Challenges of managing mnc expatriates through crises a study


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Challenges of managing mnc expatriates through crises a study

  1. 1. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online), INTERNATIONAL JOURNAL OF MANAGEMENT (IJM) Volume 3, Issue 3, September- December (2012)ISSN 0976 – 6502(Print)ISSN 0976 – 6510(Online)Volume 3, Issue 3, September- December (2012), pp. 139-143 IJM© IAEME: ©IAEMEJournal Impact Factor (2012): 3.5420 (Calculated by GISI) CHALLENGES OF MANAGING MNC EXPATRIATES THROUGH CRISES-A STUDY S.ARUNKUMAR, ASST.PROF, SCHOOL OF MANAGEMENT, SRMUNIVERSITY, CHENNAI ABSTRACT International crises experienced by multinational corporations include both the premature return of expatriates due to failed assignments and the poor retention of returned expatriates due to failed repatriation. To reduce the direct and indirect costs inherent with expatriate failure, multinational corporations are striving to improve their capability to manage their expatriates before, during and after international assignments. This article highlights these issues and discusses the challenges for human resource professionals when managing expatriates. The results of the study presented in this paper suggest that the management of international human resources is increasingly being acknowledged as a major determinant of success or failure in international business. It concludes by proposing that a well-managed and proactive response to an international crisis may help an organization retain experienced international employees. 1.0 INTRODUCTION Most common challenges faced by employers of international assignees are those regarding the competitiveness of expatriate packages, issues with different tax structures and of overall cost containment. This is especially true of companies of Indian origin who find themselves challenged by significant costs, borne to offset international compensation inequity. 139
  2. 2. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online),Volume 3, Issue 3, September- December (2012)2.0 REVIEW OF LITERATUREMultinational corporations (MNCs) use expatriates, not only for corporate control and expertisereasons in vital global markets, but also to facilitate entry into new markets or to developinternational management competencies (Forster 2000 et al.).It is widely acknowledged in therelevant literature (Coombs 2001 et al) that the process of crisis management entails three mainphases. These phases are conceptualized as (1) Preparedness, which is the period of preparingplans and procedures for addressing a crisis; (2) Responsiveness, or the actual dealing with thecrisis; and (3) Recovery, during which the organization returns to normal operations as quicklyas possible. These three phases are considered as sequential phenomena in a continuous cycle sothat the Recovery phase, which follows the Responsiveness phase, also precedes thePreparedness phase. In this paper, the Responsiveness of expatriate crisis management isdelineated inan auto reflective narrative design that utilized the responses of 15 expatriate managers.MNCs, and subsequently, identified four general categories which may contribute to expatriatesuccess. These are broadly described as (1) technical competence on the job, (2) personality traitsor relational abilities, (3) environmental variables, and (4) family situation. This is furthersupported by Ronen’s (1989) model that incorporates the dimensions of expatriate successidentified by Tung (1981). Ronen (1989), describes five categories of attributes of success: (1)job factors, (2) relational dimensions, (3) motivational state (4) family situation, and (5) languageskills. The five categories and their specific aspects are outlined in Table 1. 140
  3. 3. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online),Volume 3, Issue 3, September- December (2012) Table 1 Categories of Attributes of Expatriate Success Relational Family LanguageJob Factors Motivational State Dimensions Situation Skills Willingness of Tolerance for Belief in the Host countryTechnical skills spouse to live ambiguity mission language abroadFamiliarity with host Adaptive andcountry and Behavioral Congruence with Non verbal supportiveheadquarters flexibility career path communication spouseoperations Non- Interest in overseas StableManagerial skills judgementalism experience marriage Cultural empathy Interest in specificAdministrative and low host countrycompetence ethnocentrism culture Willingness to acquire new Interpersonal skills patterns of behavior and attitudesSource: Ronen, S. 1989, Training the International Assignee. Training and Career Development(1st ed), San Francisco: Goldstein.Ronen (1989) identified these five selection attributes (Table 1) as contributing to greaterexpatriate success in international assignments as compared to the customary selection ofexpatriates based solely on technical abilities.Once an employee has been selected, pre-departure training becomes the next critical step inattempting to ensure the expatriate’s effectiveness and success abroad (Mendenhall et al. 1987).Career counseling for the spouse is becoming necessary because the dual career dilemma isbecoming more important, especially with the increase of women in the workforce (Collins1996). Given the difficulties of re-entry, expatriates and their families need help to readjust backinto their home country. The two most important issues are (1) career planning and (2) ‘reverseculture shock’ (Hammer, Hart & Rogan 1998). To assist the expatriate and family to readapt towork and life in general and to help overcome reverse culture shock, re-entry training such as 141
  4. 4. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online),Volume 3, Issue 3, September- December (2012)counseling workshops and career development consultations prove useful in the adjustmentprocess (Sievers 1998).3.0 METHODOLOGYThe sample population of this research was drawn from 30 human resource managers in India.The respondents interviewed consisted of nine HR managers, four HR specialists, one businessservice manager and one administration officer. Sixty per cent of the respondents were females.Using the guidelines provided by the Who’s Who of India (2001), large organizations wereselected if they (1) employed more than 44 people, (2) were publicly listed, and (3) incorporatedtwo or more overseas branches. The research procedure involved interviewing human resourcemanagers or their representatives in 15 Indian companies, using a structured interviewquestionnaire which incorporated a checklist of expatriation and repatriation practices. Thesequestions were based on the best practices identified through the literature search (e.g., pre-departure training approaches, selection criteria, re-entry success). This strategy enabledrespondents to reflect on their experiences and observations of the appropriateness of HRMpractices and polices to prepare and train expatriates for the responsiveness phase oforganizational crises (i.e., expatriate management).The interview schedule explored three keyissues on expatriate management: (1) expatriate selection process (i.e., criteria of successfulselection), (2) expatriate preparation (i.e., pre-departure and cross culture training), and (3)repatriation career management/assistance (i.e., mentoring before, during and after theassignment; insuring a comparable job upon re-entry).4.0 ANALYSIS OF THE STUDYThe data from the interviews were content analyzed. Once the interview data were collected, thetapes were transcribed and data coded. Coding involved the labeling of concepts from the textrelevant to the research problem. The aim was to move from a set of unstructured data(participant’s accounts), to a collection of theoretical codes, concepts and interpretations. Thisapproach dealt with the analysis of the broad ‘themes and content of participant’s accounts’. 142
  5. 5. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 – 6510(Online),Volume 3, Issue 3, September- December (2012)5.0 FINDINGS OF THE STUDYThe results of this study were summarized in three major sections which parallel the researchfoci of expatriate management. Responses to the asked questions will be reported in the threecategories of (1) expatriate selection process, (2) expatriate preparation (pre-departure training),and (3) repatriation process.6.0 CONCLUSIONThe results of the study indicated that repatriation must be planned carefully, from the time ofexpatriation when expatriate selection occurs. By putting in place suitable HR policies andprocedures, an organization can both, more efficiently manage human resource globally andencourage more employees to accept foreign transfers. This emphasis is a visible sign that theorganization supports expatriates and attempts to contribute to employee success in the overseasassignment. This Preparedness Phase will significantly increase the probability of successfullymanaging expatriate crisis situations because responsibilities and liabilities are clarified beforethe crisis happens.7.0 REFERENCES 1.Anderson, B. (2001). Expatriate management: An Australian tri-sector comparative study. Thunderbird International Business Review, 43(1), 33-51. 2. Barton, R., & Bishko, M. (1998). Global mobility strategy. HR Focus, 75 (3), 57-59. 3.Bonache, J., & Brewster, C. (2001). Knowledge transfer and the management of expatriation. Thunderbird International Business Review, 43(1), 145 -168. 4.Clark, T., Grant, D., & Heijltjes, M. (2000). Researching comparative and international human resource management. International Studies of Management & Organisation, 29(4), 6- 23. 5.Coombs, W.T. (2001). Teaching the crisis management/communication course. Public Relations Review, 27(1), 89-101. 6.Denzin, N. K., & Lincoln, Y.S. (1998). Collecting and interpreting qualitative materials. Chicago: Sage Publications. 7.Harvey, M., & Novicevic, M. (2001). Selecting expatriates for increasingly complex global assignments. Career Development International, 6(2), 69-86. 8.Latta, G. (1999). Expatriate policy and practice: A ten-year comparison of trends. Compensation and Benefits Review, 31(4), 35-39. 9.Lazarova, M. (2001). Retaining repatriates: The role of organizational support practices, Journal of World Business, 36(4), 389-401. 10.Sanchez, J.I., Spector, P.E., & Cooper, C. (2000). Adapting to a boundary-less world: A developmental expatriate model. The Academy of Management Executive, 14(2), 96-106. 11.Selmer, J. (2000). Usage of corporate career development activities by expatriate managers and the extent of their international adjustment. International Journal of Commerce and Management, 10 (1), 1-23. 12.Varner, I. (2002). Successful expatriation and organization strategies. Review of Business, 23(2), 8-12. 13.Weech, W.A. (2001).Training across cultures. Training and Development, 55(1), 62. 143