Human resource management (HRM) is a strategic and coherent approach to the management of an organization’s most valued assets: the people working there who individually and collectively contribute to the achievement of its objectives. “HRM aims to help the organization to achieve success through people. As Ulrich and Lake (1990) remark, ’HRM systems can be the source of organizational capabilities that allow firms to learn and capitalize on new opportunities’.
HRM is concerned with both meeting human capital requirements and the development of process capabilities: in other words, the ability to get things done effectively”1. These strategic goals and objectives are most important and mandatory in a world which becomes more and more global. To be successful, companies have to keep up with their competitors, which usually mean that getting things done effectively is crucial in everything they do.
Globalization has brought remarkable developments in the diversity and complexity of International Human Resource Management (IHRM) and management of the global workforce is a critical dimension of companies’ international business. 2 1. 2 Objective of the term paper According to Harvey and Moeller3 there are currently 850,000 subsidiaries of multinational corporations operating globally. Furthermore, 65 per cent of Multinational Companies (MNCs) surveyed in a GMAC global relocation survey are expecting expatriate manager numbers to rise steadily over the next decade.
Expatriate managers continue to be a viable means for exercising control over foreign operations and they can therefore have a direct impact on organizational performance. 4 Furthermore, international assignments are also the single most expensive per-person investment a company makes in globalizing its workforce, and unfortunately, most firms are getting anaemic returns on this investment. To improve their return, managers must understand the best practices, thinking, and scientific research on international assignments.
5 According to the above fact and the current worldwide growth of the expatriation missions worldwide, this term paper should give an overview of the Process of International Assignments and its importance for internationally operating Companies – with special focus on the Repatriation of Expatriates. 1. 3 Approach First of all, the question is answered on who should be recruited and how the best person possible for the job can be acquired. If a company is not able to find the right candidate internally, personnel are often recruited externally.
But this brings along some other problems which should not be left behind, as insufficient commitment or lack of corporate identity and boundaries to the parent company. 6 Once some appropriate candidates for the vacant position are found, companies have to sort out according to the required characteristics and qualifications as well as the official job description, if available. Next, a number of objectives must be incorporated in the design of expatriates’ pay packages when it comes to negotiating and setting up contractual conditions for the future employee.
Chapter three therefore deals with elements a contract should consist of as well as compensation itself. If the contract is finally set up and signed, training for the respective employee and proper preparation regarding the international assignment is fundamental. This can ensure the employee’s success as creating a global mind, overall understandings of the expatriates’ coming tasks as well as differences in local and domestic culture are only some of the toughest tasks an expatriate has to face during his international assignment.
Preparation and support given by the company are therefore urgently needed, not only in giving information about host country, upcoming tasks and the stay itself but also in regards to questions related to family, friends, home-flights and all other social questions arising. The last stage of a foreign assignment is the process of repatriation. This phase is the most difficult and unpredictable one. The expatriate not only has to arrive and settle down at home, but also in headquarter where things, positions and people might have changed.
“Often when they return home, expatriates face an organization that does not know what they have done for the past several years, does not know how to use their knowledge and does not care”7. As the process of international assignments is very complex and this term paper limited, each chapter only gives a short and simple overview of the single topics summing up important facts and figures submitting general conspectus. 2. Personnel recruitment and selection 2. 1 International staffing strategies
Key question to international staffing regards the selection of one of the four different staffing strategies: ethnocentric, polycentric, geocentric or regiocentric. 8 Choosing the right strategy generally depends on different influencing factors like the characteristics of the parent company or foreign company, conditions in the host country as well as individual characteristics of the employee. 2. 1. 1 Ethnocentric staffing The ethnocentric approach usually indicates that companies are satisfied and happy with the strategy of the headquarter and they now try to implement their domestic standards also in the host country.
9 Home personnel are educated to lead worldwide. This means that key positions in domestic and foreign operations are held by Parent Country Nationals (PCNs). 2. 1. 2 Polycentric staffing The polycentric orientation stands in direct contrast to the ethnocentric orientation, being more variable and independent. Evaluation and control is determined locally and therefore a high level of autonomy can be found in those subsidiaries. 10 Local personnel, Host Country Nationals (HCNs), are educated to lead locally. 11 2. 1. 3 Geocentric staffing
Following the geocentric staffing approach organizations are generally complex and interdependent worldwide like McDonalds or Apple. Universal standards for evaluation and control apply and nationality does not matter in favour of ability. The best talent educated to lead worldwide. 12 This also implicates working with Third Country Nationals (TCNs). 2. 1. 4 Regiocentric staffing The fourth staffing strategy is a mixture of the polycentric and the geocentric approach. Managers are generally selected on the basis of being the best in the region, with international transfers generally being restricted to regions.
This kind of strategy has become more and more popular during the last years with many MNCs choosing to organize operations regionally. 13 2. 2 Personnel recruitment General target of personnel recruitment is to find an appropriate candidate for the right job. This process may be either conducted from outside or inside the company. Both ways of recruitment possess of advantages and disadvantages, but these can only be named exactly in a concrete recruitment case. 2. 2. 1 Internal recruitment There are different ways of internal recruitment. Personnel may be transferred or promoted to the job as an example.
Another form is an apprenticeship of young people, having the advantage to shape future personnel right from scratch. Employees may also perform an on-the-job training for their future position or responsibility. 14 According to Scherm recruitment for international assignments within the company is mostly done by above-mentioned promotions or relocation of staff from one facility to another. 15 The advantages of internal recruitment are on hand. Companies know their potential expatriate longer, are used to their behaviour, thinking, skills and company as well as product specific knowledge.
This reduces the risk of selecting the wrong candidate. According to the Global Relocation Trends Survey 200916, only 11 % of the expatriates expected to go abroad have been newly recruited externally. Due to the high selection risks, internal recruiting dominates. As basis for the recruitment decision performance measurements, personal reports, interviews with the employee as well as career plans are taken into account. 17 2. 2. 2 External recruitment If qualified personnel cannot be found internally, recruitment is done outside the company.
This is also the case if the company is not able to qualify their personnel within a set time frame or due to lack of experienced staff. It is most important that companies know the relevant job market if they want to succeed in recruiting employees externally as well as doing this in an economically way. External recruitment can then be divided into two segments, passive and active external recruitment. Whereas active external recruitment means addressing potential candidates through e. g. different institutions, media or by using social networks, passive external recruiting companies set their emphasis on spontaneous, speculative
applications of respective candidates or mouth-to-mouth propaganda of their great company image. 18 In case recruitment for an international assignment is done externally the risk for selecting the wrong candidate is often minimized by outsourcing the task to an external consultant or agency as they generally have more experience. 19 Nevertheless, the traditional ways of searching for the right candidate, e. g. simply advertising the vacancies in the local newspapers or online, employment centres or job fairs, are still applicable.
Candidates from outside the company may bring in new ideas and may have a wider range of experience due to their former tasks but the selection process might take longer, might require extensive personnel resources and might be more expensive (e. g. advertising and interview process, personnel consulter). 2. 3 Personnel selection For an international assignment to become a great success for both, company and expatriate, selecting the right candidate out of several is one of the most important steps of the whole process.
Several selection strategies are used and quite common but failure situations in individual assignment cases are widely spread in MNCs. 20 In order to make sure that the candidate possesses the right characteristics, qualifications, and skills a detailed job description and information about coming management tasks can be very helpful during this process. Unfortunately, these proper specifications are often not available or only give a rough overview of upcoming challenges. 21 2. 3. 1 Selection criteria A first impression about the population of expatriates provides the demographic data study of the Bookfield Global Relocation Trend Surveys.
22 For 2009 it is stated that 75 % of all expatriates have been aged between 30 and 49 whereas 80 % of them have been male. Only 9 % have had prior experience as international expatriates. 27 % have been single and therefore sent without partner and almost half of them have been sent off together with their kids. 23 Usually the HR Manager selects the expatriate according to the following criteria: A specific or subject-related qualification as the expatriate often has no other specialist on site. Personal characteristics like motivation, discipline, patience, endurance, and readiness to take on responsibility.
Cultural openness, willingness to learn and experience new things, open-minded, no resistance to change. Family-related criteria The single criteria may overlap to a certain point. In literature different weightings for all of these criteria exist but they all agree to the fact that Family and Cultural openness should be most taken into account. 24 2. 3. 2 Final selection process and instruments Generally, there are no other specific selection processes or criteria used for finding a candidate for an international assignment than the ones used in national context.
Among selection process and criteria four are widely known, starting with the general application documents. Job requirements and the matching candidate personal profile decide in first instance who is to be invited to a personal interview. If it is decided to recruit a candidate internally, generally the previous career and the internal development of the employee are taken into account. Often, prior to an invitation to a personal interview, candidates have to successfully take part in an assessment centre focusing more and more on intercultural competences like empathy, cultural understanding, behaviour etc.
25 It is seen as an advantage of the external assessment of intercultural competence in intercultural assessment centres that the requirement regarding the behaviour and orientation are high and the candidates will be evaluated by several observers over a longer period. 26 In addition to this, personal interviews, together with wife or husband of the respective expatriate are increasing as it is important that they support and understand situation and coming tasks.
They can help the expatriate to stay grounded and sometimes they even move with the expatriate to the new country. Last, tests can be used as a selection technique ranging from general mental ability tests to psychological tests. Finally, neither in literature nor in practice a general opinion which of the above mentioned selection processes and criteria are most appropriate or useful in regards to international assignments or the identification of intercultural competent employees exist. 27 3. Contractual conditions of the employment abroad 3. 1 Objectives of a contract
No matter if a company operates nationally or internationally, the contract of an employee should be compliant with labour law standards, offer transparency and motivate staff in order to decrease fluctuation. Further, it should provide the legal and financial frame work of the working relation and last but not least should be economical and cost effective for the company. Protection of human life, health, and comfort by creating a strong and cohesive culture as well as safe working environment should been given highest priority and objective of contracts.
3. 2 Compensation Depending on the international orientation of the company as well as kind and duration of the international assignment there are three different compensation policies which can be differentiated, following below. 3. 2. 1 Ethnocentric compensation policy The Ethnocentric compensation policy is often used in combination with the Balance Sheet Approach: During a short-term assignment (delegation, 1 to 5 years)28, the employee retains his residence in the home country.
His family usually stays back there, as moving those with the expatriate would exceed costs. The salary is paid by the parent company in the currency of the country of origin and charges can be passed on to the foreign company if applicable. The employee remains employee of the parent company and retains his employment contract. A supplementary agreement to this contract is set up for all specialties such as tasks, duration, home flights, remuneration vacation etc. 29 About 60 % of German companies are using this compensation policy for their assignments.
30 Advantages are on hand: The expatriate can maintain home country living standards and generally receives a surplus for the additional future challenges and efforts. Therefore, this approach is accepted by most employees. Disadvantages for the company are sometimes massive compensation differences within a country e. g. the salary of a PCN might be considerably higher as that of a HCN. This fact might de-motivate local employees. Furthermore, the ethnocentric compensation policy is complex in administration. 31 3. 2. 2 Regiocentric compensation policy
The Regiocentric compensation policy is often used in combination with the Going Rate Approach: During long-term assignment (relocation, 1 to 5 years)32 compensation is based on the Host Country. As the term ‘relocation’ already says, the employee gets directly involved in the foreign company. Usually, the family moves with the expatriate to the hospitable country and the salary is paid in the local currency directly by the foreign company. However, there are ways to still pay out a part of the salary in the currency of the home country, if desired.
The existing contract with the parent company is brought to rest. The employment relationship however is not cancelled just like during military service or parental leave. At the termination of employment abroad the contractual ties between employee and parent company come back to life again. 33 Currently, approximately 11 % of German companies are using this compensation policy for their assignments. 34 Advantages are quite obvious: As the salary of the expatriates is linked to the salary structure of the host country salaries might be less costly in low-wage countries.
Further the approach encourages equality between locals and expatriates and the identification with the host country. Due to an expected change in the living standards as well as huge variation between the expatriates’ salaries in different countries this approach is often very low accepted by expatriates. 35 3. 2. 3 Global compensation policy The global compensation policy neither considers the standards of the parent country nor those of the host country. Compensation is set globally and independently from other countries.
This approach should provide the basis for an international remuneration policy. It should fit into corporate identity and should give international expatriates of MNC the opportunity to gain international experiences on the same level, offering transparency and the same salaries worldwide. Although corporate guidelines for a compensation policy often exist, they can hardly be found in the above described pure form but are being mixed up as due to costs and laws in the host countries compensation policies often require adjustment. 36 4. Preparation and support
In order to make the international assignment a huge success for both the candidate and the company there are several measures which can be taken to prepare and support the expatriate. Support is an on-going process and done by superiors, responsible persons or agencies. It does only end after repatriation whereas the preparation phase should start directly after recruitment and ends with the expatriate departing. According to Festing, training and support have to take the process of cultural adjustment into account, and can therefore be divided into the phases described below37.
4. 1 “Pre-Departure” Training Preparation and training can help to improve the ability to interact effectively and adequately with foreigners in working and non-working environments38. An ideal pre-departure preparation is therefore quite necessary. This preparation should enhance knowledge about cultural, political, legal, economic, and social conditions of the host country and provides the expatriate with all general information. If the expatriate is not fluent in the host country language, foreign language instructions and trainings should be offered.
Other practices of pre-departure training include look-and-see-trips, orientation by lectures and briefings, cross-cultural trainings in order to understand why foreign partners think and behave in different ways as well as briefings by returnees who can give the expatriate valuable and important insider information. These pre-departure trainings should be extended to the expatriates’ family wherever possible and necessary. 39 4. 2 “Start-up“ Training After departure of the expatriate, the start-up training in the host country begins.
The parent company helps the expatriate and his or her family in different forms (coping with the adaptation to a foreign environment, accommodation, school for children, safeguarding the interests of the expatriate in the parent company etc. ) and continues to be present. The intensity of the support varies depending on the resources and systems the different MNCs have implemented. A mentor system is most common and should ensure that each expatriate has been assigned a senior executive at home or on-site, who has a “parent” function.
40 Furthermore, a detailed employee orientation plan for the new position in the host country can be helpful for the expatriate to find his or her way around. The continuous and direct contact to the headquarter during this stage is crucial as the expatriates should still feel connected to the company and not be left behind. Often expatriates continue to learn the language of the new country in local courses, receive specific further trainings or coaching either by experts from the parent company or by local trainers.
4. 3 “Cultural shock prevention“ Training As adoption of new thoughts and behaviours of a new culture and situation requires more time than any cross-cultural training program can offer the expatriate in advance during this stage the expatriate requires extensive support. As expatriates tend to see everything more from a touristic point of view first, they finally arrive in the host country. They easily get frustrated or disappointed by a variety of things (language barriers, behavioural differences, climate etc.
) during this stage and the experience of unpredictability in combination with the feeling of abandonment and isolation possibly comes over the expatriate and his or her family. Helpful during this stage is the assigned mentor. The expatriate can talk with the mentor about his or her feelings and share information and experience. An information exchange with other expatriates is also advantageous as they often understand problems, feelings, and thoughts better as the mentor.
If the expatriate is accompanied by his or her family and the spouse does not work during the international assignment, cultural adaptation difficulties are quite more problematic and more intense than the expatriates’. 41 5. Repatriation 5. 1 Reintegration – Generals “When the expatriate is sent abroad he expects the new, unknown situation and the problems involved. But when he returns to his home country, he encounters it completely unexpected”42. This statement of Adler still describes the situation an expatriate often has to face when returning to the home country very well.
They have left with a special task or order to complete but when they return they often do not exactly know how their position in the headquarter and their life will look like. Further problems are often connected to the duration of the assignment, the expatriates personal experiences made in the host country, cultural differences on-site and abroad, the expatriates personal situation as well as the repatriation support. 43 Therefore, it is hard to find a general recipe for successful reintegration planning.
Individual solutions have to be found and every international assignment and expatriate has to be looked after individually. “The repatriation of staff into the parent company already starts with the selection and preparation decisions for the foreign assignment. The reintegration does not end with the return to the parent company and is not completed until the staff has been introduced to its new position in the company’s headquarters, performs effectively and feels comfortable with his job”44.
In order for the expatriate to reintegrate successfully and not to quit the company after the assignment and a consequent loss for the mother company of investment and expertise (human capital), the reintegration process should be divided into the three stages following below. 5. 2 Before expatriation Already before the international assignment has taken place it should be discussed with the expatriate what he or she expects of a future position, how the expatriate would like to develop, how the expatriate sees the future career as well as tasks. This is often done by the mentor of the expatriate for the international assignment.
As the expatriation program is very expensive and time consuming for a company, failure rate or the possibility of the expatriate leaving the company after the assignment should be eliminated. Generally, an employee, who is willing to work and live for probably years in a foreign country, with all personal consequences, should be integrated into an internal performance program, right at the beginning of the assignment. Setting up an agreement outlining the type of position expatriates will be placed in upon repatriation, the compensation and a general idea of their future job description should be arranged prior to going abroad.
45 Another possibility to limit reintegration problems is the idea to limit the assignment in its duration in advance to about 3-5 years. This limitation should prevent the expatriate from getting too attached to the way of living, behaviour, values, and culture of the host country and facilitate repatriation upon return. 46 It is seen as advantageous that the expatriate is able to foresee a concrete end to the assignment. 47 5. 3 During expatriation During the assignment, it is important that the expatriate has continuous contact and an on-going information exchange with the home office.
This can be done by the mentoring program itself, regular home flights, company newsletters, information exchange platforms, and media like intranet or weekly telephone conferences with superiors and colleagues. 48 The expatriate should feel as a part of the company and should also be able to develop a worldwide network, learn to think global, and actively exchange information, knowledge and experience with other colleagues and expatriates. There should never come up the feeling to be forgotten or left behind. 5. 4 After expatriation
As indicated by Johnston, from the repatriate’s perspective problems associated with reintegrating into the home country are loss of status, loss of autonomy, loss of career direction, and a feeling that the company undervalues international experience. 49 In order to avoid these problems, most MNCs offer a reorientation program where their repatriates take part in. These reorientation programs can provide immediate help in most of the work-related questions arising after expatriation. The repatriate is given information on new products, organizational changes, personnel, corporate culture, market and new strategies and developments.
Sometimes also an experience exchange with former expatriates takes place in order to facilitate reintegration and manage the reverse culture shock as well as sudden change in lifestyle. The former expatriates can help the repatriates to cope with their new experiences as they have been mainly through the same. Additionally, repatriates are often used to train and coach colleagues that are about to begin their assignments to share their experience and give the expatriate the perception that their work and international expertise is valued, recognized, and needed.
This should avoid professional disappointment and under-utilization of newly developed global skills of the expatriates. The new position of the repatriate should fit to newly developed skills and experience or the former position should be extended but not restricted to nine-to-five work. Career deficits upon returning should be compensated by HR training methods. Social repatriation measures also include support in the adjustment back to social lifestyle, status, housing, financial counselling, and tax assistance, school systems and children’s education as well as spouses new job search, if applicable.
50 6. Conclusion 6. 1 Target achievement “Expatriation is an important step towards becoming a global leader”51. Furthermore, an international assignment is a powerful experience in shaping the perspective and capabilities of effective global leaders. People are the key to success; they are the ones behind the strategy. Developing and retaining human capital becomes more and more important nowadays. “During expatriation, managers find the opportunity to acquire and/or master their coping, cross-cultural communication, conflict resolution, negotiation, networking, and coaching skills.
They also develop business, technical, and managerial competencies while overseas, where they have to adapt to a variety of roles such as integrator, balancer, change agent, mentor/motivator, and talent developer. If international assignments are important to global leadership development, then this opportunity should be given early in a manager’s life”52. Additionally to give mangers and/or employees the opportunity to international assignments they have to be prepared and supported to become successful.
This term paper points out that cross-cultural training, support, preparation, and repatriation training can make a difference in the history of successes of international assignments of MNCs, although it is mainly underestimated. Employees are hired everywhere in the world, wherever the necessary skills, training and experience can be found. Due to time pressure, employees are often sent to foreign countries on very short notice. Furthermore, there is still a prevalent belief that intercultural knowledge and skills are not really essential to success when collaboration with foreigners.
In addition to this ignorance, there are doubts about the training effectiveness. Managers are frequently not convinced that cross-cultural training is really an effective means for gaining control of the complex issues of international cooperation. These facts make it somehow quite difficult to progress in the international assignment process. 53 6. 2 Prospects Today, an international assignment is more than only vacation abroad. The learning-by-doing approach had become outdated. In order to keep up with internationalization, companies should focus on developing global leaders and therefore structure their IHRM process quite well.
This includes a strategic expatriation and repatriation policy as losing repatriates to the competition will sooner or later create a huge competitive risk and already costs the company quite a lot of money. In order to progress and ameliorate the international assignment process however, companies have to conduct further research in some fields. This starts with selecting the right candidate for the job. How does the job look like in detail and which requirements are set? How long should the assignment exactly take and what are the specific goals? A concrete job description is one step forward to a structured IHRM process.
If the expatriate e. g. is accompanied by the spouse, which possibilities does the company have to find an adequate job for both in the same region (dual career couples)? If it would be possible to enhance satisfaction of the spouse of the expatriate, this might also reduce the risk of failure of the assignment. The same question is to be asked upon their return. Furthermore, research is also needed with regard to the question of how the allocation of the position the expatriate will receive upon return can be planned and implemented in the long run.
The expatriate should have the impression that career planning is well structured and thought-out. Another question could be how expatriates are able to successfully pass on their knowledge generated abroad, in their home company. Organisational learning should be most important as otherwise the expensive purchased knowledge is lost and worthless. The above named questions are only several which could arise during each company’s individual research and amelioration process. List of references Adler, N. J. (1986): International Dimensions of Organizational Behavior, Boston 1986
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