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EXPATRIATE FAILURE

The term expatriate failure is defined as the premature return of an expatriate.


In such a case, an expatriate failure represents a selection error, often
compounded by ineffective expatriate management policies.
The premature return rate is NOT a perfect measure of success or failure, and
may underestimate the problem. For example, in his study of 36 British-based
firm, Forsters used the broadest definition of failure (that is including
underperformance and retention upon completion of the assignment). Forster
found that a high proportion of staff do struggle to cope with their overseas
assignments, concluding:
If we accept that a broader definition of EFRs [expatriate failure rates] is
warranted, then it can he argued that the actual figure of those who are
failing' on IAs [international assignments] could be somewhere between 8
and 28 per cent of UK expatriates and their partners.

Concluding various research studies:1. Broadening the definition of expatriate failure beyond that of premature
return is warranted. Following up broad surveys with interviews with
responding firms may assist in this.
2. Regardless of the definition or precise amount of 'failure', its very exposure
as a problem has broadened the issue to demonstrate the complexity of
international assignments. In fact, one could argue that the so-called
persistent myth of high US expatriate failure rates has been a positive
element in terms of the attention that has subsequently been directed
towards expatriation practices. It has certainly provoked considerable
research attention into the causes of expatriate failure.
3. The evidence about expatriate failure rates is somewhat inconclusive.
Recent studies suggest that high failure rates reported in the 1980s have not
persisted for all nationalities. Although recent reports do not break results
down into nationality groups, US firms form the largest group in these
surveys. The European studies reported above were conducted at various
intervals since Tung's original study and do not include the same countries.
Further, non-US researchers have been reporting from regional or single
country perspectives.

4. The above studies tend not to differentiate between types of expatriate


assignments, the level of 'international' maturity, or firm size - factors that
may influence failure in its broadest sense.
5. It may be that companies operating internationally have since become more
aware of the problems associated with expatriate failure and have learned how
to avoid them. That is, multinationals have become more sophisticated in their
approach to IHRM activities. Benchmarking against other firms may have
assisted in the development of an awareness of international assignment issues.
6. One has to be careful in making assumptions, given that a large number of
firms do not keep the necessary records, so we are only getting a partial picture.

FIVE SUCCESS
DIMENSIONS

JOB FACTORS
Job factors are similar to technical competence required by the
job in Tungs findings. It includes technical skills, managerial
skills, and administrative competence as listed in the table
above. These are basic conditions when MNCs select candidates
for international assignments. In practice, most MNCs rely
much on relevant job factors during the selection process.
RELATIONAL DIMENSIONS
This dimension follows the aspect of personal characteristics in
Tungs framework. Although defining the composition of
personal characteristics is difficult, Ronen brings forward
several components: tolerance for ambiguity, behavioural
flexibility, non-judgementalism, cultural empathy low
ethnocentrism, and interpersonal skills.

MOTIVATIONAL STATE
Motivational state means willingness to relocate, interest in
working abroad, curiousness about the culture of the host
country and so on. All of them are significant for a successful
international assignment. If expatriates are in a good
motivational state, they will perform the assignment with
pleasure, and can be inspired to work harder. A current survey
(1995) conducted by National Foreign Trade Council (NFTC)
shows that 96% of the chosen companies rank the candidates
willingness to relocate on the second place.
FAMILY SITUATION
In the same way, family situation is also inherited from Tungs
theory. Family requirements are highly interrelated to the
expatriates adjustment (Dowling et al., 1999). MNCs may
involve spouses into the selection process to find out if they are
willing to go abroad. One of the main reasons for expatriate
failure is the inability of spouses to adjust (Tung, 1982 cited by
Hill, 2005). So spouses adaptability is very important for the
success of the assignment. It means the extent to which

LANGUAGE SKILLS
Differences in language are considered as a main obstacle for
the communication of people from different countries or areas,
and also a reason for culture shock. Therefore, it is necessary
for MNCs to have enough emphasis on the expatriates
language ability. Dowling et al. (1999) mention that knowledge
of the host-countrys language is also very important for the
successful international assignment, no matter what positions
the expatriates take up. However, language ability is ranked
lower in the list of predictors of success.

COST OF FAILURE
Direct Costs - Direct costs include airfares and associated relocation
expenses and salary and training. The precise amount varies according
to the level of the position concerned, country of destination, exchange
rates and whether the 'failed' manager is replaced by another expatriate.

Indirect Costs - Indirect costs might include loss of market share,


difficulties with host-government officials and demands that expatriates
be replaced with HCNs. Failure also, of course, has an effect on the
expatriate concerned, who may lose self-esteem, self-confidence and
prestige among peers. Future performance may be marked by decreased
motivation, lack of promotional opportunities or even increased
productivity to compensate for the failure. Finally, the expatriate's
family relationships may be threatened. These are additional costs to
organizations that are often overlooked.

FACTORS MODERATING
PERFORMANCE

Inability to adjust to the foreign culture


The process of adjustment
Length of assignment
Willingness to move
Work-environment related factor

INABILITY TO ADJUST TO THE FOREIGN


CULTURE

spouse/partner dissatisfaction
inability to adapt
difficulties with family adjustment in the new location
difficulties associated with different management styles
culture and language difficulties
issues associated with the accompanying partner's career
development
childrens education

THE PROCESS OF ADJUSTMENT

LENGTH OF ASSIGNMENT

Usually, longer assignments allow the expatriates more


time to adjust to the foreign situation.
For example, the average assignment for Japanese
firms is 4-5 years, compared with 2-3 years for
American firms. Hence, adjustment levels in Japanese
projects would be higher keeping only this factor in
mind.

WILLINGNESS TO MOVE

A person who is a reluctant expatriate or accompanied


by reluctant family members is more prone to interpret
negatively events and situations encountered in the
new environment.
A global study found out that managers who are most
ready for international relocations are those whose
spouses are supportive of that move.

WORK-ENVIRONMENT RELATED
FACTOR

Job Autonomy
Perceived level of organizational support
Negative cross-cultural experiences faced
by family

CAUSES OF EXPATRIATE
FAILURE
Poor Candidate Selection:
Many organizations still concentrate on a manager's
technical skills for such an assignment and do not pay
sufficient attention to cross-cultural knowledge and the
importance of the family of the expatriate.

Negative Perception of Intercultural


Trainings' Usefulness by Expatriates:
Expatriates themselves receive the training as superficial
and its duration as limited. This is the challenge for
international human resources managers; they have to judge
if the kind of training that they offer is efficient and useful
enough; and they might have to explain the expatriates its
aims to reach more acceptance.

Lack of Cultural Knowledge:


Expats often lack understanding of the other culture
which means, for example, that managers cannot make
sense of others' behaviour and their behaviour does not
achieve the desired results, which is even more
confusing. It is difficult because they neither have the
answers for the new demands of the environment, yet,
nor the skills to produce culturally adequate responses.

Responsibility Overload:
Moving to another country for a new job and leaving
one's home behind causes stress to expatriates. The
amount of stress is increased by the separation from
parents, who might be ill or elderly, and family,
children and friends.

STEPS FOR REDUCING


EXPATRIATES FAILURE

Firms are now beginning to pay more


attention to repatriation--bringing a
manager back home after a foreign
assignment has been completed.
Individuals that successfully adapted
to the foreign environment may
experience culture shock upon
returning to their own country.

Regarding non-cultural issues leading to


success or failure overseas, managers tend
to
be
more
successful
in
foreign
assignments when 5 conditions are met:
They can freely decide whether or not to
accept a foreign assignment

They have a realistic understanding of


the new job and assignment

They have a realistic expectation


of a repatriation assignment
They have a mentor in the parent
firm who will look out for their
careers
There is a clear link between the
foreign
assignment
and
the
managers long-term career path.

Compensating expatriate managers can be a


complex process because factors such as
differences in currency valuation, standards
of living, lifestyle norms, and so forth must
be taken into consideration.

A cost-of-living allowance may be given to


managers to offset differences in the cost-ofliving in the home and host countries.
A hardship premium (also known as a
foreign service premium) may be paid to
mangers who accept assignments in relatively
unattractive locations.
Special benefits packages that may be provided
to expatriate managers include housing,
education, medical treatment, travel to the
home country, and club memberships

THANK
YOU