Category Working Abroad

"Expatriate Compensation <http://lisaconsulting.com/presentation/expatriatecompensation/>"_

"Expatriate Deployment <http://lisaconsulting.com/presentation/workingabroad/>"_

"Cultural Issues in International Management <http://lisaconsulting.com/culture4/>"_

"International Negotiations <http://lisaconsulting.com/presentation/negotiations/>"_

"International Joint Ventures: Strategy and Operation <http://lisaconsulting.com/presentation/jointventures/>"_

"Business Ethics and Corporate Social Responsibility <http://lisaconsulting.com/presentation/ethics/>"_

"The International Business Environment <http://lisaconsulting.com/presentation/intbuzenvi/>"_

"Managing in MNEs <http://lisaconsulting.com//presentation/managingmne/>"_

"Managing Human Resources in the International Firm <http://lisaconsulting.com/presentation/ihrm/>"_

"A Leadership and Management Behavior in Multinational Companies <http://lisaconsulting.com/presentation/leadership/>"_

For many joint ventures, and for many firms, one major difficulty is the transfer of knowledge between different cultures. Educational systems differ around the world; this factor has an effect on the design of training schemes for all levels of staff.

One example can be given: The former COMECON countries have been striving to make the transition to a market economy. For many years, management effort was devoted to achieving production quotas set by the center. Now, company managers need to carve out their own futures and, of course, require new expertise to do this. However, one must not make the mistake of thinking that what is relevant to managers in western Europe is as relevant in Poland or Hungary, because of the legacy of the communist years. Therefore, the transfer of knowledge across borders requires more than technical expertise - it also needs a cultural dimension.

What has to be considered the major cultural impediments to business-related learning across borders?

This aspect of organizational life has concerned researchers and managers alike for many years, because it is generally recognized that sending a manager to work for the company abroad is a challenging experience, where failure could be costly for both parties. In the case of the employee, failure might be a significant demotivator and may cause him or her to leave the company, with an attendant loss of resources for the firm and might even cause the employee to rethink their future career path, even though the fault was not entirely of his or her own making. From the firm’s point of view, failure is not only expense but it might also damage its market position and affect customer relationships. Consequently, many firms now provide mechanisms for the preparation and support of the manager posted abroad, to help the manager perform to the bet of his or her ability as soon as possible after arrival.

Full details of the research do not concern us here but some important points can be made, illustrating typical problems that might be encountered and suggested steps taken to alleviate some of the pressures of working abroad.

Modern business careers increasingly involve some time working abroad, as firms increase their international activities. For many, progress in their career is dependent on international experience and there are an increasing number of people who specialize in international management, undertaking assignments for various firms during their careers.

Many students, for that matter, are undertaking study abroad, either for a semester or for a whole year. Both these activities necessarily involve people experiencing cultural differences, even in similar cultures such as the U.S.A. and Canada, Sweden and Denmark, etc. Living in a foreign country on a day-to-day basis for a significant length of time means dealing with another culture beyond the artefact level and, for many, this has a major effect on their lives. We explore what we call expatriate experience, particularly in a business context.

We are concerned here primarily with medium- and long-term deployment abroad, short business trips and short-term business projects being excepted, as they do not have the same impact on people's lives. We look at some of the fundamental reasons for working abroad, the cultural impact on the people concerned, suitable preparation for foreign deployment and factors connected with repatriation.

INTERNATIONAL ASSIGNMENTS FOR WOMEN TWO IMPORTANT "MYTHS"

• Myth 1: women do not wish to take international assignments
• Myth 2: women will fail in international assignments because of the foreign culture's prejudices against local women

SUCCESSFUL WOMEN EXPATRIATES

• Foreign not female
• Emphasize nationality not gender
• The woman's advantage
• Strong in relational skills
• A wider range of interaction options

Many firms refuse to send women to undertake expatriate roles because it is believed that they will face considerable difficulties abroad, especially in male-dominated societies. This myth has been attacked by researchers who found that, in fact, females tend to be more flexible and able to build communications networks effectively, overcoming some of the problems of cultural adjustment more easily than many males.

Also it seems that even in very male-dominated societies, women can still function effectively because, being foreign, they can be treated differently from indigenous females. So it seems that the perception of women as unsuitable for overseas deployment is a mis-match between capabilities and opportunities. Sufficient to say that it is the technical and other capabilities that makes for a successful deployment, not the sex of the manager.

Some recent research has shown that international companies tend to favour males for overseas assignments, pointing to the difficulties faced by females, especially in certain societies. Japan, Korea and Saudi Arabia, especially, are particularly difficult for women. Yet female managers have held successful assignments in difficult conditions and perhaps the problems of female overseas assignments have become stereotypes, rather than reflecting reality.

Gesteland (2000) tells the story of a Danish woman who was employed by a Singaporean company who, learning that Japan, Korea and Saudi Arabia were particularly difficult for women, asked to be placed on assignment in all three countries. Not only was her assignment successful but she exceeded previous sales figures and was even offered a job by one of the companies she visited.

It also seems that, in countries such as Japan, local women rarely obtain senior positions but foreign women, being different, may have high levels of responsibility. Therefore, Japanese males approaching a foreign female manager may well treat her very differently to a Japanese woman. That said, Japanese males still find it difficult to deal with females and a colleague tells the story that, when a Japanese company visited her department to negotiate prices for various components, they assumed that this lady was attending the discussions to take notes! In fact, she is a senior procurement manager and an important member of the negotiating group! Even when she was introduced, the Japanese team found it difficult to address her directly.

PAYING FOR THE EXPATRIATE MANAGER

Base Salary: + $150,000+

London + $300,000+

Tokyo + $250,000+

Hong Kong + $240,000+

Shanghai + $210,000+

Paris + $190,000

MOTIVATIONS TO USE EXPATS

• Managers acquire international skills
• Coordinate and control operations dispersed activities
• Communication of local needs/strategic information to headquarters

KEY EXPATRIATE SUCCESS FACTORS

• Professional/technical competence
• Relational abilities
• Motivation
• Family situation
• Language skills
• Willingness to accept position

What makes for expatriate success? It is not technical competence alone which is involved - personal and family situations are important contributory factors. Some commentators suggest that language skills are an important element but this is disputed, considering different expatriate communities and the help of local staff in dealing with language difficulties. Certainly, motivation and a desire to succeed are important but so is proper selection and preparation, not only for the staff member perhaps but also for other family members.

Success does depend on external factors in addition to personal attributes. The length of the assignment, the cultural distance to be crossed and the amount of interaction required are all factors germane to success. 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. Working in mainland China is a challenge for everyone, including citizens of Hong Kong and Taiwan, but Europeans would find the difficulties more extreme. 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.

The effect of the complexity and the responsibility of the role abroad are relevant. The job may be the same but the responsibilities and interactions different, in which case the manager will face additional complexities, compared to the job at the home base. If the job is essentially the same, complexity is reduced and so is the possibility of failure.

Take a moment and reflect on these causes of success and failure, relating them to your own experience of foreign cultures. Which, if any of these factors would be particularly relevant to yourself?

Early recall of manager - company and employee effects

• Many failures can be traced to poor company practices and lack of preparation
• US failure rates estimated between 25 - 40%.
• European data - 10% France, 3% Sweden, about 10% overall
• Japanese data - about 5%

Typical Causes of Failure (US Companies)

• Inability of spouse to adjust
• Manager's inability to adjust
• Other family problems
• Manager's personal or emotional maturity
• Inability to cope with larger overseas responsibility

Failure is defined in many ways but generally in terms of early recall of staff. This failure has serious consequences for both staff and employer.

Think and write down the possible effects of expatriate failure on both parties.

In fact, the effect on employers is easier to understand at first hand: there may be damage to the firm's standing in the market or damage may have occurred to working relationships within the organization or with supplier and customers Furthermore, expatriate deployment is an expensive exercise and, presumably, another member of staff will have to take over at short notice, adding further to the costs.

A little consideration will identify the problems of failure faced by the member of staff. Failure is always demotivating, at best, and could result in that person leaving the company's employ. However, the failure may not be the fault of the individual concerned - it might have been due to lack of preparation or even poor selection, both of which are the firm's responsibility. Alternatively, it might be due to problems with others and not the expatriate individual, for example. The data shows that U.S. failure rates are well above those of European or Japanese firms and it is interesting to speculate why this is so. The following two slides show the most common sources of failure in U.S. and Japanese firms. They are inherently different, U.S. failures tending to emanate from non-work situations and the Japanese from pressures encountered in the work situation.

• Parent Country Nationals (PCNs)
• Host Country Nationals (HCNs)
• Third Country Nationals (PCNs)

In theory, there are three classes of managing overseas activities: Parent Country Nationals (PCNs), Host Country Nationals (HCNs) and Third Country Nationals (TCNs).

'Parent Country Nationals' refers to the deployment of Headquarters staff abroad, i.e. a U.S. firm sends an American to manage its activities in Russia, a British firm sends a Briton to lead a team in Indonesia, etc. There is thus a very close cultural affinity between the staff member and the home base.

Increasingly, firms are employing nationals of the countries in which they are operating, i.e. an American firm engages a Russian to work in its Russian subsidiary, and a French firm engages an Italian to run its subsidiary in Italy. This is the case of Host Country Nationals, where such people have a close cultural affinity with the subsidiary but not with headquarters. Some firms find this a difficult situation to manage and prefer the use of PCNs.

There is an expanding corpus of managers and others who specialize in operating internationally. These are Third Country Nationals, such as a Dutchman working for a British firm in Germany or a Norwegian working for a Finnish firm in China, and so on. These TCNs have cultural affinity neither with HQ nor the subsidiary; however, they do bring desirable expertise to the company. One problem for management here is that the TCNs tend to be loyal only to their individual careers, rather that to individual firms.

Researchers have investigated the process of expatriate deployment in some depth over the years, yet it seems that important elements of the process are neglected by some companies.

Below is one process model - there are many but this is a reasonable representation of a complex set of activities.

• Selection and recruitment
• Pre-departure preparation
• Adaptation
• Repatriation
• Rotation

The first stage is selection and possibly recruitment of the international staff. Some researchers have argued that selection on technical expertise alone is not enough - the person selected must be able to work in a novel environment and still perform the tasks required. Therefore, in addition to expertise, personal capabilities such as flexibility, self-reliance, resourcefulness and an ability to build relationships with other people might be sought.

Pre-departure preparation is seen as desirable and for most people the specter of being sent on deployment at short notice with inadequate preparation has largely disappeared. There is much discussion about what pre-departure preparation is actually necessary.

The most complex part of the process is adaptation and adjustment. This is the process of settling down in a foreign country and developing a life in this new environment. This poses some fundamental challenges.

Most often the next two stages receive very little attention by companies. Having been abroad for two years or so, a person may now have lost his or her local social connections at home, as well as those with work colleagues. Reverse acculturation is sometimes quite a challenge to people, especially if they have spent lengthy periods abroad. Of course, companies will often wish to incorporate the staff member back into the home organization and perhaps use the foreign expertise (although quite often this does not in fact happen) and therefore some career planning may be necessary. And, of course, if that person is to be replaced by another working abroad, the whole process of rotation must be planned for to deliver a smooth handover of responsibilities.

• Honeymoon
• Culture Shock
• Adjustment
• Mastery

Mendenhall and his co-workers have evolved a model for the process of cross-cultural adjustment in foreign deployment, based on their research into American managers. They portray the process as successive stages of honeymoon, culture shock, adjustment and mastery.

The honeymoon period lasts for a few weeks and, like being on holiday, everything is novel. After that period, realization sets in that one is going to have to deal in detailed ways with another culture, that friends have been left behind and new associations must be built up and so on. For many, this is the 'make or break' period. After a few months, the adjustment period begins and it is only after about 18 months that one has begun to master local differences.

The above time-scale has enormous implications for those on two-year assignments. Essentially, the greater part of this time is spent in getting used to local conditions. This timescale may be diminishing as people become more internationally aware but it is still a significant factor for the use of HCNs.

Mastery may be something of a misnomer, since no one really masters another culture, especially on deployment. But it can be seen as a relative term, the expatriate having become familiar with the local culture and able to deal with such things as local laws and procedures, as well as the development of strong workplace associations.

Mendenhall and Oddou (1991) International Adjustment

Degree of adjustment depends on:

• Self-orientation
• Organizational Culture
• Non-work issues
• Job issues
• other issues - how difficult an assignment (Hofstede distance?)

This sums up the attributes of a successful international manager and the role of technical expertise.

Note that organizational culture is important, as the management context of the subsidiary may be quite different to that of headquarters and the role that the expatriate is expected to play is different to the job at home base.

Staffing Policies

Ethnocentric: parent country nationals + when: lack of qualified host nationals

why:

• maintain corporate culture
• need to transfer core competencies
• examples: Proctor and Gamble

Polycentric approach: host managers manage host subsidiaries

• less expensive
• fewer cultural clashes
• example: Unilever, but hard moving to transnational form

Geocentric: merit system regardless of nationality: problems--national laws; cost

Quite often, the firm's strategic and cultural orientation will determine whether HCN, PCN or TCN is used. Ethnocentric firms tend to use HCNs, whereas Polycentric firms (who use local talent) are happy to deal with the cultural differences involved. Geocentric firms may use a mixture of HCNs, PCNs, etc., depending on individual merit.

The Role of HR Management

Selection issues + who + career progression

Preparation +familiarization and orientation + training + inclusion of family members

Adaptation + help with local regulations + mentoring

Repatriation + information on return position + making use of expats. experience

EXPATRIATE POLICY COMPARISON

1. Texas Instruments Policy #02-06-04 “International Cross-Regional Assignments” (1996)
2. Motorola International Personal Policy Manual (1992)
3. Colgate-Palmolive Case.

SURVEY/RESEARCH ON EXPATRIATE PROGRAMS

1997 Worldwide Survey of International Assignment Policies and Practices by:

Organization Resources Counselors, Inc.

(ORC) Global Relocation Trends 1995 Survey Report

Sponsored by:

Windham International and the National Foreign Trade Council (NFTC)

1996 Survey of Expatriate Tax and Compensation Policies by: Price Waterhouse LLP

“Best Practices” 1996-1997 International Assignee Research Study by: Berlitz International Inc., and PHH Relocation in cooperation with SHRM’s Institute for International Human Resources

Books:

The Management of Expatriates

Chris Brewster

Global Assignments: Successfully Expatriating and Repatriating International Managers

10. Stewart Black, Hal B. Gregersen, and Mark E. Mendenhall

Developing the Global Organization: Strategies for Human Resource Professionals Moran, Harris, and Stripp

THE REPATRIATION PROBLEM

• Difficult for many organizations
• "Reverse culture shock"
• Expatriates must relearn own national and organizational culture
• Includes whole family

STRATEGIES FOR SUCCESSFUL REPATRIATION PROVIDE:

• A strategic purpose for repatriation
• A team to aid the expatriate
• Home country information sources
• Training and preparation for the return
• Support for expatriate and family

The repatriation process is of great importance. If the former expatriate is to be integrated back into the company and for the company to benefit from that person’s experience abroad.

Putting yourself in this position of returning to your home culture after a two-year absence, note down the things that might have changed most, such as personal relationships.

Overview

Firms send staff to work abroad for several reasons. For many years it was the practice to send out headquarters staff in order to ensure that subsidiaries were managed in the way that HQ wished, a very ethnocentric position to take. It may be that management expertise or technical skills are not available locally or the organization may wish to develop international expertise in their staff.

• "A Process Model of Expatriate Deployment <http://lisaconsulting.com/weblog/2007/aug/05/workingabroad5/>"_
• "Cross-cultural Adjustment Stages <http://lisaconsulting.com/weblog/2007/aug/05/workingabroad6/>"_
• "Expatriate Failure <http://lisaconsulting.com/weblog/2007/aug/05/workingabroad66/>"_
• "Expatriate Success <http://lisaconsulting.com/weblog/2007/aug/05/workingabroad3/>"_
• "Women as Expatriates <http://lisaconsulting.com/weblog/2007/aug/05/workingabroad2/>"_
• "HR Management factors and expatriate policies <http://lisaconsulting.com/weblog/2007/aug/05/workingabroad7/>"_
• "Managing Overseas Activities <http://lisaconsulting.com/weblog/2007/aug/05/workingabroad4/>"_
• "Repatriation <http://lisaconsulting.com/weblog/2007/aug/05/workingabroad8/>"_

Researchers tend to classify the training process into three categories: low, medium and high rigor.

The choice depends on the capability of the company, the role being undertaken and the relative cultural distance.

For which expatriate situations and why would you choose (a) Low rigor training (b) High rigor training?

TRAINING RIGOR

The extent of effort by trainees and trainers required to prepare the trainees for expatriate positions

HIGH RIGOR TRAINING

• Lasts over a month
• Experiential learning
• Extensive language training
• Often includes interactions with host country nationals

Techniques: Field trips to host country, meetings with managers experienced in host country, meetings with host country nationals, intensive language training.

Objectives: Develop comfort with host country national culture, business culture, and social institutions.

As you learned the nature and content of culture and cultural differences, you can assess the impact of culture on important business processes; areas of business where cultural differences are a major consideration, in negotiations, leadership, working in collaboration with other firms and working abroad.

So you are now in a position to work knowledgeably and critically with cultural issues and their application.

Culture-based thinking and its application in organizations is a very complex area and no one has all the answers to cross-cultural problems.

It is more important to appreciate the basis and impact of cultural differences than to concentrate on artefacts.

"1. An introduction to International Management <http://lisaconsulting.com/presentation/intmanaement/>"_ and its importance. The role of international managers.

"2. The International Business Environment <http://lisaconsulting.com/presentation/intbuzenvi/>"_ Developments in international trade. The importance of the Triad. Developments in the international business environment including the importance of economic groups such as the EU, NAFTA, ASEAN and others. Political, legal and technological issues in international business. The complexity of the international business environment, relations with host governments. The competitive advantage of nations. International competitiveness and its impact on international management.

"3. Culture and International Management <http://lisaconsulting.com/culture4/>"_ Cultural issues and the international firm, cultural diversity, convergence and divergence. Models for analyzing cultural differences. Cultural issues in the workplace and the diversity of management styles, a critical analysis of the work of Hofstede and others.

"4. International Business Ethics and Corporate Social Responsibility <http://lisaconsulting.com/presentation/ethics/>"_ Ethical behavior in MNEs, tensions in international management. MNEs and corporate social responsibility. Current debates.

Unit 5. International strategy

International corporate and business level strategy. International entry strategies.

"6. International Collaborative Strategies <http://lisaconsulting.com/presentation/jointventures/>"_

International collaborative strategies, strategic alliances and joint ventures. Managing International Joint Ventures

"7. Managing Human Resources in the International Firm <http://lisaconsulting.com/presentation/ihrm/>"_

and "A Leadership and Management Behavior in Multinational Companies <http://lisaconsulting.com/presentation/leadership/>"_

"8. Managing in Multinationals <http://lisaconsulting.com//presentation/managingmne/>"_

Managing multinational and transnational firms. International organizational structures and their evolution. Managing innovation in MNCs/TNCs. Planning, organizing and controlling international businesses, the importance of synergy in international operations.

9. International Staff Deployment

"Expatriate Compensation <http://lisaconsulting.com/presentation/expatriatecompensation/>"_

"Expatriate Deployment <http://lisaconsulting.com/presentation/workingabroad/>"_

Problems of expatriate deployment. Culture shock and expatriate failure. Training for expatriate deployment. A critical analysis of the work of Mendenhall and others. Developing international managers.

10. The Future of International Management

Contemporary debates in international business development, developments in selected areas, the EU, NAFTA, etc. The internationalization of small businesses.