrating because they cannot watch the TV programmes that they used to enjoy while in their parent company country. On the other hand, using employees for the subsidiary companies will be easier as the employees are already used to the host country’s language and culture. Therefore, they will not take time to adapt to the language and culture (Collings, Scullion & Morley, 2007 p 203). According to Caligiuri, P.M. (2000 p 63), Using expatriate professionals and managers denies career advancement for nationals of the host developing country. This may lead to a lot of resentment by the nationals of the host country and ultimately tarnish the company’s public image. If the company does not have the support from the locals, then its operations are not likely to be successful. The third limitation of using expatriates as opposed to using local employees is that expatriates are very expensive to maintain. To begin with, the company has to cater for the cost of transferring the expatriates and their families from the parent company to the host developing countries. Expatriates are entitled to several allowances other then the basic salary. Some of the allowances include Foreign Service premium which is given to the expatriate and his family for agreeing to move to the host developing country. There is also the hardship allowance which is given to expatriates who have been sent in countries that have poor living condition, cost of living allowance which is given to help expatriate maintain the same standards of living, housing allowance which is given to compensate for higher housing costs, utility allowance which is given to pay for the expatriates’ utility bills. Furnishing allowance which is used to ship the expatriate’s furnishings to the host country or buy new ones. Other allowances include home leave allowances, Relocation Allowances, Medical Allowances, Car and Driver Allowances and Club Membership Allowances where the expatriates can only access the recreational facilities through club membership (Stahl, Miller & Tung,2002 p210) . Another limitation of using expatriates is high rate of failure associated with using expatriate managers and professionals. The high rate of failure is attributed to the inability of the expatriate family to adapt to host country. Expatriates may lead to family problems and personal problems. This is due to family transition from the parent company to the host country and especially a developing country. The family of the expatriate must be willing to live in another country. If not, the family situation may cause stress to the expatriate employee and force them to terminate their assignment earlier than expected. Another major limitation of expatriate placement is culture shock. When the expatriate employees arrive in the host country, there is a feeling of excitement. However, after a few months, the expatriates may start feeling confused or frustrated as they try to understand the new environment. This feeling is known as culture shock (Briscoe &Schuler, 2004p 116). 5.0 Steps that can be taken by the international HR manager to maximize the likelihood of successful expatriate placement In order for companies to increase the likelihood of having a successful expatriate placement, there is need for the company to select employees and professionals who possess the right relationship skills. Some attributes that are important for successful expatriate employees include flexibility in behavior, good interpersonal skills, nonjudgmental temperament and tolerance to ambiguity. Also, a successful expatriate should also have high empathy to culture and avoid being ethnocentric. That is, believing that your culture is more superior to that of others (Ali, Van der Zee, and Sanders, 2003). Other characteristics that determine how successful an expatriate is are their job skills, their language skills, their relationship skills, their motivation level as well as the family situation. In most cases, technical competence is used as a criterion for selecting expatriate employees. However, this may not always be the best method. The technical competence of the managers and the professional is of course important, however, other skills are important as well. For instance, an expatriate manager is likely to be successful in his assignment in the developing countries if he or she has effective interpersonal skills beside have managerial skills and competence. There is need for there to be strong relationships between the host country and the parent country if the expatriate placement is to be successful. Also conflict resolution skills are very important for an expatriate employee. For the expatriate assignment to be a successful one, the employee must believe that the assignment will be a success and that the placement is of importance to their career (Selmer, Torbiorn,de Leon, 1998 p832). According to Tucker, Bonial & Lahti,(2004 p248 ) Motivation is also important if the expatriate placement is to be successful. Motivation is higher in an employee who already has an interest in the culture of the host country. The employee must also be willing to acquire new behavior and attitudes. The employees must be will face the challenges of expatriate placement and find their way through situations and network comfortably. There is also need to conduct training to the expatriates and their families on what they expect to find in the host country. Also for there to be successful expatriate placement, there is need for there to be cross- cultural adjustment. The expatriate professional and their families try to familiarize themselves with the new environment and try to be comfortable. In the process of familiarizing themselves with the environment, they may experience cultural shock. However, as the expatriate and their family become comfortable the culture shock will eventually go away. It is also important that the expatriate professionals should have prior knowledge of the language in the host country and more important acquire crucial non verbal skills of communication and understand well that non-verbal skills of communication vary from one culture to another. Since most expatriates carry their families with them, the family situation is of great significance if the expatriation succession is to succeed. The expatriate must be comfortable in all aspects (Caligiuri, et al,2001 p361). According to Foster, N. (2000 p 67)The willingness of the expatriates’ family to live overseas can mean success in the expatriate assignment as he or she will get all the required support from his or her family and will therefore find it easier to adapt to the host country culture. There is also need to have pre-departure training to all the expatriates which greatly improves the success of expatriate placement. The level of training may be determined by several factors including the novelty of the host country, the time available to train the expatriate, and their previous work experience in the host countries. The cross culture training given to the expatriates and their family must be of significance. This training program must consist of information about the country and its culture and ways to help employees adapt to the cultural changes in the host country. The training could be low interaction training where information is distributed in form of readings, lectures and videos or a low intensity training which would be appropriate for an expatriate who has been in the host country for an assignment or the expatriates is already familiar with the host countries (Bennet, Aston, & Colquhoun, 2000 p238). Conclusion From the above analysis, we can conclude that indeed there is need for there to be expatriate managers especially due to the rising competition. Companies have had to expand their operations so as to stay ahead of competitors. When companies expand their operations to other foreign countries, they can either chose to staff them with local employees or expatriates. There are several benefits that accrue to a parent organization that uses expatriates including ease of control, transfer of competencies and getting experience of working in a global perspective. However, there are still limitations of using expatriates including lack of support from the nationals, limiting opportunities of growth for the locals and the high cost of having expatriate employees as opposed to local employees. finally, from the analysis, there are several steps that can be taken to ensure successful expatriate placement including training of employees, motivating the employees and acquiring interpersonal skills and conflict resolution skills References Ali, A., K, Van der Zee, and G. Sanders (2003). Determinants of Intercultural Adjustment Among Expatriate Spouses. International Journal of Intercultural Relations 27, no. 5 :563–580. Bennet, R., Aston, A., Colquhoun, T., (2000).Cross-cultural training: A critical step in ensuring the success of international assignments. Human Resource Management, 39, 239-250. Briscoe, D.R., and Schuler, R.S. (2004), International Human Resource Management (2nd ed.), New York:Routledge. Caligiuri, P.M. (2000), Selecting Expatriates for Personality Characteristics, A Moderating Effect of Personality on the Relationship between Host National Contact and Cross-cultural Adjustment,Management International Review, 40, 61–81. Caligiuri, P., Phillips, J., Lazarova, M., Tarique, I., Burgi, P. (2001). The theory of met expectations applied to expatriate adjustment: The role of cross-cultural training. International Journal of HumanResource Management, 12, 357-372. Collings, D.G. Scullion, H. and Morley, M.J. (2007) Changing Patterns of Global Staffing in the Multinational Enterprise: Challenges to the Conventional Expatriate Assignment and Emerging Alternatives, Journal of World Business, 42:2, pp. 198-213. Delios, A., and Bjorkman, I. (2000), Expatriate Staffing in Foreign Subsidiaries of Japanese Multinational Corporations in the PRC and the United States,International Journal of Human Resource Management, 11, 278–293. Foster, N. (2000). Expatriates and the impact of cross-cultural training. Human Resource Management Journal, 10, 63-68 Gong, Y(2003). Towards a Dynamic Process Model of Staffing Composition and Subsidiary Outcomes in Multinational Enterprises. Journal of Management 29, no. 2 : 259–280. Punnett, B.J(2004). International Perspectives of Organizational Behavior and Human Resource Management. Armonk, NY: M.E. Sharpen Schuler, R.S., P.S. Budhwar, and G.W. Florkowski(2004). International Human Resource Management. In Handbook for International Management Research ed. B.J. Punnett and O. Shenkar. Ann Arbor, MI: University of Michigan Press. Stahl, G.K., E.L. Miller & R.L. Tung(2002). "Toward the Boundaryless Career: A Closer Look at the Expatriate Career Concept and the Perceived Implications of an International Assignment." Journal of World Business 37, no. 3: 216–227. Stroh, L.K., A. Varma, and S.J. Valy-Durbin (2000). Why are Women Left at Home: Are They Unwilling to Go on International Assignments? Journal of World Business 35, no. 3 (2000): 241–255. Tucker, M.F., R. Bonial and K. Lahti (2004). "The Definition, Measurement and Prediction of Intercultural Adjustment and Job Performance Among Corporate Expatriates." International Journal of Intercultural Relations 28, no. 3-4: 221–251. Selmer, J., Torbiorn, I., de Leon, C.T., (1998). Sequential cross-cultural training for expatriate business managers: Pre-departure and post-arrival. International Journal of Human Resource Management, 9, 831-840. Read More