Expatriation

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Expatriation process

• Expatriate strategy
• Expatriate Selection
• Expatriate Training &Development
• Expatriate Compensation
• Repatriates retention

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Strategy
Different kind of expatriates

• Expatriate managers who are citizens of the

Home-country Nationals country where the MNC is headquartered,
with a more than 1-year tenure. Sometimes
called headquarters nationals, or Parent-
Country Nationals (PCN).
• Separation allowance: Payment of overseas
premium to employees who take on foreign
assignments without families. Generally
covers all excess expenses plus tax
differential.
• When their assignment is completed and
they come back, they are called thereafter
repatriates.

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Strategy
Different kind of expatriates

• Local managers hired by the MNC.

Home-country Nationals • They are familiar with the market, language
& culture.
• They are less expensive than home-country
personnel
Host-country Nationals • Hiring them is good for public relations
• In certain countries skilled personnel is hard
to find.*
• HCN may be not familiar with the
corporation culture and practices.
• Communication problems with the HQ may
arise.

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Strategy
Different kind of expatriates

• Expats from one country working for a

Home-country Nationals foreign MNC in a 3rd country (e.g. an Indian
working for IBM in Korea).
• Particularly useful in countries of low social
capital (Saudi Arabia, Turkey).
Host-country Nationals • Their cost is lower than the respective of
PCN.
• Experts in their field & adjustable to
international environments.
Third-country Nationals
• They are familiar with the company culture
and practices.
• May cause resentment among locals, as they
limit chances of HCN to promotion.

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Strategy
Different kind of expatriates

• Individuals from a host country who are

Home-country Nationals assigned to work in the HQ
• The use of inpatriates recognizes the need
for diversity at the home office
• Employment of inpats helps MNCs to
Host-country Nationals develop global competencies

Third-country Nationals

Inpatriates

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Strategy
Different kind of expatriates

• Centralized firms
• Favor home country managers
• Most common amongst international division form

• Decentralized firms
• Favor host country managers
• Most common amongst multidomestic firms

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Strategy
The relocation transition curve

Perceived Competence 6. Search for Meaning

Understanding reasons for success
and failure. New models/personal
3. Interest theories created 7
A deeper exploration of the
environment and a
1. Unreality realization that it is 7. Integration of
The feeling that the
fundamentally different New Skills and
from home
relocation 6 Behavior Acceptance
is a dream of the new environment

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5. Experimentation and
3 Testing of New Approaches
Practice phase – trying to do things differently
Feedback of results – success and failure
1 2. Fantasia
The feeling of 4
enchantment and
excitement in the
new environment 4. Acceptance of Reality / Cultural Shock
“Letting go” of past comfortable attitudes and realizing you are a
stranger in a strange land

Beginning of Transition Time

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Strategy
The relocation transition curve

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Selection
Overall dimensions

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 Selection
Dimensions of expatriates to consider

• The self dimension:

• The skills that enable a manager to maintain a positive self-image and
psychological well- being

• The relationship dimensions:

• The skills required to foster relationships with the host-country nationals

• The perception dimension:

• Those skills that enable a manager to accurately perceive and evaluate the host
environment

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 Selection
Important factors of expatriated managers

• Cultural intelligence (CQ) :

• ability to adapt across cultures through sensing the different cues regarding
appropriate behavior across cultural settings or in multicultural settings
• Family situation:
• ability to keep in touch with families collaboratively and continuously
• Flexibility and adaptability:
• ability to fit changed circumstance
• Job knowledge and motivation:
• ability to transfer knowledge smoothly and transfer international assignment
into career advancement
• Relational skills:
• ability to build up relationships more actively
• Extra cultural openness:
• ability to communicate with others more openly

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Selection
Inventory of dimensions
I. Job Knowledge and Motivation III. Flexibility/Adaptability
Managerial ability Resourcefulness
Organizational ability Ability to deal with stress
Imagination Flexibility
Creativity Emotional stability
Administrative skills Willingness to change
Alertness Tolerance for ambiguity
Responsibility Adaptability
Industriousness Independence
Initiative and energy Dependability
High motivation Political sensitivity
Frankness Positive self-image
Belief in mission and job IV. Extracultural Openness
Perseverance Variety of outside interests
II. Relational Skills Interest in foreign cultures
Respect Openness
Courtesy Knowledge of local language(s)
Display of respect Outgoingness and extraversion
Kindness Overseas experience
Empathy V. Family Situation
Nonjudgmental Adaptability of spouse and family
Integrity Spouse’s positive opinion
Confidence Willingness of spouse to live abroad
Stable marriage
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Selection
Overseas assignment inventory

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Selection

Personality of Inability of spouse

expatriate to adjust

Why Expatriate Inability to cope

Personal
Assignments with overseas
intentions
Fail responsibilities

Family Lack of cultural

pressures skills

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Selection

Realistic previews

Careful screening

Helping
Expatriate Assignments Improved orientation
Succeed
Cultural and language
training

Improved benefits package

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Selection

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 Training & Development

• Predeparture training is needed on:

• The impact of cultural differences on business outcomes
• How attitudes (both negative and positive)
are formed and how they influence behavior
• Factual knowledge about the target country
• Language and adjustment and adaptation skills

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 Training & Development

• Trends in training:
• Use of returning managers as resources to cultivate the “global mind-sets” of
their home-office staff.
• Use of software and the Internet for cross-cultural training.
• Rotating assignments that permit professional growth.
• Management development centers where executives hone their overseas skills.
• Classroom programs provide overseas executives with educational opportunities
similar to stateside programs.
• Continuing, in-country cross-cultural training.

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 Training & Development

• Techniques & Objectives:

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 Training & Development

• Training needs:

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 Training & Development

• Performance Appraisal:
• Process of assessing how effectively people are performing their jobs
• Purpose
• To provide feedback to individuals about how well they are doing
• To provide a basis for rewarding top performers
• To identify areas in which additional training and development may be
needed
• To identify problem areas that may call for a change in assignment

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 Training & Development

• Evaluation Sources, Criteria, and Time Periods for Expatriate Performance Appraisals

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Compensation

Steps in Establishing a Global Pay System

1 Develop a global compensation philosophy framework.

2 Identify any gaps in existing rewards systems.

3 Systematize pay systems worldwide.

4 Adapt global pay policies to local conditions.

5 Conduct an ongoing pay policies program assessment.

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Compensation

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Compensation

• Challenges:
• Further Corporate interests abroad
• Minimize workers’ financial risks
• Encourage employee expatriation
• Repatriation issues
• Enhance overseas experiences
• Promoting lowest - cost strategies
• Promoting differentiation strategies

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 Repatriation & Retention

• An expatriate of a multinational corporation returns to the country of his/her origin

from an overseas assignment.
• Reasons:
• culture shock (changes happen in expatriation period).
• work-dissatisfaction: high-status position with high autonomy –a less highly
profiled role; career opportunities diminished; ‘let-down’, no longer “special” or
different.
• problems for all family members (lower income, housing, schooling).

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 Repatriation & Retention

• Consequences:
• Extensive direct costs are incurred when firms must replace departing executives
who posses valuable international and corporate experience.
• Indirect costs also occur when repatriates withdraw crucial market knowledge,
host-country client relationships, and international skills upon their departure to
other employers.
• Loss of high-potential employees to accept overseas positions.

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 Repatriation & Retention

• Solutions:

• Evidence-based executive coaching

• Definition: ‘the intelligent and conscientious use of best current knowledge
integrated with practitioner expertise in making decisions about how to deliver
coaching to individual coaching clients and in designing and teaching coach
training programs’.
• Methods: Provide invaluable support for expatriate executives through what is
usually a time of high pressure of rapid change; Engage in creative dialogue
relevant to the emotional, cognitive and behavioral aspects of issues that are of
great importance in complex overseas assignments.
• Benefits: operate interactively in-the-moment across the individual’s affective,
behavioral and cognitive domains, facilitating contextually appropriate and
creative change processes through all points of the expatriate experience

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 Repatriation & Retention
• Solutions:

• A model of Repatriation practice

• Benefits: provide a sense of career continuity; demonstrate the value the
company places on expatriate assignments; reduce repatriation turnover.
• Four stages of the strategy
• Planning for Repatriation: developing principles and philosophy; providing
stability and fairness to repatriate.
• The Repatriate agreement: including the assignment period, details of return,
incentive payment, a guarantee of a job equal to or better than the one before
leaving, provision for re-entry training, and a repatriation program to support
the person and help the family readjust upon return.
• Repatriation program: ensure positions, give repatriates challenging
assignments, and take use of their experience; a repatriation manager is
responsible for tracking, supporting, and assessing.
• Evaluation of the Repatriation Strategy: outcome measures (the impact of the
programs on repatriate retention, satisfaction and job commitment), process
evaluation (assessment of the effectiveness of different strategies), deficit audit
(the identification of gaps in support), and quality assessment (continuous
benchmarking of the overall strategy against other similar businesses) .
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