expatriate trai and dev

7/31/2019 Expatriate Trai and Dev

1/26

2006 Prentice Hall 9-1

Chapter 9Staffing, Training, and

Compensation for Global

Operations

PowerPoint by

Kristopher Blanchard

North Central University


2/26


Introduction

[In the new millennium], the caliber of thepeople will be the only source of

competitive advantage.

Allan Halcrow, Personnel Journal

Of the top 100 UK firms surveyed by CendantInternational Assignment Services, 63

reported failed foreign assignments.- www.expat.FT.com


3/26


Staffing Philosophies for Global

Operations

Firms using an ethnocentric staffing approach fill

key managerial positions with people from

headquartersthat is, parent-country nationals

(PCNs).

In a polycentric staffing approach, local managers

host-country managers (HCNs)are hired to fill

key positions in their own country.


4/26


Ethnocentric/PCN

Advantages: PCNs familiar with company goals,products, technology, policies and procedures.

Disadvantages: lack of development of local

managers (impacts moral and commitment) andpoor adaptation and lack of effectiveness ofexpatriates

Used when: inadequate local management, early

stages of internationalization, centralized approachto globalization, close communication andcoordination with HQ is needed.


5/26


Polycentric/HCN

Advantages: less expensive to hire a local

than to create an expatriate, local managers

can help with sensitive political issues andsome countries may require it.

Disadvantages: difficulty of coordinating

with HQ, conflicting loyalty of local, HQ

managers do not get valuable experience


6/26


Staffing Philosophies for Global

Operations

In the global staffing approach, the best managers

are recruited from within or outside of the

company, regardless of nationality.

Greater pool of candidates to chose from

Usually more culturally savvy and adaptable

Often more cost effective

In a regiocentric staffing approach, recruiting isdone on a regional basissay within Latin

America for a position in Chile.


7/26 2006 Prentice Hall 9-7

Problems with Expatriation

Selection based on headquarters criteriarather than assignment needs

Inadequate preparation, training, andorientation prior to assignment

Alienation or lack of support fromheadquarters

Inability to adapt to local culture andworking environment



Problems with Expatriation

Problems with spouse and childrenpooradaptation, family unhappiness: mostfrequently cited reason for expatriate

failure.

Insufficient compensation and financial

support

Poor programs for career support and

repatriation



Training and Development

Areas critical to preparation: cultural training, languageinstruction, familiarity with everyday matter.

Challenges faced by expatriates China: a continuing problem for expatriates; one complained that

at his welcome banquet he was served duck tongue and pigeonhead

Brazil: expatriates stress that cell phones are essential becausehome phones dont work

India: returning executives complain that the pervasiveness ofpoverty and street children is overwhelming

Indonesia: here you need to plan ahead financially becauselandlords typically demand rent two to three years in advance

Japan: expatriates and their families remain concerned thatalthough there is excellent medical care, the Japanese doctorsreveal little to their patients.



Cross-Cultural Training: Culture

Shock

Culture shock is a state of disorientation and

anxiety about not knowing how to behave in an

unfamiliar culture. The cause of culture shock is

the trauma people experience in new and differentcultures, where they lose the familiar signs and

cues that they had used to interact in daily life and

where they must learn to cope with a vast array of

new cultural cues and expectations.



Cross-Cultural Training: Culture

Shock

Honeymoonwhen positive attitudes and expectations, excitement,

and a tourist feeling prevail

Irritation and hostilitythe crisis stage when cultural differences

result in problems at work, at home, and in daily living

Gradual adjustmenta period of recovery in which the patientgradually becomes able to understand and predict patterns of behavior,

use the language, and deal with daily activities, and the family starts to

accept their new life

Biculturalismthe stage at which the manager and family members

grow to accept and appreciate local people and practices and are ableto function effectively in two cultures



Cross-Cultural Training: Sub-

Culture Shock

Subculture shock occurs when a manager is

transferred to another part of the country

where there are cultural differencesessentially from what she or he perceives to

be a majority culture to a minority one.


13/26


Training Techniques

Area studies, that is, documentary programs about the

countrys geography, economics, sociopolitical history,

and so forth

Culture assimilators, which expose trainees to the kinds ofsituations they are likely to encounter that are critical to

successful interactions

Language training

Sensitivity trainingField experiencesexposure to people from other cultures

within the trainees own country


14/26


Integrating Training with Global

Orientation


15/26


Integrating Training with Global

Orientation


16/26


Training Host-Country Nationals

Continuous training and development of HCNs

and TCNs for management positions is an

important factor for long-term success of the

multinational corporation

Ongoing development will facilitate the transition

to an indigenization policy

The company will have a well-trainedmanagement staff with broad international

experience


17/26


Training Host-Country Nationals

Training to facilitate e-business adoption is

taking on increasing importance

Training in information and communicationtechnologies is particularly critical for firms

in new economy and emerging markets

List of training needs for managers inEastern Europe


18/26


Compensating Expatriates

Compensation is a crucial link betweenstrategy and its successful implementation

Must be a fit between compensation and the

goals of the firm

Maintaining an appropriate compensationpackage is more complex than it would

seemLittle variation in typical salary but there is a

wide variation in net spendable income


19/26


Balance Sheet Approach


20/26


Compensating Expatriates

SalaryLocal salary buying power and currencytranslation, as compared with home salary;bonuses or incentives for dislocation

TaxesEqualize any differential effects on taxesas a result of the assignment

AllowancesRelocation expenses; cost-of-livingadjustments; housing allowance for assignment

and allowance to maintaining house at home; tripshome for family; private education for children

BenefitsHealth insurance; stock options


21/26


Compensating Host-Country

Nationals

A number of variable apply including local market

factors and pay scales, government involvement in

benefits, unions, and the cost of living must all be

considered

Eastern Europeans spend 35% to 40% of their

disposable income on food and utilities

East European managers must have cash for about 65%to 80% of their base pay

US managers must have cash of about 40%


22/26


Compensating Host-Country

Nationals

To be competitive, MNCs can focus on

providing goods and services that are either

not available at all or are extremelyexpensive.

It is important to make clear what benefits,

as well as salary, come with a position

because of the way compensation is

perceived and regulated around the world


23/26


Comparative Management in Focus:

Compensating Russians

Select Russian employees who are achievement-oriented and willing to take risks

Tie individual bonuses to initiative and personalaccountability (to encourage individual goal setting).

Organize social events and other group activities.

Provide small-group incentives

Provide a mix of short- and long-term incentives

Tailor the compensation package to individualpreferences


24/26


Repatriation: Out of sight, out of mind

Organizational problems: Perceived lack of recognition

Loss of networking and mentor relationships

Unsuitable job assignment

Loss of career and promotional opportunities

Loss of authority and professional freedom Resentment from colleagues and others

System and policy changes as well as technicalobsolescence

Personal problems: Social adaptation problems Loss of status and standard of living

Financial problems


25/26


Looking Ahead

Chapter 10Developing a Global

Management Cadre

Preparation, Adaptation, and RepatriationGlobal Management Teams

The Role of Women

Working within Local Labor Relations Systems


26/26

2006 Prentice Hall 9 26

Training Priorities for E-

Business Development

Return

expatriate trai and dev

Documents