Wednesday, May 6, 2020

International Assignments free essay sample

Why do organizations use Expatriates? Expatriates were used as a means of addressing agency issues as a result of the separation of ownership and management and their amplification through distance. Edstrom and Gailbraith (1977) proposed three motives for using expatriates. Firstly, as position fillers when suitably qualified host country nationals (HCNs) were not available. Secondly, as a means of management development, aimed at developing the competence of the individual manager. Thirdly, as a means of organisational development, aimed at increasing knowledge transfer within the MNC and modifying and sustaining organizational structure and decision processes. Although it is important to note that assignments generally have more than one rationale (Sparrow et al. , 2004) More recently, Harzing (2001) identified three control specific roles of expatriates, namely: the bear, the bumble-bee, and the spider. Bears act as a means of replacing the centralisation of decision-making in MNC and provide a direct means of surveillance over subsidiary operations. The title highlights the degree of dominance these assignees have over subsidiary operations. Bumble bees fly â€Å"‘from plant to plant’ and create cross-pollination between the various offshoots† (Harzing, 2001: 369). These expatriates can be used to control subsidiaries through socialisation of host employees and the development of informal communication networks. Finally spiders, as the name suggests control through the weaving of informal communication networks within the MNC There is a growing debate as to the continued utility and viability of the conventional expatriate assignment. 5 key aspects of this issue: supply side issues*, demand side issues*, expatriate performance and expatriate failure, performance evaluation, and finally costs and career dynamics. Supply side There is growing recognition that shortages of international managers are a significant problem for international firms and frequently constrain the implementation of global strategies in these firms (Evans et al, 2002) Broadly these issues can be grouped as issues concerning the recruitment and retention of potential expatriate employees. Issues related to recruitment and potential expatriate employees There is some evidence to suggest that families are less willing to accept the disruption of personal and social lives associated with international assignments than was the case in the past (Forster, 2000). The most recent available data suggest that the female expatriate population has not risen significantly over the past decade and remains at approximately 10 per cent however (PriceWaterhouseCoopers, 2005). Recent research conducted on the outcome of women’s global assignments has indicated that female expatriates are generally successful in their global assignments. Issues related to retention of expatriate employees There is growing recognition that companies deal unsympathetically with the problems faced by expatriates on re-entry reluctant to accept int. ssignments North American research indicates that 20 per cent of all managers who complete foreign assignments wish to leave their company on return. Yet, while it is generally accepted that retention of expatriates is a growing problem and that the costs of expatriate turnover are considerable (Dowling and Welch, 2004), many international firms have failed to develop repatriation policies or programmes designed to assist the career progression of the expatriate (Black et al 2000) There is little evidence to suggest that many companies practice talent management in a co-ordinated and efficient way (Cohn et al, 2005), Which may be defined as approaches to recruit, retain, develop and motivate a competent cohort of managerial talent with appropriate international experience in the global business environment. Evans et al (2002) â€Å"MNCs are unaware of where their best talent is located and have difficulties in indentifying their high performers. Costs A key challenge for both international HRM professionals and academics is to understand and develop methodologies for accurately measuring the relative costs and benefits associated with international assignments. Sparrow et al. (2004: 139) conclude on the basis of empirical study that few organisations had a true grasp of the costs associated with expatriate assignments, similarly they had almost no idea of the benefits accrued by the organisation from various types of international assignment. So while organisations may have a well-designed and articulate strategy with regard to staffing their foreign operations, they have often failed to monitor the performance of international assignees to accurately measure their performance and contribution to the bottom line Demand side issues Rapid growth of emerging markets such as China, India and Eastern Europe has a significant impact on both the demand and the supply of international mangers. Internatinalisation of small and medium enterprises demand Arguably therefore, a relatively small recruitment pool for global assignments is being further diluted by an expanding number of firms and locations competing for scarce international management talent Expatriate â€Å"failure† Traditionally, a key issue in the global staffing literature is expatriate failure, which represents a significant issue for MNCs due to the high costs of expatriate failure which are both direct (e. . salary, training costs, travel and relocation expenses) and indirect (damaged relations with host country organizations and loss of market share) (Dowling and Welch, 2004). Harzing (1995; 2002)- She suggests that there is little empirical evidence for the claims of high expatriate failure and claims that the myth of high expatriate failure rates has been perpetuated by careless and inappropriate referencing of Tung’s (1981; 1982) seminal work. If firms can take a broader view of the success or failure of expatriate assignments, they are more likely to gain a better picture of the utility of such assignments than they can with narrow definitions of failure Expatriate Performance Managing performance in a traditional expatriate assignment is complex. Complexity added to this process by the fact that expatriates must meet the often conflicting expectations of HQ management and subsidiary colleagues. It has been argued that there are a number of factors which impact on the performance of expatriate employees. These include technical knowledge, personal (and family) adjustment to the foreign culture, and environmental factors (political and labor force stability and cultural distance from one’s home culture) (Cascio, 2006; Oddou and Mendenhall, 2000). It is important to note, however, the potential problems which would result from a primary focus on technical competence which lacks adequate consideration of cultural factors. Career issues Traditional literature: employees lose their jobs or demoted on arrival 2 recent trends emphasis placed by employees on career mobility and decreasing commitment to specific organisations. International assignees’ perceive the value of the assignment to be in developing individual competence which can be transferred across organizations and which is valued in the external labor market (DeFillippi amp; Arthur, 1996; Parker amp; Inkson, 1999; Stahl, Miller, amp; Tung, 2002). This literature resonates with the emerging literature on the boundaryless career (Arthur and Rousseau, 1996). Thomas et al (2005: 341) note: The boundaryless careerist†¦is the highly qualified mobile professional who builds his or her career competencies and labor market value through transfer across boundaries. He or she is explicitly and implicitly contrasted with more staid careerists pursuing traditional organizational careers, who, it is implied, are at risk in a rapidly changing society because their career-relevant skills and networks are associated with single organizations vulnerable to unexpected change. it may call into question ongoing organizational loyalty, reflected, for example, in the high levels of expatriate turnover on repatriation that emerge in the literature. Alternative forms international assignment Research suggests there is little evidence of a significant decline in the use of long-term assignments but does identify the growing use of alternative forms of international assignments (cf. Dowling and Welch, 2004; Fenwick, 2004; Mayerhofer et al. , 2004; PriceWaterhoseCoopers, 2005; Scullion and Collings, 2006c; Tahanainen, Welch and Worm, 2005). Short term int assignments| Typically, what constitutes ‘short-term’ is company specific, but it could be considered an assignment longer than a business-trip but shorter than a year’s duration. used in MNCs: (1) Problem solving or skills transfer- for example in implementing a project, establishing a new process or troubleshooting; (2) for control purposes and; (3) for managerial development reasons. | Failure to build effective relationships with local colleagues and customersWork visa permits Alcoholism/marital problems| Frequent flyer assignments| The IBT has been defined as â€Å"one for whom business travel is an essential component of their work† (Welch and Worm, 2006: 284)| * face-to-face interaction without the requirement for their physical relocation. Appropriate in the European context, where many European capitals can be reached with a short flight (1 to 3 hours). Appropriate for conducting irregular specialized tasks, such as annual budgeting meetings or production scheduling| Short trips followed one after the other- health issues, serious family problems compared to traditional, Individuals fail to catch up with work back home| Commuter and Rotational Assignments| The former: an assignee commutes from their home base to another country to a post in another country, generally on a weekly or bi-weekly basis (PricewaterhouseCoopers, 2005). Latter:staff commute from their home country to a workplace in another country for a sort period followed by a period of time off in the home country (Welch and Worm, 2006). oilrigs| report particular success of this approach in the Chinese context, although they also point to the complexities of using such assignments due to issues around compensation, taxation and social security. geographic situation in Europe means that Eurocommuting and frequent visiting is a viable alternative to expatriate transfers (Mayrhofer and Brewster, 1997). concerns about the viability of commuter arrangements over an extended period of time due to the build up of stress from intensive travel commitments and the impact on personal relationships† (Dowling and Welch, 2004: 68)| Global virtual teams| As a result of increasing decentralisation and globalisation of work processes, organisations have responded to their dynamic environments by introducing GVT in which members are geographically disperse d and coordinate their work predominantly with electronic information and communication technologies. In global virtual teams, staff do not relocate to a host location but have a responsibility to manage international staff from the home base (Dowling and Welch, 2004). Help global firms to use the best talent wherever it is located (Maznevski et al. , 2006). Appropriate for relatively routine activities. | Some argue for it to be a international assignment there need to be relocation| HR implications for managing International Assignments There is little doubt that a significant challenge for international HR managers in managing this portfolio of international assignments is the need to develop a range of IHRM policies and practices to take account the different types, objectives and different circumstances surrounding each type of assignment. Policies surrounding IS International assignments result in a greater administrative burden in some areas of international HR managers. Challenges will be tracking and accounting for this increasingly diverse group of internationally mobile employees, particularly in relation to tax, social security, visa and legal requirements or the various countries (PricewaterhouseCoopers, 2005). Research indicates that over 50 per cent of respondents followed a single policy for both long and short-term assignments (PricewaterhouseCoopers, 2005). The danger for organizations and assignees in failing to develop appropriate policies is that their international assignment will fall outside the traditional remit of the international HR function and thus they will not receive the level of organizational support required. The challenge for the international HR function is to develop appropriate policies to minimise the possibility of this occurring and to support the assignment in the most appropriate way. On the other hand, while research has emphasised the importance of support for traditional international assignments (Tung, 2000), recent research has highlighted the lack of HR support for alternative international assignees and suggested that the burden of managing these assignments is largely left with employees and their families (Mayerhofer et al, 2004). - need family friendly staffing policies Recruitment and selection The importance of effective recruitment and selection for the success of traditional expatriate assignments and for enabling international firms to compete effectively in international business has long been recognised However recent research on short-term assignment indicates that formal selection for short-term assignments was rarely practiced among respondents (Tahvanainen et al, 2005). The majority of international firms continue to rely on technical skills and domestic track record as the most important selection criteria and many organisations still undervalue the importance of the â€Å"soft skills† of international management (Sparrow et al, 2004; Morley amp; Flynn, 2003). There is a need to develop a selection criteria based on the assignment. Training The value of cross-cultural training in increasing the probability of success of international assignments is relatively well documented in the extant literature (cf. Parkinson and Morley (2006). Recent research highlights the lack of HR support for international assignees and suggests that managers are often expected to assume responsibility for their own training and development (Mayerhofer et al, 2004). The practitioner literature suggests that expatriates on short-term assignments and IBTs don’t have the same time as traditional expatriates to adjust to a new culture. - thus without cultural training high tendency for alternative expat assignments to fail Reward (need evidence on rewards for traditional axpat programs) Given the fact that cost reduction is identified as a key factor driving the shift towards alternative forms of international assignments in MNCs, impacts around reward are likely to emerge as a key consideration for MNCs. On balance it appears that salary payments remain in the home country for short-term assignments (PricewaterhouseCoopers, 2005; Tahvanainen et al. 2005). There are cost of living adjustments made. Short term assignments can be comparatively expensive for MNCs- hotels vs apartments mainly IBT Occupational health and safety more related to alternative assignments This is particularly the case with regard to IBTs as there is a growing body of literature which highlights the health issues associated with business travel (DeFrank et al. , 2000; Neck, 2000;Welch and Worm, 2006). These issues can range from a lack of emphasis and decline on physical fitness (Neck, 2000), to increased alcohol consumption, to significantly increased stress levels related to business travel (DeFrank et al. , 2000; Welch and Worm, 2006). While these issues have significant implications for the individuals concerned, it is without doubt that health issues could potentially have significant implications for organizational performance (Quick, 2000)

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