Managing Expatriates

Group Members David DPenha Deepa Thakkar Gayatri Das Kunali Shah

10033 10034 10048 10069

Flow of Presentation:Topics Need for Expatriates Slide No. 1-10

Prerequisites for the Success of ExpatriatesIssues in the Management of Expatriates Managing Diversity Capabilities to Ensure Success

11-1819-27 28-37

Meaning of Expatriate

a person temporarily or permanently residing in a country and culture other than that of the person's upbringing or legal residence

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Need for Expatriates Changing Economic System from Traditional to Modern Development in the International Business Environment the World as

One Vast Market The expansion of companies to foreign countries eg. Fords (production

plants in 38 different countries and sales outlets in 200 different countries)

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Types of Expatriate Posts Key Posts Executive Posts Non-Executive Posts

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What do Expatriates do?Expatriates:1.

2. 3.

represent their companies abroad: they create a picture of the companys head office towards foreigners (from the head offices perspective) transfer knowledge from home to their foreign subsidiaries. teach their colleagues in their head offices whats really going on in the outside world

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Role of Expatriates

Expatriates are divided into three types: i. ii. iii.

PCNs (Parent Country Nationals); HCNs (Host Country Nationals); and TCNs (Third Country Nationals).

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i. ii. iii. iv.

Roles include Ethnocentric Approach Polycentric Approach

Geocentric ApproachRegiocentric Approach

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Statistics

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Current Scenario For many years, expatriates could essentially name their own

price when it came to their compensation, particularly in developing countries where their talents were in short supply and high demand.

More recently, however, there have been many indications that,

as a result of the global economic downturn, the expatriate talent supply-and-demand equation has begun to swing in the other direction. With more pressure on the bottom line, emerging trends intended

to cut costs associated with using expatriates include the following: Reducing the number and/or length of international assignments, Hiring more local talent instead of using expatriates, and Implementing new compensation plan strategies for expatriates, such

as variable pay.11

PLANNED CHANGES TO EXPATRIATE WORKFORCE SIZE AS THE ECONOMY RECOVERS

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A majority of companies employing expatriates in China/Hong Kong/Taiwan plan to keep their expatriate workforce the same.

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Key Attributes of Successful Expatriates Professional/technical competence Relational abilities Motivation Family situation

Language skills Willingness to accept position

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Other Factors Language skills are an important element but this is disputed, considering

different expatriate communities and the help of local staff (Interpretors) in dealing with language difficulties. and preparation.

Motivation and a desire to succeed are important factors in proper selection A long assignment for some may have serious family repercussions, for

instance, moving between two English-speaking cultures is easier than, say, between England and Russia. Hong Kong and Taiwan, but Europeans would find the difficulties more extreme.

Working in mainland China is a challenge for everyone, including citizens of

Working on computer systems is less demanding in cultural terms than

selling or marketing where a good deal of interaction with local people may be required.15

Selecting an Expatriate Extroverts & outgoing personalities. With a history of adventurous behaviour that includes involvement with

other people. Having experience with ethnic diversity. Who function well independently. Who believe strongly in the value of overseas experience.

Families with suitable expatriate attributes for overseas postings. Women need to be chosen more carefully than men for expatriate

postings in emerging countries.16

External Factors1.

Completion of the Assignment Some expatriates are sent overseas without a clear goal for how

long the assignment is supposed to last. Organizations may withdraw their interest in a foreign market and may recall an expatriate prematurely.2.

Performance During the Foreign Assignment. Most of the maladjusted expatriates who remain abroad are

ineffective in their foreign assignment.

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Training an ExpatriateExpatriate Training is designed for the relocating assignee and family. Training should aim at developing communication,

leadership, conflict management, and other skills that fit the particular culture. Predeparture training should be tailored to the individuals

needs. A minimum requirement is a conversational knowledge of

the host country's language.18

The expatriate's family should receive pre-departure training. Sponsorship (a mentor) should provide on-going support. The training consists of the following parts: cultural differences/culture shock business life, daily life/city specifics. The training occurs over 8-

12 hours. A separate, customized childrens and young adult program

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Stages in Traininga. b. c.

Pre-departure trainingImmersion approach Affective approach Information giving approach

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Cross-Cultural Adjustment Maladjusted expatriates are unable or unwilling to accept the

host country's behaviors, norms, and roles; they view the host culture as inferior to their own. They tend to cohere to anything that reminds them of their home country (e.g. clothing, food) They also tend to show signs of emotional stress such as

depression and homesickness. Culture shock

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Issues in Managing Expatriates While globalization and the demand for workers willing to

take on foreign assignments increases, companies are struggling with both financial and demographic trends that challenge their ability to manage this workforce.

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Managing the Cost of the Entire Assignment

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Staffing Philosophies One factor that helps to differentiate expatriate staffing

policy requirements is the level of cultural distance between the target market and the multinational corporation's home country. Europe v/s China

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Risk Minimisation in terms of Security and Healthcare in some countries The SARS epidemic in Asia and heightened security risks in

many countries around the world have forced organisations to review risk minimisation policies Exhibits:

Toyota HP

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Linking Career Development with International Assignments There was a time when poor performers were shipped off to

other countries, rather than shipped out of the company, but those days are behind most modern day businesses. The streamlining of organizations in the 1980s, and the

accompanying downsizings and layoffs, have left a work force that is far less compliant with the companys bidding. Orica often considers another international assignment after

the successful completion of the first one. British Petroleum and Shell expatriate assignments are seen

as an investment in career development for the future26

Career Disruption for the Expatriates Partner Many families have a dual income and one of those incomes

will probably have to be sacrificed in order to move with the employee. HP takes this into consideration when negotiating the

expatriates salary. Toyota funds the application for a visa, as well as provide

resume and job hunting services for the working partner As a result of policy changes instituted in 1995 Shell created

the position of spouse employment consultant.27

Continuing to Operate Legally within Changing Laws across the World

78 per cent of companies tax equalise their assignees. Clearly this is an area that needs to be considered by all

international assignees and their companies.

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How much of Expatriate Administration Management should be done in-house? International relocations are extremely time consuming and a

long process. Orica outsources all but remuneration, in order to free up the line

managers and HR to focus on the business policies and strategies, so they dont get bogged down with administration

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Repatriation Overseas they may have had broad responsibility, a lot of

financial perks, and an opportunity to develop new skills. If they return to a position similar to the one they left, they

may feel frustrated and underutilized. As a result, career anxiety and turnover among repatriates is

high. A recent study estimates that 20%of repatriated managers

leave their companies within one year of returning from abroad, with as many as 50% leaving within three years30

Cost of Expatriate Failure Expatriate failure is costly Different costs involved in expatriate failure Causes of expatriate failure

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The Importance of Expatriate Success and Role of Diversity Management The ability of expatriate managers to navigate culturally

complex environments has a significant effect on the success or failure of offshore business operations. Expatriate failure is a serious problem. Effective workforce diversity management reduces the costs

of appointing inappropriate expatriate managers and technicians, ensuring that they are carefully selected for their cross-cultural capabilities.

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Defining Diversity Diversity is all the ways in which individuals differ, both on a

personal basis and in terms of organization related characteristics. Major components of diversity comprise: 1. 2. 3.

Primary personal characteristics Secondary personal characteristics

Organization-related characteristics

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Business Models Mental Models: a new framework for understanding culture Convergent mental models: how firms understand Divergent mental models: conflict in firms

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Mental Models Mental models provide a new framework for understanding

culture that captures complexity. Mental models are deeply embedded in individuals. Such models are socially learned, educationally reinforced

and experientially altered.

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Types of Mental ModelsMental models

Convergent mental model36

Divergent mental model

Convergent Mental Models Mental models can converge and operate at the group level. Collective mental models emerge from shared experiences. Strategic consensus

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Divergent Mental Models When mental models between individuals are significantly

divergent, there is considerable scope for miscommunication and conflict. Divergent mental models impose costs on business

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Diversity Capabilities Partner selection Building personal relations Communication with host nationals Managing in corrupt environment

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Diversity Strategies: Keys to Success Conduct an expatriate audit Conduct a cultural diversity audit Refine expatriate selection procedures Provide cross cultural training Provide repatriation assistance

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