Problems and Prospects of the Process of Expatriation - International Aspect - Literature review Example

Introduction. In modern conditions of the global economy, companies tend to hire competent foreign workers. Such workers or expatriates are often given a special status that reflects their importance to the organization. The expatriate moving is much more complicated because of the dual aspect of the spouse’s career and special allowances for the children (Daspro, 2004). US companies prefer to enter into contracts with foreigners for two or three years, Western European companies prefer to enter into contracts with foreigners not less than for five years. Spouses of the expatriates do not have the right to work in the most countries (Shay, and Baack, 2002). However, even they have this right de jure, it is very difficult to implement it in practice. The main cause of it is language barrier. This matter generates disagreements inside the family. The tensions in the expatriate’s family leads either to a decrease of the work efficiency, or to the contract termination. From the other hand, HR Manager should to weigh the pros and cons of the expatriates employing. First, of all, it should be noticed that to hire expatriates is more expensive for the company (Martin, 2015). Additional cost includes taxes, heals insurance, hardship, visas international schooling for children, language and cultural training for family. In total it could be twice or more as expensive as to hire locals. At the same time, the extracts hiring has its pluses. For example, foreign workers are, at least, bilingual. Many of them know three or more related languages (Catanzaro, 2012). They are better oriented in the foreign markets, cultures, habits and needs. They can generate new fresh ideas for the company activity. Another issue can arose when the company wouldn’t like to pay for the services of qualified intermediaries. Arthur Andersen, an American consulting firm, conducted a survey of 70 multinational companies in which more than 21 thousand overseas workers has been hired. According to the results, 40 per cent of company managers refuse to discuss complications arising until the conclusion of the contract. As a result, a significant portion of the contracts are terminated and the company has more losses.

Literature Review. Many researchers devoted their works to the consideration of the expatriates’ employment issues. For example, Tungli &Peiperl (2009) identified reasons why the expatriates return prematurely. Among them there are operation and family-related reasons, low productivity of work, problems with adaptation to local conditions. Authors considered these problems on an example such countries as Germany, United Kingdom, Japan and United States. According to the research results of the Dieter (2013), these countries, except United States, has been including to the ranked lists (from 1 to 50) according to their need for migrants. The first place has Japan, Germany has rank 15, United Kingdom – 18. The same countries are analyzed by Kraimer&Shaffer (2012). They consider the problem why employees may leave their company. The core of the research is identity theory. All data for this analysis has been collected in eight organizations. Five of them were from United States, two – from the United Kingdom and one company was from the Germany. Thus, psychological aspect of expatriates’ adaptation is very relevant in today's globalized economy. This issue has been considered by the Hasleberger&Brewster (2009). The authors proposed to use psychological contract to ensure good quality of expatriates’ work. Pressing issue is also the pros and cons of hiring foreign workers. Robert L. (2008) highlighted that expatriates’ experience may be useless for the employee. For example, worker could have years of good experience in his native country in accounting area, but this experience is useless in abroad because tax and accounting systems are different there. Martin P. (2015) identified pros and cons of the expatriates hiring for the company which have decided to open multinational office or relocate some departments to another country. Dieter (2013) figured out plus and cons of the expatriates hiring in the case of its influence on the economy at whole.

Analysis and Discussion. The results of a successful regional operation can be more useful for an international company than results of some local operations. That’s why, an important role in expatriates employment belongs to the international managers and organizations. Qualified intermediaries reduce the company’s risk of failure in recruitment and selection procedures. As the results of the Tungli and Peiperl (2009) research work shows, the most companies doesn’t use systematic steps in the selection procedure. Also, they do not pay enough attention to the training procedure. In addition, as it was mentioned above, an expatriate might has family problems. As a result of it, the premature return can take place. All factors which have affected on expatriate adjustment are presented on the Figure 1 (Kraimer, Shaffer, and al. 2012 ).

Figure 1. The stakeholders in expatriate adjustment (Kraimer, Shaffer, and al. 2012 ).

The first factor is family conflict. Sometimes, it is very difficult to find a job to expatriate’s family members. They might have problems with the adaptation to the environment of the new county. As the result of it, family conflict can take place. Three forms of work-family conflicts have been considered in (Kraimer, Shaffer, and al. 2012 ). Among them there are conflicts that are based on time, strain, and behaviors.

Lately, international managers select young and childless employees. They are cheapest for the company. That’s why they are looking for the workers under 30 years of age or older than 50 (Catanzaro, 2012).

International managers try to offer family-employees different types of trips to avoid family conflicts. More and more people are appointed to short-term business travel. The employee move to work in another country from time to time (Li, 2014). This trend is now popular in Europe. For example, a banker from Vienna can work in Cologne from Monday to Friday and came back home on weekend (Daspro, 2004).

The second factor is parent company influence. This company can adjust the expatriate’s responsibilities and it is very important because expatriates are very close to burnout (Kraimer, Shaffer, and al. 2012 ). In the same time, parent company is the most interested in expatriate’s adaptation to the new environment. Because as better expatriate will adopted as more productive will be his work. The last one factor is Host Country. People of foreign country play an important role in the expatriate’s adaptation process (Kraimer, Shaffer, and al. 2012 ). This indicates in the relationship between expatriate and his chief, staff, team. If the worker sees that results of his work is fairly evaluated by chief, his productivity will be increasing. This mutual support and value helps expatriate to adapt to new environment.

In this way, the above factors may have both positive and negative effects on expatriate’s adaptation and should be taken into account by international manager.

One more cause of it is expatriate’s inability to adapt to the environment of a foreign country. Thus, international managers should to take into account many factors which have affect on expatriate management policies. Among them are (Tungli, and Peiperl, 2009): country’s culture, industry, company size, the level of needs in expatriates. For example, there are three sources of the expatriate attraction in international human resource management: PCNs (parent company nationalities), HCNs (host country nationalities), and TCNs (third country nationalities). Each country can uses different sources. The degree of use of expatriates at various levels of management depends on geographical location of subsidiaries (Shay, & Baack, 2002). Western European and American companies use HCNs in developed countries because there are many employees who have the necessary qualifications and skills to occupy management positions. But there is another situation in Japan (Shay, & Baack, 2002). Japanese international companies use PNCs on the senior and middle management levels in international assignments. It is because Japanese management style is different from other and it can cause serious problems during the integration process. Another reason is the language. Practically all communications between headquarters and foreign subsidiaries are performed in Japanese.

In additions, there are different reasons why companies wish to hire expatriates. According to Tungli and Peiperl, (2009) the main goal of Germany’s companies is to increase international management skills. Companies from United Kingdom and Japan set up new operation by hiring foreign experts. United States’ companies tries to fill in the gaps of skills. Selection method is also differing in Japan. The most popular methods among Japanese companies are references, self-nomination and cultural awareness assessment. For comparison, German, British and American firms use, mainly, references and structured interview methods (Tungli and Peiperl, 2009).

The importance of the selection process repeatedly increases in the case of international manager selection. One of the main problems of this process is premature return. The premature return means the failure of the expatriate. Failures in this area occur very frequently. The percentage of failed cases is from 20% to 50% in American corporations. This is much more than in European and Japanese companies. But careful analysis of the selection procedures for different countries has not always made it possible to avoid premature return. Psychological contract may help to reduce the present of such failure (Hasleberger, and Brewster, 2009). It has positive effect on the whole process of expatriation – from the candidate selection to the growing of his external career. The principles of the psychological contract are showed on the figure 2 (Hasleberger, and Brewster, 2009). The first bold arrow shows when the first psychological problems begin to appear.

Figure 2. Psychological contract effect on the process of expatriation (Hasleberger, and Brewster, 2009).

This is time, when the employee decides should he agree an assignment or not. He considers all pluses and cons, assesses the risks. And the psychological contract helps him to makes the right decision. The second bold arrow shows the moving time which includes a lot of uncertainty. The expatriate are very sensitive to changes, such as the high cost of living, distrust, imaginary company. The last arrow shows repatriation adjustment which includes career opportunities (Hasleberger, and Brewster, 2009). An international assignment gives employee the opportunity to develop skills, to set up new practice, to create new opportunities abroad. The parent organization suggests that expatriate’s carrier growing will be inside organization only. It is a way for the company to create ant to increase its intellectual and social capital.

Unfortunately, some expatriates, who go abroad and that return, have a tendency to leave their parent organizations. This issue has been considered by Kraimer, and Shaffer, (2012 ) and heir study is based on identity theory. When the expatriate leaves parents organization, it brings great damage to the company. The organization loses the investments, intellectual and social capitals. This leads to a weakening of the competitive position on the market. It addition, the expatriate can take chief management position of rival firm. It can also damage the reputation inside the firm. If employees see discontent of the expatriate, they may refuse international assignment in the future. According to the last researchers, many employees of US and European multinational corporations refuse to external assignments (Kraimer, and Shaffer, 2012). The causes of it also are unwillingness to have children to another school, career wrecked of a spouse (Shay, and Baack, 2002). As a result, the type of people who are assigned for international position is changing with their salary, benefits, duration of stay in the foreign departments. The terminology is also changing. The concept “expatriates” is replacing by “international representative”.

The international manager should to predict causes why expatriate can leaves organization when he returns from international assignment (Catanzaro, 2012). The identity theory may help manager to understand how international assignment affects on the life and behaviors of the expatriate. Each employee has their own identity which is his habits function, cultural values, etc. When the person receives new international assignment and adapts to the new job, life, environments, his new cultural values became to change. The main goals and worldview became different from previous (Catanzaro, 2012). Therefore, identity of expatriate is changing also and expanding by professional skills growing. Thus, when an employee returns from the international assignment, his identity became absolutely another. He expects his skills recognition by parent organization, career development, wage increasing. If the expatriate doesn’t receive it, it is possibly the leaving from the organization. In additional, many organizations stimulate financially the process of immigration (Daspro, 2004). They promote new opportunities for the high skilled expatriates and propose them to have good positions.

Conclusions and Recommendations. The process of expatriates’ hiring is very complex. It requires high level of skill and knowledge in human resources management and in employees’ psychology. The failure of expatriates has very serious consequences for the organization (Daspro, 2004). The main causes of the expatriates’ failure are family circumstances and the lack of managerial skills. The latter include the relationship between the people in the new environment.

That’s why the issues of the employing expatriates are considered by many researches. The psychological contract is recommended to use. It is not expensive psychological technique allows company to reduce risk of the expatriate’s failure. It should also be noted, that the number of the employee’s rejections of the external assignment is increasing. The most of the reasons are family problems. United States law provides the right of employment to spouses (Shay, and Baack, 2002). But it would be better for them to have the study opportunity which should be based on the specific of the country.

Thus, the first step to expatriate success is to overcome the reluctance to move abroad, the second one is psychological contract creating. But these are not all the risks with which manager may face. The last one is expatriate’s dismissal from the parent company (Dieter 2013). That’s why, international manager should take into account all the reasons that could lead to this expatriate’s decision. The best way to predict these causes is identity theory using.

In conclusion in this respect, the unified strategy of the entire cycle of expatriation should be created in the company. This strategy has to include all processes, starting with the selection process and finished by the expatriate’s returning. This will help overcome the problem of staff resistance to international assignments (Li, 2014). Also, it is necessary to provide expatriate’s career growing, to provide benefits and all forms of incentives for staff.

One of the main indicators of expatriate’s success is the duration of his stay in foreign country with respect to time that has been set up in the contact (Shay, and Baack, 2002). This fosters a positive attitude to international assignments. The absence of stress is also often used as an indicator of success. Since, it adversely affects the health and the productivity of expatriate.