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Human Resource Management Recruiting Employees For International Assignments

Learning Objectives

  1. Be able to explain how the selection process for an expatriate differs from a domestic process.
  2. Explain possible expatriate training topics and the importance of each.
  3. Identify the performance review and legal differences for international assignments.
  4. Explain the logistical considerations for expatriate assignments.

In an international environment, as long as proper research is performed, most HRM concepts can be applied. The important thing to consider is proper research and understanding of cultural, economic, and legal differences between countries. This section will provide an overview of some specific considerations for an international business, keeping in mind that with awareness, any HRM concept can be applied to the international environment. In addition, it is important to mention again that host-country offices should be in constant communication with home-country offices to ensure policies and practices are aligned with the organization.

Recruitment and Selection

As we discussed in Section 14.2 “Staffing Internationally”, understanding which staffing strategy to use is the first aspect of hiring the right person for the overseas assignment. The ideal candidate for an overseas assignment normally has the following characteristics:

  1. Managerial competence: technical skills, leadership skills, knowledge specific to the company operations.
  2. Training: The candidate either has or is willing to be trained on the language and culture of the host country.
  3. Adaptability: The ability to deal with new, uncomfortable, or unfamiliar situations and the ability to adjust to the culture in which the candidate will be assigned.

As we discussed earlier, when selecting an expatriate or a third-country national for the job, assuring that the candidate has the job factors, relational dimensions, motivational state, family situation, and language skills (or can learn) is a key consideration in hiring the right person. Some of the costs associated with failure of an expatriate or third-country national might include the following:

  1. Damage to host-country relationships
  2. Motivation of host-country staff
  3. Costs associated with recruitment and relocation
  4. Possible loss of that employee once he or she returns
  5. Missed opportunities to further develop the market

Because success on an overseas assignment has such complex factors, the selection process for this individual should be different from the selection process when hiring domestically. The process should start with the job analysis, as we discussed in Chapter 4 “Recruitment”. The job analysis and job description should be different for the overseas assignment, since we know that certain competencies (besides technical ones) are important for success. Most of those competencies have little to do with the person’s ability to do the job but are related to his or her ability to do the job in a new cultural setting. These additional competencies (besides the skills needed for the job) may be considered:

  1. Experience working internationally
  2. Extroverted
  3. Stress tolerance
  4. Language skills
  5. Cultural experiences

Once the key success factors are determined, many of which can be based on previous overseas assignments successes, we can begin to develop a pool of internal candidates who possess the additional competencies needed for a successful overseas assignment.

To develop the pool, career development questions on the performance review can be asked to determine the employee’s interest in an overseas assignment. Interest is an important factor; otherwise, the chance of success is low. If there is interest, this person can be recorded as a possible applicant. An easy way to keep track of interested people is to keep a spreadsheet of interested parties, skills, languages spoken, cultural experiences, abilities, and how the candidates meet the competencies you have already developed.

Once an overseas assignment is open, you can view the pool of interested parties and choose the ones to interview who meet the competencies required for the particular assignment.

Figure 14.3 Sample Selection Process for Overseas Assignments

Training

Much of the training may include cultural components, which were cited by 73 percent of successful expatriates as key ingredients to success (The Economist Intelligence Unit, 2010).

Training isn’t always easy, though. The goal is not to help someone learn a language or cultural traditions but to ensure they are immersed in the sociocultural aspects of the new culture they are living in. Roger N. Blakeney (Blakeney, 2006), an international business researcher, identifies two main pathways to adapting to a new culture. First, people adjust quickly from the psychological perspective but not the social one. Blakeney argues that adjusting solely from the psychological perspective does not make an effective expatriate. Although it may take more time to adjust, he says that to be fully immersed and to fully understand and be productive in a culture, the expatriate must also have sociocultural adaption. In other words, someone who can adjust from a sociocultural perspective ends up performing better because he or she has a deeper level of understanding of the culture. Determining whether your candidate can gain this deeper level would figure in your selection process.

One of the key decisions in any global organization is whether training should be performed in-house or an outside company should be hired to provide the training. For example, Communicaid offers online and on-site training on a variety of topics listed. Whether in-house or external training is performed, there are five main components of training someone for an overseas assignment:

  1. Language
  2. Culture
  3. Goal setting
  4. Managing family and stress
  5. Repatriation

Training on languages is a basic yet necessary factor to the success of the assignment. Although to many, English is the international business language, we shouldn’t discount the ability to speak the language of the country in which one is living. Consider Japan’s largest online retailer, Rakuten, Inc. It mandated that English will be the standard language by March 2012 (Thregold, 2010). Other employers, such as Nissan and Sony, have made similar mandates or have already implemented an English-only policy. Despite this, a large percentage of your employee’s time will be spent outside work, where mastery of the language is important to enjoy living in another country. In addition, being able to discuss and negotiate in the mother tongue of the country can give your employee greater advantages when working on an overseas assignment. Part of language, as we discussed in Chapter 9, isn’t only about what you say but also includes all the nonverbal aspects of language. Consider the following examples:

  • In the United States, we place our palm upward and use one finger to call someone over. In Malaysia, this is only used for calling animals. In much of Europe, calling someone over is done with palm down, making a scratching motion with the fingers (as opposed to one finger in the United States). In Columbia, soft handclaps are used.
  • In many business situations in the United States, it is common to cross your legs, pointing the soles of your shoes to someone. In Southeast Asia, this is an insult since the feet are the dirtiest and lowest part of the body.
  • Spatial differences are an aspect of nonverbal language as well. In the United States, we tend to stand thirty-six inches (an arm length) from people, but in Chile, for example, the space is much smaller.
  • Proper greetings of business colleagues differ from country to country.
  • The amount of eye contact varies. For example, in the United States, it is normal to make constant eye contact with the person you are speaking with, but in Japan it would be rude to make constant eye contact with someone with more age or seniority.

The goal of cultural training is to train employees what the “norms” are in a particular culture. Many of these norms come from history, past experience, and values. Cultural training can include any of the following topics:

  1. Etiquette
  2. Management styles
  3. History
  4. Religion
  5. The arts
  6. Food
  7. Geography
  8. Logistics aspects, such as transportation and currency
  9. Politics

Cultural training is important. Although cultural implications are not often discussed openly, not understanding the culture can harm the success of a manager when on overseas assignment. For example, when Revlon expanded its business into Brazil, one of the first products it marketed was a Camellia flower scented perfume. What the expatriate managers didn’t realize is that the Camellia flower is used for funerals, so of course, the product failed in that country (Roy, 1998). Cultural implications, such as management style, are not always so obvious. Consider the US manager who went to Mexico to manage a production line. He applied the same management style that worked well in America, asking a lot of questions and opinions of employees. When employees started to quit, he found out later that employees expect managers to be the authority figure, and when the manager asked questions, they assumed he didn’t know what he was doing.

Training on the goals and expectations for the expatriate worker is important. Since most individuals take an overseas assignment to boost their careers, having clear expectations and understanding of what they are expected to accomplish sets the expatriate up for success.

Because moving to a new place, especially a new country, is stressful, it is important to train the employee on managing stress, homesickness, culture shock, and likely a larger workload than the employee may have had at home. Some stress results from insecurity and homesickness. It is important to note that much of this stress occurs on the family as well. The expatriate may be performing and adjusting well, but if the family isn’t, this can cause greater stress on the employee, resulting in a failed assignment. Four stages of expatriate stress identified in the Selyes model, the General Adaption Syndrome, are shown in Figure 14.5 “General Adaption Syndrome to Explain Expatriate Stress”. The success of overseas employees depends greatly on their ability to adjust, and training employees on the stages of adjustment they will feel may help ease this problem.

Cultural Differences

(click to see video)

These two videos discuss practical implications of cultural differences.

Figure 14.5 General Adaption Syndrome to Explain Expatriate Stress

Source: Bala Koteswari and Mousumi Bhattacharya, “Managing Expatriate Stress,” Delhi Business Review 8, no. 1 (2007): 89–98.

Spouses and children of the employee may also experience much of the stress the expatriate feels. Children’s attendance at new schools and lack of social networks, as well as possible sacrifice of a spouse’s career goal, can negatively impact the assignment. Many companies offer training not only for the employee but for the entire family when engaging in an overseas assignment. For example, global technology and manufacturing company Honeywell offers employees and their families a two-day cultural orientation on the region they will be living in (Klaff, 2002). Some of the reasons for lack of adjustment by family members might include the following:

  1. Language issues
  2. Social issues
  3. Schooling
  4. Housing
  5. Medical services

The ability of the organization to meet these family needs makes for a more successful assignment. For example, development of an overseas network to provide social outlets, activities, schooling and housing options, assignment of mentors to the spouse, and other methods can help ease the transition.

Finally, repatriation is the process of helping employees make the transition to their home country. Many employees experience reverse culture shock upon returning home, which is a psychological phenomenon that can lead to feelings of fear, helplessness, irritability, and disorientation. All these factors can cause employees to leave the organization soon after returning from an assignment, and to take their knowledge with them. One problem with repatriation is that the expatriate and family have assumed things stayed the same at home, while in fact friends may have moved, friends changed, or new managers may have been hired along with new employees. Although the manager may be on the same level as other managers when he or she returns, the manager may have less informal authority and clout than managers who have been working in the particular office for a period of time. An effective repatriation program can cost $3,500 to $10,000 per family, but the investment is worth it given the critical skills the managers will have gained and can share with the organization. In fact, many expatriates fill leadership positions within organizations, leveraging the skills they gained overseas. One such example is FedEx president and CEO David Bronczek and executive vice president Michael Drucker. Tom Mullady, the manager of international compensation planning at FedEx, makes the case for a good repatriation program when he says, “As we become more and more global, it shows that experience overseas is leveraged back home” (Klaff, 2002).

Repatriation planning should happen before the employee leaves on assignment and should be a continuous process throughout the assignment and upon return. The process can include the following:

  • Training and counseling on overseas assignment before leaving
  • Clear understanding of goals before leaving, so the expatriate can have a clear sense as to what new skills and knowledge he or she will bring back home
  • Job guarantee upon return (Deloitte and Touche, for example, discusses which job each of the two hundred expats will take after returning, before the person leaves, and offers a written letter of commitment (Klaff, 2002).)
  • Assigning the expatriate a mentor, ideally a former expatriate
  • Keeping communication from home open, such as company newsletters and announcements
  • Free return trips home to stay in touch with friends and family
  • Counseling (at Honeywell, employees and families go through a repatriation program within six months of returning (Klaff, 2002).)
  • Sponsoring brown bag lunches where the expatriate can discuss what he or she learned while overseas
  • Trying to place expatriates in positions where they can conduct business with employees and clients from where they lived

It is also important to note that offering an employee an international assignment can help develop that person’s understanding of the business, management style, and other business-related development. Working overseas can be a crucial component to succession planning. It can also be a morale booster for other employees, who see that the chosen expatriate is further able to develop his or her career within the organization.

While the focus of this section has been on expatriate assignments, the same information on training is true for third-country nationals.

If it is decided that host-country nationals will be hired, different training considerations might occur. For example, will they spend some time at your domestic corporate headquarters to learn the business, then apply what they learned when they go home? Or, does it make more sense to send a domestic manager overseas to train the host-country manager and staff? Training will obviously vary based on the type of business and the country, and it may make sense to gain input from host-country managers as opposed to developing training on your own. As we have already discussed in this chapter, an understanding of the cultural components is the first step to developing training that can be utilized in any country.

Figure 14.4 Blakeney’s Model of Psychological versus Sociocultural Adaption

Source: Roger Blakeney, “Psychological Adjustment and Sociocultural Adaptation: Coping on International Assignments” (paper, Annual Meeting of Academy of Management, Atlanta, GA, 2006).

Compensation and Rewards

There are a few options when choosing compensation for a global business. The first option is to maintain companywide pay scales and policies, so for example, all sales staff are paid the same no matter what country they are in. This can reduce inequalities and simplify recording keeping, but it does not address some key issues. First, this compensation policy does not address that it can be much more expensive to live in one place versus another. A salesperson working in Japan has much higher living expenses than a salesperson working in Peru, for example. As a result, the majority of organizations thus choose to use a pay banding system based on regions, such as South America, Europe, and North America. This is called a localized compensation strategy. Microsoft and Kraft Foods both use this approach. This method provides the best balance of cost-of-living considerations.

However, regional pay banding is not necessarily the ideal solution if the goal is to motivate expatriates to move. For example, if the employee has been asked to move from Japan to Peru and the salary is different, by half, for example, there is little motivation for that employee to want to take an assignment in Peru, thus limiting the potential benefits of mobility for employees and for the company.

One possible option is to pay a similar base salary companywide or regionwide and offer expatriates an allowance based on specific market conditions in each country (Carland, 1993). This is called the balance sheet approach. With this compensation approach, the idea is that the expatriate should have the same standard of living that he or she would have had at home. Four groups of expenses are looked at in this approach:

  1. Income taxes
  2. Housing
  3. Goods and services
  4. Base salary
  5. Overseas premium

The HR professional would estimate these expenses within the home country and costs for the same items in the host country. The employer then pays differences. In addition, the base salary will normally be in the same range as the home-country salary, and an overseas premium might be paid owing to the challenge of an overseas assignment. An overseas premium is an additional bonus for agreeing to take an overseas assignment. There are many companies specializing in cost-of-living data, such as Mercer Reports. It provides cost-of-living information at a cost of $600 per year. Table 14.6 “The Balance Sheet Approach to Compensation” shows a hypothetical example of how the balance sheet approach would work.

Table 14.6 The Balance Sheet Approach to Compensation

Chicago, ILTokyoAllowance
Tax rate30%35%5% or $288/month
Housing$1250$1800$550
Base salary$5400$5,750$350
Overseas premium15%$810
Total allowance$1998
Total salary and allowance$5400$7748

Other compensation issues, which will vary greatly from country to country, might include the following:

  1. The cost of benefits in another country. Many countries offer universal health care (offset by higher taxes), and therefore the employee would have health benefits covered while working and paying taxes in that country. Canada, Finland, and Japan are examples of countries that have this type of coverage. In countries such as Singapore, all residents receive a catastrophic policy from the government, but they need to purchase additional insurance for routine care (Countries with Universal Healthcare, 2011). A number of organizations offer health care for expatriates relocating to another country in which health care is not already provided.
  2. Legally mandated (or culturally accepted) amount of vacation days. For example, in Australia twenty paid vacation days are required, ten in Canada, thirty in Finland, and five in the Philippines. The average number of US worker vacation days is fifteen, although the number of days is not federally mandated by the government, as with the other examples (Sahadi, 2007).
  3. Legal requirements of profit sharing. For example, in France, the government heavily regulates profit sharing programs (Wilke, et. al., 2007).
  4. Pay system that works with the country culture, such as pay systems based on seniority. For example, Chinese culture focuses heavily on seniority, and pay scales should be developed according to seniority. In Figure 14.6 “Hourly World Compensation Comparisons for Manufacturing Jobs”, examples of hourly compensation for manufacturing workers are compared.
  5. Thirteenth month (bonus) structures and expected (sometimes mandated) annual lump-sum payments. Compensation issues are a major consideration in motivating overseas employees. A systematic system should be in place to ensure fairness in compensation for all expatriates.

Figure 14.6 Hourly World Compensation Comparisons for Manufacturing Jobs

Source: Bureau of Labor Statistics, Division of International Labor Comparisons, International Comparisons of Hourly Compensation costs in Manufacturing, 2009, http://www.bls.gov/news.release/ichcc.toc.htm (accessed September 16, 2011).

Performance Evaluations

The challenge in overseas performance evaluations is determining who should rate the performance of the expatriate. While it might make sense to have the host-country employees and managers rate the expatriate, cultural differences may make this process ineffective. Cultural challenges may make the host country rate the expatriate more harshly, or in some cases, such as Indonesia, harmony is more important than productivity, so it may be likely an Indonesia employee or manager rates the expatriate higher, to keep harmony in the workplace (Whitfield, 2011).

If the home-country manager rates the performance of the expatriate, he or she may not have a clear indication of the performance, since the manager and expatriate do not work together on a day-to-day basis. A study performed by Gregersen, Hite, and Black suggests that a balanced set of raters from host and home countries and more frequent appraisals relate positively to the accuracy of performance evaluations (Gregersen, et. al., 1996). They also suggest that the use of a standardized form relates negatively to perceived accuracy. Carrie Shearer, an international HR expert, concurs by stating that the standardized form, if used, should also include special aspects for the expatriate manager, such as how well the expatriate fits in with the culture and adaptation ability (Shearer, 2004).

Besides determining who should rate the expatriate’s performance, the HR professional should determine the criteria for evaluating the expatriate. Since it is likely the expatriate’s job will be different overseas, the previous criteria used may not be helpful in the evaluation process. The criteria used to rate the performance should be determined ahead of time, before the expatriate leaves on assignment. This is part of the training process we discussed earlier. Having a clear picture of the rating criteria for an overseas assignment makes it both useful for the development of the employee and for the organization as a tool. A performance appraisal also offers a good opportunity for the organization to obtain feedback about how well the assignment is going and to determine whether enough support is being provided to the expatriate.

The International Labor Environment

As we have already alluded to in this chapter, understanding of laws and how they relate to host-country employees and expatriates can vary from country to country. Because of this, individual research on laws in the specific countries is necessary to ensure adherence:

  1. Worker safety laws
  2. Worker compensation laws
  3. Safety requirements
  4. Working age restrictions
  5. Maternity/paternity leaves
  6. Unionization laws
  7. Vacation time requirements
  8. Average work week hours
  9. Privacy laws
  10. Disability laws
  11. Multiculturalism and diverse workplace, antidiscrimination law
  12. Taxation

As you can tell from this list, the considerable HRM factors when doing business overseas should be thoroughly researched.

One important factor worth mentioning here is labor unions. As you remember from Chapter 12 “Working with Labor Unions”, labor unions have declined in membership in the United States. Collective bargaining is the process of developing an employment contract between a union and management within an organization. The process of collective bargaining can range from little government involvement to extreme government involvement as in France, for example, where some of the labor unions are closely tied with political parties in the country.

Some countries, such as Germany, engage in codetermination, mandated by the government. Codetermination is the practice of company shareholders’ and employees’ being represented in equal numbers on the boards of organizations, for organizations with five hundred or more employees. The advantage of this system is the sharing of power throughout all levels of the organization; however, some critics feel it is not the place of government to tell companies how their corporation should be run. The goal of such a mandate is to reduce labor conflict issues and increase bargaining power of workers.

Taxation of expatriates is an important aspect of international HRM. Of course, taxes are different in every country, and it is up to the HR professional to know how taxes will affect the compensation of the expatriate. The United States has income tax treaties with forty-two countries, meaning taxing authorities of treaty countries can share information (such as income and foreign taxes paid) on residents living in other countries. US citizens must file a tax return, even if they have not lived in the United States during the tax year. US taxpayers claim over $90 billion in foreign tax credits on a yearly basis (Internal Revenue Service, 2011). Foreign tax credits allow expatriates working abroad to claim taxes paid overseas on their US tax forms, reducing or eliminating double taxation. Many organizations with expatriate workers choose to enlist the help of tax accountants for their workers to ensure workers are paying the correct amount of taxes both abroad and in the United States.

Table 14.7 Examples of HRM-Related Law Differences between the United States and China

United StatesChina*
Employment ContractsMost states have at-will employmentContract employment system. All employees must have a written contract
LayoffsNo severance requiredCompany must be on verge of bankruptcy before it can lay off employees
Two years of service required to pay severance; more than five years of experience requires a long service payment
TerminationEmployment at willEmployees can only be terminated for cause, and cause must be clearly proved. They must be given 30 days’ notice, except in the case of extreme circumstances, like theft
OvertimeNone required for salaried employeesEmployees who work more than 40 hours must be paid overtime
SalaryUp to individual companyA 13-month bonus is customary, but not required, right before the Chinese New Year
VacationNo governmental requirementMandated by government:
First year: no vacation
Year 2–9: 5 days
Years 10–19: 10 days
20 years or more: 15 days
Paid HolidaysNone required by law3 total. Chinese New Year, International Labor Day, and National Day. However, workers must “make up” the days by working a day on the previous weekend
Social SecurityRequired by law for employer and employee to pay into social securityGreater percentages are paid by employer: 22% of salary paid by employer, 8% paid by employee
Discrimination LawsPer EEOC, cannot discriminate based on race, sex, age, genetic information, or other protected groupsLaws are in place but not enforced
Maternity LeaveFamily and Medical Leave Act allows 12 weeks90 days’ maternity leave

Source: Harris and Moure, pllc, “China Employment Contracts, Ten Things to Consider,” China Law Blog, http://www.chinalawblog.com/2010/04/china_employment_contracts_ten.html (accessed August 13, 2011) and Cindy Zhang, “Employment Law in China,” June 21, 2011, http://www.attorneycz.com/ (accessed August 13, 2011).

Logistics of International Assignments

As you learned earlier, providing training for the expatriate is an important part of a successful assignment. However, many of the day-to-day aspects of living are important, too.

One of the most important logistical aspects is to make sure the employee can legally work in the country where you will be sending him or her, and ensuring his or her family has appropriate documentation as well. A visa is permission from the host country to visit, live, or work in that country. Obtaining visas is normally the job of an HR professional. For example, the US Department of State and the majority of countries require that all US citizens have a valid passport to travel to a foreign country. This is the first step to ensuring your host-country national or third-country national can travel and work in that country.

Next, understanding the different types of visas is a component to this process. For example, the United States offers a Visa Waiver Program (VWP) that allows some nationals of thirty-six participating countries to travel to the United States for stays of less than ninety days. Iceland, Singapore, and France are examples of countries that participate in this program. For most host-national assignments, however, this type of visa may not be long enough, which then requires research of the individual country. It is important to mention that most countries have several types of visas, such as the following:

  1. Visas for crew members working on ships or airlines
  2. Tourist visas
  3. Student visas
  4. Employment visas for long-term employment at a foreign company
  5. Business visas

The visa process and time line can vary greatly depending on the country for which the visa is required. For example, obtaining a visa to work in China may take six months or longer. The best place to research this topic is on the country’s embassy website.

Besides ensuring the expatriate can legally work in the country, other considerations are worth mentioning as well:

  1. Housing. Where will I live is one of the most important questions that an expatriate may ask. The HR professional can help this process by outsourcing a leasing or rental company in the city where the expatriate will live to find a rental that meets the expectations of the expatriate. Choosing a place to live ahead of time can reduce stress (one of the causes of failure for assignments) for the expatriate and his or her family. Allowances may be made for housing costs, as discussed in the compensation section.
  2. Moving belongings. Determination of how belongings left behind will be stored at home or if those items will be brought to the host country is another logistical consideration. If items will be brought, beyond what can be carried in a suitcase, the HR professional may want to consider hiring a moving logistics company that specializes in expatriate moves to help with this process.
  3. The possibility of return trips home. As part of the initial discussion, the option of offering return trips home can make repatriation and performance reviews with home-country managers easier. This also gives the expatriate and his or her family the opportunity to visit with family and friends, reducing reverse culture shock upon return.
  4. Schooling. Some organizations may want to provide information on the schooling system to the expatriate, if he or she has children. Schools begin at different times of the year, and this information can make the registration process for school easier on the family.
  5. Spousal job. We know already from earlier in this chapter that one of the biggest challenges facing expatriates (and reasons for failure) is unhappiness of the spouse. He or she may have had a career at home and given that up while the spouse takes an assignment. HR professionals might consider offering job search services as part of the allowance discussed earlier in this chapter. Lockheed Martin, for example, offers job search services to spouses moving overseas (Minehan, 2011).

In any situation, support from the HR professional will help make the assignment a success, which shows that HRM practices should be aligned with company goals.

How Would You Handle This?

Visa Blues

Your manager has just notified you that one of your marketing managers has taken an assignment in China to work for one year. You tell your manager you will begin the visa process for employment. She disagrees and tells you it will be quicker to just get a tourist visa. You mention this is illegal and could get the employee and company in trouble, but she insists on your getting a tourist visa so the employee can leave within the month. How would you handle this?

How Would You Handle This?

https://api.wistia.com/v1/medias/1361075/embed

The author discusses the How Would You Handle This situation in this chapter at: https://api.wistia.com/v1/medias/1361075/embed.

Key Takeaways

  • Personality traits are a key component to determining whether someone is a good fit for an overseas assignment. Since 73 percent of overseas assignments fail, ensuring the right match up front is important.
  • The ideal expatriate is able to deal with change, is flexible, and has the support of his or her family. Ideal expatriates are also organized, take risks, and are good at asking for help.
  • The adjustment period an expatriate goes through depends on his or her initial preparation. Blakeney said there are two levels of adjustment: psychological adjustment and sociocultural adjustment. Although the psychological may take less time, it is the sociocultural adjustment that will allow the assignment to be successful.
  • Training is a key component in the HRM global plan, whether expatriates or host-country nationals are to be hired. Both will require a different type of training. Training can reduce culture shock and stress.
  • Consideration of the expatriate’s family and their ability to adjust can make a more successful overseas assignment
  • Compensation is another consideration of a global business. The balance sheet approach pays the expatriate extra allowances, such as living expenses, for taking an international assignment.
  • Other considerations such as vacation days, health-care benefits, and profit-sharing programs are important as well.
  • Laws of each country should be carefully evaluated from an HRM strategic perspective. Laws relating to disabilities, pregnancy, and safety, for example, should be understood before doing business overseas.
  • Labor unions have different levels of involvement in different parts of the world. For example, Germany has codetermination, a policy that requires companies to have employees sit on various boards.
  • The United States has treaties with forty-two countries to share information about expatriates. The United States offers foreign tax credits to help expatriates avoid double taxation. However, US citizens must file taxes every year, even if they have not lived in the United States during that year.
  • Logistical help can be important to ensuring the success of an overseas assignment. Help with finding a place to live, finding a job for a spouse, and moving can make the difference between a successful assignment and an unsuccessful one.
  • The Visa Waiver Program (VWP) is a program in which nationals of thirty-six countries can enter the United States for up to a ninety-day period. This type of visa may not work well for expatriates, so it is important to research the type of visa needed from a particular country by using that country’s embassy website.

Exercise

  1. Research the country of your choice. Discuss at least five of the aspects you should know as an HRM professional about doing business in that country.

References

Blakeney, R., “Psychological Adjustment and Sociocultural Adaptation: Coping on International Assignments” (paper, Annual Meeting of Academy of Management, Atlanta, GA, 2006).

Cartland, J., “Reward Policies in a Global Corporation,” Business Quarterly, Autumn 1993, 93–96.

Countries with Universal Healthcare (no date), accessed August 11, 2011, http://truecostblog.com/2009/08/09/countries-with-universal-healthcare-by-date/.

Economist Intelligence Unit, The, Up or Out: Next Moves for the Modern Expatriate, 2010, accessed April 28, 2011, http://graphics.eiu.com/upload/eb/LON_PL_Regus_WEB2.pdf.

Gregersen, H., Julie Hite, and Steward Black, “Expatriate Performance Appraisal in US Multinational Firms,” Journal of International Business Studies 27, no. 4 (1996): 711–38.

Internal Revenue Service, “Foreign Tax Credit,” accessed August 13, 2011, http://www.irs.gov/businesses/article/0,,id=183263,00.html.

Klaff, L. G., “The Right Way to Bring Expats Home,” BNET, July 2002, accessed August 12, 2011, http://findarticles.com/p/articles/mi_m0FXS/is_7_81/ai_89269493/.

Minehan, M., “Six Job Search Tips for Expatriate Spouses,” n.d., Expatica, accessed August 12, 2011, http://www.expatica.com/nl/essentials_moving_to/essentials/six-job-search-tips-for-expatriate-spouses-327_9125.html.

Roy, S., “Brand Failures: A Consumer Perspective to Formulate a MNC Entry Strategy” (postgraduate diploma, XLRI School of Business and Human Resources, 1998), accessed August 12, 2011, http://sudiptaroy.tripod.com/dissfin.pdf.

Sahadi, J., “Who Gets the Most (and Least) Vacation” CNN Money, June 14, 2007, accessed August 11, 2011, http://money.cnn.com/2007/06/12/pf/vacation_days_worldwide/.

Shearer, C., “Expat Performance Appraisal: A Two Tier Process?” October 8, 2004, Expatrica.com, accessed August 12, 2011, http://www.expatica.com/hr/story/expat-performance-appraisal-a-two-tier-process-10529.html.

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This is a derivative of Human Resource Management by a publisher who has requested that they and the original author not receive attribution, which was originally released and is used under CC BY-NC-SA. This work, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

The scarcity of qualified managers has become a major constraint on the speed with which multinational companies can expand their international sales. The growth of the knowledge-based society, along with the pressures of opening up emerging markets, has led cutting-edge global companies to recognize now more than ever that human resources and intellectual capital are as significant as financial assets in building sustainable competitive advantage. To follow their lead, chief executives in other multinational companies will have to bridge the yawning chasm between their companies' human resources rhetoric and reality. H.R. must now be given a prominent seat in the boardroom.

Good H.R. management in a multinational company comes down to getting the right people in the right jobs in the right places at the right times and at the right cost. These international managers must then be meshed into a cohesive network in which they quickly identify and leverage good ideas worldwide.

Such an integrated network depends on executive continuity. This in turn requires career management to insure that internal qualified executives are readily available when vacancies occur around the world and that good managers do not jump ship because they have not been recognized.

Very few companies come close to achieving this. Most multinational companies do not have the leadership capital they need to perform effectively in all their markets around the world. One reason is the lack of managerial mobility. Neither companies nor individuals have come to terms with the role that managerial mobility now has to play in marrying business strategy with H.R. strategy and in insuring that careers are developed for both profitability and employability.

Ethnocentricity is another reason. In most multinationals, H.R. development policies have tended to concentrate on nationals of the headquarters country. Only the brightest local stars were given the career management skills and overseas assignments necessary to develop an international mindset.

The chief executives of many United States-based multinational companies lack confidence in the ability of their H.R. functions to screen, review and develop candidates for the most important posts across the globe. This is not surprising: H.R. directors rarely have extensive overseas experience and their managers often lack business knowledge. Also, most H.R. directors do not have adequate information about the brightest candidates coming through the ranks of the overseas subsidiaries. "H.R. managers also frequently lack a true commitment to the value of the multinational company experience," notes Brian Brooks, group director of human resources for the global advertising company WPP Group Plc.

The consequent lack of world-wise multicultural managerial talent is now biting into companies' bottom lines through high staff turnover, high training costs, stagnant market shares, failed joint ventures and mergers and the high opportunity costs that inevitably follow bad management selections around the globe.

Companies new to the global scene quickly discover that finding savvy, trustworthy managers for their overseas markets is one of their biggest challenges. This holds true for companies across the technology spectrum, from software manufacturers to textile companies that have to manage a global supply chain. The pressure is on these newly globalizing companies to cut the trial-and-error time in building a cadre of global managers in order to shorten the leads of their larger, established competitors, but they are stymied as to how to do it.

The solution for multinationals is to find a way to emulate companies that have decades of experience in recruiting, training and retaining good employees across the globe. Many of these multinational companies are European, but not all. Both Unilever and the International Business Machines Corporation, for example, leverage their worldwide H.R. function as a source of competitive advantage.

Anglo-Dutch Unilever has long set a high priority on human resources. H.R. has a seat on the board's executive committee and an organization that focuses on developing in-house talent and hot-housing future leaders in all markets. The result is that 95 percent of Unilever's top 300 managers are fully homegrown. Internationalization is bred into its managers through job content as well as overseas assignments. Since 1989, Unilever has redefined 75 percent of its managerial posts as "international" and doubled its number of managers assigned abroad, its expatriates, or "expats."

I.B.M., with 80 years' experience in overseas markets, reversed its H.R. policy in 1995 to deal with the new global gestalt and a new business strategy. Instead of cutting jobs abroad to reduce costs, I.B.M. is now focusing on its customers' needs and increasing overseas assignments. "We are a growing service business -- our people are what our customers are buying from us," explained Eileen Major, director of international mobility at I.B.M.

When managers sign on with these companies, they know from the start that overseas assignments are part of the deal if they wish to climb high on the corporate ladder. These multinational companies manage their H.R. talent through international databases that, within hours, can provide a choice of Grade-A in-house candidates for any assignment. Even allowing for company size, few United States-based multinationals come close to matching the bench strength of a Unilever or Nestlé. The Japanese multinationals are even farther behind.

This article outlines a global H.R. action agenda based on the approaches used by leading multinational companies. The goal is to build sustainable competitive advantage by attracting and developing the best managerial talent in each of your company's markets.

The strategy demands global H.R. leadership with standard systems but local adaptation. The key underlying ideas are to satisfy your company's global human resources needs via feeder mechanisms at regional, national and local levels, and to leverage your current assets to the fullest extent by actively engaging people in developing their own careers.

Implementing these ideas can be broken down into 10 steps. By taking these steps, a company should be able to put into place an effective global human resources program within three to four years.

1. Break all the "local national" glass ceilings

The first, and perhaps most fundamental, step toward building a global H.R. program is to end all favoritism toward managers who are nationals of the country in which the company is based. Companies tend to consider nationals of their headquarters country as potential expatriates and to regard everyone else as "local nationals." But in today's global markets, such "us-versus-them" distinctions can put companies at a clear disadvantage, and there are strong reasons to discard them:

  • Ethnocentric companies tend to be xenophobic -- they put the most confidence in nationals of their headquarters country. This is why more nationals get the juicy assignments, climb the ranks and wind up sitting on the board -- and why the company ends up with a skewed perception of the world. Relatively few multinational companies have more than token representation on their boards. A.B.B. is one company that recognizes the danger and now considers it a priority to move more executives from emerging countries in eastern Europe and Asia into the higher levels of the company.
  • Big distinctions can be found between expatriate and local national pay, benefits and bonuses, and these differences send loud signals to the brightest local nationals to learn as much as they can and move on.
  • Less effort is put into recruiting top-notch young people in overseas markets than in the headquarters country. This leaves fast-growing developing markets with shallow bench strength.
  • Insufficient attention and budget are devoted to assessing, training and developing the careers of valuable local nationals already on the company payroll.

Conventional wisdom has defined a lot of the pros and cons of using expatriates versus local nationals. (See Exhibits I and II). But in an increasingly global environment, cultural sensitivity and cumulative skills are what count. And these come with an individual, not a nationality.

After all, what exactly is a "local national"? Someone who was born in the country? Has a parent or a spouse born there? Was educated there? Speaks the language(s)? Worked there for a while? All employees are local nationals of at least one country, but often they can claim a connection with several. More frequent international travel, population mobility and cross-border university education are increasing the pool of available hybrid local nationals. Every country-connection a person has is a potential advantage for the individual and the company. So it is in a multinational company's interests to expand the definition of the term "local national" rather than restrict it.

2. Trace your lifeline

Based on your company's business strategy, identify the activities that are essential to achieving success around the world and specify the positions that hold responsibility for performing them. These positions represent the "lifeline" of your company. Typically, they account for about 10 percent of management.

Then define the technical, functional and soft skills needed for success in each "lifeline" role. As Ms. Major of I.B.M. notes, "It is important to understand what people need to develop as executives. They can be savvy functionally and internationally, but they also have to be savvy inside the organization."

This second step requires integrated teams of business and H.R. specialists working with line managers. Over time, they should extend the skills descriptions to cover all of the company's executive posts. It took 18 months for I.B.M. to roll out its worldwide skills management process to more than 100,000 people in manufacturing and development.

A good starting point is with posts carrying the same title around the globe, but local circumstances need to be taken into account. Chief financial officers in Latin American and eastern European subsidiaries, for example, should know how to deal with volatile exchange rates and high infiation. Unilever circulates skills profiles for most of its posts, but expects managers to adapt them to meet local needs.

Compiling these descriptions is a major undertaking, and they will not be perfect because job descriptions are subject to continuous change in today's markets and because perfect matches of candidates with job descriptions are unlikely to be found. But they are an essential building block to a global H.R. policy because they establish common standards.

The lifeline and role descriptions should be revisited at least annually to ensure they express the business strategy. Many companies recognize the need to review the impact of strategy and marketplace changes on high-technology and R&D roles but overlook the fact that managerial jobs are also redrawn by market pressures. The roles involved in running an emerging market operation, for example, expand as the company builds its investment and sales base. At I.B.M., skills teams update their role descriptions every six months to keep pace with the markets and to inform senior managers which skills are "hot" and which the company has in good supply.

3. Build a global database to know who and where your talent is

The main tool of a global H.R. policy has to be a global database simply because multinational companies now have many more strategic posts scattered around the globe and must monitor the career development of many more managers. Although some multinational companies have been compiling worldwide H.R. databases over the past decade, these still tend to concentrate on posts at the top of the organization, neglecting the middle managers in the country markets and potential stars coming through the ranks.

I.B.M. has compiled a database of senior managers for 20 years, into which it feeds names of promising middle managers, tracking them all with annual reviews. But it made the base worldwide only 10 years ago. Now the company is building another global database that will cover 40,000 competencies and include all employees worldwide who can deliver those skills or be groomed to do so. I.B.M. plans to link the two databases by 2000.

Unilever has practiced a broader sweep for the past 40 years. It has five talent "pools" stretching from individual companies (e.g., Good Humor Breyers Ice Cream in the United States and Walls Ice Cream in Britain) to foreign subsidiaries (e.g., Unilever United States Inc. and Unilever U.K. Holdings Ltd.) to global corporate headquarters. From day one, new executive trainees are given targets for personal development. Those who show the potential to move up significantly are quickly earmarked for the "Development" list, where their progress through the pools -- company, national, business group and/or region, global, executive committee -- is guided not only by their direct bosses but by managers up to three levels above. "We want bigger yardsticks to be applied to these people and we don't want their direct bosses to hang on to them," explains Herwig Kressler, Unilever's head of remuneration and industrial relations. To make sure the company is growing the general management talent it will need, the global H.R. director's strategic arm reaches into the career moves of the third pool -- those serving in a group or region -- to engineer appointments across divisions and regions.

To build this type of global H.R. database, you should begin with the Step 2 role descriptions and a series of personal-profile templates that ask questions that go beyond each manager's curriculum vitae to determine cultural ties, language skills, countries visited, hobbies and interests. For overseas assignments, H.R. directors correctly consider such soft skills and cultural adaptability to be as important as functional skills. The fact that overseas appointments are often made based largely on functional skills is one reason so many of them fail.1

4. Construct a mobility pyramid

Evaluate your managers in terms of their willingness to move to new locations as well as their ability and experience. Most H.R. departments look at mobility in black-or-white terms: "movable" or "not movable." But in today's global markets this concept should be viewed as a graduated scale and constantly reassessed because of changing circumstances in managers' lives and company opportunities. This will encourage many more managers to opt for overseas assignments and open the thinking of line and H.R. managers to different ways to use available in-house talent.

Some multinational companies, for example, have been developing a new type of manager whom we term "glopats": executives who are used as business-builders and troubleshooters in short or medium-length assignments in different markets. Other multinational companies are exploring the geographical elasticity of their local nationals.

Consider the five-level mobility pyramid in Exhibit III. To encourage managerial mobility, each personal profile in your database should have a field where managers and functional experts assess where and for what purposes they would move. When jobs or projects open, the company can quickly determine who is able and willing to take them.

Managers can move up and down a mobility pyramid at various stages of their career, often depending on their family and other commitments. Young single people or divorced managers, for example, may be able and eager to sign up for the glopat role but want to drop to a lower level of the pyramid if they wish to start or restart a family life. Or seasoned senior managers may feel ready to rise above the regional level only when their children enter college.

I.B.M. uses its global H.R. database increasingly for international projects. In preparing a proposal for a German car manufacturer, for instance, it pulled together a team of experts with automotive experience in the client's major and new markets. To reduce costs for its overseas assignments, I.B.M. has introduced geographic "filters": a line manager signals the need for outside skills to one of I.B.M.'s 400 resource coordinators, who aims to respond in 72 hours; the coordinator then searches the global skills database for a match, filtering the request through a series of ever-widening geographic circles. Preference is often given to the suitable candidate who is geographically closest to the assignment. The line manager then negotiates with that employee's boss or team for the employee's availability.

The shape of a company's mobility pyramid will depend on its businesses, markets and development stage and will evolve as the company grows. A mature multinational food-processing company with decentralized operations, for example, might find a fiat pyramid adequate, whereas a multinational company in a fast-moving, high-technology business might need a steeper pyramid with proportionately more glopats.

1 Kevin Barham and Marion Devine, "The Quest for the International Manager: A Survey of Global Human Resource Strategies" (Economist Intelligence Unit, 1991).  

5. Identify your leadership capital

Build a database of your company's mix of managerial skills by persuading people to describe the information in their c.v.'s, their management talents and their potential on standard personal-profile templates. Jump-start the process by having your senior managers and those in the lifeline posts complete the forms first. Add others worldwide with the potential to move up. Include functional specialists who show general management potential.

Require over time that every executive join the global H.R. system. This makes it harder for uncut diamonds to be hidden by their local bosses. Recognizing that people's situations and career preferences shift over time, hold all managers and technical experts responsible for updating their c.v.'s and reviewing their personal profiles at least once a year.

Companies should make it clear that individual inputs to the system are voluntary but that H.R. and line managers nevertheless will be using the data to plan promotions and international assignments and to assess training needs. Be mindful of the personal privacy provisions in the European Union's new Data Protection directive and similar regulations forthcoming in Japan that basically require employee consent to gather or circulate any personal information.

6. Assess your bench strength and skills gap

Ask each executive to compare his or her skills and characteristics with the ideal requirements defined for the executive's current post and preferred next post. Invite each to propose ways to close any personal skills gaps -- for example, through in-house training, mentoring, outside courses or participation in cross-border task forces.

Compare the skills detailed in the personal assessments with those required by your business strategy. This information should form the basis for your management development and training programs and show whether you have time to prepare internal candidates for new job descriptions.

Unilever uses a nine-point competency framework for its senior managers. It then holds the information in private databases that serve as feeder information for its five talent pools. The company thoroughly reviews the five pools every two years and skims them in between, always using a three- to five-year perspective. In 1990, for example, its ice cream division had a strategic plan to move into 30 new countries within seven years. Unilever began hiring in its current markets with that in mind and set up a mobile "ice cream academy" to communicate the necessary technical skills.

I.B.M. applies its competency framework to a much broader personnel base and conducts its skills gap analyses every six months. Business strategists in every strategic business unit define a plan for each market and, working with H.R. specialists, determine the skills required to succeed in it. Competencies are graded against five proficiency levels.

Managers and functional experts are responsible for checking into the database to compare their capabilities against the relevant skills profiles and to determine whether they need additional training. Their assessments are reviewed, discussed and validated by each executive's boss, and then put into the database. "Through the database, we get a business view of what we need versus what we have," explains Rick Weiss, director of skills at I.B.M. "Once the gaps are identified, the question for H.R. is whether there is time to develop the necessary people or whether they have to be headhunted from the outside."

7. Recruit regularly

Search for new recruits in every important local market as regularly as you do in the headquarters country. Develop a reputation as "the company to join" among graduates of the best universities, as Citibank has in India, for example.

The best way to attract stellar local national recruits is to demonstrate how far up the organization they can climb. Although many Fortune 500 companies in the United States derive 50 percent or more of their revenues from non-domestic sales, only 15 percent of their senior posts are held by non-Americans.

There may be nothing to stop a local national from reaching the top, but the executive suite inevitably refiects where a company was recruiting 30 years earlier. Even today, many multinational companies recruit disproportionately more people in their largest -- often their longest-established -- markets, thereby perpetuating the status quo.

To counter such imbalances, a multinational company must stress recruitment in emerging markets and, when possible, hire local nationals from these markets for the middle as well as the lower rungs of its career ladder. Philips Electronics N.V., for example, gives each country subsidiary a target number of people to bring through the ranks for international experience. Some go on to lengthy international careers; others return to home base, where they then command more respect, both in the business and with government officials, as a result of their international assignments.

8. Advertise your posts internally

Run your own global labor market. In a large company, it is hard to keep track of the best candidates. For this reason, I.B.M. now advertises many of its posts on its worldwide Intranet. Unilever usually advertises only posts in the lower two pools, but this policy varies by country and by business unit.

Routine internal advertising has many advantages in that it:

  • Allows a competitive internal job market to function across nationalities, genders and other categories.
  • Shows ambitious people they can make their future in the company.
  • Makes it harder for bosses to hide their leading lights.
  • Attracts high-fiyers who may be ready to jump ship.
  • Helps to break down business-unit and divisional baronies.
  • Reduces inbreeding by transferring managers across businesses and divisions.
  • Gives the rest of the company first pick of talent made redundant in another part of the world.
  • Solidifies company culture.
  • Is consistent with giving employees responsibility to manage their own careers.

There are also certain disadvantages to this practice: Line managers have to fill the shoes of those who move; a central arbiter may need to settle disputes between departments and divisions, and applicants not chosen might decide to leave. To prevent that, disappointed applicants should automatically be routed through the career development office to discuss how their skills and performance mesh with their ambitions.

I.B.M. used to hire only from the inside, but five years ago it began to recruit outsiders -- including those from other industries -- to broaden thinking and add objectivity. Unilever is large enough that it can garner a short list of three to five internal candidates for any post. Yet it still fills 15 percent to 20 percent of managerial jobs from outside because of the need for specialist skills and because of the decreasing ability to plan where future growth opportunities will occur.

9. Institute succession planning

Every manager in a lifeline job should be required to nominate up to three candidates who could take over that post in the next week, in three months or within a year, and their bosses should sign off on the nominations. This should go a long way toward solving succession questions, but it will not resolve them completely.

The problem in large multinational companies is that many of today's successors may leave the company tomorrow. In addition, managers name only those people they know as successors. Third, the chief executives of many multinational companies keep their succession plans -- if they have any -- only in their heads. This seems to overlook the harsh realities of life and death. A better approach is that of one European shipping magnate who always carries a written list with the name of a successor for the captain of every boat in his fieet.

10. Challenge and retain your talent

Global networks that transfer knowledge and good practices run on people-to-people contact and continuity. Executive continuity also cuts down on turnover, recruitment and opportunity costs. As international competition for talent intensifies, therefore, it becomes increasingly important for companies to retain their good managers. Monetary incentives are not sufficient: the package must include challenge, personal growth and job satisfaction.

A policy should be adopted that invites employees to grow with the company, in every market. In addition, a career plan should be drawn up for every executive within his or her first 100 days in the organization. And plans should be reviewed regularly to be sure they stay aligned with the business strategy and the individual's need for job satisfaction and employability.

Overseas assignments and cross-border task forces are excellent ways to challenge, develop and retain good managers. They can also be awarded as horizontal "promotions." This is particularly useful since the fiat organizations currently in fashion do not have enough levels for hierarchical promotions alone to provide sufficient motivation.

Unilever has long had a policy of retentive development and manages to hold on to 50 percent of its high-fiyers. As an integral part of its global H.R. policy, it develops the "good" as well as the "best." Unilever reasons realistically that it needs to back up its high-fiyers at every stage and location with a strong bench of crisis-proof, experienced supporters who also understand how to move with the markets.

Unilever bases these policies on three principles:

  1. Be very open with people about the company's assessment of their potential and future.
  2. Pay people well -- and pay those with high potential really well, even though it may look like a distortion to others.
  3. Don't hesitate too long to promote people who have shown ability.

Sometimes this policy involves taking risks with people. But the point of a good system is to enable a company to place bets on the right people.

MAKING IT WORK

The 10-step global H.R. framework has the potential to affect every executive in every location. This scale of culture change has to be led by a company's chief executive, with full commitment from the top management team. A task force of H.R. and business strategists will be needed to facilitate and implement the program, but its success in the end will depend on line managers. As Rex Adams, former worldwide director of human resources at Mobil Oil, has commented, "The development of jobs and the people who fill them has to be the prime responsibility of line managers, supported by H.R. as diagnosticians and strategists."

Line managers will have to be won over to the business case for a multicultural mix, trained seriously for their career-development roles and offered strong incentives to implement world-class H.R. practices.

MANAGING OVERSEAS POSTINGS

Overseas assignments are an essential part of the 10-step program. Yet the track record at most United States-based multinational companies is poor. One study found that up to 25 percent of United States expats "black out" in their assignments and have to be recalled or let go. Between 30 percent and 50 percent of the remainder are considered "brown-outs": they stay in their posts but underperform. The failure rates for European and Japanese companies were half those of American multinational companies.2

Finding exciting challenges for returning expats is another problem. About 20 percent of United States expatriates quit their companies within one year of repatriation, often because their newly acquired overseas experience is disregarded.3 A 1992 study revealed that only 11 percent of Americans, 10 percent of Japanese and 25 percent of Finns received promotions after completing global assignments, while 77 percent of the Americans, 43 percent of the Japanese and 54 percent of the Finns saw themselves as demoted after returning home.4

Although the average annual cost of maintaining a United States employee abroad is about $300,000, and the average overseas assignment lasts about four years, United States multinational companies have been accepting a one-in-four chance of gaining no long-term return on this $1.2 million investment.5 The way around this problem is to manage an expat's exit and re-entry as you would any other major appointment by adopting these strategies:

  • Accord overseas postings the same high priority as other important business assignments.
  • Match the candidates' hard skills, soft skills, cultural background and interests with the demands of the post and location. An American manager who studies tai chi and Asian philosophy, for example, is more likely to succeed in China than one who coaches Little League.
  • Give internal applicants the edge, with personal and company training if needed.
  • Spend on some insurance against blackouts and brownouts, especially with medium- to long-term assignments in the company's "lifeline." Send the final candidates to visit the country where the post is based, preferably with their spouses, and give the local managers with whom they will work input into the final selection.
  • Give the appointee and his or her family cultural and language-immersion training.
  • Assign a mentor from headquarters who will stay in touch with the manager throughout the posting. Ideally, the mentor will have similar overseas experience and can alert the appointee to possible pitfalls and opportunities.
  • Set clear objectives for the appointee's integration into the local business environment. I.B.M., for example, traditionally expects a country general manager to join and head the local American Chamber of Commerce and to entertain a government minister at home once a quarter.
  • Continue developing the manager while he or she is overseas. Do not make it an "out of sight, out of mind" assignment.
  • Discuss "next steps" before departure and again during the assignment.

2 J. Stewart Black, Hal B. Gregersen and Mark E. Mendenhall, "Global Assignments" (Jossey-Bass Publishers, 1992).

3 "International Assignment Policies: A Benchmark Study" (Arthur Andersen, 1996).

4 J. Stewart Black, Hal B. Gregersen and Mark E. Mendenhall, "Global Assignments" (Jossey-Bass Publishers, 1992).

5 Hal B. Gregersen and J. Stewart Black, "Antecedents to Commitment to a Parent Company and a Foreign Operation," Academy of Management Journal, March 1992, pp. 65-90.

Unilever used to have big problems with expat appointments and would lose 20 percent to 25 percent on their return. The problems occurred partly because executives who could not make it in the most important markets were sent on overseas assignments. According to Mr. Kressler of Unilever: "When they were ready to come back, nobody wanted them. It took two years to get the message out that we would not post anyone who wouldn't have a fair chance of getting a job in-house on their return. Now, our rate of loss is well under 10 [percent]."

Unilever's overseas postings now have two equally important objectives: to provide the local unit with needed skills, technical expertise or training and to develop general management talent. Unilever prefers to have its foreign operations run by local nationals, supported by a multinational mix of senior managers, so most expats report to local nationals. Only 10 percent are sent to head a unit -- either when no local national is available or when the assignment is important to a manager's career development.

A manager who is sent on overseas assignment remains linked to a company unit that retains a career responsibility for him or her. The unit must include the manager in its annual performance reviews and career-planning system. Responsibility is given to the unit rather than to an individual manager to provide continuity and is included in the performance assessment of the unit and its director.

Career development is a factor in managerial bonuses in emerging markets, where Unilever is trying to train and develop local people, and in established markets, which help supply young expatriate managers to emerging markets.

HOW LONG IS ENOUGH?

The duration of any overseas appointment has to make sense for the individual, the company and the country. Three-year assignments are typical for the regional and global levels on the mobility pyramid, but they are not always enough. The cultural gap between a Western country and Japan, for example, is especially large, so a Westerner appointed as country manager will probably need to stay six years to make a significant impact.

Even when the culture gap is narrower, three-year assignments may be too short, except for the skilled glopat. Usually the first year is spent unpacking, the third year is spent packing up and anticipating the next move, leaving only the second year for full attention to the job. Most Unilever expat assignments last three to four years, although Mr. Kressler believes four to five years would be preferable in many cases.

Unilever now gives managers international exposure through training courses and career development at younger ages than in the past. "We do this because younger people today have a far greater international orientation -- command of languages, experience of travel -- than their peers of previous generations. We want these people in Unilever and they want to work for an organization that can offer international assignments early on."

MATCHING COMPLEMENTARY SKILLS

One caveat -- overemphasizing individual development planning can lead to trying to turn every executive into a superman or superwoman. In fact, organizational effectiveness depends mainly on leveraging complementary skills of team members. The mobility pyramid can be a great advantage here. Using a variety of information technology groupware and mobile assignments, companies can partner managers from domestic and international markets in complementary and mutually supportive assignments to transfer ideas, skills and technology.

This is done particularly in high-technology industries, where it often takes time and training to bring newly hired local nationals up to speed on highly technical product lines. In such cases, an experienced manager can be sent to the market on a short-term assignment both to build initial sales and to train the local nationals while learning about the local market from them. I.B.M., for example, uses this approach to build a more integrated network of local nationals.

Given the shortage of true glopats, many multinational companies find it useful to pair a headquarters-oriented executive from outside the market with an executive familiar with the local market as the two most senior managers in an operating subsidiary. These two often have complementary skills, and their pairing permits a "good cop, bad cop" approach to certain customers. The expat knows the product line and company well, and his or her lack of detailed knowledge about the local culture can actually help provoke a fresh and open approach to local obstacles. The insider then provides the well of country knowledge and connections for the expat to draw upon.

Once a beachhead is established, further penetration of the local market favors the executive with local knowledge. The outsider can then mentor from behind the scenes, staying in touch with headquarters to guarantee the transfer of good ideas. Motorola has used this approach very successfully in Russia.6

In the event of a financial crisis, the home office often elects to tighten controls and appoint a financially savvy general manager with strong ties to headquarters. A major strategy change or acquisition may also require such leadership to implement it. Once the situation is under control, however, leadership may revert to a manager with deep local knowledge.

CONCLUSION

Most multinational companies now do a good job of globalizing the supply chains for all their essential raw materials -- except human resources. Players in global markets can no longer afford this blind spot. Competition for talent is intensifying, and demand far outstrips supply. To have the multicultural skills and vision they need to succeed, companies will have to put into place programs that recruit, train and retain managers in all their markets.

If companies are to handle the challenges of globalization and shift to a knowledge-based economy, they must develop systems that "walk their talk" that people are their most valuable resource. The purpose of a global H.R. program is to insure that a multinational company has the right talent, managerial mobility and cultural mix to manage effectively all of its operating units and growth opportunities and that its managers mesh into a knowledge-sharing network with common values.

Reprint No. 99103 

6 "Who's the Boss?," The Wall Street Journal, Sept. 26, 1996, p. 15f.


Authors
John A. Quelch, John A. Quelch has been dean of London Business School since July 1998. He was formerly a professor at Harvard Business School. His latest book is "Global Marketing Management" (Addison-Wesley, 4th edition, 1998), written with Christopher Bartlett.
Helen Bloom, Helen Bloom is an international consultant who specializes in work/life and career development issues. She is based in Brussels and is the co-author, with Roland Calori and Philippe de Woot, of "Euromanagement: A New Style for the Global Market" (Kogan Page and Editions d'Organisation, 1994).

 

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