The Key Aspects of Expatriation in Emerging Markets - Essay Example

Topic: Expatriation in Emerging Markets Name: Lecturer: Course name: Course code: Date: Executive Summary In this report, a critical analysis establishes the International Human Resource Management requirements and preparation of expatriates for foreign assignments in the emerging nations. The advancement of multinational business has accentuated the need of development of a centered HR department to globally distribute the expertise with an aid of enhancing efficiency in business activities. The cross cultural training based on local arena is ought to provide successful expertise to meet the encroachment of international business. Adoption of International Human Resource Management expatriates will promptly contribute measures enhancing quality services. The elucidation and supporting details are illustrated below. Contents Executive Summary 1 Contents 2 Introduction 4 Strategic importance of International Human Resource Management 4 Expatriation 4 Roles of expatriates 5 Expatriates and transfer knowledge 5 Failures of expatriates 6 Culture shock 6 Cross Cultural Training 6 Pre-departure Training 7 Pre-Departure Visit 7 Post-Departure Training 8 Methods and Types of Training 8 Compensation on foreign assignments 9 Salary negotiation 9 Foreign Service premium 9 Cost of living adjustment 10 Housing Allowance 10 Tax assistance 10 Health insurance 10 Retirement 11 Spouse assistance 11 Recruitment and selection of foreign assignments 11 Selection criteria 12 Remuneration of expatriates 12 Performance management on expatriates 13 Criteria for measuring the performance of expatriates 14 Conclusion 14 Reference list 15 Introduction Due to the increase in the influence and number of multinational businesses, there has been a growth in interest in international HR management, with the reflection of the appreciation of growth that successful management of HR determines the success of any multinational business (Maike Andresen, 2012). The quality of management in the international arena is more critical than it is in the local operation. The center of HR development is to develop the superior workforce so as to allow individual employees and the entire organization to achieve their goals in providing services to the customers. The major role of human movement, international trade and fast movement of capital merger of financial markets has joined the world into the global village. Globalization is the increasing merging of economies all over the world, mostly through financial and trade flows Strategic importance of International Human Resource Management International Human Resource Management is strategically placed currently unlike before because it has expanded and is connected to the need of the organization. IHRM performs a vital role in gaining the competitive advantage. Expatriation An expatriate is a skilled worker who has unique expertise and sent to another branch of the same company but is located in the overseas country on a temporary basis (Selmer, 1999). There are two types of expatriates i.e. Third Country National (TCN) which comprises of nationals from other countries other than Multinational Corporations home country and other subsidiary countries. There is also Parent Country National (PCN) which the original national origin is same as that of the corporate headquarters. Roles of expatriates In order to attain successful implementation of worldwide strategies, the right people with the right skills have to be moved across the national borders. There is a greater need for control and coordination due to fast growing of multinational corporations as this has been a challenge towards the achievement of integration within the organization (Bean, 2006). The primary role of expatriates is to facilitate, coordinate and control subsidiary companies in order to attain global integration. Expatriates play an vital role in the control of subsidiaries where the control of activities at a local level is of high importance to the head office. Expatriates and transfer knowledge Most companies base their competitive success on management of intellectual capital and less on physical and financial resources since the core competencies of the business firms are made from firm’s leaning. In the globalized world, today, there should be sharing of organizational knowledge since this is one of the competitive strategies as it is hard to be copied and imitated by other organizations (Hugh Scullion, 2006). Expatriates in today’s competitive world play a critical role in functions that are related to knowledge which include the development of local staff and transfer of skills from the headquarter, developing the top talent as well as future leaders of the company, improving the trust in the branches and in charge of training employees on a local level to enhance individual and group. Failures of expatriates This is the inability of the expatriates to adjust in the environment of the host country, poor performance at foreign assignments and returning to home country before completing the assignment. The rate of failure of expatriates on the foreign assignments is increasing depending on the host country (Caligiuri, 2004). One of the most problem facing multinational companies is the high failure rate of expatriates and has been noted that most of them come home before finishing their appointment period and those who did not make premature return showed poor performance. Culture shock This shows that people will feel nervous and puzzled because of unusual circumstances and different standards and norms. When people migrate to a new country and have experience of a new culture, they take values, principles and behaviors with them. When the new culture is totally different from homeland culture, most of the people may experience culture shock. It is therefore a psychological process which people feel unhappy, confused, homesick, irritable and furious. Cross Cultural Training Training of expatriates has been one of the important issues that most researchers and HR practitioners have studied. CCT plays an important role in facilitating the success of cross cultural adjustment. CC training can be also defined as a procedure that intends to increase the ability of an individual in coping with work in foreign atmosphere (Peter J. Dowling, 2008). It develops the learning orientation of an expatriate and makes them understand the culture of foreign destination. Pre-departure Training This is one of the training that is vital especially when the expatriate arrives at abroad countries. These trainings provide essential knowledge to expatriates which is required when they have arrived to their destination for instance, expatriates should know customs and cultural imperatives, business etiquettes of the country, dress code that fits the environment, necessary and optional customs to attend, cultural adiaphorous and also training on good language Pre-Departure Visit This is a good way of briefing actual information pertaining the culture of the host country and most companies give an opportunity to the expatriates to visit the hosting country before the start of the assignment. Information gathered during the pre-departure visit help in mitigating the uncertainties that are attached with overseas environment thus reducing culture shock (Maike Andresen, 2012). In order to make such visits to be successful, companies must give a realistic view of how life is spent in the hosting environment as this will reduce culture shock level one will face after being made part of the assignment. Post-Departure Training Training on pre-departure does not address the specific cultural and dynamic workforce demands that are present in a specific assigned nation, and pre-departure or on-site training is more important and effective than pre-departure training. A few days pre-departure training does not fully prepare expatriates for the challenges they will encounter during their assignment therefore it should continue after entering into a new country (Peter J. Dowling, 2008). Post-arrival training should as well continue in the hosting country. Few days of pre-departure training cannot prepare fully the expatriates for the challenges they will face during their assignment therefore it should also continue after entering into the new country. Post arrival training is significant as it assists in diminishing culture shock and difficulties of cross-culture adjustments. This training may also involve assistance of basic requirements like dealing with opening of local bank (Gunter K. Stahl, 2012), how to deal with tax, schooling of children and other guidance on how to do basic things in host location. Methods and Types of Training Training methods, types and the length of training should be carefully selected according to the hardness of the culture of the hosting nation. Training on culture can be divided into three methods: behavioral, cognitive and effective. Cognitive methods are adopted by the use of conferences and sessions that is non-participative and corresponds to the dissemination of information (Caligiuri, 2004). On the other hand, behavioral method intends to improve the ability of an expatriate to adopt into the communication style of the hosting country. The effective method aims at provoking the reaction of an expatriate so as to allow the subject to learn on how to deal with the cultural incidents. Compensation on foreign assignments It is always a difficult phenomenon to negotiate for compensation, but when one is offered an overseas job, issues of compensation grow more complex. Even though, packages may differ by company, most of the foreign employment offers: help in paying taxes, housing allowance, trips home and spousal employment (Gregersen, 2005). The other extra items can double the compensation. When negotiating for your package, location is a matter of considered. The way one negotiates the package and other things on your package depends on the countries one goes. The following are the compensation packages Salary negotiation Culture has an influence in which when and how an international salary is negotiated. In countries like UK for example conversations should start whether the position is within the current firm or with the new company. Foreign Service premium Almost half of the firms pay Foreign Service premiums to expatriate for taking the assignment. Cost of living adjustment These are based on: the difference on cost of living between ones current job and new locations, the proportion on the size of the family with the salary spent on annual expenditure on goods and services and also the housing costs. Housing Allowance In countries like Asia, there are plenty of decent housing facilities. Areas near international schools are limited, and there is high demand (Maike Andresen, 2012). In Cities like London, there are good rentals but expensive. The size of the family and corporate rank dictates the size of housing allowance. Tax assistance For employees who work outside US still pay taxes. There are credit exemptions to allow one not to pay double taxes. In china, one will pay substantial local taxes, but compensation will be structured tax effectively Health insurance When one works in the UK, the family will get free health coverage. Those in the upper level of management will as well get private coverage. In Shanghai, Chinese nationals are given health coverage although some companies offer international health insurance (Kraimer, 2001). The family will be able to access basic healthcare, and this mostly happens in those countries that have no medical care Retirement If one stays for a period of less than five years, one can opt to contribute into the retirement plan of the host country. Most companies in the US will continuously pay FICA to allow one to stay in the US social security system. This contrasts Chinese retirement system which is only meant for Chinese nationals Spouse assistance Half of the companies will assist your spouse get a job. It assists in handling issues relating to visa and aids the family to settle in the new location. Recruitment and selection of foreign assignments Every organization aims at hiring and deploying employees to positions where they can effectively deliver. Recruitment therefore is looking for and obtaining potential employees in adequate quality and numbers so that it allows an association to decide on the most suitable employees to fill the need so the job. Selection is the process of acquiring information for the purpose of deciding and evaluating on a person to be hired with regard to certain job (Vance, 2004). Both recruitment and selection are discrete process s which needs to effectively operate in case the firm needs to manage its staffing process. There exist some of the major differences between local and international staffing. Many business firms have predispositions when it comes to who should hold positions in the headquarters and branches. Selection criteria It should be noted that selection is a multi- process that exist between the organization and individual. A potential candidate may reject the overseas assignment either situational factors like perceived hardiness of a particular culture or personal factors like family considerations (Scheffler, 2010). This poses intense challenge to the foreign staff selection responsible for assignment to design appropriate selection criteria. Some aspect that need to be keenly considered during expatriate selection include technical ability of an individual, cross-cultural suitability, country or cultural requirements, family requirements and language. During the recruitment and selection process, there should be considerations of on the issue of equal opportunities for all potential employees. It entails putting into considerations the conflicting laws of employment. Remuneration of expatriates Selection of managers to serve in the international countries is an issue of considerable interest in which the professionals should exert their efforts. This will help them to predict their success in foreign assignments (Hamel, 2005). Some scholars have even foreshadowed that remuneration of expatriates affect greatly their selection. Therefore, one of the key prompts to comfort of employees is the expatriate assignment. The amount which the expatriates will be paid depends o their commitments (Peter J. Dowling, 2008), nature of their work as well as the working environment. The main objective of expatriate remuneration policy is eliminating any favor to individuals so that nobody is better or worst. The expenses incurred in sending an employee to foreign countries exceed the salary. Furthermore, the company ought to consider providing air ticket to and from their destination before other charges which may include an employee travelling with the family or even for recreation (Inkson, 2004). The cost of accommodation cost of training the foreign language as well as other expenses relating to relocation is some of the workloads which the employer has to meet. Actually, it is demanding exercise and must not be taken without any gain to the employer. Every organization ought to be aware of such displace and anxiety expenses do occur severally especially when one is repatriated. The big obstacle to reentry according to most researchers is that the assignment does not end after the return of the expatriates to motherland (Domsch, 2006). If necessary, the employees should be well acquainted with the aid and counseling is within their reach, in case they need them. The most commonly used expatriate systems are rates of the local market, the balance sheet and the hybrid which is a summer of both balance sheet and local market rates. The most suitable method depends on the duration the assignment takes, the essence of equality among different groups, the expatriates nationality and the purpose of the assignment. Performance management on expatriates Several factors affect the performance level of expatriate managers. This include personal adjustment, technical knowledge and other environmental factors including labor force stability, fluctuations and distance of culture from home culture. Even though Technical knowledge is necessary (Bennet, 2010), an expatriate who has relevant skills but ignores the element of culture and customs that is pertinent to performance of certain job will probably be ineffective. The level of performance depends on the extent to which the expatriate get support from the head office i.e. Services and benefits which include the education of children and job search for the spouse affects the performance of an expatriate. The environment of the host country can affect the physical needs of the expatriate (humidity, heat, and cold), economic development and type of business operations e.g. Subsidiary ventures versus internationally owned ventures. Criteria for measuring the performance of expatriates The following are the indicators of job performance of the expatriates. Maintenance and establishment of business contacts as these will be used to attain the goals. Another way is through technical performance for instance successful performance of a task (Bean, 2006). Volume of work done by the expatriate is an indicator of productivity in the assignment. Ability to interact and work with others within the organization shows the level of performance of an individual. Interpersonal relations, management and supervision and overall job performance describe the efficiency of an expatriate. Conclusion Although cross cultural training has been seen as the key element for the success of every organization, few studies have focused on the interrelationships among the competence of expatriates, expatriate training mode, learning style and the effectiveness of the entire training process of expatriates. Workplace is becoming more diversified not only in culture stipulations but also in provisions of change in demographics. Most of the women are employed in the workforce, this as a result to increase in women expatriates. This report reviewed the concepts of CCT, importance and methods of CCT, effectiveness of cross cultural training in the increase in performance of expatriates. However, despite several years of research on CCT and factors that surround it, as the world get smaller and work place evolves, there is still more to be explored in the field and the workplace. Reference list Bean, R.B., 2006. Cross-cultural competence and training in Australia :Diversity Factor.. spp.pp 14-22. Bennet, R.A.A.&.C.T., 2010. Cross-cultural training: A critical step in ensuring the success of international assignments. Human Resource Management. pp.pp 239-250. Caligiuri, P.S.V., 2004. Global Competence: What is it, and Can it be Developed Through Global Assignments In Human Resource Planning. pp.pp.27-35. Domsch, M..&.L.B., 2006. Managing the global manager:. Pre-departure training and development for German expatriates in China and Brazil. Journal of Management, p.pp 41–52. Gregersen, H.B..H.J.M..&.B.J.S., 2005. Expatriate performance appraisal in U.S. Journal of International Business Studies, pp.pp 711-738. Gunter K. Stahl, I.B., 2012. 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International Journal of Management, pp.pp 547 - 552. Vance, C.M./.E.S., 2004. An Ethical Argument for Host Country Workforce Training and Development in the Expatri-ate Management Assignment. Journal of Business Ethics, pp.pp. 635 - 642. Read More