Hr Assignment

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12Strategic Human ResourceManagement ofInternational Assignments

Dr Marie Waxin

Objectives

Throughout this chapter, the student will be exposed to:

The different approaches to staffing foreign operations The reasons for using international assignments: position filling, sharingand transferring knowledge, developing employees, and controlling andcoordination of international activities

The different categories of international personnel: parent country, hostcountry, and third country nationals, impatriates

The different types of international assignment for parent countrynationals: expatriates, short-term assignees, international commutersand frequent flyers, global managers, and high potentials.

The different steps of the strategic management of internationalassignments: strategic planning and job analysis, recruitment, selec-tion, preparation to transfer, cross-cultural adjustment and organiza-tional support, performance appraisal, compensation, repatriation, andretention.

385

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386 International Business

Opening Case

Imagine that you are Stephen Grant, marketing manager in a large inter-

national company in London, United Kingdom. The following are some

personal facts.

You are married to a financial analyst who works in a bank located in

the same city. You have two childrena boy, aged 10, and a girl, aged 8. You and your family are actively engaged in a variety of volunteer activ-

ities sponsored by your church, which include environmental activities

and providing food for the needy. You and your spouse enjoy sports activities togetheryou jog, play ten-

nis, and golf on regular basis. You also enjoy cultural events together,

such as concerts and plays.

You have just received the following letter from your employer.

Dear Stephen,

We are pleased to inform you that you have been selected as a candi-

date for an overseas position in our subsidiary in Kenya. Please contact

M. Santerre, our international human resources manager, as soon as possible

to discuss this opportunity further.

Best regards

Graham White, International Marketing.

Question: Individually, consider this situation and how you would react

to it.

Identify your major concerns as well as reasons why you would want to

accept or decline such an offer.

Source: Compiled by Marie Waxin.1

International managers constitute valuable resources that organizations

do not always use to the best of their potential. Further, senior managers

assigned to positions in foreign subsidiaries do not always live up to their

bosses expectations. When they succeed in their international assignments,

they often leave the organization upon returning to their country of ori-

gin. Organizations can reverse this trend by encouraging managers interna-

tional mobility, through better planning of assignments, better recruitment

and selection practices for international assignments, better pre-departure

preparation, better performance management, and better management of

the return of their international managers.

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Strategic Human Resource Management of International Assignments 387

The following challenges are associated with the strategic managementof international assignments:

Assigning the right kind of international manager to the right position,at the right time

Designing international HR practices for balancing generic and localneeds on the one hand, and control, coordination, and autonomy needson the other

Establishing balance between global competitiveness and reactivenessto the local environments peculiarities

Identifying the needs for international personnel with a high degree ofprecision

Strategic management of international assignments and of internationalpersonnel at the lowest cost: what type of international employee mustbe chosen, and to fulfill which position? Which type of contract mustbe drafted?

In the following sections, we will first look at the different approachesto international staffing, the reasons for using international assignments,and the different types of international employees. Then, we will proposea model for the strategic management of international assignments. Finally,we will look at the role played by women in the global arena.

The Different Approaches to International Staffing

The international HRM (iHRM) literature uses four terms to describe MNEapproaches to managing and staffing their subsidiaries. These terms comefrom Perlmutter2 who identified among international executives three dif-ferent attitudesethnocentric, polycentric, and geocentrictoward buildinga multinational enterprise. The distinctions are based on top managementassumptions upon which functional and geographical decisions about keyproducts are made. Perlmutters distinction between these three differentapproaches was later refined by Heenan and Perlmutter,3 who added a fourthattitude: regiocentric. To describe these four attitudes, the authors use theconcepts of complexity of organization, authority and decision-making, eval-uation and control, rewards and punishments, communication processes,geographical identification, basic HRM strategy and state of international-ization (Exhibit 12.1). These distinctions, now widely accepted, have beenused in various scholarly books on international human resource manage-ment. Heenan and Perlmutters3 attitudes are presented in Exhibit 12.1. Wewill see how these four attitudes influence the degree of utilization of thedifferent categories of international personnel.

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388

Intern

ationalBusin

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Exhibit 12.1

The Four Approaches to International Staffing

Ethnocentrism Polycentrism Regiocentrism Geocentrism

Complexity of

organization

Complex in home

country, simple in

subsidiaries

Varied and

independent

Highly interdependent on a

regional basis

Increasingly complex and

highly interdependent

on a worldwide basis

Authority and

decision-making

High in

headquarters (HQ)

Relatively low in

headquarters

High regional HQ and/or

high collaboration among

subsidiaries

Collaboration of HQ and

subsidiaries around the

world

Evaluation and

control

Home standards

applied for persons

and performance

Determined locally Determined regionally Standards which are

universal and local

Rewards and

punishments;

incentives

High in HQ; low in

subsidiaries

Wide variation; big

or small rewards

for subsidiary

performance

Rewards for contribution to

regional objectives

Rewards to international

and local executives for

reaching local and

worldwide objectives

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StrategicHuman

Reso

urce

Managem

entofIntern

ationalAssign

ments

389

Communication

and information

flow

High volume of

orders, commands,

advice to

subsidiaries

Little to and from

headquarters; little

among subsidiaries

Little to and from corporate

HQ, but may be high to and

from regional HQ and

among countries

Both ways and among

subsidiaries around the

world

Geographical

identification

Nationality of

owner

Nationality of host

country

Regional company Truly worldwide

company, but

identifying with national

interests

Basic HRM

strategy

People of home

country developed

for key positions

everywhere in the

world

People of local

nationality

developed for key

positions in their

own country

Regional people developed

for key positions anywhere

in the region

Best people everywhere

in the world developed

for key positions

everywhere in the world

State of inter-

nationalization

Early Middle Middle Late

Source: Heenan and Perlmutter.3

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Ethnocentric Approach. Strategic decisions are made at headquarters,and foreign subsidiaries have little autonomy. Key jobs at both domesticand foreign operations are held by headquarters management personnel andsubsidiaries are managed by expatriates from the home country. Head officemanagers see expatriation as a way to accelerate the progression of theircareer, since the competence development of expatriates is preferred to thatof local managers.

Polycentric Approach. In this case, expatriation is no longer at the centerof the international development strategy. The MNC treats each subsidiaryas a distinct national entity and empowers it with some decision-makingautonomy. Subsidiaries are usually managed by local nationals (HCNs), whoare seldom promoted to positions at headquarters. With this approach, theMNC avoids the difficulties associated with expatriation and cross-culturaladjustment. The control exercised by the head office is weak, and the diver-sity of the situations in which the subsidiaries find themselves complicatesthe process of integrating the organizations international activities.

Geocentric Approach. With this approach, the MNC designs its strategyfrom an international standpoint right from the beginning. The organiza-tion favors ability and experience over nationality. Parent country nation-als (PCNs), third country nationals (TCNs), and host country nationals(HCNs) are thus equally mobile internationally. In order to be successful,this approach to staffing without regard to nationality must be accompaniedby a worldwide, integrated business strategy.

Regiocentric Approach. The MNC that favors a regiocentric approachadopts uniform practices for all managers within the same geographicalzone. Like the MNC that functions with a geocentric approach, it utilizes awider pool of managers but in a limited, regional way. Personnel may moveoutside of their countries, but only within their particular geographic region.For instance, European managers are mobile solely within Europe. Regionalmanagers may not be promoted to headquarters positions but they enjoyconsiderable regional autonomy in decision-making (see Exhibit 12.1).

Functions of International Assignments

Why use international employees? Reasons vary fromonemultinational orga-nization to theother,butananalysisof the literature suggests that internationalemployees fulfill five major roles. The first three roles are tactical in nature:fulfilling a need for a certain type of personnel that is not available in the hostcountry, sharing and transferring information, and developing the capacitiesand level of implication of managers within the organization. The other tworoles are strategic in nature: controlling and coordinating activities.

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Fulfilling a Specific Need for Personnel andKnow-how

The first role of international assignments is to fulfill the insufficient technicaland managerial competencies in certain countries where the market structureis often characterized by a shortage of engineers, senior technicians, andtrained managers.

Sharing and Transferring Knowledge

Another reason for using international assignments is to share and exchangeinformation. A multinational organization can send an expatriate employeein order to better understand a subsidiarys activities in a particular context,to share knowledge regarding a new type of equipment or a specific tool, orto communicate elements of its organizational culture, processes, or compe-tencies. Expatriation allows for a rapid and efficient transfer of know-how.The need for such an assignment can arise, for instance, when setting upan activity that does not exist in the host country. Expatriation then playsa role in the training of the local personnel, until the subsidiaries enter agrowing phase, who then replace the expatriate employees in managementand supervision positions. It is important to note that the knowledge trans-fer does not only flow from the head office to the subsidiaries, but alsobetween the subsidiaries and from the subsidiaries toward the head office.According to Black et al.,4 there are two unique aspects to expatriationwith regard to information exchange. First, the duration of the assignments,between one and five years, allows the collection and transfer of com-plex information. Secondly, the information exchange takes place not onlyduring the expatriation, but also afterward. The organization can benefitfrom the expatriates acquired knowledge concerning the foreign subsidiariesand integrate that knowledge in the strategic planning and decision-makingprocesses.

The Development of Managers and theirImplication Toward the Organization

International assignments constitute a proven method for developing globalmanagers. Most senior managers have extensive international experience.When the expatriates role comprises supervision functions, expatriationcan play a prominent role in developing managerial competencies and infostering loyalty toward the organization. Indeed, expatriation allows juniormanagers or high-potential employees to face new situations, to develop new

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competencies, especially when it comes to acting autonomously and takingrisks, thus facilitating the development of abilities required for becominga senior manager. The managers various international experiences help indeveloping a global understanding of the organization. Moreover, interna-tional transfers develop the individuals commitment toward the organiza-tion, his orher feeling of belonging and his loyalty. Organizations that useexpatriation to improve their managers competencies, either formally ornot, associate expatriation with promotions. Organizations that use expatri-ation to improve their managers abilities associate international assignmentsmore or less formally with a promotion. This practice gets the messagethrough to expatriates that their international experience will be valued as anasset.

Control of Activities. From an organizational standpoint, managers are gen-erally expatriated in the early phase of the internalization process, in orderto control the subsidiaries activities. In an international context, the transferof managers constitutes an informal control mechanism, which can comple-ment or replace more formal control measures such as the elaboration ofnorms and procedures common to all subsidiaries. Expatriate employees arealso used to reduce the uncertainty stemming from the environment (polit-ical risk, cultural distance, legal environment, competition), which is alsoa form of control. As these uncertainty factors increase in importance, therole of the expatriate becomes increasingly managerial in nature. Similarly,the higher the interdependence between the head office and the subsidiariesand the more complex the activities, the more the expatriates function willbe control oriented.

Coordination of Activities. Expatriates as well as impatriates play an essen-tial part in the coordination of subsidiaries activities. Through complexdialectic processes (local/global, individual/collective), international assign-ments are aimed at reinforcing the integration of individual and organiza-tional dynamics which contribute to the cohesion of the firm. Internationalassignments indeed allow for the creation and development of internationalnetworks that reinforce the integration of activities. According to Janssensand Brett,5 the coordination of a global organization relies on three elements:centralization (decision-making by a core of senior managers), formalization(decision-making following established rules and procedures), and socializa-tion (decision-making following shared norms and values).

The various functions of international assignments demand different typesof international employees, with different profiles. For instance, if the mainpurpose of an assignment is managerial development, the organization willselect a junior manager or a high-potential employee. If, on the other hand,the main purpose of an assignment is to control a subsidiarys activities, theorganization will select an experienced manager who is familiar with the

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head offices values and managerial procedures. Finally, it must be noted thatthe five functions of international assignments are not mutually exclusiveand can be combined.

Types of International Personnel

In this section, we will look at the main categories of international employ-ees, discuss their respective advantages and disadvantages, and present thevarious types of assignments for employees from the organizations countryof origin.

The Different Categories of International Personnel

In the literature, four categories of international personnel have been iden-tified, based on their country of origin and the location of their assignment.These categories are parent PCNs, HCNs, TCNs, and impatriates.

The PCNs are employees from the multinationals head-office (expatri-ate employees). For instance, a Japanese manager working in a Japanesemultinationals French subsidiary is an expatriate, or a PCN.

The HCNs are employees from the host country (the subsidiarys). Forinstance, a French manager working in a Japanese multinationals Frenchsubsidiary is an HCN.

The TCNs are employees from countries other than that of the multina-tionals head office and that of the subsidiary. For instance, a Belgian man-ager working in a Japanese multinationals French subsidiary is a TCN. Anexample of a multinational using these three types of international employ-ees is Honda: working in Hondas subsidiary in Dubai are one Japanesemanager, an expatriate from Honda JAPAN, the international head office,one French expatriate from the European head office, and 35 HCNs (Indiansand Philippinos).

Impatriates (as opposed to expatriates) are HCNs sent to the headoffice. The reasons most frequently cited to justify hiring HCNs for transferat the head office have to do with competence development of managers,knowledge transfer, and subsidiary integration. Moreover, generating a flowof impatriates toward the head office is an excellent way to trigger the processof socializing NPHs. Through impatriation, HCNs develop a sense of belong-ing to the global organization. The reasons for using impatriation determinethe selection criteria for future impatriates. When the main goal is knowl-edge transfer and subsidiary integration, for example, communication skillsin the multinationals official language as well as in the subsidiarys languageare important criteria. Finally, it is worth noting that the duration of impa-triations is generally shorter than that of expatriations. Many organizationsuse impatriates in order to reduce, in the end, the number of expatriates.

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When a specific position needs to be filled, how should organizationschoose between the different categories of international employees? Usually,the choice is partly determined by three elements: the general staffing policyon key positions in headquarters and subsidiaries (ethnocentrism, polycen-trism, geocentrism, and regiocentrism), the constraints imposed by the hostgovernments on hiring policies, and staff availabilities. Beyond these consid-erations, the advantages and disadvantages associated with PCNs, HCNs,and TCNs, presented below, are considered.

Six criteria seem relevant to discuss the respective advantages anddisadvantages of these three categories of international employees.

1. Cost2. Knowledge of the organization (products, organizational culture)3. Cultural proximity4. Knowledge of the local environment5. Attitude of the foreign government6. Promotability of local employees.

With regard to costs for the organization, hiring a PCN always costsmore than hiring an HCN. On average, an expatriates salary is two totwo and a half times that of a local employee or of a TCN. These costsincrease if the expatriate fails in his assignment. The high cost of expatriationsometimes leads the organization to opt for other solutions, such as short-term assignments.

The PCNs, however, present two advantages compared to the othercategories of international managers. First, their technical and managerialcompetencies have been put to test in their previous positions, in the par-ent country, and have been recognized by the head office. Secondly, theypossess extensive knowledge of the organization: its products, its managers,and the organizational culture. These two characteristics allow for efficientcommunication with the head office.

As far as cultural proximity and knowledge of the local environment areconcerned, HCNs are obviously at an advantage. All things being equal,a local employee who speaks the local language, understands the politicalsystem and, often enough, is a member of the local elite, should proveto be more efficient than a foreign manager. For local personnel, culturaladjustment is not an issue. Training HCNs also seems simpler, from ashort-term point of view, than selecting high-potential employees from theorganizations country of origin and spending resources in order for themto adjust to the host country. Well-trained local managers thus constitutefirst-rate candidates for organizations. On the other hand, local managersare not familiar with the organization and with its culture. In addition, localmanagers might be too deeply involved in the local community and have a

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hard time understanding the parent companys global strategy, and few ofthem might truly identify with the organization and its goals.

Local governments sometimes exert explicit or implicit pressure on multi-national companies so that they develop and promote local managers to keypositions in order to nationalize the management or foreign subsidiaries.Local legislation concerning working visas partly determines the subsidiaryscapacity to hire TCNs. In some countries, such as Canada, companies mayhire TCNs only if they can prove that available local candidates were notsuitable for the position.

Finally, the constitution of a pool of international managers takes placeat the expense of the recruitment and promotion of local managers and viceversa. Third country nationals can be closer to the country of origins culturethan HCNs, but they hinder local managers chances to get promoted. Thechoice to hire TCNs must thus be made taking all these considerations intoaccount.

Selection between the three classic categories of managers will be influ-enced, beyond the vast differences in terms of advantages and disadvantagesof each, by the degree of internationalization of the company, its internation-alization strategy, its iHRM approach, its international assignment policy,and the specific needs of its subsidiaries. The more the head office wishes toimpose its nationalistic views (ethnocentric approach), the more it resorts toexpatriation, and the more the head office wishes to expose its geocentricside without trying to impose the control methods used at the head-office,the more it will select based on competence rather than nationality.

Exhibit 12.2 summarizes the advantages and disadvantages of the variouscategories of international managers.

The Different Types of International Assignmentfor PCNs

Within organizations, many types of assignments can be found for PCNs.The duration of assignments distinguishes between expatriations and differ-ent kinds of short-term assignments. In addition, the role of internationalassignments in an employees career distinguishes between global managers,expatriates, and international junior managers.

Long-term Assignments, or Expatriations. An expatriation is an assignmentabroad, for a duration of one to five years, but generally three. The employeeand his family are relocated to the host country. At the end of his initialcontract, if the employee wishes to remain with the subsidiary, it will beunder a local contract. According to Harris,6 expatriations are mostly usedfor strategic missions, and meet the needs of the control function (a functionthat was mentioned by 62 percent of companies using expatriate employees),knowledge transfer function (74%), and professional development function

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396

Intern

ationalBusin

ess

Exhibit 12.2

The Advantages and Disadvantages of the Various Categories of International Managers

Type of international

manager

Advantages Disadvantages

Parent country

nationals (PCNs)

Control over the subsidiaries

Share a common culture and

educational background

Facilitate communication

and coordination with corporate

headquarters

Lack of knowledge regarding countrys economic

development, culture, legal system, and political

process

Very expensive to both relocate and maintain

(expatriatespeople working and residing in their

non-native countries)

Legal restrictions imposed by many countries as to the

number of foreign employees that can be employed

Host country nationals

(HCNs)

Understand and know local laws,

culture, and economic conditions

Cost is much lower

Opportunity for development and

source of motivation

Legal regulation of employment

Cultural difficulties hindering recruitment and

training activities

Lack of knowledge concerning the organization,

its products, and its services

Communication problems with the head office

May not be as familiar with the business culture and

practices

Control and coordination of headquarters may be

impeded

Third country nationals

(TCNs)

Costs are lower than those of PCNs

Knowledge of the organization, of its

practices, of its management policies

Culture close to that of the head office

Legal restrictions imposed by many countries as to the

number of foreign employees that can be employed

Hinders local employees chances to get promoted

Lack of loyalty towards the organization

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(60%). Expatriations, however, are costly for companies. The main difficul-

ties related to expatriate management concern dual career couples, lack of

candidates for assignments in less-attractive areas and repatriation. Organi-

zations first concern is, however, the high cost associated with expatriations.

In order to avoid those costs and the difficulties associated with manag-

ing expatriates, more and more companies reduce the number of expatriate

employees, propose shorter-term assignments, localize their expatriates, offer

less generous compensation packages, and hire more local employees.

Avayas strategies to reduce the number of career expatriates

Avaya Inc., a provider of communication systems in Basking Ridge, New Jersey,with 15,000 employees, keeps its number of expatriates low (currently at 15,down from 90 two years ago) by using three strategies:

First, Avaya started sending more employees on short-term assignments in2002. The short-term assignment, generally six months long, is treated more likea business trip. The employee stays in a hotel or company apartment and is reim-bursed for meals and trips to home every other month, eliminating the need topay pricey housing allowances and costs related to moving the employees fam-ily. The company is now tightening its policies for short-term assignments. Wewant to treat employees on a fair and equitable basis rather than basing it oneach persons negotiating power or each managers willingness to say yes or no.

Second, Avaya controls costs by hiring third country nationals. Avaya cur-rently has 365 foreign nationals, about twice as many as it had two and ahalf years ago. By hiring foreign nationals, the company saves because benefitssuch as tax assistance, education for dependents and housing allowances areoffered only for a limited time. Also, foreign nationals arent paid a cost-of-livingadjustment, a hardship allowance or an expatriate premium. Foreign nationalsalso typically dont need as much time to acclimate because they dont face thecultural barriers that an American might. Theres no language problem and thatperson is also in tune with the business style of the region.

And third, Avaya started localizing some of the expats. Once expatriatesare localized, Avaya phases out housing and schooling allowances after a year,pays employees in the local currency, switches them to local health benefits anddoesnt have to pay income tax in both countries. For an expatriate who earnsa salary of $100,000, the dual income taxes alone cost $140,000.

Source: Leslie Gross Klaff.7

Short-term Assignments (112 months). Employees sent on short-term

assignments stay in the host country between one and twelve months. Tech-

nically, the employee might be hired by the subsidiary, and receive a mobility

bonus. The employees family may go along but, in practice, this rarely

happens. Career management takes place at the head office and performance

evaluation is often shared between the head office and the host country.

According to Harris,6 short-term assignments can be used to compensate

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for the lack of mobility of dual-career couples. This type of assignment isused mainly for knowledge transfer (69%) and for managerial development(39%). Short-term assignments may prove stressful for employees. Indeed,it becomes difficult to maintain a proper balance between work and privatelife, because of the long work hours in the host country and because ofthe distance between the employee and his social and family environments.Organizations have a hard time establishing consistent policies and practices,and managing taxation and compensation issues.

In addition, Harris6 identifies two other sub-categories of short-termassignment: the international commuters and the frequent flyers. Inter-national commuters travel between their country of origin and the hostcountry once or twice per week, while their family remains in the countryof origin. Frequent flyers travel frequently for business, for periods ofthirty-one days or less, while remaining based in the country of origin. Usu-ally, business trip and per diem policies apply to those trips. According toHarris,6 international commuters and frequent flyers are used to carryout operational assignments, but are also adequate for control and knowl-edge transfer functions, as well as replacement of local competencies andcoordination. These assignments often lead to problems with work/familybalance and excessive fatigue among employees. In addition, the impact ofcultural differences is often underestimated in these assignments and cross-cultural training is generally nonexistent. Finally, organizations often lackconsistent policies regarding these assignments.

According to Harris,6 organizations are not monitoring these alternativesto long-term expatriation closely enough, often having little idea of theirnumber, how much they cost them, and how cost-effective they might be.

Global Managers. As opposed to the expatriate manager, who spendsbetween one and five years abroad and then returns to the head office, theglobal manager strings together multiple expatriations for the duration ofhis or her career. Global managers have an international career, have showntheir ability to survive and work efficiently in various cultures, have greatcommunication skills, and an open mind. The international life style is atrue motivation for them, and the management of their career is centralizedat the head office.7

International Junior Managers. International junior managers are sentabroad to develop their managerial abilities. They are young managers,mostly high-potential employees.

In conclusion, organizations use global managers and expatriatesfor strategic assignments, short-term assignments for tactical missions,commuters and frequent flyers for operational missions, and internationaljunior managers for managerial development. These distinctions between thevarious types of international assignments for PCNs give organizations the

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flexibility to react to the different problems they encounter at the lowest pos-sible cost. In expatriation policies, specific sections can be found concerningthe different types of contracts.

Strategic Management of International Assignments

Many companies are sending employees and managers abroad to imple-ment their global strategies and to control or coordinate their far-flungsubsidiaries.9 But sending managers abroad is very expensive. Black andGregersen10 showed that expatriates cost two to three times what theywould in an equivalent position back home. Moreover, between 10 and20 percent of the expatriates come back before the end of their contractbecause they could not adjust to the job or to the country. Among thosewho stay in their position abroad, one-third do not perform up to theirsupervisors expectations.10 International managers constitute a crucial andcompetitive resource for multinationals, a resource that needs to be man-aged and developed. Value created by international assignments dependson the way they are planned and managed. Basing themselves on the lit-erature and on interviews with international HR managers, Waxin et al.11

propose a model for the strategic management of international assignments.This model comprises eight steps: (1) strategic planning and job analysis, (2)recruitment, (3) selection, (4) preparation for the transfer, (5) adjustmentand organizational support, (6) evaluation and performance management,(7) Compensation and (8) repatriation and retention (Exhibit 12.3).

Strategic Planning and Job Analysis

According to Waxin et al.,11 the first step consists in establishing, for eachinternational assignment (1) the goals, (2) the job description, (3) the jobspecification and (4) the ownership for the responsibility of managing thefull expatriation/repatriation cycle.

Firstly, the goals of each international assignment must be specified,and their strategic value must be determined with regard to the organiza-tions strategic objectives. What are the assignments goals? (increase theorganizational performance, train local employees, transfer the head officesorganizational culture toward a subsidiary, solve a technical problem, launcha new product, etc.). Which of these objectives are directly linked withthe organizations strategic objectives? Dowling and Welch12 distinguishbetween hard, soft and contextual job goals. Hard goals are objective, quan-tifiable, and can be directly measured (e.g., return on investment, or marketshare). Soft goals tend to be relationship- or traitbased, like leadership

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Exhibit 12.3

A Model for the Strategic Management of International Assignments

Strategicplanning andjob analysis

Recruitment

Selection

Preparation

Adjustment

Performanceappraisal

Repatriationand retention

Compensation

Source: Waxin et al.11

style or interpersonal skills. Contextual goals attempt to take into consider-

ation factors that result from the situation in which performance occurs, like

arbitrary transfer pricing or other financial tools for transactions between

subsidiaries to minimize foreign risk exposure. Job goals will be translated

later on into performance appraisal criteria so specificity and measurability

are essential. However, there are considerable differences in the way the

goal-setting process is handled in different countries. Tahvanainen13 found

that in Sweden and Germany, for example, it is normal for managers to

participate in the setting of job goals, whereas setting job goals is the priority

of senior managers in the USA.

The job analysis, which comprises of the job description and the compe-

tency profile, must then be carried out. The job description contains general

information on the position, the goals to be met, a list of tasks in order

of importance, the particular conditions, the context of the position, the

duration of the contract, the date of review, and the date of approval. In the

context of an international assignment, the jobs context must be described

in great detail; the main characteristics of the subsidiarys organizational

culture must be identified, as well as those of the host country. Harvey14

suggests that job analysis must generate criteria that adequately capture the

nature of international work as opposed to the domestic context, in order

to provide valid appraisal information.

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The job specification states the required knowledge, abilities (know-how)and experience, and personal characteristics for the job. The profile must beobjective and realistic. In order for such a profile to be drawn, the competen-cies required to complete each task of the job description must be identifiedand weighed. In the context of an international assignment, it is importantto include in the profile cultural competencies and personal characteristics,such as a social orientation, cultural flexibility, stress resistance, and so onthat are required.15 Ideally, the job specification will be used again as a basisfor the choice of the evaluation criteria.

Finally, ownership for the responsibility of the management of the fullexpatriation/repatriation cycle must be determined. Will the expatriate referto their home- or host-country HR manager during their assignment? Thisis where collaboration between home and host HR and line management isessential. Confusion will only make communication between the expatriateand HR more difficult, and will make the expatriate feel less supported.

This first step helps determine the ideal type of international managerfor the position (PCN, TCN, HCN, other type of international employee).The objectives of the position, the job description and specification, andthe details about the management of the expatriation/repatriation processesshould be explained to the candidate by the end of the selection process. Inany case, the expatriate should know the exact purposes of his assignmentbefore the beginning of his assignment.

Recruitment of International Employees

The main objectives of international recruitment are (1) elaborating waysand techniques which will allow the organization to attract a sufficientnumber of motivated and qualified international candidates, (2) identifyingcandidates susceptible to filling foreign positions at the lowest possible cost,and (3) increasing the pool of international candidates at the lowest possiblecost, anticipating for the organizations future needs in personnel. The majordecisions at this step regard the sources and the methods of recruitment.

Recruitment Sources. The first decision to be made is whether to recruit inter-nally or externally. In spite of the external recruitment possibility, it is welldocumented that the majority of firms depend almost exclusively on internalrecruitment for foreign positions, especially for their expatriates positions.This preferred recruitment option can be found even in local markets wherethere is plenty of skilled labor. Why is there not a greater emphasis onexternal recruitment? The answer has to do with the strategic value of theinternational assignment. Internal recruitment is justified if the strategic pur-pose of the assignment is coordination or control of operations. However,in the case of learning units, for example when the subsidiary acquires and

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develops new resources that may be later exported to other parts of the

organization, recruiting from the external market can be more appropriate.

Recruitment Methods. The second decision to be made regards the choice of

the recruitment methods. The major internal recruitment methods for inter-

national positions are (international) job posting and utilization of internal

databases. To enable the company to identify suitable internal expatriates

candidates, HR departments need to build global databases that include data

on potential candidates, their work experience, performance, skills, avail-

ability, and their preferences regarding a potential international assignment:

where he or she would be interested in working, in what capacity, and on

what sort of projects.16 For example, Tetra pack developed their Manage-

ment Planning and Development centralized database which contains the

profile of over thousands high potential employees and which is updated

once a year. This database is consultable by the HR directors community

and can be used to support the expatriates recruitment process.8

The Danone Groups Career recruitment site, for internaland external recruitment

The Danone Group has opted for daily posting all vacant positions on theDanone Career website, which is accessible from the outside as well as frominside the company. To apply, candidates must find positions that correspond totheir profile. The site is the fastest and most efficient way to obtain informationregarding vacant positions within the Group, from anywhere in the world. Toapply for a position, candidates must:

1 Conduct a search, specifying their level of experience (studentseeking an internship, junior (12 years of experience), senior(2 years+of experience), or director/executive), their field of spe-cialization and the geographical area where they wish to work.

2 Select a job offer within the search results3 Study the job descriptions and apply.

After having filled out his or her personal information on a form, the can-didate can attach his or her CV and cover letter. Within 72 hours of applying,the candidate will get a receipt notification.

The English language is preferred throughout the recruitment process. TheGroup searches for candidates with an international profile, and proficiency inEnglish is highly valued. The candidate may, however, use the language of hisor her choice in the free-text fields or in the attached documents.

The progressive opening of the Careers website to foreigners will help facil-itate the internationalization of the recruitment process. Fifteen countries cur-rently use the website, and the international development continues.

Source: Danone.fr

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When suitable candidates cannot be found internally, companies turn tothe external market. External recruitment methods for international posi-tions include using the Internet, launching campaigns in international media,using the services of recruitment agencies and/or international head-hunters,and establishing relationships with learning institutions.

Selection of International Employees

The main objectives of the selection process are (1) enabling the companyand the employee to determine whether the candidate possesses the compe-tencies and motivation to successfully accomplish his or her internationalassignment, (2) minimizing the risk of assignment failure and the relatedcosts, and (3) assigning candidates to suitable positions, thus maximizingthe organizations and the candidates benefit. Because of the specificity andimplications of the task the expatriate will have to perform, multinationalcompanies should ensure that they have an appropriate selection process forinternational assignments. We will now take a closer look at the selectioncriteria, the choice of the evaluators and the selection methods.

Selection Criteria. In theory, the choice of selection criteria for internationalemployees is based on an analysis of the characteristics of the multinational,those of the subsidiary, the host country, and the position to fill.11

Depending on the results of this analysis, the ideal candidates profilevaries from one international assignment to the other (Exhibit 12.4).17

Given the considerable diversity of potential positions and host coun-tries, it is not possible to draw a list of key competencies for expatriates.18

Unfortunately, organizations tend, when selecting expatriates, not to lookfar beyond technical expertise and previous performance in the countryof origin. However, in the context of an international assignment, criteriarelated to the cross-cultural competencies and individual characteristics ofthe candidate, such as social orientation, will to communicate, good stressresistance, and open-mindedness, should be considered.15 Studies show thatindividuals who seek challenges, new experiences, and who enjoy learningare more likely to approach an international assignment in a positive andcreative way, and are also more likely to succeed as expatriates. If the jobanalysis has been done properly, the selection criteria will be based on theinternational assignments competency profile.

Choice of Evaluators. Black et al.4 recommend forming an expatriate selec-tion team which includes managers from the country of origin and managersfrom the host country, as well as a representative from the iHRM depart-ment. Harris and Brewster16 note, however, that most of the time, the iHRMspecialists role is limited to that of an advisor, while the actual decision is

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Exhibit 12.4

Determinants of the Selection Criteria for International Employees

Subsidiarys characteristicsLegal form/ownership modeLocalization

Positions characteristicsFunction of the international assignmentJob description and specificationContract durationHardness of communication

Stage of internationalizationIndustrial sectorBusiness strategyHRM orientationiHRM policiesOrganizational culture

Multinationals characteristics

Selection criteria- Type of international manager- Education- Experience- Professional competencies- Personal characteristics- Cultural competencies

Host countrys characteristicsNational cultureLabor laws and regulations

Source: Waxin et al.11

taken by the managers alone. Marchon8 states that when the expatriationis requested by a subsidiary, the selection process is more transparent: thesubsidiary, responsible for the selection, will make a final selection amongseveral candidates it has chosen. However, when the expatriation is deemednecessary by the head office, the subsidiarys role is often limited to approv-ing or rejecting the final choice of the candidate.

Selection Methods. Several methods are available, like interviews, psycho-logical tests, assessment centers, work simulations or role plays, references,biographical and background data and so on.

According to Linehan et al.,19 the interview is the most used and is stillregarded as the most effective method to select overseas assignees. It providesa forum to understand the expectations and motivations of the candidateand to inform him/her about the job.

The use of formal testing like psychological or relational tests is very lim-ited in the practice but according to Harvey20 they are becoming used morefrequently. Finn and Morley21 cite that cultural awareness and adaptabilitytests are almost never used because they are expensive, difficult to constructand interpret, and their reliability is questioned. Forster and Johnsen22 men-tion that in an international context there are some enormous problems withboth suitability and comparability of tests for different national groups and

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cultures. Finally, the same authors note that the introduction of these testsencounters resistance from the selectors because this could undermine theirpower and prestige in terms of decision-making.

Assessment centers are considered costly and time-consuming, but theyregroup all the methods of evaluation in a single place within a few days.They allow the assessment of the communication skills and the adaptabilityof the candidates as well as their strategic competencies.

References, and biographical and background data are principally usedto ensure that the applicant has the necessary technical expertise to do thejob, and are so less decisive in the selection of an expatriate, even if they canbe useful to spot a particular candidate. According to the authors in iHRM,the best thing to assess a candidate correctly is the use of several differenttechniques and sources of data.

Expatriates selection process in a global fast-food multinational company

Tricon Restaurants International, based in Dallas, Texas, is the franchiser forover 10,000 overseas Kentucky Fried Chicken, Pizza Hut, and Taco Bell Restau-rants. The company has 100 expatriates; 20 are Americans working overseas.

Tricon has established a very formal selection process to staff its overseaspositions.

Selection Criteria. Rather than choosing candidates who are merely excitedabout overseas assignment and who have the technical skills to perform thejob, Tricon is taking a closer look at whether the candidates have the necessarypersonality characteristics, such as their empathy, their ability to adapt to dif-ferent situations, their ability to interact with others (sociability), and the familysupport needed to succeed in overseas assignments.

Selection Methods:

(1) To select candidates for overseas assignments, Tricon interviewscandidates about the positions, the countrys culture, and itsmarketplace.

(2) If there is any doubt whether the candidate can make the adjust-ment, a consulting firm is hired to further assess whether thecandidate has the personality needed to succeed in an overseasassignment.

(3) If candidates pass the interview, a 360-degree feedback survey,which asks peers and their managers about their strengths andweaknesses, is used to evaluate their skills.

(4) If the evaluation is positive, candidates and their families aresent overseas for a one-week look-see trip. During the visit, local

(continued)

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managers evaluate the candidate while the family evaluates thecommunity. The family spends time touring local schools andpotential housing locations, and meeting with other expatriatesin the country who help them understand the local culture andenvironment.

(5) If the local managers find the candidate acceptable, the can-didate, with input from family, can accept or reject theposition.

Source: Based on C. Patton.23

Harris and Brewster16 propose a typology of selection methods for inter-national managers, which comprises four categories, placing the variousselection methods on two axes: open/closed procedure and formal/informalprocedure.

First, the selection process can be open or closed. In an open system, allvacancies are advertised and anyone with appropriate qualification and expe-rience may apply. All the candidates are interviewed with greater or lesserdegrees of formalized testing. Selection decisions are taken by consensusamongst selectors. In contrast, in a closed system, selectors at corporate head-quarter choose or nominate through line managers the suitable candidates.These candidates are informed only once agreement about acceptability hasbeen reached between headquarter personnel and the line manager. Theselection interview consists of a negotiation about the terms and conditionsof the assignment.

Then, the selection process can be formal or informal. In formal systems,vacancies are advertised internally, selection criteria are made explicit andare business focused, and directly related to the job description and jobspecification. Psychometric testing is likely to be used, and selectors need toagree among themselves about candidate match. In informal systems, thereis a lack of specificity between competencies and job description, criteriaare often not specified. Selectors assume that personality characteristics arealready known, and give a great importance to networking, reputation, andteam fit. There is an increasing likelihood that individual preferences ofselectors can predominate (Exhibit 12.5).

In practice, however, the majority of organizations operate predominantlyclosed and informal selection systems, which are not that different fromthe systems used for domestic assignments. Stahl24 states that 81 percent ofthe 116 expatriates sampled in his study were recruited through an opaqueselection system, on the basis of nonstructured interviews. Only 19 percent ofthe candidates went through a structured interview. None of the candidateshad had to pass a test, and in no case, at any moment during the selectionprocess, was the life-partner taken into account (Exhibit 12.6).

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Exhibit 12.5

Typology of Expatriates Selection Processes

Clearly defined criteria Clearly defined measures Training for selectors Open advertising of vacancy

(Internal/external) Panel discussions

Clearly defined criteria Clearly defined measures Training for selectors Panel discussions Nominations only

(networking/reputation)

Less defined criteria Less defined measures Limited training for selectors No panel discussions Open advertising of vacancy Recommendations

Selectors individual preferencesdetermine criteria and measures

No panel discussions Nominations only

(networking/reputation)

Open

Closed

Formal Informal

Source: Harris and Brewster.16

Exhibit 12.6

The Expatriates Selection Methods

81%

19%

N = 116 expatriates

0% 0% 0%0%

10%20%30%40%50%60%70%80%90%

UnstructuredInterview

StructuredInterview

PsychologicalTests

AssessmentCenter

Inclusion ofPartner

Source: Stahl.24

Closed and informal selection systems present at least three majordisadvantages.16 First, they limit the degree to which interpersonal andintercultural skills are taken into account when selecting international man-agers. Secondly, they restrict the pool of potential candidates to the candi-dates who are appreciated by the selectors. This is particularly problematicfor women, given the fact that between 80 and 95 percent of internationalmanagers are men. Within such an imbalanced selection context, it is allthe more important to ensure that an open/formal selection system preventspotential discriminatory biases on the part of selectors. An open formal

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The expatriates selection processes in five Swiss multinational companies(Credit Suisse, Nestle, Holcim, Tetra Pak, Novartis)

In each case the task of the selection falls to the host company, either throughthe line manager or through the HR., with sometimes a possible involvement ofa central department. These persons have generally no particular internationalexperience and therefore do not emphasize the cultural dimension throughoutexperience and therefore do not emphasize the cultural dimension throughoutthe selection process. The selection criteria mainly used by these five companiesare based on technical and professional competencies, when the literature rec-ommends relying firstly on crosscultural skills, without of course forgetting theprofessional skills. For all five companies, the selection methods employed toevaluate the competencies of the candidates are the references, the backgroundof the employee and an interview. The informal selection procedure mainlyleans on the personal contacts and the network of the selectors. An interviewis normally used to confirm the selection choice. None of the companies usesany kind of formal testing to assess the cross cultural or relational skills of thecandidate. However, three out of the five companies say they are willing toimprove their selection processes in the near future by introducing some morestructured selection tools in the selection process.

Source: Marchon8.

selection system forces the selectors to continually question their assump-tions about womens or other minorities suitability and their acceptabilityin international management positions. Thirdly, they prevent the organiza-tion from managing international assignments strategically. The role of theHR manager is limited to dealing with the financial, physical, and socialaspects of international selection, instead of having an input into which kindof international manager is needed and what kind of assignment could beoptimal for that international manager.

In conclusion, although the researchers are unanimous about the sig-nificance of an effective selection system, there is a big gap between theirsuggestions and the organizations practices. As we will see, the work accom-plished during the selection is also useful for determining the preparationneeded by the selected candidate.

Preparation to Transfer

When an appropriate candidate has been selected for an international assign-ment, he or she must get prepared to face the challenges of the new position.The purpose of the preparation step is to provide the expatriates with allthe necessary elements that will help them succeed during the international

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assignment by facilitating their adjustment in the host country and allow-

ing them to work efficiently throughout the duration of their contract. The

options company can use include organizing preliminary visits, providing

practical assistance to the international employees, providing language and

cross-cultural training.

Preliminary Visits or Look-see Visits. This is a trip to the host country offered

to the assignee so that he or she can assess by himself the situation he or she

will have to face. This option is sometimes used at the end of the selection

process so that the candidate can confirm his or her acceptance of the

position. During this trip the expatriate will finalize the contract and settle

some issues like finding an accommodation or a school for the children. The

expatriate will also get an idea about the new work environment. Usually,

a preliminary visit includes the spouse, sometimes the children.

Practical Assistance. This aspect of the preparation is to make everything

ready for the transfer of the expatriate and his family in order to facilitate

the settling in. This consists in arranging for the visas, for the transporta-

tion, finding a new accommodation for the family, new schools for the

children, if it has not been done during the look-see trip, and so on. Many

multinationals now use the services of relocation specialists to provide this

practical assistance. Informing the expatriate on how the transfer will occur

and how life in the host country will be will reduce the stress related to the

uncertainty of the foreign assignment and facilitate the adjustment in the

new environment. The organization should give adequate notice of the new

posting given the professional and personal arrangements that the employee

will need to make before he leaves his home organization and country.

Language Training. The assignee is taught the language of the region where

he or she will be sent. According to Ashamalla,25 language ability facilitates

the adjustment in the local environment and enhances effectiveness in dealing

with foreign counterparts groups including government officials, bankers,

labor organizations, suppliers, and customers. The rigor of the training

should depend on the relational aspect of the expatriates job.

Cross-cultural Training. The objective of cross-cultural training is to teach

membersofone culture to interact effectivelywithmembersof another culture,

andtopredispose themtoarapidadjustment to theirnewpositions. 26Brislin,27

a cross-cultural psychologist, identifies three methods of cross-cultural train-

ing: cognitive, affective, and behavioral. The cognitive method corresponds

to a diffusion of information, using conferences or nonparticipative sessions,

in a foreign cultural environment. The affective method aims at provoking

individual reactions so the subject can learn to deal with critical cultural inci-

dents. The behavioral method aims at improving participants capacity to

adapt to their communication style and to establish positive relationships

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with members of another culture. Management science researchers haveused Brislins model and have added to it the situational (hardness of theculture and hardness of the communication, function and role of the man-ager, planned duration of expatriation) and individual variables (personallearning objectives, degree of active participation). Tung28 suggests that thetraining method should be chosen according to the type of assignment andshould be contingent to two determinant factors: the degree of similaritybetween the culture of origin and the host culture (which is a synonym ofcultural distance) and the degree of interpersonal interaction between themanager and the host countrys inhabitants, which would be linked, accord-ing to Black et al.,4 to the role and function of the manager. In conclusion,the different models of cross-cultural training and their content are builtaround three fundamental variables: the cultural distance between the coun-try of origin and the host country, the managers level of integration with hisenvironment, and the duration of the overseas assignment (Exhibit 12.7).

Gertsen30 proposes a typology of training methods encompassing fourcategories. First, she identifies two kinds of training: conventional train-ing, where the information is transmitted through a unidirectional commu-nication, as is the case in schools and universities, and experimental train-ing, where the trainer gets the trainees to participate by simulating real-lifesituations. Then, she identifies two possible orientations: either the training

Exhibit 12.7

Cross-Cultural Training Model

Level ofdifficulty Cross-cultural training method and content

12 months

14weeks

Low

High

Less than1 week

Cognitive approachConferencesFilms/booksLanguage (basic level)

Affective approachRole playsCase studiesCritical incidentsStress reductionLanguage(intermediate level)

Intensive approach, or immersionEvaluation centreField experiencesSimulationsLanguage(advanced level)

Lengthof training

Low High

1 month or less 13 years212 months

Level ofintegration

Length ofexpatriation

Moderate

Moderate

Source: Adapted from Mendenhall, Dunbar and Oddou.29

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Exhibit 12.8

Types of Training Methods

Experimentaltraining

Generalexperimental

training

Specificexperimental

trainingGeneralculture

Specificculture

Generalconventional

training

Specificconventional

training

Conventionaltraining

Source: Gertsens typology of cross-cultural training.30

focuses on the notion of culture in general and aims at sensitizing partici-pants to the notion of culture, or it focuses on one specific culture and aimsat making participants more competent in that particular culture. Accordingto Gertsen,30 the combination of these two dimensions reveals four types oftraining, as represented in Exhibit 12.8. In our research, we use these fourtypes of training.

Pre-departure Cross-cultural TrainingEffectiveness

Studies in the fields of cross-cultural psychology and management demon-strate the beneficial impact of cross-cultural training on expatriatescross-cultural adjustment.31 Their findings can be summarized in threeconclusions: cross-cultural training is associated with (1) feelings of well-being and self-confidence, (2) development of appropriate behaviors in thecontext of the foreign culture, and (3) improvement of the relationshipswith host countrys inhabitants. In 2005, Waxin and Panaccio32 studied theimpact of the four types of pre-departure cross-cultural training identified byGertsen30 on the three facets of cross-cultural adjustment (work adjustment,interaction adjustment, and general adjustment) for French, German, Scan-dinavian, and Korean expatriates working in India. In summary, the findingsof their research confirm the view expressed by researchers over the lasttwenty years that pre-move cultural training has a positive effect on adap-tation to international assignments. The authors further contribute to theliterature in three different ways. First, their study shows that experimental

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types of training are the most effective ones. Secondly, their results show

that the larger the cultural distance between the country of origin and the

host country, the more pronounced are the effects of cross-cultural training.

Thirdly, the authors show that efficacy of inter-cultural training is clearly

influenced by the magnitude of expatriates prior international experience.

Cross-cultural trainings effectiveness is indeed stronger for managers with

less international experience.

Pre-departure preparation thus appears to be an important factor for

adjustment. However, in most multinationals, cross-cultural preparation for

expatriates is superficial, incomplete or simply nonexistent.32 The fact that

decision-makers often have no international experience might, among other

reasons, explain this state of affairs (see Box below).

Pre-departure preparation at Novartis, Switzerland

Before formally accepting the overseas position, expatriates at Novartis areoffered a look-see trip to the host country.

English courses may be offered to the expatriate if needed, English being theofficial language of the company. Furthermore, if it is considered as essential thatthe assignee and his spouse have basic knowledge of the host country language,the company can pay for such a language tuition.

Novartis invites then the assignee and the spouse to a pre-assignment briefingto coordinate the arrangements for the transfer, to explain the compensationpackage and to answer any question about the host country.

Moreover, a cross cultural training is offered, consisting of a country briefingand a course about managing in the host country, communication and negoti-ation skills useful for the country of assignment. This training is provided by anative of the host country. Even if it lasts only 2 days, this preparation allows abetter adjustment and expatriates are globally satisfied with it. A pre assignmentcheck list is also given to the expatriate in order for him/her not to forget anyimportant issue before leaving.

Source: Marchon.8

As an alternative to pre-departure training, cross-cultural training in the

host country could also be envisaged.33 Mendenhall and Stahl34 mention

in-country real-time training as one of the three new tendencies that are

emerging for HRmanagers who work in the international HR area, alongside

with global mindset training and CD-ROM/Internet-based training. Further,

corporations should provide cross-cultural training to expatriates spouses,

since a lack of adjustment on their part could have negative repercussions

on the adjustment of the expatriate himself. Finally, Harris35 notes that

corporations would benefit from using their former expatriates as trainers

for the new expatriates. Indeed, usage of the newly acquired competencies

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of expatriates is often neglected, and cross-cultural training constitutes anarea where those competencies could easily be put to contribution.

Adjustment of the Expatriate Manager:Organization Support upon Arrival and duringthe Assignment

Once the expatriate lands in the location of assignment, he or she needsfurther support from the company to adjust as quickly and smoothly aspossible in the new job and in the new environment. Also, since the expatriateis supposed to come back to the home country after the realization ofhis mission, the company must also keep links with the expatriate so thatthe employee does not suffer from the out-of-sight, out-of-mind syndrome.Furthermore, maybe even more than the expatriate, the spouse needs alsosupport. First, we will define the notion of adjustment and present theadjustment model and the expatriates adjustment factors. We will then seehow the organization can support the expatriate employee, upon arrival andthroughout the assignment.

The Process of Cross-cultural Adjustment

Expatriates adjustment to their new role and environment is of great sig-nificance, both to the organization and to the managers themselves. Fromthe organizations perspective, expatriates degree of adjustment partiallypredicts performance and completion of the mission.36 From the managersperspective, adjustment is a factor of job satisfaction and psychologicalwell-being.37 As a result, there has been a burgeoning ac

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