Leading & Managing People †Expatriate Essay

Multinational firms throughout the world are increasingly concerned about hiring, developing and retaining managers with international experience and global perspectives† quoted by Briscoe and Schuler in 2004. This report will be focusing on variety of issues relating to Human Resource implications which faced by the expatriate working in MNC located in Malaysia as well as Malaysian working in overseas. The extraction will be from the most recent newspaper, journal and articles relating to the following topics in human resource management. 1) Expatriate Failure and the Selection policy 2) Training and development for cross-cultural 3) Performance appraisal for expatriate The expatriation was subjugated by professionals sent by their employers to foreign subsidiaries or headquarters. 3. 0 KEY ISSUES AND ANALYSIS 3. 1 Expatriate Failure and the Selection policy Expatriate facade many new challenges both in the workplace and the community. For instance, culture shock differences in work-related norms, isolation, homesick, housing, schooling, language, customs, cost of living and coping with his/her spouse’s problems of adapting to new environment. According to Stone(2008), research indicates that a manager’s inability to adapt or their partner’s inability to adapt is the major cause of expatriate failure. Harvey(1983) cited the consequence include premature return from a foreign posting and high resignation rates, with expatriates leaving their company at about twice the rate of domestic managements. Tung (1987) expounded the three main reasons contributing to the failure of expatriates in US MNC is as follows:- * the inability of the manager’s spouse to adjust to a different physical or cultural environment; * the manager’s inability to adapt to a different physical or cultural environment; * other family-related problems. One study by International Orientation Resources, an HRM consulting firm, found that 60 percent of expatriate failures occur due to these three reasons too(Solomon,1994). Besides the above mentioned reasons, include inappropriate selection practices, inadequate preparation and training as well as the stresses associated with expatriation which identified by New Zealand research (Enderwick and Hodgson, 1993). Another critical reason is the cross-cultural communications can be a struggle for the international manager. Gestures, facial expressions, behaviour and words can have different meanings and connotations. China, Korea and Japanese have high-context cultures where considerable importance is given to non-verbal and situational cues. In contrast, Australia, Canada, the US and Britain have low-context cultures where what is said is what it meant(Stone,2008). In contrast, some Malaysians who work aboard feel that the grass is greener on the other side. In Appendix A, this article highlighted the reasons why some Malaysian prefer to remain overseas. Due to higher paid, to widen their horizons, the prestige of working in a foreign company and the quality of life is unbeatable. The expatriate is unable to adapt in the foreign environment due to lack of cultural skills. According to HRM consulting firm, this is because the expatriate selection process at many organisations is essentially flawed (Solomon, 2000). Expatriates failed because these three focal reasons which mentioned by Tung that have not been part of the selection process. The underlying message was that the family is the basic unit of expatriation, not the individual. The MNC needs to look into this matter seriously in order to reduce expatriate failure. 3. 2 Training and development for cross-cultural Many companies including MNC have been ignored on providing training for employees whether local or global organisations. MNC recruits expatriate based on technical competence and past job performance as the key selection criteria and assumed the expatriate is able to adapt in the country where he was posted. MNC should not take them for granted. They should be pre-prepared by providing orientation, training on the cultural, language and living skill in the host country. Shown in Appendix D, expatriate reports interviewed an expatriate working in Nanchang, China on how significant was the culture shock he experienced when he moved abroad? He replied that quite significant and hard to adapt to the Chinese food and people spitting on the streets. Certainly, at the initial stage every expatriate will face cultural shock difference which may lead to miscommunication, misunderstanding and misinterpretation. Then directly he will be unproductive, inefficiency and faces expatriate failure. The MNC has to recruit a new manager to replace him which will be time consuming and have to repeat the process of selection and hiring. The MNC requires the expatriate to train the local employees in the host-country by transferring his knowledge and skills to them so that they are able to be independent and step into the positions/responsibilities within the shortest possible time. The article in Appendix B highlighted Malaysia government will review the education system to produce talent needed for an advanced nation and also perks to lure home highly skilled Malaysians (brain drain) and retain global talent to develop a quality workforce. Even our government recognise the essential of education/training to develop our highly skilled employees that are not only vital to the companies but also making the nation into globally competitive and transforming it as the high-income economy for instance Singapore, HK and Shanghai. 3. Performance appraisal for expatriate Stone (2008) cited that performance appraisal is a matter of serious concern for many expatriates. This is because performance appraisal is often handled badly. Companies fail to take into account the added complexities that come with international appraisals. Key issues involving performance expectations, performance measures and who will be responsible for the conduct of the appraisals are left vague or undecided. Worse, some head office managers ignore the international appraisal and do not incorporate it into the career development process. The end result is that expatriates perceive the appraisal process as unfair and as a source of never-ending frustration. Groeschi (2003) quotes that a number of comparative international and cross-cultural management research projects have concluded that HRM is influenced by culture. He also highlighted the same HRM policy is likely to be attributed quite different meanings by different cultural groups for instance performance appraisal. An organisation’s performance appraisal systems are an important element of its control systems, which is a central component of organisation architecture (see Figure 1 as below). In many international companies, the thorny issue is how best to evaluate the performance of expatriate managers (Hill, 2009). During the appraisal evaluation for the expatriate, there are two groups who evaluate the performance of expatriate managers. They are host-nation manager and home-office managers whom are subject to bias. The host-nation managers may be biased by their own cultural frame of reference and expectations. On the other hand, home-country mangers’ appraisals may be biased by distance and by their own lack of experience working abroad. Home-office managers often not aware of what is going on in a foreign operation and they tend to rely on hard data in evaluating an expatriate’s performance, such as the productivity, revenues, profitability or market share which reflect factors outside the expatriate’s control. Due to such biases, many expatriate managers believe that headquarters management evaluates them unfairly and does not fully appreciate the value of their skills and experience. It also one of the reasons many of them believe a foreign posting does not benefit their careers (Hill, 2009). 4. 0 RECOMMENDATION 4. 1 Expatriate Failure and the Selection policy Managing a MNC provides a diversity of challenges which the crucial one will be how the parent-company will recruit potential expatriate to manage their off-shore operations affiliates/subsidiaries. Selection of the expatriate must be right at the first time although time and resources consuming in reviewing and evaluating all the potential candidates follow by filtering them. The expatriate should not be selected based on technical competence and past job performance as the key selection criteria. Expatriate failure in many cases is the result of a lack of personal adjustment rather than a lack of technical skills. Harvey (1997) cited furthermore, research shows that in many companies expatriate selection is often haphazard and irrational. Organisations need to understand that in choosing expatriates, they should take into account differences in the business, social and cultural environment in the specific country and the impact on the potential expatriate, spouse and dependants (Stone, 2008). Stone’s (1991) study found that both local managers and expatriate managers perceive the essential selection criteria as the expatriate’s ability to adapt and the adaptability of the partner and family. 4. Training and management development for cross-cultural According to Hill (2009), superior performance requires not only strategy must also be supported by the right organisation architecture. Strategy is implemented through organisation. In Figure 1, people are the linchpin of a firm’s organisation architecture. For a firm to outperform its rivals in the global marketplace, it must have the right people in the right postings. Those people must be trained appropriately so they have the skill sets required to perform their jobs effectively and so they behave in a manner that is congruent with the desired culture of the firm. The following trainings are recommended for MNCs’ expatriates:- * Cross-Culture Training prior to departure The purpose of this training allows individuals to more rapidly adjust to the new culture before departing to host-country, and therefore, to be more effective in their new roles (Black and Mendenhall, 1990). It has been widely recognised for more than 20 years that the partners and children of expatriates play an important role in contributing to the success of expatriate assignments (Fukuda and Chu, 1994; Rahim, 1983) Cultural, Language and Practical(Living Skill) trainings * These trainings are helping to control and reduce expatriate failures. There is no question that comprehensive cultural training can have many benefits for MNCs. For starters, it can help orient and develop expatriates to better communicate, understand, and work effectively with people from different cultural, religious, and ethnic backgrounds. Comprehending and valuing cultural differences can al so help expatriates in the effective management of multi-cultural teams. Understanding global markets, customers, suppliers, and competitors is another indirect benefit. Pragmatically, cultural training can have a positive impact on combating very expensive expatriate failure (Luthans, 2002). Their spouse adaption problem, it is important that the spouse and the whole family to be included in this training * Language training usually conducted in host-country’s language. When the expatriate willing to communicate in the host-country language(even not fluent), can help build rapport with local employees and improve the manager’s effectiveness. * Benefit of practical training in helping the expatriate manager and family ease themselves into daily life in the host country. The expatriate community group can be a great source of support and information sharing in helping the expatriate’s family adapt to a foreign culture. 4. 3 Performance appraisal for expatriate To overcome the expatriate’s frustration and problems, the HR manager needs to ensure that the following key issues are clarified before the expatriate begins an overseas assignment:- * What are the organisation’s performance expectations? * What criteria and standards will be used to measure performance? * Who will conduct the evaluation – a local manager, a head office manager or both? * What will be the frequency of the appraisals? What consideration will be given to local environmental influence? (for example, volatility of foreign exchange rate fluctuations, availability of skilled labour, political instability, corruption and so on) * Is the appraisal positively incorporated into the career development process? * Are head office managers cognisant of the local business environment? * Are there any cultural influences that may distort the measurement of the expatriate’s performance? In order to overcome the biases of the two groups who evaluate the expatriate managers’ performance, it is recommended to implement 360-degree feedback.