Planning for International Placements

The Expatriate or the Host Country Manager

• Multinationals must decide whether to use expatriates or home country nationals
• Need to look at some questions
- Given the firm’s strategy, what is the preference for the position?

The Expatriate or the Host Country Manager

• Using expatriate managers
- Do parent country managers have the appropriate skills?
- Are they willing to take expatriate assignments?
- Do any laws affect the assignment of expatriate managers?
• Using host country managers
- Do they have the expertise for the position?
- Can we recruit them from outside the company?

Is the Expatriate Worth It?

• Decisions must consider costs of such assignments
- High cost
- High failure rate

Decisions to be made about staffing choices

Before anyone is sent on an international placement and number of decisions need to be made
to ensure success:
• The classical approach used to be PCNs
• Now there are other concerns about how international enterprises are staffed
1. Social responsibility for employment conditions for local labor
2. Sometimes labor law protection in developing countries is minimal
3. The choice of approach is dependent on the organizational strategy, local
economic and political conditions.

Corporate Approach or mindset

• Ethnocentric – PCNs are favored

• Polycentric – HCNs manage subsidiaries
• Geocentric – Ability is more important than nationality
• Regiocentric – Similar to geocentric, but limited to a given region

Advantages of using PCNs

• Organizational control and co-ordination is maintained and facilitated
• Promising managers are given international experience
• PCNs may be the best people for the job because of special skills and experiences
• There is an assurance that the subsidiary will comply with MNE objectives, policies, etc.
Disadvantages of using PCNs
• The promotional opportunities of HCNs are limited
• Adaptation to host country may take a long time
• PCNs may impose an inappropriate HQ style
• Compensation for PCNs and HCNs may differ

Advantages and disadvantages of using TCNs

Advantages
• Salary and benefit requirements may be lower for PCNs
• TCNs may be better informed than PCNs about the host country environment
Disadvantages
• Transfers must consider national animosities between host country and TCN’s
home country.
• The host government may resent hiring of TCNs
• TCNS may not want to return to their home country after the assignment

Advantages of using HCNs

• Language and other barriers are eliminated
• Hiring costs are reduced and no work permit or visas are required
• Continuity of management improves since HCNs stay longer in their positions
• Government policy may dictate hiring of HCNs
• Morale among HCNs may improve as they see future career potential
Disadvantages of HCNs
• Control and co-ordination of HQ may be impeded
• HCNs have limited career opportunity outside the subsidiary
• Hiring HCNs have limited career opportunities outside the subsidiary
• Hiring HCNs limits opportunities of PCNs to gain foreign experience
• Hiring HCNs could encourage a federation of national rather than global units

Local factors
• Legal frameworks and legislative cultures
• The level of adherence to equality and fair and equal treatment
• Attitudes towards applicant’s privacy – may prevent group selection
• The perceived relevance of different selection methods to different jobs
• The Labor Market

Labor Markets
• The availability of skills – skill shortages can occur in large labor markets with full
employment
• Local education systems – have an influence on the skill sets that are available to
recruiters
• Wage levels and contemporary trends in wages and salary levels. Rises in expectations
and consumer spending power
• Population profiles – e.g. larger youth population or older workers (baby boomers)
Reasons for International Assignments
• Position filling
 Lack of available skills therefore PCN works abroad
• Management Development
 Training, career development, common corporate values
• Organizational development
 Transfer of knowledge, competence, practices
 Exploit global market opportunities

Types of International Assignments

• Short-term - up to 3 months
• Extended - up to I years
• Long-term - 1 to 5 years (traditional expatriate assignment)
Non-standard assignments
• Commuter - go home every 1 to 2 weeks
• Rotational - commute for a set period followed by break in home country
• Contractual – specific skills employees hired for 6-12 months on specific projects (may
not be firm employee – e.g. global nomads
• Virtual – employee manages international responsibilities from base in home country

Differences between traditional & short-term assignments

Traditional assignments Short-term assignments

Purpose • Filling positions or skills gaps • Skills transfers/problem solving

• Management development • Management development
• Organizational development • Managerial control

Duration Typically 12-36 months Typically up to 6 months or 12 months

Family’s Family joins the assignee abroad Assignee in unaccompanied by family

Position

Differences between traditional & short-term assignments

 Traditional Assignments Short-term Assignmen

Selection Formal procedures Mostly informal, little

Advantages • Good relationships with colleagues • Flexibility

• Constant monitoring • Simplicity
• Cost-effectiven

Disadvantages • Dual career considerations • Taxation

• Expensive • Side-effects (al
• Less Flexibility divorce rate)
• Poor relationsh
colleagues
• Work permit is