Expatriate Adjustment.docx

Expatriate Adjustment.docx

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ExpatriateAdjustment

“CriticallyanalysetheHRactionsthatmultinationalcorporationsshouldtaketofacilitateexpatriateadjustment”

Therehasbeentremendousgrowthintheinternationalbusinessactivityinthelastfewdecades.Thegrowthininternationalbusinesshasbeencharacterisedbygrowinginterconnectednesswithinglobaleconomyandgrowthoftransnationalcorporations.Forinstance,between1950totheendofthetwentiethcenturytotalworldmerchandisegrewtwentytimeshowevertheworldmerchandiseproductiongrewsixtimesonly.Thisindicatesthetrendthatmoreandmoretradeistakingplaceacrossthenationalboundaries（Dicken,2007）.Thegrowthinmultinationalcorporationsthroughforeigndirectinvestmentshasimplicationsformanagementofhumanresourcesonaglobalscale.ItisarguedthattheinternationalcompetitioncontinuestointensifyasMNCsareincreasinglyadoptingglobalbusinessstrategyintheirquestfornewmarketsandgeographicallocationstoaccessanddevelopsustainablecompetitiveadvantage（HarzingandVonRuysseveldt,2004）.Consequently,aglobalbusinessstrategyrequiresaglobalhumanresourcesmanagementcapableofdevelopinggloballycompetentemployeestomanageoverseasbusinesses.OneofthewidelyusedstaffingstrategiesbyMNCstoenhancetheirunderstatingofinternationalbusinessisexpatriation.Expatriationistheprocessofselectionandemploymentofcompetentemployeesofanorganisationforoverseasassignments.Althoughexpatriationisconsideredasanattractivemethodtounderstandandmanageforeignmarketoperations,organisationsfacenumerouschallengesinselectionandmanagementofexpats（LiuandLee,2008）.ThebriefcriticallyanalysestheHRactionsthatMNCsshouldtaketofacilitateexpatriateadjustments.First,theadvantagesandchallengesrelatedtoexpatriationhavebeendiscussedbriefly.Followingwhichthetheoriesofexpatriateadjustmenthavebeenlookedat.Inthesubsequentsection,therelevantHRactionshavebeenadvisedtofacilitateexpatriateadjustmentinthehostcountryenvironment.Intheend,thebriefpresentstheconcludingremarkontheanalysis.

Expatriateisthehomecountryemployeeofanorganisationwhoworksintheforeignsubsidiariesofthecompanyforashorttolongtermperiod（usuallybetween2-5years）（HarzingandVonRuysseveldt,2004）.Expatriatedevelopmentisincreasinglybecominganimportanthumanresourcemanagementissueformultinationals（Osman-GaniandRockstuhl,2009）.Ithasbeenarguedbyresearchersthatculturaladjustmentinthehostcultureisoneofthekeydeterminantsofexpatriateperformanceduringinternationalassignmentsoverandaboveotherfactorssuchaspoorselection,partnerdissatisfaction,andfamilyissues.Forinstance,previousstudiesreportedthatbetween16to40percentofallexpatmanagersreturnedprematurelyfromtheiroverseasassignmentsduetotheirinabilitytoadjustincross-culturalenvironment（BlackandMendenhall,1991）.Louis（1980）suggeststhatexpatriateswhoaregoingonaninternationalassignmentrequiremakingsenseofthepolitical,economic,monetarysystem,culturalvalue,normsandbehaviourinthehostcountrybesidestheknowledgeofneworganisationalfacility.Theunderstandingofthesefactorshelpstheexpatriatemanagerinmanagementofculturalshock.OtherissueswithexpatriationasreportedbyBlackandGregersen（1999）are.Theyare2-3timescostlythantheaveragedomesticposition.Itisabout10-20percentageearlydismissalsfromoverseasassignmentduetodissatisfactionandculturalproblems.Itisrelativelylowerperformancethanexpected（around30%ofexpatriatesthatremainedoverseasdidnotmeetseniormanagementexpectations）,thelastreasonforIHRMisthehighattritionrateafterreturn（overaquarterleftcompanyonreturn）.AlthoughexpatriationthrowsmanychallengesforindividualsandMNCsasbrieflymentionedabove,italsooffersmanyadvantages.Forinstance,Rosenzweig（1994）arguedthatexpatriationfacilitatesinter-subsidiarycommunicationandcoordinationasresultoftransferofcorporatephilosophyandcompanyvisionwithexpatriatemanager.ColakogluandCaligiuri（2008）arguedthatexpatriatesarehelpfulinenhancingtheperformanceofthesubsidiariesastheyserveasachannelforthetransferofknowledge,skillsandpractices.Asfarasdisadvantagesoftheexpatriationareconcerned,theseare:

highturnover,poormoral,reducedproductivity,highcostofexpatriatestaffingandresultantlossduetolongtimerequiredforadaptationandpoordecisions（Harrisetal,2003）.

Expatriateadjustmenthasbeenwidelyinvestigatedinliterature.Oneoftheearlytheoriesthatdescribethecross-culturaladjustmentofexpatriatesinhostcountryenvironmentisU-CurveTheory.Itinvolvesfourstagesofadjustmentsnamely-honeymoon,cultureshock,adjustmentandmasterystages.Honeymoonstageisthefirststageduringwhichtheexpatriatesarefascinatedbythenewplaceandculturewhichchangesintosecondstageofcultureshock（feelingoffrustrationandhostilitytowardshostnationanditspeople）whennewcomersstartlivinginthenewenvironmentonadailybasis.Thisfollowswiththeadjustmentstagewhenexpatriatesbegintosettlethemselvesinthenewnormsandvaluesthroughexperientiallearning.Inthemasterystagetheybecomeeffectivelyfunctionalinthenewenvironment（LiuandLee,2008）.BasedontherecentstudiesLiuandLee（2008,p.183）haveidentifiedfivecomponentsofcross-culturaladjustmentprocessofexpatriatesasfollowings:

Thefirstoneispre-departuretraining.Thesecondoneispreviousoverseasexperience;thethirdoneistheselectionmechanism.Theforthoneistheindividualskills.Thelastoneisnon-workfactors.

Blacketal（1991）suggestedexpatriateadjustmentmodel（referfugure-1）byutilisingboththedomesticandinternationaladjustliteraturecitingthatamorecomprehensiveunderstandingofinternationaladjustmentcanbeattainedthroughintegration.Astheyargued,thatdomesticadjustmentliteraturefocusesonpreandpostentryadjustmentvariablessuchasorganisationsocialisation,workroletransition,careerdevelopmentandrelocationwhereasinternationaladjustmentliteraturefocusesonindividualandnon-jobvariables.

Figure-1:

Frameworkforexpatriateadjustment

Source:

Blacketal,1991（adoptedfromLiuandLee,2008,p.184）

Consideringthetheoriesonexpatriateadjustmentsandotherliterature,itcanbedeterminedthatsuccessfulexpatriatemanagementinvolvesselectionofsuitableexpatriates,pre-departuretrainingandpreparationfortheassignment,providingoverseasadjustmentsupportsandreintegrationonreturn.Therefore,multinationalcorporationsshouldadoptstrategiestoassistexpatriateadjustmentatthesestages.Themostimportantstageistheselectionofexpatriatemanagersforoverseasassignment.Asmentionedearlierthisisoneofthekeydeterminantsoftheexpatriateperformanceduringanoverseasassignment.MNCsshouldhavecomprehensiveselectioncriteriabasedonfirm’smanagementphilosophy,requirementofoverseasassignmentandthehostmarketconditions（Oddou,1991）.MNCscanlookatcertainfactorswhileselectingexpatriatessuchasadaptabilityofindividualtochange,degreeofopen-mindednesstobehaviourandattitudesdifferentfromhisorherown,abilitytomeetnewpeopleandlearningaboutthemandtheirculture,degreeofself-confidenceandself-relianceoftheindividual,abilitytodealwithstressandextenttowhichtheindividualenjoyfamilysupport.Theindividualbeingselectedfortheoverseasassignmentrequiredtohavetheseattributesinordertocopeinthenewenvironment.Theindividualadaptabilitytochanges（expectedandunexpected）inthedomesticworkplaceensurethatthepersonwillbeabletocopewiththestressresultingfromtheunexpectedchangesthatareaprominentcharacteristicsoftheoverseasassignment.Forinstance,thenewforeigncultureandlanguagethrowsunexpectedchallengesfortheexpatriatemanagerthatcancausemajorstressandifthepersonhasbeenquickinadoptingpolicyandproceduralchangesinthedomesticenvironmentheismorelikelytoadaptquicklytothenewcultureandbusinessenvironment.Therefore,selectionmechanismshouldnotoverlookthisdimension.Theselectionprocessshouldalsolookatthefactastohowmuchopen-mindedtheindividualistoideasandbeliefsthatdifferentfromhisown.Theeffectivenessofemployeesindealingwiththedisagreementinbusinessmatter,withpeopleofdifferentgenderandofvariousethnicgroupsinthedomesticenvironmentcanbeanalysedinordertoassesshissuitabilityforanoverseasassignment.Peoplewhocandealeffectivelywithcolleagueswithdifferentideas,attitudes,beliefsandethnicityaremorelikelytoperformbetterinaninternationalenvironmentascomparedtothosewhofinditdifficulttodealwithsuchpeople.MNCscanalsoconsiderthesocialisationhabitofthepotentialemployeeduringtheselectionprocess.Forinstance,itcanbeassessedthatdoestheemployeeenjoymeetingnewpeopleandlearningnewcultures,andparticipateenthusiasticallyinsocialevents.Researchsuggeststhattheoutgoingnatureofexpatriateshelpthemadaptbetterinthenewcultureastheyhavethestrongdesiretoassociatewithothersaswellasakeeninterestinlearningaboutthenewcultureandpeople（Harrisetal,2003）.Itisalsoveryimportanttoconsiderthathowself-confidentandself-reliantistheperson.Thiscanbeassessedfromtheperformanceoftheemployeeinpastassignmentinthedomesticenvironment.Theorysuggeststhatoneofthereasonsofexpatriatefailurehasbeentheinabilityofpartn