Host Country National Managers Contribution to Success of Expatriates - Dissertation Example

? The Impact of Host Country National Managers Contribution to Success of Expatriates al affiliation The Impact of Host Country National Managers Contribution to Success of Expatriates Introduction The purpose of this dissertation is to ensure deeper understanding of the impact of the host country’s national managers’ contribution to the success of expatriates. This is achieved by describing, exploring challenges faced by expatriates and the way host country managers solve them, hence, leading to their success due to improved performance. Minter (2008) noted that some of the objectives of multinational corporations’ (MNCs) compensation policy are to attract, retain, motivate high-quality talent, and be externally competitive. However, research indicates that there are problems with disparities with regard to compensating expatriates working in a wide variety of environments (Caruth & Handlogten-Caruth, 2002; Lee, 2005; Herrera, 2005; Latta, 2006; Minter, 2008). Human resource lacks comprehensive planning in advance for disparities of pay scales, taxation, or even, cultural adaptation; failure to concentrate on offering international training and management development skills for new expatriates. One approach is by asking the following question: what can organizations and their managers do so as to gain a better understanding of policies regarding international compensation? One way to gain a better understanding is through an effective training program for the new expatriate workforce, and compensation policies that are externally competitive and internally equitable for the success of any MNC (Human Development Report, 2009). METHODOLOGY This section shows how data was collected so as to find the answers to the research question, hence fulfilling the purpose of this dissertation paper. This will be subdivided into a description of the purpose of research, research approach and strategy. Later, data collection, sample selection and analysis of data will be presented. Lastly, we conclude the chapter with discussion on how the data collected and presented is valid and reliable (Creswell, 2009). Purpose of the Research This paper aims at showing how the host country’s managers contribute to the success of the expatriates. This objective is descriptive in nature as it seeks to explain how the impact of the host managers leads to success of expatriates. Research Approach Qualitative approach to this research is the most appropriate basing on the purpose of this dissertation paper. It is the most appropriate approach to deal with people’s perceptions that are intangible. It also ensures close contacts to the study objects (Tayeb, 2005). Data Collection Data can either be primary or secondary, where each of the methods is a high complement of the other. It is highly recommended that a researcher uses as many measurements as possible so as to improve the validity of the study, hence leading to more convincing and accurate findings and conclusions. In this paper, the main data sources used were interviews evidence from documentation. Interviewing was chosen as the most appropriate primary data collection method as it directly focused on the topic of this dissertation. The discussion involved questions dealing with a wide range of concepts, hence, enabling me attain the open character of the interview. This also ensured flexibility in the respondent’s answers, and at the same time focusing on the certain issues in the guide. Data gathered through documentation is vital in substantiating evidence from other sources (Liu & Shaffer, 2005). Data Analysis Data was analyzed depending on my style of thinking, accompanied with sufficient presentation of evidence, while considering available alternatives and interpretations. Data was simplified by reducing and later on displayed, from where conclusions based on the findings were drawn. Data Validity and Reliability Validity is the ability of the measuring instrument to determine what it is supposed to access with the highest percentage of accuracy ever. To ensure that this is achieved, multiple sources of evidence on the same phenomena can be used. Interviews were conducted using language that best suited the respondents so as to ensure improved validity of this research. This helped reduce cases of eventual misunderstandings due to language barriers. Data was recorded through tapes and also taking notes. Later, data collected was compared with the theoretical data, hence improving its validity. When it comes to reliability, it ensures that the same findings are arrived at if another similar research on the same phenomenon is carried out. However, same procedure followed by the earlier researcher must strictly be followed. Reliability also ensures that minimization of errors and bias in a study, since they cannot be fully eliminated. The use of a tape recorder made double checking of the responses possible, hence eliminating any misinterpretations. Well organized notes that were taken during interviews ensure that readers can easily retrieve any desired material (Stehle & Erwee (2007). PROPOSAL AND DEFENSE Employees who have worked in other countries for some time are referred to as expatriates. These expatriate employees are placed in various international offices and have international responsibilities. Management of multinational companies around the globe requires monitoring numerous political, social, legal, and cultural differences among countries, which could trigger events that would adversely affect the long run profitability or value of the company (Deresky, 2011). It is vital for international business individuals to be students of culture. The management must have factual knowledge, which is relatively easy to gain; but they must also become sensitive to cultural differences, which can be challenging (Miao, Adler & Xu, 2011). Much of the literature on international expatriates deals with matters of employee hiring process such as selection and recruitment (Connelly, et al. 2007). Selecting and rewarding the best international candidates can make a significant difference in the world if a multinational corporation (MNC) successfully competes with other companies around the globe (Minter, 2008). The human resources compensation program supports the way the business is structured, organized, and operated, when organizations decide to operate internationally (Mondy, 2012). There must be a match between compensation and goals for which host managers want expatriate employees to achieve. In a recent survey of employers with global operations, 85% said they have a global compensation strategy to guide compensation decisions for employees at all levels and in all countries where they operate (Noe, et al. 2011). A MNC employs several types of international employees and must realize the importance and shortcomings of inequality when awarding expatriate compensation globally and locally. By appreciating the importance of the above factors, Deresky (2011) noted that those expatriate employees would not feel exploited whether they are host-country nationals, parent-country nationals or third-country nationals. Moreover, research shows that the majority of managerial positions in subsidiaries or headquarters are filled by locals instead of foreigners (Dessler, 2011). This indicates that expatriates represent a minority in MNCs'. A research study concluded that MNCs “should uphold the management criteria of social justice, faith and credit, and show much concern for the feelings, jobs, and life quality of expatriates in order to enhance their sense of being identified with and attached to their organization. In this way, corporate managers can avoid exploiting expatriates and enhance the corporation’s positive image” (Wang, 2008: 878). Hence, MNC expatriate employees should have a sense of equality towards compensation and benefits. By doing this, the host managers will also be playing a vital role towards the success of these expatriates, hence improving the company’s performance. There is an extensive literature on expatriate employees (Harvey, 2008), but the international assignments are failing because the expatriates are not properly trained and fully equipped to adapt, and take on their assignments. There are many reasons for expatriate failure, and it is critical that MNCs determine these underlying reasons (Shen & Hall, 2009). The managers of these host MNCs noted that, upon expatriates’ arrival at their destinations, many found it difficult to adjust to the culture, language, and even climate of their assigned countries. This is sometimes even more difficult if employees are not supported by the host company managers, their spouse, family, and if he/she was given no choice in deciding whether or not they wanted the job. Host managers are made aware of the importance of family adjustment for the success of expatriates; therefore, expatriate’s spouse should be included in the preparation training program (Andreason, 2008). Failure of the family to adjust is a common reason for expatriates’ terminating their international assignments (Shaffer & Harrison, 2006). Selecting Expatriates Expatriate employees especially the managers for global operations should be selected based on their level of intelligence and soft skills and also technical knowledge and skill, which will enable them to earn the respect of subordinates (Csizmar, 2008). Host managers should consider each candidate’s skill, learning style, and approaches to problem solving. Each of these factors should be related to achievement of the organization’s goals, such as; solving a problem, transferring knowledge to host-country employees, or developing future leaders for the organizations (Noe et al. 2011). Caruth and Handlogten Caruth, 2002 also suggested that the best way to build an excellent global workforce with the right knowledge and ability is to offer a considerate compensation program and career growth opportunity. This problem became known for many organizations with employees working internationally that are continuing to face some unique compensation issues (Mathis & Jackson, 2011). As the global economy evolves into a more complex and interrelated system, MNCs are facing an increasingly complicated task in finding, motivating and retaining talented expatriate employees. Most multinational companies use all three (PCNs, HCNs & TCNs) forms of international staffing. It could be extremely difficult to implement all of these tasks into the recruiting and selection process (Deresky 2011). Herod (2009) argued that effective management selection, planning of tasks, relocation services, family support, career and repatriation planning; assessing assignment and process results are crucial principles and practices to be included in the international staffing process. These factors are the main challenges associated with international human resource management (Bohlander & Snell, 2007). Expatriate Adjustment The international exchange and movement of human resources has led to the emergence of research study, which targets the changes affecting the expatriates in a foreign culture (Stone, Isenhour & Lukaszewski, 2008). The opportunities involved in being an expatriate include an increase in developmental skills and providing more tangible outcomes. However, previous research has been developed, designed and conducted most research related to the needs of others who are preparing for international jobs and careers in the U.S. (Lee, 2005). In his study of Taiwanese financial institution expatriates in the U.S., Lee found that expatriate adjustment was enhanced with greater satisfaction at the host country. He noted that given the associations between comfort and job security and cultural adjustment between employees of different cultures, multinational companies need to ensure that they have human resource rules, regulations and practices to support job satisfaction of their expatriates while abroad (Lee, 2005: 278). Some researchers noted that expatriate managers must be trained in diversity and organizations have to start employing a more diverse workforce. If a manager has not been around to learn one’s culture, how can he/she teach the workforce the trade? The lack of knowledge about another culture will deprive an individual of opportunities to pursue global careers (Olsen & Martins, 2009). The quality of a company could potentially be enhanced if they not only use the market tools that they possess, but also utilize marketable individuals they have in the company (Fernandez-Araoz, 2007; Inman, 2009). Thus, the factors contributing to the successful expatriation experience are significant to MNCs (Avril & Magnini, 2007). Expatriate failure can be costly if he/she leaves the company (Shaffer, et al., 2006). Pre-departure training programs that involve lectures and other activities have demonstrated an effective way to prepare expatriates (Littrell et al. 2006). Training programs should provide expatriates information to study what the foreign culture is and what it consists of. Training would also create successful expatriate assignments, as well as provide crucial management skill. In doing so, host country managers should have expatriate policies covering matters such as training programs, compensation, and transfer costs in their international or global operations (Csimar, 2008). Compensating Expatriates Research on expatriates’ success has also had significant attention on the issue of global rates of paying wages. The globalization of business entities has led to increased knowledge of, and concern for having an internationally equitable compensation system in many multinational companies. Expatriates serve as representatives for their organization when assigned internationally (Harzing & Christensen, 2004). However, before being assigned, many organizations stress the importance of their overseas assignments and inform these employees of the potential benefits to them as individuals (Shen & Hall, 2009). There is plenty of evidence that one of the major disadvantages of moving people from one continent to another is that of significant problems arising in compensation-related matters (Herrera, 2005). It has been noted that a number of suggestions are made as to what companies can do to curb this problem. What may work for the assignment of some foreign employees of the same nationality may not be appropriate for the organization that begins to assign employees of different nationalities (Herod, 2009). Another study stated that there have been plenty of attempts “to find out how and what should be included in an international compensation package.” These how and what questions regarding the differences in expatriate compensation plans results in significant differences in cultural, identity change (Ghafoor et al. 2011). The differences in compensation packages may be seen as necessary in order to compensate for the country’s differences in general. These variations in legislations, cost of living, policies regarding taxation, and some other determinants must all be considered in establishing the compensation for local employees and managers, as well as managers and professionals brought in from other countries (Mondy, 2012; Herrera, 2005). With these and numerous other concerns, developing and managing a global compensation system becomes extremely complex (Latta, 2006). However, one of the ways of handling the problem is by paying an equal base salary companywide, and then adding on different salary allowances, in accordance to the levels of individual labor market (Dessler, 2011). For example, in places like Nigeria and China, the supply of managerial skills and abilities has not caught up to the demand; therefore there is a vast gap between the pay for management positions and pay for clerical workforce (Noe et al. 2011). Hence, organizations should think globally but act locally. The survey of 243 MNCs conducted by Lockley (2008-2009) reported that a majority of 86% considers death benefits and long-term disability benefits for expatriate employees a medium to high priority in business related affairs. However, 26% admit to having no overarching policy for providing expatriate benefits. Many companies with benefits for expatriates lack essential provisions. According to the new study by Berdan (2009), 80% of MNCs who provide certain benefits do not consider local social security provisions. Furthermore, the study reveals that some host country managers feel that maintaining benefits for expatriates is too expensive and complicated (Briscoe & Schuler, 2004). This factor causes companies to miss the opportunity to upgrade their benefits offering, and gain favorable competitive edge, all over the world. The survey showed that in order for international assignments to end more successfully, host country managers must make sure that they provide the benefit that expatriates need (Creswell & Harzing, 2009). Conclusion Despite the many benefits of the internationalization of businesses, multinational organizations with employees working all over the world face significant challenges in compensation-related issues. The globalization of business demands the development and management of employees’ compensation from different countries. Also, it should be cost-effective and at the same time, remain attractive and motivating for employees who accepted international assignment. The need for greater compensation and benefits to recruit and retain ambitious foreign employees must not be underestimated by these organizations. These employees expect that the skills and knowledge acquired overseas will benefit in terms of salary growth and external marketability (Benson & Pattie, 2008). The challenge for researchers and policy analysts in compensating expatriates is to bridge the variation in expatriate compensation plans that create significant differences in cultural identity changes. These variations in compensation scales may be seen as necessity so as to compensate for the country’s difference for local employees and managers, as well as managers and professionals brought in from other countries. Further research is needed that could reveal new insights for multinational organizations concerning the impact of externally competitive and internally equitable management for expatriate assignments. References Andreason, A. W. (2008). Expatriate adjustment of spouses and expatriate managers: An integrative research review. International Journal of Management, Vol. 25 (2): 382-393. Avril, A. B., & Magnini, V. P. (2007) A holistic approach to expatriate success. International Journal of Contemporary Hospitality Management 19: 53-64. Benson, G.S., & Pattie, M. (2008). Is expatriation good for my career? The impact of expatriate assignments of perceived and actual career outcomes. The International Journal of Human Resource Management, Vol. 19 (9): 1636-1653. Berdan, S. (2009). Expatriate employee numbers double according to new study. Personnel Today, 11-25. Bohlander, G.W., & Snell, S.A. (2007). Managing human resources. (14th Eds.) KY: Thomson. Brewster, C. (2007). Comparative HRM: European views and perspectives. International Journal of Human Resource Management , 18 (5), 769 - 787. Briscoe, D., & Schuler, R. (2004). International Human Resource Management: Policies & Practices for the Global Entreprise. New York: Routledge Learning Higher Education (2007). Capturing talent. The Economist, 59-61. Caruth, D.L., & Handlogten-Caruth, G.D. (2002). Fundamentals of international compensation. Innovative Leader, Vol. 11 (7). Clegg, S., Kornberger, M., & Rhodes, C. (2007). Business ethics as practice. British Journal of Management , 18 (2), 107 - 122. Connelly, B., Hitt, M.A., Denisi, A.S. & Ireland, R.D. (2007). Expatriates and corporate-level international strategy: Governing with the knowledge contract. Management Decision, Vol. 45 (3): 564-78. Creswell, J., & Harzing, A.W.K. (2009). Expatriate failure: Time to abandon the concept? Career Development International, 9(6-7): 616-626. University of Nebraska-Lincoln: Lincoln, NE, USA. Creswell, J. (2009) Research design: Qualitative, quantitative, and mixed methods approaches. University of Nebraska-Lincoln, Lincoln, NE, USA. Csizman, C. (January/February, 2008). Does Your Expatriate Program Follow the Rules of the Road? Compensation & Benefits Review, 61-69. Deresky, H. (2011). International Management: Managing Across Borders and Cultures. New York: Prentice Hall. Dessler, G. (2011). Human Resource Management, (12th Eds.) Upper Saddle River, NJ: Prentice Hall/Pearson. Dirani, K. (2009). Measuring the Learning Organization Culture, Organizational Commitment and Job Satisfaction in the Lebanese Banking Sector. Human Resource Development International, 12 (2). Dowling, P., Festing, M., & Engle, A. (2008). International Human Resource Management (5th ed.). London: Thomson. Expatriate Assignments Are On The Rise. (October 27, 2008). American Management Association, www.Amanet.Org. Expatriate Challenges (2008): What Are The Biggest Problems For Expatriates? www.justlanded.com. Fernandez-Araoz, C. (Fall 2007). Making People Decisions in the New Global Environment. MIT Sloan Management Review, Vol. 49 (1): 17-20. Haile, S., Jones, M.D. & Emmanuel, T. (2010). Why International Assignments end in Failure? Situational Factors Impacting Expatriate Success and Failure in Focus. European Journal of Management, Vol. 10 (2): 49-53. Harvey, W.S. (2008). Strong or Weak Ties? British and Indian Expatriate Scientists Finding Jobs in Boston. Global Networks, Vol. 8 (4): 453-473. Harzing, A.W.K., & Christensen, C. (2004). Expatriate Failure: Time to Abandon the Concept? Career Development International, 9(6-7): 616-626. Heijder, J., Van Der, Engen, M.L. Van & Paauwe, J. (April 2009). Expatriate Career Support: Predicting Expatriate Turnover. (April, 2009). The International Journal of Human Resource Management, Vol. 20(4): 831-845. Hellin, S., & Sandstrom, J. (2008). Codes, Ethics and Cross-cultural Differences: Stories from the Implementation of a Corporate Code of Ethics in a MNC Subsidiary. Journal of Business Ethics, 82, 281-291. Herod, R. (2009). Expatriate Compensation Strategies, SHRM, and Publications (Item #:61.15503). --------- (2009). Managing the International Assignment Process, SHRM, Publications (Item #: 61.15507). Human Development Report, (2009) Overcoming Barriers: Human Mobility and Development. Ghafoor, S., Khan, U.F., Idrees, F., Javed, B., Ahmed, F. (2011) Evaluation of Expatriates Performance and their Training on International Assignments. Interdisciplinary Journal of Contemporary Research in Business 3: 335-351. Inman, M.E. (2009). How Foreign Language Study Can Enhance Career Possibilities, 1-4. Jack, D., Stage, V. (2005) Success Strategies for Expats. American Society for Training and Development 59: 48-54. Jamali, D., & Sidani, Y. (2008). Insights into Classical versus Modern Managerial CSR Perspectives. Business & Society Review, 113 (3), 329 - 346. Jamali, D., Saffieddine, A., & Rabbath, M. (2008). Corporate Governance and Corporate Social Responsibility, Synergies and Interrelationships. Corporate Governance, an International Review, 16 (5). Latta, G.W. (2006). The Future Of Expatriate Compensate On. Worldat Work Journal (Second Quarter), 42-49. Lazarova, M.B., & Cerdin, J.-L. 2007. Revisiting Repatriation Concerns: Organizational Support versus Career and Contextual Influences. Journal of International Business Studies, 38(3): 404-429. Lee, H.W. (March 2005). The Factors Influencing Expatriates. The Journal of American Academy of Business. Cambridge (2): 273-278. ------- (2007) Factors That Influence Expatriate Failure: An Interview Study. International Journal of Management 24: 403-414. Littrell, L.N., Salas, E., Hess, K.P., & Riedel, S. (2006). Expatriate Preparation: A Critical Analysis of 25 Years of Cross-Cultural Training Research. Human Resource Development Review, Vol. 5: 355-389. Liu, X., & Shaffer, M.A. (2005). An Investigation of Expatriate Adjustment and Performance: A Social Capital Perspective. International Journal of Cross Cultural Management, 5(3): 235-254. Lockley, R. (2009). Expatriate Employee Numbers Double As Companies See Increased Value In Expatriate Assignments. www.mercer.com/summary.htm. Magnusson, P. & Boggs, D.J. (2006). International Experience and CEO Selection: An Empirical Study. Journal of International Management, Vol. 12 (1): 107-125. Mathis,R.L. & Jackson, J.H. (2011). Human Resource Management, (13th Eds.) Mason, OH: South- Western Cengage Learning. Miao, L., Adler, H., Xu, X. (2011) A Stakeholder Approach To Expatriate Management: Perceptions of Hotel Expatriates Managers In China. International Journal of Hospitality Management 30: 530-541. Minter, R.L. (2008). Preparation Of Expatriates for Global Assignments: Revisited. Journal of Diversity Management, Vol. 3 (2): 37-42. Mondy, R.W. and Mondy, J.B. (2012) Human Resource Management, (12th eds). Upper Saddle River, NJ: Pearson. Noe, R.A., Hollenbeck, J.R., Gerhart, B. & Wright, P.M. (2011). Fundamental of Human Resource Management, (4th eds). New York: Mcgraw-Hill/Irwin. Olsen, J.E. & Martins, L.L. (March-April 2009). The Effects of Expatriate Demographic Characteristics on Adjustment: A Social Identity Approach. Human Resource Management, Vol. 48 (2): 311-328. Selmer, J. & Fenner, C.R. (2009). Job Factors and Work Outcomes of Public Sector Expatriates. Human Resource Management Journal, Vol. 19 (1): 75-90. Shaffer, M., Harrison, D.A., Gregersen, J.H., Black, J.S., & Ferzandi, L.A. (2006). You Can Take it With You: Individual Differences And Expatriate Effectiveness. Journal of Applied Psychology, Vol. 91: 109 -125. Shen, Y. & Hall, D.T. (September-October 2009). When Expatriates Explore Other Options: Retaining Talent through Greater Job Embeddedness and Repatriation Adjustment, Vol. 48 (5): 793-816. Stehle, W., & Erwee, R. (2007). Transfer of Human Resource Practices from German Multinational Enterprises to Asian Subsidiaries. Research and Practice in Human Resource Management, 15 (1), 63 - 88. Stone, D., Isenhour, L., & Lukaszewski, K. (2008). A Model of the Influence of Cultural Values on Job Application Intentions and Behaviors. In D. Stone, & E. Stone-Romero, The Influence of culture on Human Resource Management Process and Practices (pp. 25 - 51). Psychology Press & Lawrence Erlbaum Associates. Susaeta, L., & Pin, J. (2008). The five phases in the transfer of HR policies and practices within MNCs. Working Paper No, 724, IESE Business School. Survey of Expatriate Shows Differing Employer-Employee Perceptions, (2001). Employee Benefit Plan Review 55: 40-41. Tariq, I., Schuler, R., & Gong, Y. (2006). A Model of Multinational Staffing Composition. International Journal of Human Resource Management , 17 (2), 207-224. Tayeb, M. (2005). International Human Resource Management. A Multinational Company Perspective. Oxford: Oxford University Press. Toh, S.M., & DeNisi, A.S. (2007). Host Country Nationals as Socializing Agents: A Social Identity Approach. Journal of Organizational Behavior, 28(3): 281-301. Wang, I-Ming. The Relationship between Expatriate Management and the Mentality and Adjustment of Expatriates. Social Behavior and Personality, 36 (7): 865-882. Welch, D.E., Welch, L. S., & Worm, V. 2007. The International Business Traveler: A Neglected but Strategic Human Resource. International Journal of Human Resource Management, 18(2): 173-183. Read More