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23 Cards in this Set
- Front
- Back
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Expatriate
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A person who is sent temporarily to work in a country other than his/her legal residence.
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Home-Country Nationals
(type of expatriate) |
Citizens of the country in which the company is headquartered.
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Third-Country Nationals
(type of expatriate) |
Citizens of neither the local assignment country nor the company headquartered country.
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What is HRM?
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Human Resource Management - the activities that a company, whether solely domestic or thoroughly global, takes to staff its organization.
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Trends in Expatriate Assignment
(5) |
- In recent years, shorter assignments, more junior level assignments, and more employees from emerging markets are being sent to developed countries.
- Companies looking for older and younger employees who are more mobile, was a midcareer opportunity. - More women involvement, about 20% of all expatriates - Cost concerns = companies seek flexibility in expatriate assignments. Some temporary instead of permanent. Third-country nationals get "local terms" which is a lower compensation package. - Still hard to find appropriate and able executives to run foreign operations. |
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Staffing Frameworks in MNE (Multinational Enterprise)
(3) |
1. The Ethnocentric Framework
2. Polycentric Framework 3. Geocentric Approach |
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The Ethnocentric Framework + Advantages/Drawbacks
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Fills all key management positions with home-country nationals.
Advantages: better company understanding, maintain command/control consistent with hq policy, fill local talent gaps, social integration, safeguard intellectual property in joint ventures, best practices from other locations, counteract high turnover among locals, help develop global outlook, less foreign stress. Drawbacks: narrow perspective of foreign markets, blinds to new opportunities, local employees are unmotivated and demoralized, resentment. |
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Polycentric Framework + Advantages/Drawbacks
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Host country nationals manage local subsidiaries.
Advantages: Control costs, cater to host-country nationalist, local management talent, boot employee morale, counteract high expat failure rates, maximize local adaptations for particular products. Drawbacks: Accountability and allegiance if gap develops between HQ and local operations. |
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Geocentric Approach + Advantages/Drawbacks
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Best people for key jobs throughout org, regardless of nationality.
Advantages: Instrumental for companies pursuing global and transnational strategy. Drawbacks: Hard to develop, costly to maintain, complicated by economic factors, decision-making routines, and legal contingencies. May be impossible due to immigration laws + workplace regulations. |
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Which Framework?
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Ethnocentric to International Strategy.
Polycentric to Multidomestic Strategy. Geocentric to Global and Transnational Strategy. - may use elements of each |
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Expatriate Selection (3)
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1. Technical Competence
2. Adaptiveness ( self-maintenance, good relationships with host nationals, sensitivity to host environments) 3. Leadership (communication skills, self-reliance, courage, risk-taking, doplomacy, optimism, etc) |
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Expatriate Failure + Percentages
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When a manager returns home from foreign assignment prematurely due to poor job performance. It is very expensive for MNE.
16-40% Americans returned early, 70% sent to less developed countries returned home early. |
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Cost of Expatriate Failure
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Avg. Cost can be as high as 3 times the annual domestic salary plus the cost of relocation + additional personal, family, and career costs.
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How to prevent Expatriate Failure
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Improved Training, better selection procedures.
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Leading Cause of Expatriate Failure
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Inability of a spouse to adapt to the host nation. More stressful for expatriate family than for expatriate.
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Expatriate Preparation Programs (4)
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1. General Country Understanding
2. Cultural Sensitivity 3. Practical Skills 4. Exceptions and Anomalies |
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How to Compensate Expatriates (what plan?)
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Most common approach is the balance sheet compensation plan. - aims to develop a salary structure that equalizes purchasing power across countries to expatriates have same standard of living in their foreign assignemtn.
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Home-Based Compensation method
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Set compensation based on the salary of a comparable job in the expatriate's home city.
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HQ-Based Method
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Sets salary in terms of salary of a comparable job in the city where the MNE has its headquarters.
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Host-based Method
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Bases compensation on prevailing pay scales in the locale of the foreign assignment, plus foreign-service premiums, extra allowances, home-country benefits, and taxation compensation. Also known as "destination pricing" and "localization."
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Key Aspects of Expatriate Compensation (5)
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1. Base Salary
2. Foreign service premium - extra pay for living far from family and friends, dealing with new culture etc 3. Fringe Benefits - medical, retirement 4. Tax Differentials - generally pays expatriate's tax bill in host country. 5. Allowances - cost-of living, housing, spouse, hardship. Trends in allowances: offering fewer allowances because of desirability of international assignments, high costs, and locations less difficult now. |
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Repatriation
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Process of returning the expatriate to his/her home country working environment and fraught with difficulties.
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Repatriation Problems (3)
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1. Readjustment to Home-Country Organization
2. Changes in Personal Finances 3. Personal Readjustment |
