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Expatriates and HR Presentation
- 1. SUCCESS AND FAILURESFOR EXPATRIATES Dr. Lynn Wilson and Jonathan Norris Saint Leo University
- 2. EXPATRIATES AND DATAON MNC‘S (2009) The success of international business operations mainly depends on expatriates In 1997, American multinationals had 150,000 expatriates stationed abroad and 83,000 employees of foreign companies worked in the United States. >> 31.3 million international workers globally >> worldwide sales by MNCs were over $11 trillion Current rates continue to decline somewhat in both areas because of the global economic downturn. US Department of Commerce, Bureau of Economic Analysis
- 3. “HR has tobe concerned with more than just employee welfare. HR’s role, because of globalization, has to become more strategic.” Farndale, Paaluwe, 2005
- 4. Globalization haselevated the importance of HRM in developing organizations: ―The HR function is realigning itself in response to this process of cross function globalization (building new alliances with these functions), creating new activity streams, and new rules and skills required of the HR professional.‖ Sparrow, Brewster, Harris, 2004
- 5. 4 NEW ROLESFOR HR DUE TO GLOBALIZATION 1. function as a steward of human capital 2. to become a knowledge facilitator 3. to be a relationship builder and 4. to become a rapid deployment specialist with emphasis on adaptability, tolerance, and a capacity to learn Leggnick, Hall, 2002
- 6. WHY THE INCREASINGNEED FOR INTERNATIONAL WORKERS? What‘s to blame? Global shortages in population and a dearth of skills among populations. Culture
- 7. CULTURE Defined as―socially transmitted beliefs, behavior patterns and values that are shared by a group of people‖ (Varner et al., 2005. p.1) Influences the way people communicate with each other Influences how we negotiate business, contracts and organize our business
- 8. STEPS FOR PREPARINGTO FUNCTION EFFECTIVELY IN ANOTHER CULTURE Understand own cultural orientation and ―acceptable‖ behavior within that cultural context Overcome the belief that one‘s own self reference criterion is universal and avoid judging culturally different behavior negatively. We do not as individuals take the time to study our culture indepth Expatriate needs to not only know his priorities but also be familiar with the company‘s priorities. Less wording
- 9. SELECTION >> PERSONALQUALITIES THAT PREDICT SUCCESS IN THE INTERNATIONAL ENVIRONMENT >> Strong language skills >> An extensive cultural knowledge >> Positive personality traits >> A positive attitude towards other cultures >> Cross-cultural communication skills (the new ―norm‖) >> Mature emotional regulation, such as coping ability
- 10. WAYS TO ASSIMILATE CULTURAL COMPETENCY Develop cultural relativism --accept a point of view vs. assuming something must be right or wrong Demonstrate inclusiveness --incorporate perspectives from diverse points of view Learn to value cultural differences --consider cultural differences as positive vs. as obstacles Expand one‘s cultural intelligence (CQ) --what don‘t you know, that you don‘t know?
- 11. DIVERSITY CHALLENGES INHERENT IN INTERNATIONAL CULTURES →The Explicit culture –observable reality of the language, food, homes, buildings, monuments, agriculture, shrines, markets, fashions, and art. →Yet, another cultural layer—norms and values (these reflect deeper layers of cultures, i.e., the norms and values of an individual or group) a. Norms are the mutual sense a group has of what is ―right‖ and ―wrong.‖ Norms can develop at the formal level as laws or the informal level as social control. b. Values determine the definition of ―good‖ or ―bad.‖ They are closely related to the ideals shared by the group
- 12. FOR AN INDIVIDUAL,AN EXPATRIATE POSITION PROVIDES Opportunities for personal and professional development A higher salary (often comparative to the local cost of living, do your research) A good life experience Greater employability for future assignments
- 13. EXPATRIATE FAILURE Rates: 10% - 50% depending on the country Emerging countries are at higher risk than advanced nations The U.S. – 30% - 40% Europe – 20%
- 14. REASONS FOR EXPATRIATE FAILURE Cultural adjustments Language differences Foreign Service hardship Length of assignment Schools Living Accomodations Health Care Access
- 15. STAGES OF EXPATRIATEADJUSTMENT 10 9 8 Satisfaction Scale 7 6 5 4 3 2 1 0 Honeymoon Culture shock Gradual Competence Mastery (5 to (2 to 6 (6 to 8 adjustment (1 (2 to 4 years) 7 years) weeks) months) to 2 years)
- 16. STAGES Honeymoon –lasting 2 to 6 weeks Culture Shock – lasting 6 – 8 months Gradual Adjustment – lasting 1 – 2 years Basic Competence - 2 to 4 years Mastery – 5 to 7 years
- 17. HOW SUCCESSFUL EXPATRIATIONIS MEASURED How effective is the expatriate during his/her stay? What knowledge has the expatriate gained and how the company utilizes it? How long does the expatriate stay with the company after repatriation?
- 18. AREAS THAT DETERMINEEXPATRIATE COMPETENCE Ability – can be trained Knowledge – can be trained (including language) Personality – more innate, difficult to manipulate Emotional – Coping ability Developmental Goals for the Expatriate Focus on international business Increasing ability to function in another culture Increasing openness and flexibility Decreasing ethnocentrism
- 19. STEPS FOR SUCCESSFUL EXPATRIATION Develop comprehensive, culturally appropriate corporate plans Establish clear realistic international objectives with bicultural strategies for implementation Selection process Accurate and adequate information Communicate frequently and clearly Training and Orientation Support Services Strategic planning for re entry Re-entry support
- 20. DISCUSSION The mostpopular training content is not associated with higher organizational performance Two less popular skills are associated with higher organizational performance ―Interpersonal & political savvy‖ – 7th on the list of 12 ―Expansion of organization‘s brand‖ – 10th on the list of 12 If analysis is correct, companies are emphasizing leadership training on the wrong competencies
- 21. DISCUSSION How docompanies decide which leadership competencies to emphasize? - The ones that are easier to teach? - The ones the leaders request? - The ones the consultants can provide? - Why don‘t multinationals emphasize on more cultural awareness training? Why don‘t multinationals employ a different policy instead of an ethnocentric policy?
- 22. REPATRIATION "Expats repeatedlycite repatriation as the area of highest dissatisfaction with respect to organizational policies.‖
- 23. REPATRIATION ISSUES GraspingOpportunity --The No. 1 issue for expatriates is career management support. --Should involve the assignee in discussions regarding possible or likely positions and opportunities to which they might return. Keeping in Touch --Expats often come home to a company that has undergone significant change.
- 24. Reduce ReverseCulture Shock --‖If they‘ve adapted well in the host country, then ‗going home‘ is not really going home.‖ Give It Time --Don‘t assume the repatriation is finished when the person is back home and has started the new role.
- 25. HR‘S ROLE INTHE GLOBAL ENVIRONMENT ―HR, as a strategic partner, is becoming the new ―guardian of culture‖ because it oversees the implementation of global corporate values in the global corporate system‖ Sparrow, et. al, 2003
- 26. HR‘S GLOBAL CHALLENGE ―HR must develop robust global recruitment practices while realizing that turnover will occur; ...must know the business as well as HR practices; ...must tailor retention efforts to individual employee needs; ...must know how business operates globally; and ...must be accountable for retention.‖ Lance Richards, Kelly Services
- 27. Thank you foryour interest.
Editor's Notes
- #2 Our topic is one that is getting a lot of media attention these days (hear about global leaders, their importance, their skill sets) but – given it’s popularity, there is a surprising lack of scholarly research available to inform organizations just what competencies they should focus on
- #3 The success of international business operations mainly depends on expatriates and how well they do in maintaining communications between the head office and international operations.
- #8 Culture is defined as “socially transmitted beliefs, behavior patterns and values that are shared by a group of people (Varner et al., 2005 p. 1)Culture can influence the way people communicate with each other and how they do business Culture influences how we negotiate business, contracts and organize our businesses.
- #9 Expatriates need to understand their own cultural orientation and how they influence “acceptable” behavior within that cultural context. “Learn to overcome the belief that one’s own self reference criterion or mindset is universal and avoid judging culturally different behavior negatively.”We do not as individuals take the time to study our culture indepth, rather we were born into it and raised by our culture. “We don’t reflect on it or study it, and we seldom contemplate how others view us. We think we know our culture, but acting instinctively is not enough and may send the wrong message” Expatriate needs to not only know his priorities but also be familiar with the company’s priorities.
- #14 Expatriate failure is usually defined as a posting that either ends prematurely or is considered ineffective by senior management. Most research into the matter has come to the conclusion that failure rates are high and can vary between 10% and 50% depending on the country. Emerging countries such as those of Southeast Asia are considered higher risk than so-called advanced nations. The costs of failure have been estimated by numerous means with widely varying results. Despite the lack of clarity, it is clear that a failed assignment in an overseas location is considerably more expensive than one occurring closer to home. The percentage of failure for American expatriates is estimated between 30 and 40 percent, significantly high. For Europeans and Japanese expatriates the failure rate is 20%
- #15 Expatriate failure is a growing concern for many multinationals and has been an area of research by academics and HR practicioners. This is because of high failure rates by expatriates who are being sent for overseas assignments. According to Bird and Dunbar’s study (1991), it has increased to 50 percent and the costs associated with failure are not only financial but also societal. Employees might lose their confidence in assignments and can have decreased motivation and morale. There might be several reasons why many expatriates fail to deliver the objectives assigned by the headquarters. Cultural adjustments, language differences, Foreign Service hardship, length of assignment, etc are some of the failure factors that Dowling and Welch (2004) discussed in their textbook. Expatriate failure not only means the premature return of an expatriate but also the underachievement in that assignment. Eventually it represents the organizational failure to manage human resources internationally.
- #16 Phase 1: HoneymoonPeriod Lasting: 2 to 6 weeks (depending on the individual)In the Honeymoon phase, expatriates are excited to be in the new country and fascinated by its sights and sounds. Most expatriates relocating to emerging countries in Southeast Asia will experience a relative increase in status and standard of living. They will probably have house-hold servants and personal drivers for the first time. As well, employers usually fund a portion of their expatriates’ living costs so they are much wealthier than in their home countries. For these reasons and others, expatriates feel good about themselves and their family situation in this first brief period of expatriation. Phase 2: Culture ShockPeriod Lasting: 6 to 8 months (depending on the individual)Within a month or so of arrival, the honeymoon phase ends and expatriates quickly begin to comprehend the magnitude of the barriers they face to doing their jobs. They discover that methods used successfully over their entire careers are either worthless or even destructive in another cultural environment. The result is expatriates who are severely emotionally distressed and ineffective at their jobs.And then it gets worse. When expatriates arrive home from their hard days at the office, they are usually faced with family members who are even more traumatized than they are. And, each one is expecting to be saved by the person who was responsible for bringing them to the strange country. The combination of severe adjustments at both work and home results is classic culture shock symptoms: frustration, anger, confusion, suspicion, etc. Phase 3: Gradual AdjustmentPeriod Lasting: 1 to 2 years (depending on the individual)During this phase, expatriates slowly regain their self-confidence and effectiveness in a steady but difficult process. Through trial and error, and by building relationships with experienced expatriates and helpful local people, they gradually come to understand the need to adapt themselves to the local culture before trying to manage it. Expatriates eventually come to appreciate local language, cuisine and business practices.Phase 4: Basic CompetencePeriod: 2 to 4 years from start of posting (depending on the individual)Basic Competence in the practices of business in any country takes years. This is especially so in emerging countries where the rules of the game are not clearly stated or fixed, and very dependant on the vagaries of personal relationships. Despite the challenges, most expatriates are able to develop functional proficiency in the local environment with a couple of years from relocation. Phase 5: MasteryPeriod: 5 to 7 years from start of posting (depending on the individual)For expatriate leaders to make substantial and sustainable progress, they generally need strong relations with people in positions of influence within their own organizations and outside of it. This requires a lot of time. Various studies and experience has shown that at least 5 to 7 years are necessary to develop deep appreciation of the country and its opportunities.
- #17 Phase 1: HoneymoonPeriod Lasting: 2 to 6 weeks (depending on the individual)In the Honeymoon phase, expatriates are excited to be in the new country and fascinated by its sights and sounds. Most expatriates relocating to emerging countries in Southeast Asia will experience a relative increase in status and standard of living. They will probably have house-hold servants and personal drivers for the first time. As well, employers usually fund a portion of their expatriates’ living costs so they are much wealthier than in their home countries. For these reasons and others, expatriates feel good about themselves and their family situation in this first brief period of expatriation. Phase 2: Culture ShockPeriod Lasting: 6 to 8 months (depending on the individual)Within a month or so of arrival, the honeymoon phase ends and expatriates quickly begin to comprehend the magnitude of the barriers they face to doing their jobs. They discover that methods used successfully over their entire careers are either worthless or even destructive in another cultural environment. The result is expatriates who are severely emotionally distressed and ineffective at their jobs.And then it gets worse. When expatriates arrive home from their hard days at the office, they are usually faced with family members who are even more traumatized than they are. And, each one is expecting to be saved by the person who was responsible for bringing them to the strange country. The combination of severe adjustments at both work and home results is classic culture shock symptoms: frustration, anger, confusion, suspicion, etc. Phase 3: Gradual AdjustmentPeriod Lasting: 1 to 2 years (depending on the individual)During this phase, expatriates slowly regain their self-confidence and effectiveness in a steady but difficult process. Through trial and error, and by building relationships with experienced expatriates and helpful local people, they gradually come to understand the need to adapt themselves to the local culture before trying to manage it. Expatriates eventually come to appreciate local language, cuisine and business practices.Phase 4: Basic CompetencePeriod: 2 to 4 years from start of posting (depending on the individual)Basic Competence in the practices of business in any country takes years. This is especially so in emerging countries where the rules of the game are not clearly stated or fixed, and very dependant on the vagaries of personal relationships. Despite the challenges, most expatriates are able to develop functional proficiency in the local environment with a couple of years from relocation. Phase 5: MasteryPeriod: 5 to 7 years from start of posting (depending on the individual)For expatriate leaders to make substantial and sustainable progress, they generally need strong relations with people in positions of influence within their own organizations and outside of it. This requires a lot of time. Various studies and experience has shown that at least 5 to 7 years are necessary to develop deep appreciation of the country and its opportunities.
- #18 In order to be able to measure successful expatriation Varner and Palmer (2005) come up with 3 pointers to see how successful expatriation can be measured. How effective is the expatriate during their stay in the foreign country What knowledge has the expatriate gained and how the company utilizes it How long does the expatriate stay with the company after repatriation? If the expatriate leaves the firm within a short time of completing the assignment, one could argue that the assignment was not successful because the company might lose the knowledge (human capital) that the expatriate gained at the company’s expense.
- #19 Since expatriate failure is costly, there has been an increasing attempt to isolate criteria that can contribute to success and select employees for expatriation who meet these criteria. Caligiuri and Di Santo (2001) identified three areas that determine expatriate competence: ability, knowledge, and personality. Results of their study indicate that ability and knowledge can be trained; however, personality is more innate and, therefore, more difficult to manipulate.The developmental goals for the expatriate focus on learning about international business, increasing one's ability to function in another culture, increasing one's openness and flexibility, and decreasing one's ethnocentrism. The conscious learning of one's own culture is not stated as a specific goal.
- #20 Develop comprehensive, culturally appropriate corporate plans for international activities. Include in the process managers having overseas experience and foreign nationals. Upper management sometimes isn't aware of the impact of culture on global business operations and expatriate performance. Time taken initially to gather extensive on-site data and conduct comparative corporate analyses of the sending and receiving organizations will have immeasurable payoffs. The most valuable lessons often can be learned from the insights, experiences and mistakes of other multinational and global companies operating in the area. In China, business behavior revolves around Guanxi, the special personal relationships between individuals. Companies that went into the People's Republic for the short term failed. Guanxi takes a great deal of time and patience to develop. Corporations that understand the importance of this commitment have invested in establishing long-term relationships in China to position themselves for future business.Establish clear realistic international objectives with bicultural strategies for implementation. American companies often set unrealistic timetables for their overseas ventures. To meet their overall worldwide goals, corporate approaches must recognize, integrate and optimize cultural differences. A U.S. telecommunications firm contracted to transfer a certain technology to a local firm in Saudi Arabia. The performance deadlines for the Saudi trainees were impossible to meet, given the trainees' lack of educational background, usual work hours and limited language competency. The frustrated U.S. expatriates ended up doing the trainees' work for them to meet the deadlines and never achieved their main objective of transferring the technology.Select employees who, in addition to technical skills, possess the characteristics, traits, attitudes and attributes required for intercultural effectiveness. There are research-based profiles that can assist in candidate assessment. The accompanying spouse and family also must be evaluated as crucial members of the expatriate team. A midwest financial services firm sent its top marketing manager to spearhead their marketing effort for their new joint venture in Japan. The successful executive's aggressive, direct style proved disastrous with his Japanese co-workers and clients. He was repatriated from Tokyo in less than one year.Give the candidate and family enough adequate, accurate information about the assignment and location for them to make an informed decision. Offer them tools and procedures to assess their suitability to live and work abroad. Don't expect a brief familiarization trip to accomplish this task. A week in Hong Kong's Regent Hotel or in London's Ritz doesn't represent fairly the daily existence of an expatriate.Communicate frequently and clearly throughout all stages of the process. Both the employee and spouse should be well briefed on the job responsibilities and the company's expatriate policy regarding compensation, benefits, security procedures and repatriation. During the period of transition stress, having both spouses understand the parameters of the assignment prevents unpleasant surprises and anger at the company over any misperceptions. A well-known international law firm colluded with the transferring partner in lying to his spouse about the intended length of their three-year assignment to Hong Kong for fear she would refuse to go. This shy woman was also unaware that her husband's job entailed that she do a great deal of client entertaining. When she later discovered the deception, she returned after only 18 months.Provide training and orientation for the employee and family members that will equip them with the information, skills and attitudes necessary to be comfortable, effective and productive overseas. Cross-cultural and language training can be sequenced for maximum benefit pre-departure and in-country. The best programs are tailored to the company and participants. Modules cover a variety of topics, including:* Intercultural business skills* Culture shock management* Lifestyle adjustment* Host country daily living issues* Local customs and etiquette* Area studies* Repatriation planning* Language learning strategies.Sending and maintaining expatriates abroad can cost companies two to four times home base salary. A few thousand dollars invested in training and preparing their personnel can save organizations untold dollars in expensive mistakes made by well-intentioned but ill-informed expatriates. In addition, early returns, marginal performance and lost business opportunities can be avoided.7. Offer support services that will minimize the relocation stresses. Expatriates value assistance in the areas of: spouse career guidance, children's educational planning, legal matters, packing and shipping advice, homefinding, financial planning, family and personal counseling (for such special issues as divorces blended families, adolescent development problems and commuter marriages) and in-country orientation to shopping, transportation, schooling, medical care, banking, recreation and so on. Special expatriate spouse assistance programs for dual career couples are increasingly in demand. Companies often are forced to resort to their third and fourth choice candidates because the trailing spouse refuses to relocate abroad without extra support.8.Strategic planning for re-entry should begin at selection. The valuable international skills, knowledge and capabilities of personnel on foreign assignment should be reintegrated into the corporation throughout their time abroad and upon repatriation.9. Re-entry support for the employee and family addresses the same issues as pre-departure: the spouse's career children's educational needs, housing, community re-orientation, and so on. Structured expatriate debriefings yield important information and lessons learned, which become part of the corporate memory. Repatriation sessions for the family enable them to deal effectively with re-entry shock.Most repatriates report that coming home is far more difficult than going out. They find that they have changed and so have their companies, communities, families and friends. Repatriates often need help in understanding the changes, accepting their losses, determining how they will have to adapt to fit in and in planning for the future.Retaining employees with international experience and talent will become increasingly crucial to building companies that can compete effectively in the worldwide marketplace.
- #22 Since the expatriate failures are mostly related with cultural adjustments, why don’t multinationals emphasize more on cultural awareness training or why don’t they employ a different policy instead of an ethnocentric policy? I believe that adequate emphasis on cultural orientation can reduce the risk of expatriate failure. But it is indeed a difficult job of adjusting to a different culture; hence culture is how we sense everything with our collective views.