Managing Overseas Activities
- Parent Country Nationals (PCNs)
- Host Country Nationals (HCNs)
- Third Country Nationals (PCNs)
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
Staffing Policies
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
A Process Model
- Selection and recruitment
- Pre-departure preparation
- Adaptation
- Repatriation
- Rotation
Cross-cultural Adjustment Stages
- Honeymoon
- Culture Shock
- Adjustment
- Mastery
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?)
Expatriate Failure
- 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
Expatriate Failure - Japanese Firms
- Inability to cope with responsibility
- Difficulties in new environment
- Personal or emotional problems
- Lack of technical competence
- Inability of spouse to adjust
Expatriate Compensation
Payment levels for expatriate managers
purchasing power parity adjusted salaries
components
- base salary
- foreign service premium
- allowances (hardship; housing; cost of living; education)
- taxation
- benefits
Women Expatriates
- Role of women in society
- Domestic and work issues
- Local family support and other mechanisms
- Capabilities versus opportunities
- Clustering
- Repatriation pressures
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
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
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
PRIORITY OF SUCCESS FACTORS
Depends on :
- Assignment length
- Cultural distance
- Amount of required interaction with local people
- Job complexity/responsibility
TRAINING RIGOR
The extent of effort by trainees and trainers required to prepare the trainees for expatriate positions
LOW RIGOR TRAINING
- Short time period
- Lectures
- Videos on local culture
- Briefings on company operations company operations
HIGH RIGOR TRAINING
- Lasts over a month
- Experiential learning
- Extensive language training
- Often includes interactions with host country nationals
HIGH RIGOR TRAINING
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.
Mid-level RIGOR TRAINING
Techniques: Experiential learning exercises, role playing, simulations, case studies, survival language training.
Objectives: General and specific knowledge of host country culture, reduce ethnocentrism.
LOW RIGOR TRAINING
Techniques: Lectures, videotapes, reading background material.
Objectives: Provide background information on host country business and national cultures, basic information on company operations.
| Multinational Strategy | Example Additional Training Needs |
| Multilocal | Parent country nationals: Local business culture, political environment, laws, technology transfer. Host country nationals: Production or service practices. |
| Regional | Parent country nationals: How to facilitate two-way technology transfer and corporate culture transfer. Host country nationals: Corporate culture, manufacturing or service systems. |
| International | Parent country nationals: How to facilitate technology transfer; knowledge of local business culture, political environment. Host country nationals: Sales and service systems. |
| Transnational | All nationals: Corporate culture, strategies. |
CHALLENGES OF EXPATRIATE PERFORMANCE APPRAISAL
- Unreliable data
- Complex and volatile environments
- Time differences and distance separation
- Local cultural situations
| Evaluation Sources | Criteria | Periods |
| Self evaluation | Meeting objectives, Management skills, Project successes | Six months and at the completion of a major project |
| Subordinates | Leadership skills, Communication skills, Subordinate development | After completion of major project |
| Peer expatriate and host country manages | Team building, Interpersonal skills, Cross-cultural interaction skills | Six months |
| On-site supervisor | Management skills, Leadership skills, Meeting objectives | At the completion of significant projects |
| Customers and clients | Service quality and timeliness, Negotiation skills, Cross-cultural interaction skills | Yearly |
USING EXPATRIATE MANAGERS
Do parent country managers have the appropriate skills?
Are they willing to take expatriate assignments?
Do any laws affect the assignment of expatriate managers?