Unit 6 - Globalization of human resources: Expatriation in Asia-Pacific

Unit 6

Globalization of human resources: Expatriation in Asia-Pacific

I.          Objectives

1.             Critically comment on the importance of international human resources within MNEs

2.             Analyze alternative staffing policy options and the reasons for selecting a particular strategy

3.             Outline the challenges of expatriate selection, preparation and repatriation

4.             Analyze the issues raised in successful staff repatriation

5.             Distinguish between expatriation and impartation

6.             Discuss the limitations of traditional approaches to expatriate management

7.             Discuss the principal differences between expatriate managers and global managers

8.             Analyze the strategies companies might adopt to utilize fully the expertise and experience of repatriated staff and apply these to career management and development

9.             Explain how effective global  competitors are moving towards an integrated approach to expatriate management that is increasingly focusing on the production of global managers

II.       Introduction

1.             Organization attempt to manage human resources across national boundaries

2.             HRM has escalated to the forefront of organizational attention due to the enormous transformations taking place in the social, political, economic and educational environment

3.             Businesses providing information and services as well as requirements for increased utilization of technology, demand a well-education and trained workforce

4.             Effective HRM is the most of critical processes contributing to an organization’s ability to respond rapidly to change

5.             Expatriate staff (work outside their country of the national origin) are an expensive and problematic resource

6.             There are 2 main difficulties likely to be encountered when managing or utilizing expatriate staff

a)      Arisen when people work in unfamiliar locations and environments:

                                            i.            Failure, defined as premature return from, or under-performance in, an assignment

                                          ii.            Difficulties of re-integrating returning staff into the home organization

                                        iii.            Dual career families and the growing number of women expatriates

b)      Challenges arises from the dynamic nature of the international business environment

                                            i.            Traditional model of expatriate management increase appropriate

                                          ii.            Balance the demands of global and regional market development, they become increasingly aware of the limitations of traditional executive managers

(1)        Demanding new breed of executive, the so-called ‘global manager’

(2)        Familiarity with a range of international business environments

(3)        Ability to move easily across geographical, functional and cultural

 boundaries

7.             HRM be able to develop company structures and policies that truly support each aspect of an international assignment

III.     International staffing policy

1.             Concerned with the selection of employees for jobs (require the particular skills)

2.             Involving selecting individuals who have the skills required to do the job

3.             Staffing policy can be a tool for developing and promoting the corporate culture of the organization

4.             Adopt for the recruitment and development of its international executives as well as the question of what the appropriate mix of nationalities should be

5.             3 types of people available to fill international management positions in both an organization’s headquarters and foreign subsidiaries:

a)            Parent-country nationals (PCNs), firm has corporate headquarters

b)             Host-country nationals (HCNs), the nationals of country where a subsidiary is

located

c)             Third-country nationals (TCNs), as the outside both. The example of Taiwanese  

                        manager

6.             Companies rely on HCNs for lower-level positions and tend to favour PCNs and TCNs for certain technical or managerial positions

a)            Chief executive officer and the chief financial officer

IV.     International staffing strategy

(A)     Ethnocentric approach

1.         Company essentially believes that PCNs are better qualified, and perhaps more trustworthy, than HCNs and TCHs

2.         Home country standards are also applied to subsidiaries

3.         Advantage of PCNs appears to be their familiarity with the parent company’s way of doing things

4.         Disadvantage of PCNs lack of awareness of local cultures

5.         Peruse an ethnocentric staffing policy for a number of reasons:

a)        Lack of qualified HCNs to fill senior management positions. This argument is heard when the company has operations in developing countries

b)        Maintain its unified corporate culture. Example of Japanese firms prefers their foreign operations to be headed by expatriate Japanese managers. Toyota and Matsushita adopt this type of orientation

c)         Establishing in early stages of internationalization, as new business, process or product in another country and prior experience is essential

d)        Transfer its core competencies to a foreign operation, the best way to do this is to transfer PCNs who have knowledge of that competency to the foreign operation

(B)     Polycentric approach

1.         HCNs are recruited to manage subsidiaries in their own country while PCNs occupy positions at corporate headquarters

2.         Belief that local people know the local environment better than anyone else does

3.         Companies allow subsidiaries in different countries to set their own standards

4.         Example as Nestlé

5.         The most important advantage of using HCNs appears to be their local knowledge, whereas the key disadvantages tends to be their lack of expertise and familiarity with the parent company

(C)     Geocentric approach

1.         Policy staffing with the best person suited for the job, regardless of national origin

2.         Ignores national origin in its staffing decisions and encourages the movement of all personnel among all locations

3.         Example as Motors and Xerox

4.         Advantages:

a)        Develop an international executive team, which bringd together several nationalities of specialists to solve specific problems and perform a wide variety of ongoing activities

b)        Overcomes the federation drawback of the polycentric approach

5.         Disadvantages:

a)        Obtaining a work permit for PCNs and TCNs. If appropriately skilled people are available locally, the host government may utilize immigration controls to ;encourage’ HCN employment

b)        Expensive to implement because:

                                                                  i.              Widespread recruitment may result or be needed

                                                                ii.              Substantial investment in cultural orientation and language training programmes for managers and their families might be necessary

                                                              iii.              Substantial costs in transferring executives and their families into and away from foreign posts will definitely be incurred

                                                               iv.              Salary levels of expatriates maybe higher than national levels in many countries

(D)    Regiocentric approach

1.         Recruiting is done on a regional basis

2.         Host countries can be grouped geographically, culture, experiences and practice can be transferred within each regional group

3.         Transfers of staff between regions and between regions and headquarters would be rare

4.         Examples of Pepsi-Cola, ABB and IBM

5.         Advantages:

a)        Sensitivity to local conditions, since local subsidiaries are staffed almost totally by HCNs or at least TCNs familiar with the region

b)        International firm to gradually move from a purely ethnocentric or polycentric approach to a geocentric approach

6.         Disadvantages:

a)        Create federalism at a regional rather than a country level and constrain the organization from taking a global stance

b)        Improve career prospects at the national level, move the barrier to the regional level

                                                                  i.              Advance to regional headquarters but rarely to positions at the parent headquarters

(E)     Inpatriation strategies

1.         Transferring interational managers from their overeas assignments to the home market on a permanent or semi-permanent basis

2.         source of international management skills and allows the creation of truly multicultural and multinational organizations

a)        Speedy alternative to building

b)        Through the traditional process of expatriate and repatriated staff

c)         Example as Shell

3.         Crucial linkages between home and home organizations, assisting in the attainment of both cultural and strategic consistency

4.         Strategy of inpatriation has much to offer:

a)        Rapidly increase cognitive diversity within an organization

                                                                  i.              Increase in cognitive diversity encourages

                                                                ii.              Decision making and facilitates inter-organizational trust and communication

b)        Communication point for host country managers ensuring a greater clarity of vision

c)         The development of an effective strategy of ‘globalization’

d)        Allow global organizations to overcome some of the limitations of traditional expatriates

e)         More likely than expatriates to accept assignments to emerging markets where infrastructure is likely to be underdeveloped

V.        Expatriate recruitment and selection

(A)     Recruitment

1.         Through identifying overseas managers who are currently working for the firm in a host country or managers

2.         It might be prepared to undertake an international assignment in the host country

3.         The reasons for employing those people are:

a)        Unavailability of host country nationals who have the technical expertise or managerial talent

b)        Maintain and facilitate organizational coordination and control

c)         Maintain a foreign image in the host country

d)        More promising managers with international experience and so equip them for more responsible positions

4.         External recruitment methods have two benefits:

a)        Hiring bring in seasoned management experience and personal maturity

b)        Accustomed to working and living in different cultures

5.         Drawbacks of external recruitment:

a)        Search process is expensive because reputable national and international executive search firms impose high charges

b)        Difficult to manage and implement due to the distance involved

c)         Expatriate manager recruited from outside may find it difficult to adjust to the new environment

(B)     Selection

1.         Human resource managers must decide which candidates from the pool are the best qualified for overseas assignments

2.         Expatriates in a foreign country are faced with unfamiliar sets of environmental forces that can be very different those of the home country

3.         Devise a suitable selection process for candidates and their family members when contemplating sending them on an overseas assignment

4.         Appropriate criteria are suggested below:

a)        Adaptability of expatriates and family members

                                                                  i.              Candidates and their spouse of or family to new environments are very important factors for selection criteria

                                                                ii.              Most expatriate failure is not caused by inadequate technical skills

                                                              iii.              Inability of expatriates and their families to adjust to an unfamiliar culture

                                                               iv.              Adapt to new circumstances and situations and to respond flexibly to different ideas

                                                                 v.              Solve problems within different frameworks, such as differences in culture, polities, religion, ethic or different perspectives

                                                               vi.              Family situations reason for expatriate failure

                                                             vii.              In-depth interviews help assess adaptability

(1) Explore the level of marital stability, responsibilities for ageing parents, existence of learning disabilities in a child, behavioral problems in teenagers, emotional stability of family members

b)        Technical skills

                                                                  i.              Located at some distance from headquarters or the centre of technical expertise

                                                                ii.              Cannot consult as readily with their peers and superiors at headquarters on matters related on their job

                                                              iii.              Human empathy and cross-cultural sensitivity may be more important than technical skills

c)         Personal traits and relational abilities

                                                                  i.              Deal effectively with their superiors, peers, subordinates, business associates and clients

                                                                ii.              Ability to related to, live with and work among people whose value systems, beliefs, customs, manners and ways of conducting business may differ greatly from one’ own

                                                              iii.              The candidate should also be a person who has maturity and emotional stability

                                                               iv.              Maintain emotional equilibrium at all times

                                                                 v.              The ability to cope with the adversity that can arise in a variety of situation

d)        Interpersonal skills

                                                                  i.              Verbal and non-verbal communication, the capacity to build trust and ability to utilize referent power when managing within foreign environment

                                                                ii.              Expatriate manager should be a skilled negotiator and obtain the treatment for treatment for the foreign host country’s government

                                                              iii.              Expatriates sometimes have to train local replacement and transfer knowledge to their local colleagues

e)         Foreign language proficiency

                                                                  i.              Confidence in interacting with locals will lead to successful overseas assignment

f)          Managerial and decision-making abilities

                                                                  i.              Expatriates are operating under conditions of isolation or physical distance from the centre of decision-making in the home office

                                                                ii.              Candidates must have knowledge of management practices and the ability to put them into practice

g)        Other criteria: age, gender and race

                                                                  i.              Some countries are male dominated, such as Japan

                                                                ii.              Companies may be reluctant to send women expatriates to such locations

                                                              iii.              Chinese believe that elders are more knowledgeable as a result of their life experience

5.         Cross-cultural and technical skills resulted in a number of approaches that international companies used

6.         Any weaknesses identified are addressed through appropriate training and personalized development plans and timetable are drawn up

7.         Recruitment to students from universities considerable international orientation through travel, language acquisition or cross-cultural experience

VI.     Expatriate failure and repatriation problems

1.         Expatriate failure means that companies are likely to face both direct and indirect costs

2.         Expatriate failure is costly to both the expatriate and the company involved

3.         Overseas compensations, allowances and repatriation costs

4.         Indirect costs:

a)        Loss of time and business opportunities

b)        Damaged relations with the host country government

c)         With local organizations

d)        With direct customers in the foreign country

e)         Long-team negative impact upon the firm’s reputation in the regional area

5.         Expatriates costs:

a)        Damaged career prospects

b)        Emotional upheaval

c)         Reduced self-esteem

d)        Self-confidence

e)         Job satisfaction

f)          Prestige among peers

g)        Motivation

6.         Some factors can contribute to expatriate failure:

a)        Inappropriate selection criteria and/ or policy

                                                                  i.              Resolve a staffing crisis in an overseas subsidiary

                                                                ii.              Tend to choose only on criteria such as technical skills

                                                              iii.              Tend to ignore such factors: the expatriate’s personality, ability, emotional characteristics, family situation and cultural knowledge

b)        Lack of pre-departure programmes for expatriates and their families

                                                                  i.              Cross-cultural and language training assists expatriates in recognizing the likely difficulties

                                                                ii.              Pre-departure programmes should include critical family issues such as what the partner do, children’s schools, medical coverage and making friends

c)         Inadequate support mechanisms

                                                                  i.              Compensation packages

                                                                ii.              Career support

                                                              iii.              Repatriation practice

(A)   Repatriation problems

1.             Repatriation, expatriates re-entering the home organization at the end of their assignment requires attention

2.             Failure to address the issues raised by repatriation will result in costs

a)        Loss of highly capable employees

b)        Underutilization of skills

c)         Reluctance by others to accept overseas assignments

3.             Problems often arise where companies maintain a sharp division between their domestic and operations

4.             Equally damaging can be the situation that considered in some way secondary to domestic business

5.             Tendencies can result in problems with repatriation:

a)        Send overseas medicore performers and limited career progression upon repatriation

i.    Decision to send only mediocre are less important that at home

ii.  From a desire to transfer ‘problem’ staff or reluctance of high

potential staff to follow the overseas track

b)        Expatriates suffer an ‘out of sight, out of mind’ situation that considered of new positions or promotions until they return

(1)    Finding a position may be difficult and some compromise appointment may result

c)         Limited job opportunities at the time of re-entry

i.          The cyclical nature of some businesses, restrictive practices

ii.        Employee must re-enter the same division or short planning horizons can restrict opportunities

d)        Repatriates are often disappointed by the reception they receive

i.          Their skills and experience may be undervalued

ii.        Less than challenging position may result in a decision to leave the organization

e)         Repatriation problems are often symptomatic of more deeply entrenched HR difficulties

i.          Inability to effectively utilize resources

ii.        Reflected in too short a term focus

iii.      Inability to integrate domestic and foreign experience

iv.       Limited authority of the HR function

6.             Strategies available to international organizations that can result in more effective repatriation process:

a)        Select more competent staff to place on overseas assignment

i.          Higher demand upon their return and placed into challenging positions

b)        Assign a formal mentor to expatriates

i.          Keep channels of communication open and to ensure that the interests of the expatriate are represented at a senior level

ii.        Reflects a concern that HR division of many organizations will be unwilling or unable to perform

c)         Link overseas assignment to long term career development

i.          Stronger link between overseas experience and future career responsibilities

ii.        Increase the return on a period spent overseas and encourage the most able staff to consider such appointments

d)        Plan the timing and pattern of re-entry better

i.          Greater flexibility in overseas assignment could contribute significantly to the planning of re-entry

ii.        Appropriate positions in the home market

e)         Final strategy would be to use repatriates as trainers of future expatriates

i.          Ensure knowledge acquired overseas is passed on

ii.        Foster a more receptive environment for international staff who would enjoy a greater commonality of shared experiences and concerns

7.             Both HK and China emphasized problem-focused as opposed to symptom-coping strategies since the former is associated with more positive adjustment

8.             The principal coping mechanisms in China were problem-focused

9.             The cross-cultural contrasts are considerable, greater efforts are made to come to terms with such differences

(B)   Challenges of expatriates

1.             Cultural dimensions and orientations

a)        Expatriate managers will face in Asia-Pacific region is to utilize Hofstede’s cultural dimensions framework

b)        Or examine differences through this

c)         Power distance

i.          Less powerful members of institutions and organizations within a country expect

ii.        Accept that power is distributed unequally

iii.      Major impact on management practices:

(1)      Autocratic policies can be pursued

(2)      Acceptance of wage and salary differentials

(3)      Acceptance of status and position

(4)      Institutionalization of power through hierarchy

d)        Individualism

i.          Contrasted with collective cultures where people identify with strong, cohesive groups

ii.        The importance of harmony, the balance between tasks and relationships and the criteria for promotion

iii.      In Confucian cultures the family is the basic defining group

e)         Masculinity

i.          Tend to rate achievement and success much more highly than the quality of life or caring for others

ii.        Management practices will reflect the salary versus working hours, competition in the workplace and styles of leadership

iii.      Similar dispersion is apparent in the case of the Anglo countries

f)          Uncertainly avoidance

i.          People are socialized into accepting ambiguity and tolerating uncertainty about the future

ii.        Organizations in cultures which rate high on uncertainty avoidance are characterized:

(1)      Tightly structured

(2)      Follow written rules

(3)      Managers become involved in operational details

(4)      Unlikely to undertake risky decision

g)        Long-term orientation

i.          Most clearly contrasted with Anglo cultures in terms of this final dimension

ii.        Anglo cultures are much more short-term in their orientation

h)        The principal dimensions differentiating Asian nations are individualism, power distance and long-team orientation

i)          Overwhelming tendency in the region for collectivism, high power distance and an emphasis on the long team

j)          Importance of paternalism and relationship-focused management in the region

2.             Woman and dual career issues

a)        Situation of a female going overseas is seen as more problematic than that of a male assignee

b)        Some problems arise within MNEs:

i.          Perception that women are not interested in overseas assignments

ii.        Foreign prejudice towards women, women in the workforce

iii.      Belief that dual career marriages make it more difficult to take on an overseas assignment

c)         Women’s lack of interest

i.          Women are less interested in overseas assignments than their male counterparts

(1)      Because of the way they perceive their family role

(2)      Their career and their greater fear of isolation and loneliness in a foreign culture

d)        Foreigners’ prejudice

i.          Women expatriates would be ineffective as managers in ‘all’ international assignments

ii.        Limit international management participation for women

e)         Dual career issues

i.          Dual career marriages are considered a major reason that companies avoid sending women managers abroad

ii.        Refuse overseas assignments because of the problems of managing dual-career marriages

iii.      Male partners face additional obstacles in terms of adjusting to the role of secondary breadwinner of homemaker

iv.       Women make the transition to these role easier than men

f)          Negative or natural career move can be troublesome for men

3.             Female brings distinct disadvantages in working internationally, the perception among female expatriates themselves is quite different

4.             Female expatriates enjoy advantages:

a)        Visibility

i.          Female expatriates are more visible than male expatriates because there are relatively few female expatriates

ii.        Foreign clients are curious about them, anxious to meet them and tend to remember them better

b)        Interpersonal skills

i.          Local men to talk to because women are often more nurturing than men

ii.        Women listen better and have more patience

c)         Adjustment

i.          Greater ability to adjust to the isolation during foreign assignments than their male counterparts

d)        Novelty

i.          Tend to assume that the women would not have been sent unless they were the ‘vary best’

ii.        The major difficulties include home companies’ barriers, misconceptions, gender-specific laws and unintentional discrimination

e)         Home companies’ barriers

i.          Limit the female expatriates’ professional opportunities and job scope

ii.        Lead to low trust of women expatriates

iii.      Increase the difficulty of achieving success in the foreign assignment

f)          Misconceptions

i.          Female expatriates may be misconceived as subordinates or as women accompanying a spouse

ii.        Challenge the credibility, authority and responsibility of women expatriates

g)        Gender specific laws

i.          Face difficulties resulting from regulating entry, movement and activity within countries

h)        Unintentional discrimination

i.          Strongly masculine culture that blind to its ingrained bias and slow to change

ii.        Locations may create unease for female expatriates and may even result in lost opportunities

(C)   Changes in international staffing policy and strategy

1.             Prompting a reconsideration of traditional expatriate policy:

a)        Encouraging international HR managers to give careful consideration to their expatriate policies

b)        Globalization, strategy alliances and regional strategies are rending the traditional expatriate model increasingly ineffective

c)         Some factors are providing opportunities or pressures for major change in staffing strategy and policy

i.          Education

(1)      Increasing number and level of qualified people world-wide

ii.        Telecommunications

(1)      Provided better access to resources, wider coverage and lower cost

(2)      Break down international barriers and made the world smaller and more accessible

iii.      Air travel

(1)      The decreasing cost and increasing speed of air travel

(2)      Larger number of locals can be employed as it is easier for headquarters to monitor them

iv.       Increasing global congruence

(1)      National boundaries is being reduced by the development of regional trading agreements such as NAFTA, the EU and ASEAN

(2)      Increased convergence in areas such as sport and entertainment

v.         Host government policy

(1)      Optimize and utilize the talent pool available domestically

(2)      Through immigration policy and visa requirements

vi.       Use of non-traditional forms of international market servicing strategy, particularly strategic alliances

vii.     Increased competitive pressure and recognition that key source of competitive advantage now lies with human capital resources

d)        Limitations of expatriates assignments encouraged the development of a new class of international executive-The global manager

i.          Human resource is internal discuss the principal changes in a little more detail

2.             The demands of global strategy

a)        MNEs have matured through international communications, travel, transportation and distribution infrastructure

i.          Globalize or standardized approach towards sourcing, production, marketing and functions is both feasible and desirable

b)        The global firms that emerge are often structured by products or product/region matrices and require substantial coordination across local market

i.          Reduce PCN staff at operative levels

ii.        Increased the use of expatriates in strategic functions

iii.      Heavily on management by corporate strategies which require frequent international contacts and exchange and solid personal networks among managers at several levels

c)         Reduce the need for PCNs abroad

i.          Require the HCN to train in the home country headquarters, which can be termed as a foreign country national (FCN)

ii.        The internaltional application of such as ‘parameter’ night prove to be a blunt instrument if not carefully as if a PCD were assigned

d)        Adapt MNE foreign operations to host country cultures

i.          Provides the mode of operation of MNEs in their home countries

3.             Strategic alliances

a)        Globalization is the continuing emergence of new constellations of competitors

b)        Market economies have been increasingly willing to participate in cooperative ventures with their direct competitors

c)         The partners in an alliance maintain their individual identities and engage in other activities

d)        Expansion through mergers and acquisitions of established competitors

e)         The restructuring of local activities to new corporate context may call for temporary assignments of PCNs

f)          The merging of different organizational cultures may require HCNs to spend time at the headquarters

4.             Regionalization

a)        Aims at economic growth through the widening of domestic markets to allow economies of scale and facilitate international exchange

b)        Firms to use relatively more or fewer PCNs rely on the degree of within-region integration

i.          Fortress-type regions

(1)      Due to more pronounced motives of control

(2)      Know-how transfer associated with undertakings to generate greater value added within regions

ii.        Open regions, competition is harder and use of HCNs before PCNs

(1)      Makes control of subtle differences in customer demand

(2)      Effective handling of local matters crucial for success

(3)      Operative positions by HCNs rather than by PCNs, take the form of networks including suppliers and/or customers

iii.      Global teams address certain problems, implying short-term assignments

(1)      Companies with a more comprehensive picture of customers’ needs

(2)      Profit from the synergy to unify the varying perspectives of different cultures and different business functions

5.             The expatriate manager versus the global manager

a)        The crucial determinant of success in global business is effective development of global mangers

b)        Define a global manager:

i.          Flexible and open mind

ii.        With a well-rounded understanding of international business

iii.      Ability to work across cultural

iv.       Functional boundaries

v.         Balance the simultaneous demands of global integration and national responsiveness

c)         TCNs are multilingual and ability to work in more than one language and may exhibit greater cultural sensitivity

d)        PCNs manager selected ob the basis of technical ability with little attention paid to international experience

e)         Place importance on local hiring may consider TCNs just as unacceptable as PCNs

f)          MNEs develop their globally sophisticated managers

g)        Trend towards greater teamwork, cross-functional teams that comprise different cultures, languages, locations and time zones

h)        The principal source of such skills is internal, and created a new staffing strategy that of inpartriation