ITS ABOUT INTERNATIONAL HUMAN RESOURCE

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McGraw-Hill Education 2010
Chapter 5
The expatriation cycle

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McGraw-Hill Education 2010
Learning objectives
• To consider criteria and methods for recruiting expatriates
• To highlight issues in the under-representation of women and
ethnic minorities in the expatriate population and to consider
how this might be overcome
• To examine the strategic issues involved in formulating a
training programme for international trainees
• To investigate the significance of expatriate pay and the
strategic tensions in formulating international reward
packages
• To consider the value of international performance
management and problems in its implementation
• To examine problems and issues in repatriation and to suggest
why the returning assignee represents a valuable resource to
the international organization

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McGraw-Hill Education 2010
‘best practice’ recruitment criteria
•Job suitability- relating to the technical expertise of
the potential expatriate and his or her ability to
perform the job requirements
•Cultural adaptability- the ability to adjust to new
and alien job environments while delivering technical
and managerial expertise
•Desire for foreign assignment (candidate and
family)- the willingness of the potential candidate to
make the effort to adjust
•Profiles of successful assignees- including
experience, education, personal interests, flexibility,
family situation and desire for assignment

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McGraw-Hill Education 2010
Tung (1981) –factors for success
• Technical ability on the job
• Relational abilities (social skills)
• Ability to deal with environmental constraints
(government, labour issues etc.)
• Family situation
A contingency approach advocated

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McGraw-Hill Education 2010
Possible recruitment methods
•Interviews
•Formal assessment
•Committee decision
•Career planning
•Self selection
•Internal job posting and individual bid
•Recommendations
•Assessment centres
Harris and Brewster (1991) however suggest that, in practice, the ‘coffee machine’ or ‘water cooler’ approach in
widespread

6. Avoiding discrimination in expatriate
selection (Harris, 2004)
•Plan assignments in a strategic fashion
•Adopt a sophisticated approach to determination of selection
criteria
•Monitor selection processes and career development systems
•Run selection skills training
•Avoid motivational decisions
•Provide flexible benefits packages
•maximise chances of success in international assignments
•Manage domestic aspects of assignments
•Manage residence in host country
Created by Graham Hollinshead, Copyright
McGraw-Hill Education 2010

7. Training and development of expatriates-
desirable orientation of programmes
•Training should be provided both prior to departure and
on arrival in the host environment
•Training in cross-cultural proficiency should accompany
move job specific, technically orientated material
•Training/ adjustment needs of spouse/ partner (and
children) should be considered
•Fluency in host country language is likely to be useful
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McGraw-Hill Education 2010

8. Mendenhall and Oddou (1986)- a contingency
approach to expatriation training
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McGraw-Hill Education 2010

9. Briscoe and Schuler (2004) expatriate
training topics
• Intercultural business skills
• Culture shock management
• Lifestyle adjustment
• Host country daily living issues
• Local customs and etiquette
• Area studies
• Repatriation planning
• Language learning strategies
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McGraw-Hill Education 2010

10. Challenges in expatriate pay
• Attracting and retaining qualified expatriates and local
managers
• Facilitate transfers between foreign affiliates and
between affiliates and parent
• Establish and maintain consistent relationship between
compensation of employees of all affiliates
• Maintain reasonable compensation in relation to
competitors, yet minimising cost
• Significance depends upon stage of development/
strategy of MNC
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McGraw-Hill Education 2010

11. Aims of global compensation
programme
• Incentive to leave home country for foreign assignment
• Maintain given standard of living
• Take into consideration career and family needs
• Facilitate re-entry into home country
• Relate pay to type of expatriate
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12. Types of scheme-balance sheet
• Basic objective maintenance of home country living
standard plus financial inducement
• Home country pay and benefits are foundations of this
approach
• Adjustments to home package to balance additional
expenditure in host country
• Financial incentives (expatriate/hardship premium)
added to make package attractive
• Most common system in usage in MNCs
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13. Balance sheet
Advantages;
• Equity between assignments and
expatriates of same nationality
• Facilitates re-entry
• Easy to communicate to employees
Disadvantages
• Can result in disparities between
expatriates of different
nationalities, between
expatriates and local nationals
• Can be complex to administer
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McGraw-Hill Education 2010

14. Regional/going rate
• Based on local market rates
• Relies on survey comparisons among local
nationals,expats of same nationality,expats of all
nationalities
• Compensation based on selected survey comparison
• Base pay benefits may be supplemented by additional
payments for low-pay countries
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15. Going rate
• Advantages
• Equality with local nationals
• Simplicity
• Identification with host country
• Equity among different
nationalities
Disadvantages
• Variation between
assignments for same
employee
• Variation between expats of
same nationality in different
countries
• Potential re-entry problems
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16. Other systems
• Lump sum-firm decides total salary, expat decides how
to spend it
• Cafeteria- benefits up to predetermined monetary limit
• Global- global pay and benefits packages for job
classifícation
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17. Complexities/complications
• Getting data on pay rates, tax etc.(US State Department
data, MNC ’compensation clubs’)
• Need to contend with government currencý controls,
removing money from country, changing exchange
rates, inflation rates
• Maintenance and payroll files- normal systems seldom
designed to handle additional information
• Privacy issues
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McGraw-Hill Education 2010

18. International performance
management
Uses
• Evaluating expats,foreign managers for pay increases
• Performance feedback
• Development planning
• Identification of training needs
• However, Little use of performance management by MNCs (less than one
half- GMAC survey 2007)
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19. Issues (Briscoe D.S. and Schuler R.S. (2004)
• Choice of evaluator (local or parent) contact with expatriate
• Host- country management’s perceptions of performance
• Difficulties in long-distance communications with HQ
• Inadequate contact between parent company rater and
subsidiary ratee
• Inadequate establishment of performance objectives of the
foreign operations and means of recording individual and
organisational performance
• Parent company ethnocenticm and lack of understanding of
foreign environment/culture
• Indifference to the foreign experience of the expatriate and
the importance of international business in general
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McGraw-Hill Education 2010

20. Solutions?
• Review the criteria for expatriate success with reference to
realities of doing business in host environment
• Include cross-cultural and related factors as necessary
competences for many occupations
• Combine parent and local company standards as appropriate
• Involve returning expatriates in design and operation of
performance management systems
• Maximise sources of information relating to expatriate in
arriving at judgements concerning his or her performance
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McGraw-Hill Education 2010

21. Repatriation- problems
• A majority of organisations do not provide post-
assignment guarantees
• Returnees with international experience most likely
to leave company
• Lack of attractive positions in employing organisation
• ‘out of sight- out of mind’ syndrome common
• Organisational changes whilst abroad might make
position peripheral
• Technical advances in parent might make knowledge
and skills obsolete
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McGraw-Hill Education 2010

22. Solutions? (Brewster et.al. 2007)
• Pre-departure career discussions
• A named contact person at the home country
organisation
• A mentor at the host location
• Re-entry counselling
• Family repatriation programmes
• Employee debriefings
• Succession planning
View returning expatriate’s knowledge as a
vital organisational resource
Created by Graham Hollinshead, Copyright
McGraw-Hill Education 2010

23. Conclusion
The management of expatriation may be regarded as
approximately cyclical, involving the interlocking policies of
recruitment, training and development, reward, performance
management and repatriation. It is evident from our
investigation that actual HR practice in managing international
assignments falls some way short of ideal notions of policy,
perhaps most obviously concerning vital knowledge lost
through inadequate repatriation. We have also observed that
appropriate policies for expatriation are likely to ne
contingent in nature, varying according to the nature of the
work in question, the cultural ‘toughness’ of the assignment,
and the individual characteristics of the assignee and his or
her spouse/partner and family.
Created by Graham Hollinshead, Copyright
McGraw-Hill Education 2010