EXPATRIATES



Expatriates 568
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An expatriate is an employee sent by his or her employer to work in a foreign country. The firm is normally referred to as the parent company, while the country of employment is known as the host country. If General Motors sent one of its U.S. executives to oversee a new development in Brazil, the executive would be an expatriate, General Motors would be the parent company, and Brazil would be the host country. Equally, if an employee from Brazil was sent to the U.S. or an employee from Canada were sent to the People's Republic of China, they would be expatriates.

Many corporations are sending expatriates to their overseas operations. In fact, expatriates have and the need for internationally competent managers is expected to rise as more and more firms face global competition. Organizations need to understand the dynamic relationships between staffing and outcomes, and how these relationships change over time.

Expatriates provide a number of benefits for companies, including greater parent control and particular expertise. International experience is also seen as providing opportunities for personal and professional development and career advancement. Expatriates are very expensive, however, and this can discourage extensive use of expatriates. Many companies have also experienced relatively high failure rates, with failure often being attributed to the family's inability to adapt.

Surprisingly, give the high costs, and likelihood of failure, companies often make these expensive commitments with little or no preparation for the need for cross-cultural transition. Expatriate success and job performance is closely related to intercultural adjustment and the same is true of families.

Given this, it is critical that companies use a rigorous selection process to identify which employees would likely succeed as expatriates. The selection process should also include consideration of the family.

Several characteristics determine an expatriate's expected level of success: job skills, motivational state, language skills, relationship skills, and family situation. Technical competency is most often used as the selection criteria for expatriates, but that is rarely the best selection technique. The technical skills of an expatriate are of course important, but other skills can be as important. For example, an expatriate is likely to make more progress at the overseas location if he or she has effective managerial skills and administrative competencies. Strong relationships with the host country and headquarters' operations also make the expatriate's assignment more productive. Conflict resolution skills are also important to the expatriate. Expatriates must also have a strong belief in the assignment if it is to be a success, and they must believe that the assignment will be advantageous to their careers.

Motivation is likely to be higher if the person has an interest in the specific host country culture as well as in an overseas experience. To be successful the expatriate must be willing to acquire new behavior patterns and attitudes. The most successful expatriates enjoy the challenge of forging their way through new situations and are comfortable networking and initiating new social contacts. These are also critical for the families of expatriates. Training for expatriates and their families is therefore as important as proper selection.

To reduce the likelihood of premature termination of the assignment, companies should choose expatriates who have well-developed relationship skills. Some characteristics are crucial for a successful expatriate: tolerance for ambiguity, behavioral flexibility, strong interpersonal skills, and a nonjudgmental disposition. In addition, an effective expatriate would have high cultural empathy. Ethnocentrism is the belief that one's culture is superior. Ethnocentric expatriates are likely to have problems adjusting to a new culture, and the local people are likely to perceive them negatively. Communication is also key.

The expatriate needs to have some working knowledge of the host language. but it may be more important that the expatriate have outstanding nonverbal communication skills and an understanding that nonverbal communication varies between cultures. He or she should become familiar with common nonverbal protocol in the new culture.

Most expatriates take their families with them to the foreign country, and their family situation is one of the most critical factors in the successful completion of an overseas assignment. Family transition must be taken very seriously. An expatriate must be comfortable on a personal level. Major stress can be caused for the entire family by something as seemingly trivial as the transportation of a family pet. An expatriate's spouse must have a very strong willingness to live abroad. The spouse must be supportive as well as adaptive. Many firms have had expatriates' assignments terminated early because the spouse was unwilling or unable to make the necessary adjustments to the host country.

Predeparture training for the expatriate greatly increases the likelihood of success. The extent of training can depend on a variety of variables: previous overseas experience (if applicable), time until departure, and novelty of the new country. Cross-cultural training must be meaningful for the expatriate and family. Training should, at the minimum, inform the expatriate about the new country, and at the best, it would immerse the expatriate into the new culture.

Low-interaction training is focused on information distribution. It generally takes the form of lectures, videos, and readings. The material should include general area studies and a company operational overview. A low-intensity training would be appropriate for some-one who has been on an expatriate assignment before or someone familiar with the host country. Unfortunately, this is often the only training received by most expatriates whether they have previous experience or not. This lack of training is usually due to last-minute selection or no training budget.

Exhibit 1
Types of Allowances Given to Expatriates

Foreign Service Premiums

This is a sum of money that is simply a reward for being willing to move one's family to a new country. The sum is generally a percentage of one's base salary—usually between 10 to 25 percent.

Hardship Allowance

The hardship allowance is actually another foreign service premium added to the original one. It is based on not just having to go overseas, but where you go overseas. Hardship allowances are greatest when the expatriate is sent to places having poor living conditions, a vastly different culture, less access to good health care, etc.

Cost of Living Allowances

Cost of living allowances (COLAs) enable expatriates to maintain their standard of living. COLAs are given when the cost of living in the host country is greater than that in the United States.

Housing Allowances

The cost of housing in various parts of the world is much higher than it is in the United States. Large apartments in Tokyo or Hong Kong, for instance, can go for upwards of $10,000 a month. Housing allowances compensate expatriates for these higher costs.

Utility Allowances

Some companies give expatriates a fixed sum of money above their base salary to pay their utilities bills; other companies try to ascertain the difference in utility bills between the home and the host countries, and give an allowance based on that difference.

Furnishing Allowances

Some companies offer to ship all of the expatriate's furnishings overseas. A second approach is to pay for the lease or purchase of furnishings overseas by expatriates. A third approach is to just give the expatriate a fixed sum of money (usually between $8,000 to $10,000) to buy furnishings.

Education Allowances

Most expatriates send their children to private school overseas. Companies often pay the full cost of tuition, books, and supplies.

Home Leave Allowances

Companies usually provide expatriates and their families with round-trip, business-class airfare to visit the home country at least once a year.

Relocation Allowances

The allowance makes up for any mistakes made in any of the other allowances for unforeseen complications. Expatriates receive about one month's salary.

Medical Allowances

Companies usually pay for all medical expenses. In hardship countries where medical facilities are inadequate, this includes emergency trips to other countries to receive medical care.

Car and Driver Allowances

Most companies offer expatriate managers a car allowance. This enables the expatriate to lease, buy, or rent a car in the host country. In some cases, the expatriate is given funds to hire a chauffeur.

Club Membership Allowances

In some countries the only way an expatriate can gain access to recreational facilities (e.g., tennis courts, swimming pools, country clubs) is by joining clubs. Also, in many cultures these facilities are important places in which to develop contacts and conduct business. This type of allowance is usually made on a case-by-case basis.

Taxes

Many companies reimburse expatriates for taxes they pay in excess of what they would have paid had they remained in the United States.

Medium- to high-intensity training should have duration of one to two months. This training provides affective learning and cultural immersion. Medium-intensity training takes the intercultural experience workshop approach, offering cultural simulations, role plays, and case studies. Skill development can be culture-general or culture-specific. High-intensity training, most necessary for inexperienced expatriates entering a very different culture, provides sensitivity training and includes communication workshops and field exercises that focus on self awareness, listening skills, open-mindedness, and communication skills.

There are currently relatively few women expatriates (Stroh, Varma, Valy-Durbin, 2000), but their numbers are likely to increase in the future. Women expatriates and their male spouses present a different challenge for companies, and their special needs should be taken into account (Punnett, 2004). Similarly, there are situations where factors such as race, religion, disabilities, or sexual orientation may make it difficult for an individual to succeed in a particular location.

Given that expatriates are very expensive, it is in a firm's interest to make sure the assignment is successful. Proper expatriate selection and training, as well as attention to the needs of the family can be a productive investment.

SEE ALSO: Human Resource Management ; International Business ; International Cultural Differences ; International Management ; Japanese Management ; Organizational Culture

Dena Waggoner

Revised by Betty Jane Punnett

FURTHER READING:

Ali, A., K. Van der Zee, and G. Sanders. "Determinants of Intercultural Adjustment Among Expatriate Spouses." International Journal of Intercultural Relations 27, no. 5 (2003): 563–580.

Gong, Y. "Towards a Dynamic Process Model of Staffing Composition and Subsidiary Outcomes in Multinational Enterprises." Journal of Management 29, no. 2 (2003): 259–280.

Punnett, B.J. International Perspectives of Organizational Behavior and Human Resource Management. Armonk, NY: M.E. Sharpe, 2004.

Schuler, R.S., P.S. Budhwar, and G.W. Florkowski. "International Human Resource Management." In Handbook for International Management Research ed. B.J. Punnett and O. Shenkar. Ann Arbor, MI: University of Michigan Press, 2004.

Stahl, G.K., E.L. Miller and R.L. Tung. "Toward the Boundaryless Career: A Closer Look at the Expatriate Career Concept and the Perceived Implications of an International Assignment." Journal of World Business 37, no. 3 (2002): 216–227.

Stroh, L.K., A. Varma, and S.J. Valy-Durbin. "Why are Women Left at Home: Are They Unwilling to Go on International Assignments?" Journal of World Business 35, no. 3 (2000): 241–255.

Tucker, M.F., R. Bonial and K. Lahti. "The Definition, Measurement and Prediction of Intercultural Adjustment and Job Performance Among Corporate Expatriates." International Journal of Intercultural Relations 28, no. 3-4 (2004): 221–251.



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