Archive for year: 2023

110 CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUrTMENT AND SELECTION. CHAPTER t

• The var ious types of International ass ignments; shor t – te rm, e x t e n d e d and longer- term; and n o n –

s tandard ar rangements; commute r , rotator, contractual , virtual and selt-inltlated ass ignments.

• The role of expatr iates a n d non-expatr ia tes in suppor t ing Internationai business activit ies.

Then w e will concent ra te more closely on recrui tment and select ion issues, focus ing especially on :

• The debate surrounding expatr iate failure as a start ing point .

• S e l e c t i o n c r i t e r i a and p rocedures for international ass ignments . i , ‘ . T

• Gender In international H R M : Dual careers and the female expatr iate.

INTRODUCTION The purpose of this chapter is to expand on the role of I H R M in sustaining global g r o w t h . I n this context sourcing decisions are most i m p o r t a n t . W e examine the various approaches taken to staff ing internat ional operations and the a l locat ion of h u m a n resources to the f i rm’s varied internat ional operations to ensure effective strategic outcomes. The p i v o t a l role o f in ternat ional assignments is out l ined . W e then concentrate on recruitment and selection as major influence factors o n the success o f g lobal assignments.

APPROACHES TO STAFFING

There are staff ing issues that internat ionai iz ing f irms confront that are either no t present i n a domestic environment , or are complicated by the internat ional context in w h i c h these activities take place. Take , for example, this scenario. A US M N E wishes to a p p o i n t a new finance direc- tor for its Ir ish subsidiary. I t may decide to f i l l the posi t ion by selecting f r o m finance staff avail- able in its parent operations (that is, a P C N ) ; or to recruit locally (a H C N ) ; or seek a suitable candidate f r o m one of its other foreign subsidiaries (a T C N ) .

The I H R M literature uses four terms to describe M N E approaches to managing and staff ing their subsidiaries. These terms are taken f r o m the seminal w o r k of Per lmutter , ‘ w h o claimed tha t it was possible to identifj’ among international executives three primary attitudes — ethnocentric, polycentric and geocentric – t o w a r d b u i l d i n g a mui t inat iona i enterprise, based on top manage- ment assumptions upon w hich key product , funct iona l and geographical decisions were made. T o demonstrate these three attitudes, Perimutter used aspects of organizat ional design; such as de- c is ion-making, evaluat ion and c o n t r o l , i n f o r m a t i o n f lows , and complex i ty of organizat ion . H e also included ‘perpetuation’ , which he defined as ‘ recruit ing, staffing, development’ . A f o u r t h attitude – regiocentr ic – was added later.” W e shall consider the connection between these four cate- gories and staffing practices, and examine the advantages and disadvantages of each approach.

Ethnocentric I n ethnocentric f i rms, few foreign subsidiaries have any a u t o n o m y and strategic decisions are made at headquarters. Key positions i n domestic and foreign operations are held by managers f r o m headquarters. Subsidiaries are managed by staff f r o m the home co unt r y (PCNs). There are often sound business reasons for pursu ing an ethnocentric staff ing p o l i c y :

• A perceived lack of qualif ied host -count ry nationals (HGNs).

• The need to maintain g o o d commun ica t ion , coord inat ion and contro l links wi th corpora te

headquar ters. For f i rms at the early s tages of internationaiization, an ethnocentr ic app roach can

CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTON

reduce the perceived high risks inherent in these novel env i ronments. W h e n a mult inational acqui res a f i rm in another country , it may wish to initially replace local managers wi th PCNs to ensure that the n e w subsidiary compl ies wi th overall co rpora te object ives and policies; or because local staff may

. not have the required level of compe tence . Thus, an ethnocentr ic app roach to a particular foreign market situation cou ld be perfectly valid tor a very exper ienced mult inat ional. Having your o w n person , in w h o m you can place a degree of t rust t o do the right th ing, can modera te the perceived high risk involved in foreign activities. This has been well descr ibed by Bonache , Brewster and Suutar i as ass ignments as control .^

A n ethnocentric pol icy, however, has a number o f disadvantages?

• It l imits the p romot ion opportuni t ies of HGNs, wh i ch may lead to reduced product iv i ty and increased turnover a m o n g that g roup .

• The adaptat ion of expatr iate managers to host countr ies of ten takes a long t ime, dur ing wh ich P C N s often make mistakes and poor decis ions.

• W h e n PCN and H C N compensa t ion packages are c o m p a r e d , the of ten cons iderabie income g a p in favor of PCNs may be v iewed by H C N s as unjust i f ied.

• For many expatr iates a key overseas posi t ion means new status, authori ty, and an increase in s tandard of living. These changes may affect expatr iates ‘ sensitivity to t he needs and expectat ions of their host count ry subord inates wh ich may be quite different to the percept ions of the PCN manager .

Polycentric Using a polycentric approach involves the M N E treating each subsidiary as a distinct nat ional

entity w i t h some decis ion-making a u t o n o m y . Subsidiaries are usually managed by local nation-

als ( H C N s ) , w h o are seldom promoted to posit ions at headquarters, and PCNs are rarely trans-

ferred to fore ign subsidiary operations. The main advantages of a polycentric pol icy , some of

w h i c h address shortcomings o f the ethnocentric pol icy identif ied above, are:

• Employ ing H C N s el iminates language barr iers; avoids the adjustment p rob lems of expatr iate managers and their tamilies, and removes the need for expensive cultural awareness training p rograms.

• Employment of H C N s al lows a muitinationai c o m p a n y to take a lower profi le in sensit ive poilticai s i tuat ions.

• Employment of H C N s is of ten less expensive, even if a p rem ium is paid t o attract high-quali ty iocal appl icants.

• This app roach gives cont inui ty to the managemen t of foreign subsidiar ies and avo ids the turnover of key managers that, by Its very nature, results f r om an ethnocentr ic app roach .

A polycentr ic pol icy , however, has its o w n disadvantages:

• Br idging the gap be tween HCN subsidiary managers and P C N managers at corporate headquarters is difficult. Language barriers, conflicting national loyalties, and a range of cultural differences (for example, personal value differences and differences In att i tudes to business) may Isolate the corporate headquarters staff f rom the various foreign subsidiaries. The result may be that an M N E could b e c o m e a ‘ federat ion’ of independent national units wi th nominal links to corporate headquarters.

• Hos t -count ry managers have limited oppor tun i t ies to gain exper ience outs ide their o w n count ry a n d cannot progress beyond the senior pos i t ions in their o w n subsidiary. Parent-country

112 CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS ~ STAFFING, RECRUITMENT AND SELECTION CHAPTEI

managers also have l imited opportuni t ies to gain overseas exper ience. As headquar ters posi t ions

are held only by PCNs, the senior corpora te management g roup will have limited exposure to

international opera t ions a n d , over t ime, this may constrain strategic dec is ion-mak ing and resource

al locat ion.

O f course, i n some cases the host government may effectively dictate that key managerial posi- tions are f i l led by its nationals . Al ternat ive ly , the M N E may wish to be perceived as a local com-

pany as par t o f a strategy o f local responsiveness. H a v i n g H C N s in key, visible posit ions assists a local izat ion strategy.

Geocentric W i t h a geocentric approach, the M N E is t a k i n g a global approach to its operations, recognizing

that each part (subsidiaries and headquarters) makes a unique c o n t r i b u t i o n w i t h its unique com-

petence. I t is accompanied by a w o r l d w i d e integrated business, and nat ional i ty is less i m p o r t a n t

than abi l i ty . This is a major goal the European telecommunications company Vodafone w o u l d

l ike to achieve. As a company speaker said:

We want to create an international class of managers. In our view, the right way to do it is to have people dose to one another, sharing their different approaches and understanding how each different part of the company now faces specific business challenges in the same overall scenario. We want to develop a group of people who understand the challenges of being global on the one hand and are still deeply rooted in the iocal countries on the other. Our target is to develop an internationai man- agement capability that can leverage our global scale and scope to maintain our leadership In the industry.^

There are three main advantages to this approach:

• it enables an M N E to deve lop an internationai executive team wh ich assists in developing a global perspect ive and an internal pool of labor for dep loyment th roughout the global organizat ion.

• It overcomes the ‘ federat ion ‘ d rawback of the polycentr ic approach .

• This app roach suppor t s coopera t ion and resource sharing across units.

As w i t h the other staff ing approaches, there are challenges and disadvantages associated w i t h a geuccimic policy;

• Host governments wan t a high number of their cit izens emp loyed and may utilize immigrat ion contro ls in order to Increase H C N emp loyment If enough people and adequate skills are available or require training of HGNs over a specif ied t ime per iod to replace foreign nationals.

• Most countr ies (both advanced economies and developing economies) require M N E s to prov ide extensive documenta t ion if they w ish t o hire a foreign national instead of a local nat ional. Providing this documenta t ion can be t ime-consuming , expensive, and at t imes futile. Of course, the same d rawback appl ies to an ethnocentr ic pol icy. A related Issue Is the difficulty of obtain ing a w o r k permit for an accompany ing spouse or partner.

• A geocentr ic pol icy can be expensive t o implement because of increased training a n d relocat ion cos ts . A related factor is the need to have a compensa t ion structure wi th s tandard ized international base pay, wh ich may be higher than national levels in many countr ies.

• Large numbers of PCNs, T C N s , and H C N s need to be sent abroad in order to bui ld and maintain the international cadre required to suppor t a geocentr ic staffing policy. To successful ly imp lement a geocentr ic staffing policy requires relatively long lead t imes and more central ized cont ro l of t he

) SELECTION CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTION

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Regiocentric ” This approach reflects the geographic strategy and structure o f the M N E . L ike the geocentric approach, i t utilizes a wider p o o l of managers but i n a l imi ted way . Staff may move outside their home countries but only w i t h i n the part icular geographic region. Regional managers m a y not be promoted to headquarters positions but enjoy a degree o f regional a u t o n o m y in decision- making.’^ For example, a US-based M N E could create three regions: Europe, the Americas, and Asia-Pacific. European staff w o u l d be transferred t h r o u g h o u t the European region but staff transfers to the Asia-Pacific region f r o m Europe w o u l d be rare, as w o u l d transfers f r o m the regions to headquarters in the Uni ted States.

The advantages of using a regiocentric approach are: , ,

• it facil itates Interaction be tween managers transferred to regional headquar ters f rom subsidiaries In that region and PCNs pos ted to the regional headquarters. • ‘ • ‘ ‘

• It reflects s o m e sensitivity t o local condi t ions, s ince local subsidiaries are usually staf fed a lmost totally by HCNs,^ – .,

There are some disadvantages in a regiocentric pol icy:

: m It can p roduce federal ism at a regional rather than a count ry basis and constra in the M N E f romz , T develop ing a more global perspect ive. : : • ‘ r • .• i ; ; . to ; .c . y ,

• Whi le this app roach does improve career p rospec ts at the national level, it only moves the barrier to the regional level. Talented managers may advance to jobs In regional headquar ters but less frequent ly to posi t ions at the MNE headquar ters .

A philosophy towards staffing In summary , based in p a r t o n t o p management attitudes, a m u l t i n a t i o n a l can pursue one o f sev- eral approaches to in ternat iona l staff ing. I t may even proceed o n an ad-hoc basis,*’ rather than systematically selecting one o f the four approaches discussed above. H o w e v e r , an ad-hoc approach is really pol icy by default; there is no conscious decision or evaluat ion of appropriate policy. The ‘pol icy ‘ is a result o f corporate inert ia , inexperience, or b o t h . The m a j o r disadvant- age here (apart f r o m the obvious one of inefficient use of resources) is that the M N E ‘ s responses are reactive rather than proactive and a consistent human resources strategy that fits the overall M N E strategy is more d i f f i c u l t to achieve.

Table 5 .1 summarizes the advantages and disadvantages of using the three categories of s t a f f – PCNs, H C N s and T C N s . These approaches to staffing i n par t reflect top management attitudes but i t is impor tant to keep in mind that the nature of international business often forces adapta- t i o n upon implementation. For example, an M N E may adopt an ethnocentric approach to all its foreign operations, but a particular host government may require the appointment of its o w n citi- zens to the key subsidiary positions so, for that market , a polycentric approach needs to be imple- mented. The strategic importance of the foreign market , the matur i ty of the operation and the degree of cul tural distance between the parent and host country can influence the way i n w h i c h the M N E makes key staffing decisions. In some cases an M N E may use a combinat ion of approaches. For example, it may operate its European interests in a regiocentric manner and its Asia Pacific interests i n an ethnocentric way u n t i l there is greater confidence in operating in that region o f the w o r l d .

114 CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMEITT AND SELECTON CHAFTE

TABLE 5.1 The advantages and disadvantages of using PCNs, TCNs and HCNs

P a r e n t c o u n t r y n a t i o n a l s

Advantages • Organizat ional con t ro l a n d coord inat ion is m a n t a i n e d and faci l i tated. • Promis ing managers are given international exper ience. • PCNs may be the bes t peop le for the j o b because of special skills and exper iences.

• The promot iona l oppor tun i t ies of H C N s are l imited. • Adap ta t ion t o hos t -count ry may take a long t ime. • P C N s may impose a n inappropr ia te H Q style. • Compensa t i on for P C N s a n d H C N s may differ.

T h i r d – c o u n t r y n a t i o n a l s

Advantages • Salary a n d benefit requi rements may be lower t han tor PCNs.

• T C N s may be bet ter in fo rmed than PCNs abou t the host -count ry env i ronment .

Disadvantages • Transfers mus t cons ider poss ib le national animosi t ies (e.g. India a n d Pakistan). • The hos t government may resent hiring of T C N s . • T C N s may not w a n t t o return to their h o m e coun t ry after the ass ignment .

H o s t – c o u n t r y n a t i o n a l s

Advantages • Language a n d o ther barriers are el iminated. • Hiring cos ts are reduced a n d n o w o r k permi t is requi red.

Cont inui ty o f managemen t improves, s ince H C N s stay longer in their pos i t ions. Government pol icy may d ic tate hiring of H C N s . Morale a m o n g H C N s may Improve as they see future career potent ia l .

—tagds Contro l a n d coord inat ion o f H Q may b e i m p e d e d . H C N s have l imited career oppor tun i ty outs ide the subsidiary. Hiring H C N s limits oppor tun i t ies for PONs t o ga in foreign exper ience. I liring H C N s cou ld encourage a fodorat ion of national rathor than global uni ts.

Determinants of Staffing choices ‘ Because of these operat ing realities, i t is sometimes d i f f i cu l t to precisely equate managerial atti- tudes towards internat ionai operations w i t h the structural forms we presented in Chapter 3. The external and internal contingencies facing an internat ional iz ing f i r m influence its staff ing choices. These include the f o l l o w i n g :

C o n t e x t s p e c i f i c i t i e s – the local context of the headquarters as well as of the subsid iary can be descr ibed by cultural and institutional variables (as out l ined in Chapter 2).® Cultural values may differ considerably be tween the headquarters and the host count ry context . For example, Tar ique, Schuier and G o n g see the cultural similarity be tween parent count ry and subsidiary count ry as a modera to r in t he relat ionship be tween M N E strategy and subsidiary staffing.”‘*’ G o n g found that MNEs tend to staff cuitural distant subsidiaries wi th PCNs wh ich had a posit ive effect on labor

CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTION 115

p roduc t i v i t y . ” The institutional envi ronment includes, for example, the legal env i ronment and the educat ion system. ‘ ‘^ The latter may be direct ly l inked to staff availability on the local labor market . Fur thermore, the country-speci f ic contextual factors in the parent count ry may lead to a country-of – origin effect, i.e. fvlNEs may try to transfer management pract ices f rom their home country to foreign locat ions. Another effect is the host-country-ef fect , wh ich implies that subsidiaries are inf luenced by their local e n v i r o n m e n t . ” As d iscussed in Chapter 1, the type of industry the firm is active in may have an impact as wel l .

• F i r m s p e c i f i c v a r i a b l e s – these are mainly dep ic ted f rom the f ramework on strategic H R M in mult inational enterpr ises in t roduced in Chapter 1 . The most relevant variables are M N E st ructure a n d strategy, international exper ience, co rpora te governance and organizational cul ture wh ich descr ibe the M N E as a w h o l e . ”

• L o c a l un i t s p e c i f i c i t i e s – as the staffing app roach may vary wi th the cultural and institutional env i ronment it may also be dependent on the specificit ies of the local unit. An impor tant factor here is the establ ishment m e t h o d of the subsidiary, i.e., whether it is a greenfieid investment, a merger, an acquisi t ion or a shared p a r t n e r s h i p . ” Furthermore, the strategic role of a subsidiary, its strategic impor tance tor the M N E as a whole and the related quest ions of the need for contro l and the locus of dec is ion-mak ing can influence staffing d e c i s i o n s . ”

• I H R M p r a c t i c e s – select ion, training a n d deve lopment , compensa t ion , and career management ( including expatr iat ion and repatriation) play an important role in the deve lopment of effective pol icies required to sustain a preferred staffing approach .

These f o u r groups o f factors systematically influence staff ing practices. Due to s i t i iat ionai fac;._

tors, individuaJ staff ing decisions might be taken in a non-expected w a y . Further , it has.-rd’be

acknowledged that there are interdependencies between these variables. Figure 5 .1 iiiiistrates

the various determinants of staffing choices. This model may be helpful in d r a w i n g together the

various contextual , organizat ional , and HR-re la ted issues i n determining staff ing choices. For

example, a f i r m that is m a t u r i n g into a nerworked organizat ion ( f i r m specificity) w i l l require

I H R M approaches and activities that w i l l assist its abi l i ty to develop a flexible global organiza-

t ion that is centrally integrated and coordinated yet locally responsive – a geocentric approach.

H o w e v e r , a key assumption underlying the geocentric staff ing phi losophy is that the M N E has

sufficient numbers of high-caliber staff (PCNs, T C N s and H C N s ) constantly available for trans-

fer anywhere , whenever global management needs dictate.^”

FIGURE 5,1 Determinants of staffing choices^

Context specificities ‘ Cultural context • institutional context > Staff availability ‘ Type of industry

Local unit specificities ‘ Establishment method ‘ Strategic role and importance • Need for control ‘ Locus of decision

Company specificities MNE structure and strategy international experience Corporate governance Orgdnlzdliondi culture

IHRM practices Selection Training and development Compensation Career management

116 CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTION CHAPTER

W h i l e most of the research o n staff ing has concentrated on movements f r o m the headquarters to other units of the M N E , a study by Col l ings , M c D o n n e l l , Gunnigle and Lavelle has analyzed o u t w a r d staff ing f lows i n M N E s , i.e. f lows o f H C N s and T C N s w o r k i n g i n Ir ish subsidiaries, to headquarters or other units of their employer. A l t h o u g h the numbers of o u t f l o w movements were quite small they indicate a movement f r o m ethnocentric approaches to more global staff ing perspectives in many M N E s . ^ ^ M a n y studies investigating the determinants of s taff ing policies have been conducted in M N E s stemming f r o m developed countries. A study of Chinese M N E s has conf i rmed that Western models are generally applicable to Chinese M N E s as well.^° H o w – ever, the author points out that the same categories sometimes have different meanings. I t is interesting to note that in this study cu l tura l ly determined factors such as trust and personal ethics proved to be o f special importance for staff ing decisions. Overa l l , it seems that the differ- ent determinants of staff ing choices out l ined above ail have an i m p o r t a n t impact , a l though the model as a w h o l e is yet to be empir ica l ly tested.

TRANSFERRING STAFF FOR INTFRNATIONAL BUSINESS ACTIVITIES

The above discussion demonstrates the opt ions for staffing key positions i n foreign operations. W e w i l l n o w look at the H R consequences o f these approaches, and the broader impl icat ions in terms o f the reasons f o r using internat ional assignments, types of internat ional assignments, the role of expatriates and non-expatriates, and the role of inpatriates.

Importance of international assignments Given the difficulties s u r r o u n d i n g internat ional assignments, i t is reasonable to question w h y mul t inat ionals persist in using expatriates. Certa inly , there are ebbs and f lows associated w i t h the number of staff moved internat ional ly . Frequently, predictions are made that expatri- ates w i l l become like dinosaurs as f i rms implement localization strategies, replacing expatriates w i t h H C N s as a w a y o f conta in ing employment costs.

I n a 2005 survey by the consul t ing f i r m PriceWaterhouseCoopers,^’ par t i c ipants reported tha t their use o f expatriates w o u l d cont inue to g r o w i n response t o pressure for i n t e r n a t i o n a l l y mobi le staff. The economic crisis s tart ing in 2008 had an i m p o r t a n t impact o n the expected importance o f in ternat iona l assignments. W h i l e 68 per cent o f the cunipaii ies investigated by G M A C in 2008 expected a fur ther increase in the number o f i n t e r n a t i o n a l assignments o n l y 37 per cent o f these companies could r e p o r t a real g r o w t h when they were asked later.

The Brookfield Report 2009^^ showed that this pessimistic development was an ongoing trend:”^ 33 per cent o f the companies expected an increase w h i l e 25 per cent were convinced of a decrease i n the number o f internat ional assignments (the average o f the years before was 60 per cent, respectively 12 per cent). I n fact, in 2010 only 27 per cent of the investigated companies experienced an increase i n the number o f expatriate assignments. O n l y in 2 0 0 1 was the increase in the expatriate p o p u l a t i o n l o w e r . H o w e v e r , a slight o p t i m i s m can be identif ied in the 2010 survey as 44 per cent o f the companies expected an increase in the n u m – ber o f internat ional assignments.^^ C u r r e n t l y , the response of the M N E s to the economic crisis w i t h respect to internat ional assignments is that 72 per cent of companies have reduced assignment expenses, 84 per cent even reported increased pressure to further reduce costs as compared t o 2010. I m p o r t a n t measures to reduce costs were ‘reduced pol icy offerings (29 per cent), scrutiny of pol icy exceptions (19 per cent), local h i r ing ( I I per cent), and short- term assignments (9 per cent)’.^^

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LECTION w CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTION 119 family usually remains in the home country. This ar rangement is c o m m o n l y used on oil rigs and w i th hardship iocations in the globai mining industry.

• C o n t r a c t u a l a s s i g n m e n t s – used in si tuat ions where employees wi th specif ic skills vital to an international project are ass igned for a l imited durat ion of 6 t o 12 mon ths . Research a n d Deve lopment (R&D) is one area that is using mult inational project teams and lends itself to shor t – te rm contractual ass ignments in conjunct ion wi th longer- term ass ignments and virtual t eams . ” ”

• V i r t u a l a s s i g n m e n t s – where the employee does not relocate to a host location but manages, f rom home-base , various international responsibi l i t ies for a part of the organizat ion in another count ry . In this case, the manager relies heavily o n commun ica t ion technologies such as te lephone, email o r v ideo conferences. Visits to the host count ry are also necessary. The main reasons for using virtual ass ignments are similar to that of other non-s tandard fo rms of international ass ignments : the shor tage of exper ienced staff prepared to accep t longer te rm post ings, the immobi le family, and cost conta inment . We lch , W o r m and Fenwick ‘s “^ s tudy into the use of virtual ass ignments in Austral ian and Danish f irms sugges ts that while there are certain advantages to operat ing virtually (such as not having to relocate a family unit), there are d isadvantages that may affect successful w o r k ou tcomes . For example, role confl ict, dual al legiance, and identif ication Issues occur be tween the person in the home locat ion and the virtual w o r k g roup in the foreign locat ion. It is not clear to w h o m the virtual assignee ‘be longs ‘ – the home locat ion where the person physically resides for most of the time, or t o the foreign unit. Another issue is how m u c h t ime shou ld be devo ted to ‘virtual’ work responsibi l i t ies versus the ‘real ‘ work . In addi t ion, given that m u c h of the work is done th rough electronic media, the potent ial for cultural misunders tand ings increases, and the geographica l d is tance rules ou t normal g roup interact ion. Commun ica t ion is mainly th rough conference calls, v ideoconferenc ing, and emails, and requires g o o d skills in using : these media.

Visits be tween the two locations are necessary to suppor t the work ing of this arrangement as not everything can be sett led virtually. Face- to- face meet ings are still needed . In summary , virtual ass ignments tend to be used for regional posi t ions (e.g. European Market ing Manager) where the person is mainly coord inat ing a number of national market ing activities bu t is based at a regional center. Based on the results of a German/As ian case study, Ho l tb rugge a n d Schlllo”® suggest that specif ic intercultural training needs to be prov ided for the virtual assignee as well as for the team m e m b e r s abroad in order to avoid intercultural misunders tand ings.

• S e l f – I n i t i a t e d a s s i g n m e n t s – While s tandard expatr iat ions are usually initiated by the organizat ion, self-init iated ass ignments are initiated by the individual. Many organizat ions d o not systematical ly t rack and manage these k inds of ass ignments . However , of ten these employees are highly interested in an International chal lenge, have adequa te language skills, an international mindset and are qui te entrepreneurial. They compr ise an impor tant resource for their employers a n d can increase internationai mobil i ty potential in the organizat ion.”^ It is therefore important to manage t hem carefully and to unders tand their mot ivat ion to stay in the MNE, particularly upon comple t ion of the self-initiated international assignment.”* ‘ Accord ing to a s tudy by Cerd in and Pragneux,”^ organizat ion-assigned and self-initiated expatr iates are relatively similar w i th respect to the career anchors of international ism, chal lenge and their lifestyle wi th a preference for achieving a balance be tween work and personal life. They differ f rom each other wi th respect t o other d imensions such as security. A recent example of university academics as self-Initiated expatr iates is repor ted by

Seimer and Lauring. 50

THE ROLES OF AN EXPATRIATE ‘ ‘

As mentioned above, the teasons for using expatriates are not m u t u a l l y exclusive. Tbey do b o w – ever underpin expectations about the roles that staff play as a consequence of being transferred f r o m one locat ion to anotber country . Tbese roles are delineated i n Figure 5.2.

120 CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTION

FIGURE 5 ,2 The roles Of an expatriate

Agent of direct control

Language node /^^^k Agent of socializing l

Boundary spanner X̂ B̂F Network builder

Transfer of competence and knowledge

The expatriate as an agent ot direct control The use o f staff transfers can be regarded as a bureaucratic c o n t r o l mechanism, where the p r i – m a r y role is that of ensuring compliance t b r o u g b direct supervision. H a r z i n g ^ ‘ f o u n d that German companies tend towards this f o r m of c o n t r o l . She labels expatriates w h o are such agents as ‘bears’, a rguing that the analogy reflects the level o f dominance of this type of expatri- ate c o n t r o l . T o a certain extent, using expatriates for control reflects an ethnocentric predisposi- t i o n , but this can be i m p o r t a n t i n ensuring subsidiary compliance, enabling strategic objectives for local operations to be achieved.

The expatriate as an agent of socialization There is an impl i c i t expectation that expatriates assist in the transfer of shared values and beliefs. H a r z i n g names expatriates w h o transfer corporate values as ‘bumble-bees’. H o w e v e r , as Fenwick et al.^^ po in t out , there has been litt le empbica l investigation of the effectiveness of expa- triates as agents of socialization. In fact, attempts to instill corporate values and norms ritualized in the f o r m of certain expected behaviors often have negative results at the subsidiary level.

I Expatriates as network builders As w e discussed in Chapter 3, internat ional assignments are viewed as a w a y of developing social capitaP^ by fostering interpersonal linkages that can be used for i n f o r m a l c o n t r o l and c o m m u n i c a t i o n purposes. N a t u r a l l y , as employees move between various organizat ional units , their n e t w o r k o f personal relationships changes, leading to Harzing ‘s analogy of expatriates as ‘spiders’ to describe this role. H o w these employees are util ized is person-dependent. People tend to nurture and protect their ne tworks , to be very selective about the w a y they use their connec- tions, and to evaluate the potent ia l damage to key individuals in their networks i f the connection was to be used inappropr ia te ly . I n their study of project teams and networks , Scbweiger et aid” provide the f o l l o w i n g example of h o w internat ional assignments assisted n e t w o r k development:

/ depended heavily on the contacts i had developed over the years. The time spent in internationai assignments was invaluable. I knew important people in several key operations, i knew how they

. operated and what was important to them. They also knew that i was credible and would help them when the opportunity arose.

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ELECTION CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTON 121

W h i l e short – term assignments may no t a l l o w the expatriate to develop as wide a range o f con- tacts i n one locat ion to the degree that a t r a d i t i o n a l assignment permits , over t ime they can increase the number and variety of networks , bu i ld ing channels for the transfer of ideas and competence?^ D u r a t i o n o f the assignment, therefore, w i l l have an impact on the person’s ab i l i ty to develop networks .

Expatriates as boundary spanners Boundary spanning refers to activities, such as gathering i n f o r m a t i o n , that bridge internal and external organizat ional contexts. Expatriates are considered boundary spanners because they can collect host country i n f o r m a t i o n , act as representatives of their f i rms in the host country , and can influence agents. For example, at tending a social func t ion at a foreign embassy can pro- vide the expatriate w i t h an o p p o r t u n i t y to n e t w o r k , gather market intelligence and p r o m o t e the f i rm’s prof i l e at a h igh level.

Expatriates as language nodes Marschan-Piekkari et ald^ f o u n d that Finnish expatriates w o r k i n g for the elevator company Kone, sometimes became w h a t they termed language nodes upon repatr ia t ion .

Transfer of competence and knowledge Internat ional assignments d o assist in knowledge sharing and competence transfer, and encour- age adopt ion o f c o m m o n w o r k practices w h i c h m a y strengthen elements of corporate cul ture . Thus, they may contr ibute to fur ther developing the social capital w i t h i n the M N F . ^ ‘ ‘ Staff in various organizational units also encounter different viewpoints and perspectives that w i l l shape their behavior and may reinforce their feeling of belonging. Goodal l and Roberts^** relate the experience o f a Chinese employee in the Chinese operat ion o f a European o i l company. Fler t ime i n the parent’s operat ion in Europe enabled her to appreciate h o w the company valued its name and reputat ion, and was able to better understand the company’s code o f conduct and att i tude towards occupational health and safety.

Overal l , internat ional assignments are seen as an effective w a y o f accomplishing mult ip le objectives. In fact, one could argue that there are elements of knowledge transfer in al l the roles we have ident i f ied. H o w e v e r , clear empir ical evidence as to the effectiveness of expatriates in conducting their numerous roles is l imi ted . Factors that may influence effectiveness include:

• The creat ion of an envi ronment of openness and suppor t for cross-fert i l ization of ideas and implementat ion o f b e s t p r a c t i c e ‘ .

• The need for know ledge and information to travel dyadically, that is, be tween the expatr iate and the host locat ion, and back to the expatr iate ‘s h o m e locat ion, if the mult inational is to benefit f rom international ass ignments as a mechan ism for know ledge transfer.

• • Despite the recognit ion of the impor tance of personal ne tworks in know ledge and information transfer, staffing decis ions are of ten made wi thout regard to their effect o n ne twork relat ionships. In many cases there is no strategic approach appl ied to control for potential ly negative effects.

There is a link be tween the durat ion of the ass ignment and the effective transfer of knowledge. Some knowledge may be transferred quickly whi le other skills and know ledge (particularly where a high level of taci tness is present) may take longer.

i^uch of what is t ransferred depends on the expatr iate concerned in te rms of ability to teach others and motivat ion to act as an agent of knowledge transfer.

kd

122 CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTON

• The success of the know ledge transfer p rocess depends not only on the mot ivat ion and abilities of the assignee but also on the local employees a n d their relationships.^^

A f inal po in t : Bol ino and Feldnian*”^ make an interesting observation that when expatriates are assigned for posit ion f i l l i n g due to a lack o f appropr iate local staff, these expatriates are often forced to take over some o f the responsibilities o f their colleagues due to differences i n k n o w l – edge levels. Consequently, they argue, that expatriates often spend a lot o f t ime on less challeng- ing tasks to help o u t local co-workers , and t r a i n t h e m . I n such cases, w h i l e the expatriates may assist in skills transfer, over t ime their o w n level o f competence may erode as they are no t devel- oping their o w n expertise. Thus , w h e n expatriates r e t u r n to their home operat ion, they may f i n d that their knowledge is somewhat o u t o f date.

THE ROLE OF NON-EXPATRIATES

The above discussion has centered on the internat ional assignment. W h a t has tended to be over- looked is that a considerable a m o u n t o f in ternat ional business involves w h a t can be called ‘ n o n – expatriates’ : people w h o travel internat ional ly b u t are no t considered expatriates, as they do no t relocate to another country . These non-expatriates have been called internat ional business travelers^’ – employees w h o spend a large p r o p o r t i o n of their t ime vis i t ing foreign markets , subsidiary units and internat ional projects. Popular terms for these employees include ‘ road w a r r i o r s ‘ , ‘globetrotters ‘ , ‘ frequent fliers’ and ‘flexpatriates’ .* ‘- Internat ional travel is an essential component of their w o r k , such as internat ional sales staff whose job is almost to ta l ly comprised o f internat ional travel ; and managers whose j o b entails numerous visits to internat ional opera- t ions. In ternat ional sales representatives attend trade fairs, visit foreign agents and dis t r ibutors , demonstrate new products to potent ia l clients, and negotiate sales contracts. Var ious staff w i l l visit fore ign locations to deal w i t h host-country government officials , alliance partners, subcon- tract ing f i rms , and foreign suppliers.

A p a r t f r o m the resource implicat ions , there are issues relating to the management o f interna- t ional business travelers. DeFrank etald^ ident i fy the f o l l o w i n g factors as stressors:

• H o m e a n d f a m i l y i s s u e s – such as missing impor tant anniversaries and school events. The more frequent the travel, the greater the potential for family and marital relat ionships to be strained.

• W o r k a r r a n g e m e n t s – the ‘domest ic ‘ side of the job stili has to be at tended to even though the person is traveling internationally. Modern communica t ions allow w o r k to accompany the business traveler w h o is often expected to remain up to da te wi th home-off ice issues whi le away f rom the office.

• T r a v e l l o g i s t i c s – airline connect ions, hotel a c c o m m o d a t i o n , and meet ing schedules.

• H e a l t h c o n c e r n s – poor diet, lack of physical exercise, lack of sleep, cop ing wi th jet lag, and exposure to viruses a n d other health p rob lems (e.g. Deep Vein Thrombos is f rom excessive air travel). ;

• H o s t c u l t u r e i s s u e s – as international bus iness is conduc ted in other cultural sett ings, the person is still expec ted to be able to operate in unfamil iar env i ronments and handle cultural di f ferences effectively. However, the l imited empirical and anecdota i ev idence sugges ts that non-expatr ia tes d o not receive the same level of cross-cul tural training as expatr iates – it any.

Non-expatr ia te business travelers also p e r f o r m many o f the roles o f expatriates – in terms of being agents f o r social ization, ne twork-bui lders , boundary spanners and language nodes. F r o m the l imited evidence available, however, i t w o u l d seem that the management of staff using these forms of arrangements falls to the funct iona l or line managers involved rather than the H R department as such. Possible H R strategies that could better meet the demand of f lexpatriates

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SELECTION CHAPTER 5 SOURCING HUlVlAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTION 123

have been suggested by Demel and M a y r h o f e r ? ” They suggest that the specific s i tuation o f flex- patriates should be included in job descriptions and w o r k i n g contracts and could be part of spe- cific H R . M policies for this target g r o u p . For example, selection criteria should go beyond technical knowledge and cross-cultural skills and include, for example, health issues such as physical fitness. The issue of w o r k i n g and travel ing time must also be addressed w i t h respect to recognizing the need for the employee to recover f r o m internat ional travel (adjustment to jetlag, changes i n diet, etc.). I f these concerns are taken into consideration, flexpatriates can be an even more valuable alternative solut ion to internat ional mo b i l i ty .

THE ROLE OF INPATRIATES

As we have out l ined in Chapter 1 , inpatriates are mainly distinguished f r o m expatriates by defi- n i t i o n . They include internat ional assignments o f H C N s or T C N s f r o m a foreign locat ion to the parent country (usually the corporate headquarters) of the M N F . Inpatriates are:

expected to share their iocal contextual knowledge with HQ staff in order to facilitate effective corporate activities in these local markets. At the same time they are socialized in the HQ corporate culture and learn firm-specific routines and behaviors that enable them to master future management tasks within the organization. As a result, inpatriates seem to act both as knowledge senders and receivers.

Coll ings and Scullion*”’ have identif ied the f o l l o w i n g key drivers for recrui t ing and transferring inpatriate managers:

• Desire to create a global core compe tency and a cultural diversity of strategic perspect ives in the top management team,®^ thus, increasing the capabi l i ty of organizat ions to ‘ think giobal and act local ‘ .

• Desire to provide career opportuni t ies for h igh potential employees in host countr ies, i.e., HGNs and T C N s . ,

• The emergence of developing markets wh i ch of ten represent difficult locat ions for expatr iates in te rms of quality of life and cultural ad justment .

However , the strategy o f inpatr iat ion also underlines that the strategic importance of the head- quarters is stil l predominant , indicating that the knowledge of the culture, the structure, and the processes specific to the headquarters are still i m p o r t a n t requirements for vertical career advance- ment. Usually, the assignment to the headquarters aims at t ra in ing the manager for a top manage- ment position back home in the foreign subsidiary. I n many M N F s , an inpatriate assignment may be a first and l imited career step, reflecting a rather ethnocentric approach. Harvey and Buckley”^ conclude that in this case ‘ inpatr iat ion may be a dangerous process’. W h i l e i t might be more d i f f i – culc for inpatriates than for PCNs to realize a vertical career in the headquarters they experience the same integration and repatriation problems as expatriates dur ing and after their international assignment. Consequently, they may not receive the same return on investment for their interna- t ional assignment as expatriates. This can only be guaranteed i f career opportunities for inpatriate H C N s or T C N s exist w i t h i n the headquarters and across the wider organization. I n this case inpatr iat ion can be an important step in realizing a geocentric or ientat ion w i t h i n the M N F and thus an ‘open sky’ (i.e. where career success is not dependent on an employee’s nationality) for H C N and T C N managers. Based on a sample of 143 inpatriates in ten German mult inat ionals Reiche, Kra imer and Harzing’ ‘^ have analyzed the retention of inpatriates. They f o u n d that trust and f i t w i t h the headquarters staff as well as firm-specific learning and career prospects played an impor tant role in ensuring retention of inpatriate employees.

I n an internat ional comparat ive study T u n g l i und Peiperl f o u n d significant differences in the target g r o u p of internat ional assignments between German, Bri t ish, Japanese and US M N E s .

124 CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITlVIENr AND SELECTION CHAPTE

The authors differentiate between PCNs, T C N s and inpatriates The study found that Japanese M N E s rely almost solely o n PCNs for in ternat ional assignments w h i l e British M N E s seem to systematically use different groups of employees (56 per cent PCNs, 37 per cent T C N s and 7 per cent expatriates in the headquarters). The g r o u p o f internat ional assignees f r o m G e r m a n M N E s consisted o f 79 per cent PCNs, 12 per cent T C N s and 9 per cent inpatriates.^” M o r e research on the long- term consequences of these different practices is needed.

m RECRUITMENT AND SELECTION OF INTERNATIONAL MANAGERS

H i r i n g and deploying people to positions where they can perform effectively is a goal of most organizations, whether domestic or in ternat ional . Recruitment is defined as searching for and obta in ing potent ia l j o b candidates i n sufficient numbers and qual i ty so that the organizat ion can select the most appropriate people to f i l l its j o b needs. Here, employer branding may play a crucial role , especially in emerging countries such as China or India where i t may be d i f f i – cul t to f i n d enough qual i f ied personnel for foreign companies due to the strong g r o w t h rates of these economies and the fierce compet i t ion for talent in the local labor markets. Selection is the process of gathering i n f o r m a t i o n for the purposes of evaluating and deciding w h o should he employed in part icular jobs. I t is i m p o r t a n t to note that recruitment and selection are discrete processes and both processes need t o operate effectively i f the f i r m is to effectively manage its staffing process. For example, a f i r m may have an excellent selection system for evaluating candidates but if there are insuff ic ient candidates to evaluate, then this selection system is less than effective. Both processes must operate effectively for opt imal staff ing deci- sions to be made.

Some of the major differences betx\’een domestic and internat ional staff ing are first that many f i rms have predispositions w i t h regard to w h o should hold key posit ions in headquarters and subsidiaries (i.e. ethnocentric, polycentric , regiocentric and geocentric staff ing orientations) and second, the constraints imposed by host governments (e.g. i m m i g r a t i o n rules w i t h regard to w o r k visas and the c o m m o n requirement in most countries to provide evidence as to w h y local nationals should not be employed rather than h i r i n g foreigners) w h i c h can severely l i m i t the M N F ‘ s abi l i ty to hire the r ight candidate. I n a d d i t i o n , as Scullion and Coll ings^’ note, most expatriates are recruited internally rather than externally, so the task of persuading managers (part icularly if they are p r i m a r i l y w o r k i n g i n a domestic environment) to recommend and/or agree to release their best employees for internat ional assignments remains a key issue for inter- na t iona l H R managers. The small number o f external recruits is conf i rmed by data f r o m the Global Relocation Trends Survey 2010. Here , the p r o p o r t i o n of external hires for internat ional posit ions was only 8 per cent across ail f i rms that part ic ipated i n the 2010 survey. This repre- sented the lowest f igure i n the history of the repor t (the benchmark historical average is 12 per cent o f expatriates).”^

Recrui tment of internal hires for expatriate assignments is preferred because this reduces the r isk o f a poor selection decision. In an internal selection process performance appraisals, per- sonal reports , interviews w i t h colleagues and f i rm- in terna l career plans can he used as informa- t ion sources in order to reduce uncertainty. I n their study o f 653 Spanish companies Bayo- M o r i o n e s and O r t i n – A n g e l show that the preference for internal recruitment is not o n l y moti – vated by the m i n i m i z a t i o n of selection risks but also by the wish to secure present and past investments i n human capital. ‘ ‘^ In the case o f expatriate recruitment on the external labor mar- ket the selection risk is often managed by using specialized (and relatively expensive) consul- tants. The more t rad i t iona l devices of recrui tment and selection such as t r a d i t i o n a l j o b advertisements and executive search (also k n o w n as headhunting) can also be used (See I H R M in A c t i o n Case 5.1).

Pecul iar for inten are hard m e t h o d than 10( tional) H da ted Xh many cc resource 4 3 per o tors a n d the near their rear there are internatie agemen t d e m a n d

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B a s e d • cultural difl ences dep- v iews. The c a n d i d a t e d idates wi t

126 CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTION

(Continued)

There are particular challenges tor HR consultants in a dynamic international environment. Dr Hann notes: ‘S iml l^ to the requirements for the candidates, the requirements and criteria for a qualified HR consultant in the internationai business environment are also high’. Notably, multlllngualism is important to understand the needs of the customers and those of the candidates. In addition to a professional qualification, entrepreneurial thinking as well as Intemational work experience are essential requirements to find a position in a recruiting company as an external setvice provider

Source: © Lena Knappert and Marion Resting. Based on Personal communication with Ulrich Hann, June 8, SOIO^^B

: , Maekelae, B j o r k m a n and Ehrnrooth’^” have identif ied a variety’ o f staff ing archetypes (iocal- interna] , locaJ-external, g lobal – internal and global external) that relate to h u m a n capital advan- tages. These are main ly concerned w i t h knowledge and social capital advantages inc luding a positive effect o n interact ion and trust w i t h i n the organizat ion.

Expatr iate fai lure and success are obviously cr i t ical and related issues for global f i rms . Both topics have been intensively examined by I H R M researchers for decades. W e w i l l start w i t h the more t rad i t iona l focus on expatriate fai lure. Considering the major determinants for expatriate fai lure clarifies the l inks to expatriate success. First, there are three questions related to fa i lure : its d e f i n i t i o n , the magnitude o f the phenomenon, and the costs associated w i t h fai lure.

What do we mean by expatriate failure? The term expatriate failure has been defined as the premature re turn of an expatriate (that is, a r e t u r n home before the per iod o f assignment is completed). I n such a case, an expatriate fa i lure represents a selection error , o f ten compounded by ineffective expatriate management policies. There has been some discussion i n the l i terature about the usefulness o f def in ing expatriate fail- ure so n a r r o w l y . For example, an expatriate may be ineffective and p o o r l y adjusted, but i f n o t recalled, the person w i l l no t be considered a fa i lure . Clearly, an inab i l i ty to either effectively handle new responsibilities or to adjust to the country of assignment is very l ikely to contr ibute t o diminished performance levels. These results may n o t be immediately apparent b u t can have long-term negative consequences in terms o f subsidiary performance. H o w e v e r , i f the expatriate remains for the dura t ion o f the assignment, to all intents and purposes, the assignment w i l l have been considered a success.

Another significant issue is that of expatriates leaving the M N E w i t h i n the f i rs t or second year after repatr iat ion (for more details o n repatr ia t ion see Chapter 7) because they feel that their newly acquired knowledge is no t valued.’^^ A g a i n , in this case the in ternat iona l assignment w o u l d he regarded as a success a l though i t leads to the loss of a valuable employee. O n the other h a n d , a project abroad can be completed early, w h i c h could lead to a premature r e t u r n o f an ex- patr iate . A c c o r d i n g to the above-mentioned def in i t ion this w o u l d be erroneously classified as a fa i lure . Thus , the t rad i t iona l def in i t ion of premature return of an expatriate that has dominated the l iterature does not necessarily indicate expatriate fai lure. H a r z i n g suggests that a def in i t ion of expatriate fai lure should include poor performance as wel l as repatr ia t ion problems.’^^ A n example of research that adopts this broader def in i t ion of expatriate fa i lure (that is, i n c l u d i n g under-performance and retention upon complet ion of the assignment) is a study conducted by Forster^^ o n 36 Brit ish f i rms tha t concluded:

for IHRM.

EXPATRIATE FAILURE AND SUCCESS

CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTION

If we accept ttiat a broader definition of EFRs [expatriate failure rates] is warranted, then it can be argued that the actual figure of those who are ‘failing’ on lAs [internationai assignments] could be somewhere between 8 per cent and 28 per cent of UK expatriates and their partners.

I n the next section we l o o k at the magnitude of expatriate fai lure in further detai l .

What is the magnitude of the phenomenon we call expatriate failure? The Brookfield Report 2010 provides several indicators for expatriate fa i lure . Firms indicated that 6 per cent of expatriate assignments were regarded as failures. The survey also reported that expatriate turnover was about 17 per cent d u r i n g the internat ional assignment, 28 pet cent w i t h i n the f irst year upon repatr ia t ion , 23 per cent between the f irst and the second year and 22 per cent after t w o years. C o m p a r i n g these figures to an average annual turnover rate of 13 per cent these percentages can be considered as relatively high, especially since i m p o r t a n t invest- ments by the assigning f i r m are at stake. Locat ions w i t h the highest expatriate fa i lure rates were China (12 per cent), India (10 per cent) and the US A (8 per cent).^^

In the f o l l o w i n g section we w i l l report some selected results f r o m academic studies on expa- triate fai lure. First, the analyses show that differences in expatriate fa i lure rates by country-of – o r i g i n of the M N E are relatively l o w . Second, they indicate the historical development of expa- triate fa i lure rates. W e d r a w on data f r o m the i m p o r t a n t w o r k by Tung*^^ on expatriate fai lure in US, Ftiropean and Japanese M N E s which ini t iated this discussion in the early 1980s and recent w o r k by T u n g l i and Peiperl, w h i c h reports figures f r o m Germany, Japan, Britain and the USA in 2 0 0 9 . * ° The results of both studies ate presented in Table 5.3.

T A B L E 5 .3 Expatriate Failure Rates

127

ire than 10% bu t less

than 20%

Equal t o or more

than 20%

Source: R. L Tung, ‘Selection and Training Procedures of U.S., European, and Japanese Multinationals’, California Management Review, Vol. 25, No. 1 (1982), pp. 57-71 and p. 164; Z. Tungli and M. Peiperl, ‘Expatriate Practices in German, Japanese, U.K., and U.S. Multinational Companies: A Comparative Survey of Changes’, Human Resource Management, Vol. 48, No. 1 (2009), pp. 153-171. Reproduced with permission.

As Table 5.3 shows, T u n g identif ied higher expatriate failure rates and a higher percentage of M N F s report ing more than 10 per cent fai lure rates in US M N F s than i n European or Japanese organizations. The mote recent data show that the reported figures have become mote s imilar across the investigated countries and that premature return of expatriates still represents an ongoing challenge.* ‘ H a r z i n g * ‘ has questioned the repotted fai lure rates in the US l iterature, c la iming there is ‘almost no empirical f o u n d a t i o n for the existence of high fai lure rates when measured as premature re-entry’ . M o r e recently, Christensen and H a r z i n g have again questioned the value o f the whole concept of expatriate fa i lure , arguing that ‘ i t m i g h t wel l be t ime to aban- don the concept of expatriate failure altogether and instead d r a w on the general H R literature to analyze problems related to turnover and performance management in an expatriate context ‘ . **

128 CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUTMENT AND SELECTION

F r o m the above discussion we can d r a w the f o l l o w i n g conclusions: .

1 Broadening the definit ion of expatr iate failure beyond that of premature return is war ran ted .

Fol lowing up b road surveys wi th interviews w i th responding firms may assist in this explorat ion.

2 Regardless ot the definit ion or precise amoun t of ‘failure’, its very presentat ion as a p rob lem has b roadened the issue to demonst ra te the complex i ty of internationai ass ignments. In fact, one cou ld argue that the so-cal led persistent myth of h igh US expatr iate failure rates has been a posit ive

i e lement in te rms of the at tent ion that has subsequent ly been d i rected t owa rds expatr iat ion pract ices, it has certainly p rovoked considerable research attent ion into the causes ot expatr iate failure. •

What are the costs of failure? . . ‘ V ‘ . ‘ ‘ ‘h. T he costs of expatriate fai lure can be both direct and indirect . Direc t costs include airfares and associated relocation expenses, and salary and t ra in ing . The precise a m o u n t varies according to the level of the posit ion concerned, country o f destination, exchange rates, and whether the ‘ fa i led ‘ manager is replaced by another expatriate. The ‘ invisible ‘ or indirect costs are harder to q u a n t i f y in money terms but can prove to be more expensive for f i rms. M a n y expatriate posi- tions involve contact w i t h host government officials and key clients. Failure at this level may result in loss of market share, difficulties w i t h host-government off icials , and demands tha t expatriates be replaced w i t h H C N s (thus affecting the mul t ina t iona l ‘ s general staff ing approach) . The possible effect o n local staff is also an indirect cost factor, since morale and pro- duc t iv i ty could suffer.*”

Failure also has an effect on the expatriate concerned, w h o may lose self-esteem, self-confi- dence, and prestige among peers.** Future performance may be m a r k e d by decreased motiva- t i o n , lack of p r o m o t i o n a l opportunit ies and perhaps increased p r o d u c t i v i t y to compensate for the fai lure. F inal ly , the expatriate’s fami ly relationships may be threatened. These are a d d i t i o n a l costs to organizations that are of ten over looked.

Reasons for expatriate failure – and what about expatriate success? T u n g * ^ is recognized as the f i rs t researcher t o investigate the reasons f o r expatr iate fa i lure . A l t h o u g h she f o u n d differences according t o the c o i m t r y – o f – o r i g i n o f the M N F , i m p o r t a n t personal factors were the i n a b i l i t y to adapt either on the p a r t o f the spouse or the manager. Odicr family problems, the maturity of the manager and problems coping w i t h higher responsibil i t ies inherent i n the p o s i t i o n a b r o a d were also noted . T he m o r e recent compara t ive study by T u n g l i and Peiperl does not indicate any c o u n t r y specificities i n the results. I t con- f i r m s the importance o f the f i rs t three reasons ment ioned i n the s tudy by T u n g : the i n a b i l i t y to adapt by the f a m i l y or the manager as w e l l as other f a m i l y issues. H o w e v e r , i n a d d i t i o n they also f i n d that f i rm-speci f ic issues and deficient performance by the expatr iate were m a j o r reasons for a premature r e t u r n . * ‘ In his s tudy based on 2 1 interviews Lee** f o u n d s imi lar rea- sons for expatriate fa i lure . H o w e v e r , he also f o u n d that the activities o f the M N F itself and s u p p o r t for the expatr iate and the families were m a j o r success factors for i n t e r n a t i o n a l assignments.*^

Final ly , the Brookf ie ld study reports that spouse/partner dissatisfaction (65 per cent), the inab i l i ty to adapt (47 per cent), other family concerns (40 per cent) and poor candidate selection (39 per cent) accounted for expatriate fai lure. I n a verbat im comment they c o n f i r m the results by Lee that I H R M has an i m p o r t a n t role in creating successful internat ional assignments: career and talent management (before, d u r i n g , and after) is the single most i m p o r t a n t factor i n reta ining

employees after the assignment …”^^

138 CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTION CHAPTEI

Other examples o f on-assignment assistance are p r o v i d i n g help in establishing contacts and p a y i n g for lost spouse income. The idea is to m a i n t a i n skills so that the spouse may f i n d w o r k u p o n re-entry in t o the home c o u n t r y . These attempts demonstrate tha t creative t h i n k i n g can assist M N E s to overcome this potent ia l barr ier . I t is no t possible to c o m m e n t w i t h a u t h o r i t y o n h o w effective the above assistance schemes are in terms o f o v e r c o m i n g the d u a l career bar- rier . H o w e v e r , i t is clear that mul t ina t io n a l s are a t tempt ing to address the issue and create sol- ut ions for this barr ier to m o b i l i t y . A c c o r d i n g to the Brookfield Global Relocation Trend Survey 2010:

Spouses and partners feel strongly that their professional lives are valid concerns – both during and after international assignments. After all, 50 per cent of spouses were employed before such assign- ments. Consequently, they are demanding that companies assist them in maintaining their careers – especially when economic conditions make this difficuit.^^’^

Besides support ing the expatriate’s spouse before, d u r i n g and after the internat ional assignment M N E s can also choose to offer non-standard assignments as described earlier in this chapter – commuter and v i r tua l assignments seem to p r o v i d e relevant options here.

A r e f e m a l e e x p a t r i a t e s d i f f e r e n t ? O u r f ina l issue in terms o f selection for internat ional assignments is related to gender. The typical expatriate st i l l tends to be male. The Brookfield Global Relocation Trend Survey found in 2010 that 17 per cent o f all expatriates were female (historical average i n the Brookfield Reports: 16 per cent). H o w e v e r , there is a t rend towards increasing numbers o f female expatriates. For example, in 1984 A d l e r * ” ” reported a survey of internat ional H R practices in over 600 US and Canadian companies that f o u n d only three per cent of the 13 338 expatriates identified were female. She f o u n d that female expatriates tended to be employed by companies w i t h over 1000 employees in the banking , electronics, petro leum and publ ishing industries. Researchers have continued to examine w h y so few expatriates are female. Is i t because they were u n w i l l i n g to relocate? Is i t at t i tudinal? Does i t reflect a c o m m o n preconception that men in some cultures, such as certain Asian countries, do not l ike repor t ing to female managers, par t icular ly foreign w o m e n , and therefore w o m e n should n o t be posted overseas. This unspoken assumption m a y contr ibute to w h a t has been referred to as ‘the glass border that supports the glass cei l ing’ . H o w e v e r , this is a view that has no s t rong empirical

141

support . A number of studies challenge some o f the attitudes regarding the suitabi l i ty of females for

internat ional assignments. For example, S troh, V a r m a and V a l y – D u r b i n ‘ ” ‘ f o u n d that US and Canadian women are interested i n and l ikely to accept internat ional assignments, though there are response variat ions between those w i t h chi ldren and those w i t h o u t . H o w e v e r , the w o m e n in this study tended to believe tha t their f i rms were hesitant to ask them to accept an in ternat ional assignment, though supervisors (whether male or female) d i d n o t necessarily share that belief. Further, performance of female expatriates was found ini t ia l ly to be affected by host country prejudice regarding the role of w o m e n in certain countries – considered as c u l t u r a l l y tough assignment locations. H o w e v e r , the longer the w o m e n were on such assignments, the less they perceived that prejudice was a barrier to effectiveness. Cal ig iur i and T u n g , ‘ ” * in their s tudy o f female and male expatriates in a US-based m u i t i n a t i o n a i f o u n d that females can p e r f o r m equally as w e l l as their male counterparts regardless o f a country ‘s att i tude t o w a r d w o m e n i n manage- rial posit ions.

T a k i n g a different approach i n her study o f A u s t r i a n female expatriates, F i s c h l m a y r ‘ ” ” used the concepts o f external and self-established barriers to explore w h y w o m e n are under- represented i n internat ionai assignments.

T h r o u g h 2 1 in terv iews w i t h H R managers and female expatriates i n A u s t r i a n m u l t i n a t i o n – als from various industries and positions, Fischlmayr found that attitudes o f H R directors

D SELECTION CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUFTMENT AND SELECTION 139

;ontacts and l y f i n d w o r k t h i n k i n g can ith a u t h o r i t y 1 career bar-

id create sol- ation Trend

during and ich assign- ‘r careers –

I assignment lis chapter –

nternat ional ; Brookfield were female m d towards

a survey of i l y three per iates tended

3, petroleum jatriates are t a c o m m o n ke repor t ing )t be posted 1 to as ‘the ng empirical

females for that US and hough there le w o m e n in nternational : that belief, lost country iral ly tough :he less they .eir study of o r m equally

i n manage-

schlraayr ‘ “” are under-

n u l t i n a t i o n – R directors

were a m a j o r barr ier to the selection of female expatriates, t h o u g h self-established barriers were also very s t rong . Females in A u s t r i a n companies of ten had to specifically request an i n t e r n a t i o n a l assignment whereas their male colleagues were required to take i n t e r n a t i o n a l assignments. Fur ther , some w o m e n regarded their age as a factor i n terms o f others ‘ per- ceptions and expectations about their behavior . The older the w o m a n , the easier i t was to o b t a i n a p o s i t i o n overseas. Fischlmayr concludes that w o m e n are p a r t l y to blame for their = under-representat ion.

M a y r h o f e r and S c u l l i o n ‘ ” * report o n the experiences of male and female expatriates i n the German c lo th ing industry . They f o u n d that w o m e n were sent to a diverse range o f countries, i n c l u d i n g Islamic countries. Overal l , there were few differences in the experiences of b o t h gen- der groups, though female expatriates placed more value on integration of spouse/family issues p r i o r to and d u r i n g the assignment than d i d the males in the sample. Assignment lengths in this industry tended to be shorter and involved various forms o f non-standard assignments and there were generally more female managers than perhaps f o u n d i n other industries. M o r e w o m e n than men were assigned for longer assignment terms, and the authors conclude that the higher p r o p o r t i o n of wom e n in the industry appeared to make gender a less i m p o r t a n t issue. H o w e v e r , this d i d not apply to the t o p senior management positions where w o m e n were less represented. M a y r h o f e r and Scullion conclude that there are s t i l l barriers to female expa- triates i n terms o f senior expatriate posit ions.

A f u r t h e r c o n t r i b u t i o n comes f r o m a s tudy by N a p i e r and T a y l o r ‘ ” ^ o f female expatriates : f r o m various countries w o r k i n g i n Japan, China and T u r k e y . The w o m e n fe l l i n t o three cate- gories: t r a d i t i o n a l expatriates, ‘ t ra i lers ‘ w h o were spouses/partners o f male expatriates, and ‘ independents ‘ – professional w o m e n w h o c o u l d be called self-selected expatriates. N a p i e r and T a y l o r f o u n d tha t g a i n i n g credib i l i ty w i t h local clients was a m a j o r issue. Acco m modat – ing to c u l t u r a l differences, m a i n t a i n i n g a social l i fe and a need for a p p r o p r i a t e interpersonal skills were i m p o r t a n t factors in co p ing w i t h w o r k demands. N e t w o r k s became i m p o r t a n t for b o t h business and social contexts. Being a m i n o r i t y (a fo r e ign female) meant higher visi- b i l i t y t h a n they were used to and c o u l d be posi t ive in terms o f ge t t ing access to key clients and customers.

W h a t emerges as c o m m o n across the various studies o n female expatriates is tha t assignment locat ion, level of organizat ion support , spouse/partner satisfaction and inter -cul tural experien- ces are i m p o r t a n t in terms of performance. The list of moderators is similar to those we dis- cussed i n general terms earlier in this chapter. W h a t does appear to differentiate female and male expatriates is the degree to w h i c h these moderators affect i n d i v i d u a l performance and the value placed o n cul tural awareness t ra in ing p r i o r to the in ternat ional assignment. The dual ca- reer issue may prove to be a greater barrier for female m o b i l i t y as males are more reluctant to accompany their spouse/partner.

Insch, M c l n t y r e u n d N a p i e r ‘ ” ‘ have developed strategies for break ing the glass cei l ing before, d u r i n g and after an in ternat iona l assignment. They consider the perspectives o f b o t h the female expatr iate and the M N E . Table 5.6 depicts these strategies. O v e r a l l , the per form- ance o f female expatriates is influenced by the prejudices against female managers i n the re- spective countr ies . H o w e v e r , this influence is perceived as less s t rong the longer the female managers stay a b r o a d . ‘ ” * C a l i g i u r i and Cascio ‘ “^ argue tha t fore ign w o m e n are often evalu- ated according to other cr i ter ia than local w o m e n . I n countries i n w h i c h females tend to be rather d iscr iminated against i n w o r k i n g l i fe , fore ign w o m e n are seen as neutra l . C a l i g i u r i and Cascio state tha t i t cou ld be a success factor if female expatriates do no t emphasize t o o much their female role and take on typica l female role behavior in the fo r e ign c o u n t r y . Instead they should deliberately dif ferentiate themselves f r o m the behavior described as typ ica l f o r local w o m e n . This should lead to the perception o f being seen as an expert rather than being seen as a w o m a n and s h o u l d enable a successful and equal business re la t ionsh ip .

140 CHAPTER 5 SOURCING HUMAN RESOURCES FOR GLOBAL MARKETS – STAFFING, RECRUITMENT AND SELECTION CHAPTE

TABLE 5,6 strategies for breaking the expatriate glass ceiling

Strategies

Pre-ass ignment strategies

On-ass ignment strategies

Post -ass ignment strategies

For female expatriates

Self awareness

Unders tand ing ttieir o w n strengths, a n d recognize t he values a n d emot ions tha t one Identifies wi th based o n upbr ing ing a n d cul ture

Using t hose s t rengths and skills t o t he fullest advantage Planning o n e ‘ s lite as well as one ‘s career Deve lopment o t the relat ionships a n d social ne tworks

Finding a n d using mento rs as well as cor respond ing wi th female expatr iates to r advice a n d gu idance

• Finding a n d us ing mento rs as a key t o success

• Develop t he wi l l ingness and skill t o abso rb k n o w l e d g e f r o m the local set t ings

Simply acknow ledg ing that the l ikel ihood of extensive use ot know ledge is unlikely Female expatr iates may think and ac t more entrepreneurial ly, tak ing even greater responsibi l i ty for managing their careers

For MNEs

Begin w i th a tho rough review o t their select ion criteria for overseas ass ignments

Eliminate, t h rough policy a n d training, any overt or subt le gender b iases in the select ion p rocess Train select ion dec is ion-makers t o avoid the subt le gender biases in the select ion p rocess

Trailing spouse a n d ‘dual-career ‘ issues should b e d iscussed and prov ided for regardless o t the manager ‘s gender Make a m o r e concer ted effort t o insert w o m e n into the relevant informal and formal organizat ional ne tworks

Cons ider ass ign ing female expatr iates t o countr ies whe re they are likely t o have a greater oppor tun i ty t o ad just quickly, deve lop , a n d g row , part icularly earlier in their careers Cons ider a n d deve lop possibi l i t ies tor shor t – te rm ass ignments Con t inued training a n d mentor ing

Psychological cont rac t mus t b e fulfilled w h e n an expatr iate returns e.g. pay particularly at tent ion to the cont inued mentor ing a n d training, oppor tun i t ies tor the expatr iates t o use their n e w expert ise

t

Source: G. Insch, N. Mclntyre and N. Napier, ‘The Eixpatriate Glass Celling: The Second Layer of Glass’, Journal of Business Ethics, Vol. 83, No. 1 (2008), pp. 19-28. Reproduced with permission via Rightslink.

SUMMARY ‘ • : . ‘

This chapter has expanded on the role of staff ing, tecruitment and selection in intetnat ional operations for sustaining intetnat ional business opetations. The f o l l o w i n g issues were discussed:

• W e have out l ined t he var ious app roaches to staff ing internat ional opera t ions – e thnocent r ic , polycentr ic , geocent r i c , and regiocentr ic a n d d iscussed their advan tages a n d d isadvantages . In add i t ion , w e presen ted a mode l del ineat ing fac tors that may de te rmine t he cho ice ot these op t ions : Contex t specif ic i t ies, M N E character is t ics , features of the local unit as well as IHRM pract ices.

• Primary reasons for using international ass ignments include posit ion filling, management development

and organization development . There are Indicators that the impor tance of management development

is increasing.

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