Despite the problems and costs that arise from failed international assignments research empirically shows that companies do little to assist their expatriates. This is ‘perplexing’ as the development of a pool of experienced international managers and staff is in a firm’s best interest, considering the benefits and competitive edge over their competitors that this would give them (Selmer, 1999; Shen, 2005). There is a superfluous of literature available on how MNCs can successfully manage their expatriates. This needs to include the selection of the ‘right’ individuals to be expatriated, how to prepare these staff for their experience including any family or organisational concerns they may have, preparing an effective compensation package, and repatriation.
The selection of staff to go an overseas assignment is difficult, and if the right candidate if not chosen the chances of the assignment being successful are slim. MNCs need to recognise that individuals need to have skills and abilities over and above those that are required at a national level (Hamill, 1989; Rodrigues, 1997; Yavas and Badur, 1999), and should understand that due to differences in culture across the world, as Darby (1995) illustrates, although someone is an excellent manager in the UK, they may not be elsewhere in the world. Harvey and Novicevic (2001) recognise that individuals with the right competencies can support and promote knowledge transfer throughout the organisation, and will be more able to appreciate, and take advantage of, trends at a regional, national and international level, based on the skills developed and acquired overseas.
In her research, Suutari (2003) identified motivators that affect the likelihood of an individual accepting an international assignment. These include a personal interest in expatriation, for the experience this offers, and to further their own careers, however the acceptance of an offer can depend on factors such as age, and marital status.
The literature acknowledges many attributes and competencies that expatriates should have, and there is little controversy in the research as to what these are (Yavas and Bardur, 1999; Baruch et al, 2002; Fish, 2004; Holopainen and Bjorkman, 2005). Having undertaken an extensive review of the literature, Jordan and Cartwright (1998) identified that the most prominent of these are four key competencies, relational ability, cultural sensitivity, linguistic skills and the ability to handle stress; and three main attributes, low neuroticism, moderate extroversion and a high openness to experience.
Research also suggests, however not significantly so, that individuals with high emotional intelligence, the ability to understand and control ones own emotions, be socially aware, build strong relationships and communicate well with others (Goleman et al. 2001), will be able to prosper and adjust well during an international assignment (Gabel et al.,2005; Tan et al., 2005).
If MNCs can factor these components into their selection process for expatriation, they will be more likely to ensure the success of the assignment. It is important to note however, that as well as having the ‘right’ person in place, there are a number of organisational determinants that can affect the success of an international assignment.
Morgan et al. (2004) suggest that the type of work that the expatriate will be undertaking can have a substantial impact on their success. Individuals working in the ‘upstream’ functions of Porter’s value chain, such as logistics and production will have less difficulty in adjusting to their new environment than those working in ‘downstream’ functions, such as marketing or sales. This is due to the fact that individuals working in these latter functions will have more personal contact and integration with HCNs, and so will be more aware of the cultural differences.
The systems that a company has in place can impact the outcome of an international assignment. If the systems used in the subsidiary are different to those in the home country, the expatriate will have to overcome this as well as coping with adjusting to external cultural differences (Morgan et al., 2004)
Research has found that companies can affect expatriate success by remaining in communication with their international employees (Yavas and Badur, 1999; Harzing and Christensen, 2004; Bonache, 2005). This would calm any fears of isolation and ambiguity, which can lead to the failure of an assignment. Additionally, Wright and Baker (1996) suggest that companies should allow their expatriates some time to settle in to their new environment and become accustomed to their new environment before assuming their full job responsibilities.
Once a MNC has established what operational factors can be altered to facilitate the success of the international assignment, the company needs to establish any family related factors that could affect the assignment.
Approximately 60 percent of international assignments fail due to family problems (Ruhsing and Kleiner, 2003) which could be due to difficulties of the partner or spouse adapting to the local environment, and often, they have more trouble adjusting than the expatriate themselves (Fish and Wood, 1997; Suutari and Burch, 2001). This is due to the fact that they are mainly left to cope on their own without the support of the MNC however the company can take steps to resolve this.
MNCs need to be aware of the growing number of dual career couples in the workplace. According to the research, very few firms have made an effort to support such families, and if companies fail to address these problems, then they will suffer from both a lack of suitable individuals accepting overseas assignments, consequently limiting their pool of international talent (Selmer, 1999; Yavas and Bodur, 1999b; Riusala and Suutari, 2000; Moore, 2002)
To limit the extent of these problems, research suggests (Fish and Wood, 1997; Simeon and Fujiu, 2000; Rusing and Kleiner, 2003) that companies should endeavour to create a network of expatriate families before departure, to reduce the feelings of isolation that can go hand in hand with moving to a new country, away from family and friends. Many spouses leave careers, so some companies have began to provide career advice, and have even considered employing spouses at the subsidiary (Fish and Wood, 1997; Riusala and Suutari, 2000; Glanz and van der Sluis, 2001; Baruch et al 2002).
The children of expatriates are another concern. There is little research on this area, however Rhushing and Kleiner (2003) suggest that these children should be given cross cultural and language training, and the MNC should make an effort to find out about child care or the schooling in the destination country, and if necessary, contribute towards fees or costs. Hurn (1999) recognises that ideally where children are involved, companies should coincide the dates of the assignment with school terms, to limit disruption.
Expatriate families will also have concerns about housing, both at the destination, and regarding what should be done with their family home. Pets are another concern, however Rushing and Kleiner (2003) suggest that companies should take advantage of professional specialist services that can assist with the practical side of the move. The firm also needs to consider ‘soft’ factors, principally cross cultural training, to facilitate the move.
Research proves that any type of cross cultural training facilitates expatriate adjustment, as it enables individuals to better understand, and integrate themselves with foreign cultures (Treven, 2003; Jassawalla et al, 2004; Waxin and Panaccio, 2005). Luthans and Farner (2003) suggest that this training should be a mixture of both social norms, and business culture to be most effective. Historically, pre-departure training has been generic however some research found strong evidence to suggest that such training can be improved by including the opinions of HCNs (Vance and Paik, 2002). Some of the literature suggests that firms should undertake post departure training, yet Shih et al. (2005), in their study of the management of expatriates in five large MNCs found that this didn’t occur at all.
There is a distinct lack of congruence between management practices and the advice in the literature on training and development (Shen, 2005; Lewis, 1996). This is again paradoxical, as it would be in the best interests of the company to provide such training, not only to limit the costs of a failed expatriation, but as the world is becoming more globalised and interdependent, it is likely that the company will have increasingly more customers, suppliers, and other employees from different cultures. Hence, MNCs need to ensure that they have some type of cross cultural training in place. Perhaps the example set by the Finnish MNCs, whom have a proportionately higher number of successful expatriates than other countries, can be followed (Suutari and Brewster, 2001). One reason why they are so successful is that they have a longer period between the selection of expatriates, and sending them abroad, allowing more time for support and training, showing how important this training is.
Once the expatriate is on their assignment, there is a wealth of research to suggest that assigning the expatriate an ‘international’ mentor can help alleviate any feelings of isolation, and provide support (Downes et al., 2002; Harzing and Christensen, 2004; Crocitto et al., 2005). Crocitto et al. (2005) suggest that the expatriate should have a network of experienced mentors, so that they can obtain social support, or business advice from a number of different sources. This really is a method of knowledge sharing, and so can be of mutual benefit for the organisation and the individual. This will only be possible however, if the firm has had some considerable experience on the global arena. A final factor that MNCs need to consider when preparing to expatriate an employee is the compensation and reward package that they provide.
Researchers recognise that reward packages that attract, retain and motivate ‘outstanding’ employees going on international assignments are essential in achieving organisational goals (Phillips and Fox, 2003; Simms and Schraeder, 2005). However Banoche (2005) has found that many expatriates are unsatisfied with their compensation packages (Banoche, 2005).
The most common approach is the balance sheet approach, whereby the expatriate keeps their ‘home salary’ but is given extra compensation to cover such costs as living allowances and long and short term performance incentives. Some companies even provide support for spouses or partners (Phillips and Fox, 2003; Sims and Schraeder, 2005; Banoche, 2005; Baruch et al 2002). There are many criticisms of this approach. As Phillips and Fox (2003) remark, it can be costly if the expatriate assignment runs for a long time, and it can create friction between expatriates and local workers doing the same job but for lower pay.
To cut down on the expense of expatriates, Selmer (1999) identifies that increasingly, firms are reducing expatriate compensation packages or cutting extra compensation all together, reasoning that international experience is essential for career advancement, and is a necessity in today’s globalising environment.
However, expatriates are not likely to function properly if they cannot see a clear link between performance and reward, not only in regards to their financial compensation, but their future career progression (Harzing and Christensen 2004). Shih et al., (2005) remark that this may be a sign that MNCs themselves are unsure as to how to harness and develop their management talent, especially on repatriation. This is the final step in expatriation, and should be an integral process, thus needs to be managed effectively for the assignment to be a success.
Repatriation is often overlooked (Paik et al., 2002), and research has found that people are significantly less satisfied by their repatriation, than expatriation (Morgan et al., 2004). Some companies, including Unilever and GlaxoSmithKline have sought outside advice to help this transition (Hurn, 1999). Companies need to realise that problems at this stage can seriously diminish the psychological contract that employees have with the firm, resulting in low morale, and high turnover (Fish, 2004). If this occurs, then the knowledge and expertise that the expatriate has gained from going overseas may be lost to a rival firm (Anon, 2003; Crocitto et al., 2005; Shih et al., 2005)
Typical repatriation problems include feelings that the international assignment is not of as much value as expected to the company and financial difficulties, due to readjusting back to the basic reward package (Selmer, 1999). Change is another massive problem. Depending on the duration of the assignment, the likelihood will be that both the employee and the company will have changed considerably. This organisational change not only relates to systems and technology, but the turnover of colleagues and support networks (Paik et al., 2002; Baruch et al., 2002).
To facilitate repatriation, MNCs should keep channels of communication open to provide support to the employee, continuing after the assignment has finished. Hurn (1999) suggests that firms should debrief the employee, identifying areas of skill development and deficiency, and actively search for roles that will now utilise and develop these skills further, showing commitment to the employee and enforcing the psychological contract. He remarks that repatriation should not be seen as a separate phase, but a holistic career step, and an intrinsic component to the expatriation process (Hurn, 1999).
To summarise, firms can reduce the expense of failed international assignments by ensuring that they follow the necessary steps to select, expatriate, train and develop, and repatriate their staff. As discussed, the benefits to both the firm, and the individuals involved are substantial, and by following this process, firms can establish and nurture these international experiences into a source of key competitive advantage.
Word Count: 3,022
Bibliography
Anon (2003) ‘Colgate-Palmolive database captures cultural awareness: Expatriate knowledge put to good use’ Human Resource Management International Digest Vol.11 No.6 pp19-22
Baruch, Y., Steele, D. and Quantrill, G. (2002) ‘Management of expatriation and repatriation for novice global player’ Journal of Manpower Vol.23 No.7 pp.659-671
Bender, S. and Fish, A. (2000) ‘The transfer of knowledge and the retention of expertise: the continuing need for global assignments’ Journal of Knowledge Management Vol.4 No.2 pp.125-137
Bonache, J. (2005) ‘Job satisfaction amongst expatriates, repatriates and domestic employees’ Personnel Review Vol.34 No.1 pp110-124
Crocitto, M., Sullivan, S. and Carraher, S. (2005) ‘Global mentoring as a means of career development and knowledge management’ Career Development International Vol.10 No.6/7 pp.522-535
Darby, R (1995) ‘Developing the Euro-manager: managing in a multicultural environment’ European Business Review Vol.95 No.1pp.13-15
Downes, M., Thomas, A. and Singley, R. (2002) ‘Predicting expatriate job satisfaction: the role of firm internationalisation’ Career Development International Vol.7 No.1 pp.24-36
Fish, A. (2005) ‘Assisting cross-cultural manager adjustment: psyco-cultural and socio-cultural interventions’ Personnel Review Vol.34 No.2 pp.225-245
Fish, A. and Wood, J (1997) ‘Managing spouse/partner preparation and adjustment: developing a meaningful portable life’ Personnel Review Vol.26 No.6 pp.445-466
Gabel, R., Dolan, S. Cerdin, J. (2005) ‘Emptional Intelligence as a predictor of cultural adjustment for success in global assignments’ Career Development International Vol.10 No.5 pp.375-395
Glanz, L. and van der Sluis, E (2001) ‘Employing organisations and expatriate spouses: balancing self-knowledge and knowledge about options’ Career Development International Vol.6 No.3 pp.169-175
Goleman, D., Boyatzis, R. and McKee, A. (2001) ‘Primal Leadership: The Hidden Driver of Great Performance’ Harvard Business Review December 2001, pp 43 - 51
Hamill, J. (1989) ‘Expatriate policies in British multinationals’ Journal of General Management Vol.14 No.4 pp.18-33
Harris, P. & Moran, R (1996) “European leadership in globalisation” European Business Review Vol.96 No.2 pp.32-41
Harvey, M. and Novecivic, M. (2001) ‘Selecting expatriates for increasingly complex global assignments’ Career Development International Vol.6 No.2 pp69-89
Harzing, A. (2001) ‘An analysis of the functions of international transfer of managers in MNCs’ Employee Relations Vol.23 No.6 pp.581-598
Harzing, A. and Christensen, C. (2004) ‘Expatriate failure: time to abandon the concept’ Career Development International Vol.9 No.7 pp.616-626
Hill, C. (2005) ‘International Business: Competing in the Global Marketplace’ 5th Ed. NY: McGraw Hill
Hodgetts and Luthans (2003) ‘International Management: Culture, Strategy and Behaviour’ 5th Ed. NY: McGraw Hill
Holopainen, J. and Bjorkman, I. (2005) ‘The personal characteristics of the successful expatriate: a critical review of the literature and an empirical investigation’ Personnel Review Vol.34 No.1 pp.37-50
Hurn, B. (1999) ‘Repatriation - the toughest assignment of all’ Industrial and Commercial Training Vol.31 No.6 pp.224-228
Jassawalla, A., Truglia, C., and Garvey, J. (2004) ‘Cross-cultural conflict and expatriate manager adjustment: an exploratory study’ Management Decision Vol.42 No.7 pp.837-849
Jordan, J. and Cartwright, S. (1998) ‘Selecting expatriate managers: Key traits and competencies’ Leadership and Organisation Development Journal Vol.19 No.2 pp.89 - 96
Lewis, K. (1996) ‘Breakdown - a psychological contract for expatriates’ European Business Review Vol.97 No.6 pp279-293
Luthans and Farner (2002) ‘Expatriate Development: the use of 360 - degree feedback’ Journal of Management Development Vol.21 No.10 pp780 - 793
Moore, M. (2002) ‘Same ticket different trip: supporting dual-career couples on global assignments’ Women in Management Review Vol.17 No.2 pp.61-67
Morgan, L., Nie, W., and Young, S. (2004) ‘Operational factors as determinants of expatriate success’ International Journal of Operations and Production Management Vol.24 No.12 pp.1247-1268
O’Keefe, T. (2002) ‘Preparing expatriate managers of multinational organisations for the cultural and learning imperatives of their job in dynamic knowledge based environments’ Journal of European Industrial Training Vol.27 No.5 pp.223-243
Paik, Y., Segaud, B. and Malinowski, C. (2002) ‘How to improve repatriation management: Are motivations and expectations congruent between the company and expatriates?’ International Journal of Manpower Vol.23 No.7 pp.635-648
Phillips, L. and Fox, M. (2003) ‘Compensation Strategy in transnational corporations’ Management Decision Vol.41 No.5 pp.465-476
Riusala, K. and Suutari, V. (2000) ‘Expatriation and careers: perspectives of expatriates and spouses’ Career Development International Vol.5 No.2 pp.81-90
Rodrigues, C. (1997) ‘Developing expatriates’ cross-cultural sensitivity: cultures where “your culture’s OK” is really not OK’ Journal of Management Development Vol.16 No.9 pp.690-702
Rushing, K. and Kleiner, B. (2003) ‘New developments in executive relocation practices’ Management Research News Vol.26 No.2/3/4 pp12-19
Selmer, J. (1999) ‘Career issues and international adjustments of business expatriates’ Career Development International Vol.4 No.3 pp.77-87
Shen, J. (2005) ‘International training and management development: theory and reality’ Journal of Management Development Vol.24 No.7 pp 656-666
Shih, H., Chiang, Y. and Kim, L. (2005) ‘Expatriate performance management from MNCs of different origins’ International Journal of Manpower Vol.26 No.2 pp.157-176
Simeon, R. and Fujiu, K (2000) ‘Cross-cultural adjustment strategies of Japanese spouses in SiIicon Valley’ Employee Relations Vol.22 No.6 pp.594-611
Sims, R. and Schraeder, M. (2005) ‘Expatriate Compensation: An exploratory review of salient contextual factors and common practices’ Career Development International Vol.10 No.2 pp.98-108
Stanek, M. (2000) ‘The need for global managers: a business necessity’ Management Decision Vol.38 No.4 pp.232-242
Suutari, V. (2003) ‘Global managers; career orientation, career tracks, life-style implications and career commitment’ Journal of Managerial Psychology Vol.18 No.3 pp.185-207
Suutari, V. and Brewster, C. (2001) ‘Expatriate management practices and perceived relevance: Evidence from Finnish expatriates’ Personnel Review Vol.30 No.5 pp.554-577
Suutari, V. and Burch, D. (2001) ‘The role of on-site training and support in expatriation: existing and necessary host-company practices’ Career Development International Vol.6 No.6 pp.298-311
Tan, J., Hartel, C., Panipucci, D. and Strybosch, V. (2005) ‘The effect of emotions in cross-cultural expatriate experiences’ Cross Cultural Management Vol.12 No.2 pp.4-15
Treven, S. (2003) ‘International training: the training of managers for assignment abroad’ Education + Training Vol.45 No.8/9 pp.550-557
Vance, C. and Paik, Y. (2002) ‘One size fits all in expatriate pre-departure training? Comparing the host country voices of Mexican, Indonesian and US workers’ Management Development Vol.21 No.7 pp.557-571
Waxin, M. and Panaccio, A. (2005) ‘Cross-cultural training to facilitate expatriate adjustment: it works!’ Personnel Review Vol.34 No.1 pp.51-67
Webbe, A. and Wright, P. (1996) ‘The expatriate experience: Implications for career success’ Career Development International Vol.1 No.5 pp.38-44
Wright, P. and Baker, G. (1996) ‘Managing expatriates: A Systems Approach’ Management Decision Vol.34 No.10 pp.32-42
Yavas, U. and Badur, M (1999a) “Correlates of adjustment: a study of expatriate managers in an emerging country” Management Decision Vol.37 No.3 pp.267-278
Yavas, U. and Badur, M (1999b) ‘Satisfaction among expatriate managers: correlates and consequences’ Career Development International Vol.4 No.5 pp261-269
