Expatriate ManagementHRM6040: Performance Human Resource Systems and Development Instructor: Elaine M. Walker

Overview

•Expatriate Selection•Expatriate Training &Development•Expatriate Compensation•Repatriates retention •Case study: P&G Expatriate Program

Selection

With the expanding global competition and the growing number of international assignees, managing expatriates has been a major problem that relates to the success or failure of an organization’s implementation of international strategies.

Three dimensions of expatriate managers:

•  The self dimension: The skills that enable a manager to maintain a positive self-image and psychological well-being

• The relationship dimensions: The skills required to foster relationships with the host-country nationals

• The perception dimension: Those skills that enable a manager to accurately perceive and evaluate the host environment

Six important factors of expatriated managers:

• Cultural intelligence (CQ) : ability to adapt across cultures through sensing the different cues regarding appropriate behavior across cultural settings or in multicultural settings

• Family situation: ability to keep in touch with families collaboratively and continuously

• Flexibility and adaptability: ability to fit changed circumstance

• Job knowledge and motivation: ability to transfer knowledge smoothly and transfer international assignment into career advancement

• Relational skills: ability to build up relationships more actively

• Extra cultural openness: ability to communicate with others more openly

“Big Five” – the predictors of expatriate selection

a. Reliability: the consistency of a performance measure; the degree to which a performance measure is free from random error

b. Validity: the extent to which a performance measure assesses all relevant-and only the relevant-aspects if job performance

c. Generalizability: the degree to which the validity of a selection method established in one context extends to other contexts

d. Utility: the degree to which the information provided by selection methods enhances the effectiveness of selecting personnel in real organizations

e. Legality: describe the government’s role in personnel selection decisions, particularly in the areas of constitutional law, federal laws, executive orders, and judicial precedent

The significance of implementing a successful selection of Expatriate Management strategy

• Expatriate are used to transfer technologies, in joint ventures, to transmit organizational culture, to enter new markets, and to develop the international skills of employees. (Bennett, Aston & Colquhoun, 2000)

• Effective expatriate selection has been identified as a major mechanism to enhance expatriate success. (Bolino &Feldman,2000; Kealey, 1996; Solomon, 1996).

• As We move into 21st century, the pressure of managing expatriate managers well will not diminish-it will accelerate.

Cross-Cultural Training (CCT) figures

• 2 in 5 managers fail when sent abroad due to insufficient preparation • 18% of American companies vs. 33% of

European, African & Middle Eastern  companies provide some training• 22% of American companies do virtually

nothing in terms of training

The importance of CCT

• Cross-cultural adjustment is found to be the most significant factor determining the success of international assignments

• Training facilitates effective cross-cultural interactions

• Training was found to be effective for reducing uncertainty and increasing self-efficacy -> cross-cultural adjustment

Types of CCT

• Most common: language training & overview of cultural differences

• Two main categories: didactic & experiential learning

• Additional categories: attribution, cultural awareness, cognitive-behavior modification and interaction training

CCT – Emerging Issues• Need for in-country, real-time training - CCT

is likely to be more effective when delivered upon arrival in the host country than prior to the foreign assignment• Developing a global mindset – companies

operate in global context; all employees need to think globally even if they act locally• Self-training (Internet; specific software) –

free resources, flexible timing, alternative to professional consulting and academic community

CCT– Best Practices

Global Compensation PackagesExpatriate compensation

Compensation Challenges

• Further Corporate interests abroad• Minimize workers’ financial risks • Encourage employee expatriation• Repatriation issues• Enhance overseas experiences• Promoting lowest - cost strategies • Promoting differentiation strategies

Approaches Advantages Disadvantages

Balance Sheet• Goods and

services• Housing • Income taxes • Reserve

• Can keep the expatriate whole from a compensation perspective with respect to incumbents in the same or similar positions in their home country.

• It allows for ease of movement between foreign assignments and back to the home country.

• It complexes to administer and intrudes into the expatriate’s finances.

LocalizationIt involves basing the expatriate’s salary on the local (host country’s) salaries.

• The ease of administration and equity with local nationals.

It usual needs for negotiated supplements and pay based on host country economics versus performance and job responsibilities.

Common approaches to developing expatriate compensation packages

Approaches Advantages Disadvantages

Lumpsum It uses the home country’s system for determining base salary.

• It does not intrude into the expatriate’s finances

• Employer does not pay for things the expatriate does not want

• the calculation of the lumpsum, it involves a complex and time-consuming analysis.

NegotiationTo determine the package through mutual negotiation between the employee and employer.

• it is conceptually simple; employer and each individual expatriate simply find a mutually agreeable package.

• Tends to be costly• It will creates

comparability problems when an increasing number of expatriates are compensated

CafeteriaThe total salary level is determined by the organization and the employee

• It is a more cost-effective method, expatriate is offered a selection of options to choose from

• It has a limit to choices and amounts

Common approaches to developing expatriate compensation packages

Compensation Strategies For Expatriates

To develop clear and defined business goals similar to those of home-based executives. The

executive has to look at the assignment as a step in career

progression, allowing the company to reduce the

excessive assignment-related allowances and present the

executive with a clearly defined path.

To validate the performance of the expatriate against clearly

defined goals: Did the executive meet these goals, and if the

answer is no, the company has to think about 3 things: whether

the goals are achievable, is this the right person for the role, a

local hire could better understand the market, is there enough local talent available to

meet the expectations.

Repatriate Retention

Up to 25 percent of repatriates wish to leave the company after their return to a “normal post”

When it occurs and why it is a problem

• An expatriate of a multinational corporation returns to the country of his/her origin from an overseas assignment.

• Reasons: a. culture shock (changes happen in expatriation period). b. work-dissatisfaction: high-status position with high autonomy –a less highly profiled role; career opportunities diminished; ‘let-down’, no longer “special” or different. c. problems for all family members (lower income, housing, schooling).

Influences of bad repatriate retention management

• Cost ($1.5 million/loss of a repatriate ) a. Extensive direct costs are incurred when firms must replace departing executives who posses valuable international and corporate experience. b. Indirect costs also occur when repatriates withdraw crucial market knowledge, host-country client relationships, and international skills upon their departure to other employers.• Loss of high-potential employees to accept overseas

positions.

Possible Solutions• Evidence-based executive coaching a. Definition: ‘the intelligent and conscientious use of best current knowledge integrated with practitioner expertise in making decisions about how to deliver coaching to individual coaching clients and in designing and teaching coach training programs’. b. Methods: Provide invaluable support for expatriate executives through what is usually a time of high pressure of rapid change; Engage in creative dialogue relevant to the emotional, cognitive and behavioral aspects of issues that are of great importance in complex overseas assignments. c. Benefits: operate interactively in-the-moment across the individual’s affective, behavioral and cognitive domains, facilitating contextually appropriate and creative change processes through all points of the expatriate experience.

Possible solutions• A model of Repatriation practice a. Benefits: provide a sense of career continuity; demonstrate the value the company places on expatriate assignments; reduce repatriation turnover. b. Four stages of the strategy * Planning for Repatriation: developing principles and philosophy; providing stability and fairness to repatriate. * The Repatriate agreement: including the assignment period, details of return, incentive payment, a guarantee of a job equal to or better than the one before leaving, provision for re-entry training, and a repatriation program to support the person and help the family readjust upon return. * Repatriation program: ensure positions, give repatriates challenging assignments, and take use of their experience; a repatriation manager is responsible for tracking, supporting, and assessing. * Evaluation of the Repatriation Strategy: outcome measures (the impact of the programs on repatriate retention, satisfaction and job commitment), process evaluation (assessment of the effectiveness of different strategies), deficit audit (the identification of gaps in support), and quality assessment (continuous benchmarking of the overall strategy against other similar businesses) .

Case Study: Procter & Gamble

• American multinational consumer goods company• 300 brands, 80 countries of operations and

138,000 employees in total• Expatriate Employee Assistant Program

P&G Expatriate Employee Assistant Program

• For expatriate employees and their immediate family members• Aims to help employee adjust to the new culture• Provides helpful solutions for typical concerns

faced by expatriates on assignment • Addresses the personal and family impact of the

relocation • Provides useful tips on parenting or address

concerns with family left behind in home country • Insight about intercultural differences found in

host location

P&G Expatriate compensation & Policy

• Provide Home Country Based Package + benefit• Minimizes shortfalls• Eases transition back to home country• Uninterrupted long term benefit plans• Keeps decisions based career development vs.

financial attractiveness

P&G Expatriate compensation & Policy

• Expatriates Receive home country salary and long term

benefits Contribution to tax, goods and services, housing and utilities at same levels as home country peers Receive incremental allowances to maintain home country goods & service purchasing power and live in appropriate housing at host location

References• Abueva, J. E. (2000, May 17). Many Repatriation Fail at Huge Cost to Companies. New York Times. • Chew, J. & Debowski, S. (2008). Developing an Effective Repatriation Strategy for MNC: A Model and Tools for

International Human Resources Management. Journal of Comparative International Management, 11 (2). Management Futures

• Forgas, M. (March, 2010). Expatriates at P&G. Retrieved from https://www.iom.int/jahia/webdav/shared/shared/mainsite/microsites/IDM/workshops/migration_and_transnationalis m_030910/Session4-Forgas.pdf

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References• Moral, M. & Abbott, G. (2009). The Routledge Companion to International Business Coaching. Oxon, OX:

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• Porter, G. & Tansky, J. W. (March 8, 1999). Expatriate Success May Depend on “Learning Orientation”: Considerations for Selection and Training. Human Resource Management Volume 38, Issue 1, pages 47–60, Spring 1999 Retrieved from www.docin.com/p-87307911.html

• SHRM.org.(December, 11 2012). Global: Expatriate: How should we compensate an employee on a foreign assignment?. SHRM. Retrieved from

• http://www.shrm.org/templatestools/hrqa/pages/howshouldwecompensateanemployeeonaforeignassignment.aspx

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• Robert H. Sims and Mike Schraeder 2004 Expatriate compensation: An exploratory review of salient contextual factors and common practices http://people.math.sfu.ca/~van/diverse/bellut-papers/test-8.pdf