Discuss The Challenges Facing Multinational Corporation In The Management Of Global Talent.

“The Jack Welch of the future cannot be like me. I spent my entire life in the United States. The next head of General Electric will be somebody who spent time in Bombay, In Hong Kong in Buenos Aires. We have to send our best and brightest overseas and make sure they have the training that will allow them to be global leaders who will make GE flourish in the future.”

Jack Welch

Discuss the challenges facing Multinational Corporation in the management of global talent.

In a highly competitive global economy where the other factors of production- capital, technology, raw materials and information, are increasingly able to be duplicated “the calibre of the people in an organisation will be the only source of sustainable competitive advantage available to US companies (J.L Laabs 1996). Therefore attention must be paid to and resources must be ploughed into the management of global talent to take the business forward. To do this attention must be paid to several areas, in particular to maximise long-term retention and use of international cadre through career management so that the company can develop a top management team with global experience and to develop effective global management teams (Deresky 2006).

International assignments are becoming increasingly important for the reasons outlined by Jack Welch above; moving forward, top level managers need to have international experience in order for their company to remain competitive. An understanding of the management of expatriates is of growing importance due to the rapid increase in global economic activity and global competition (Young and Hamill, 1992). It is increasingly being recognised that expatriates play a vital role in success or failure of international business (Tung 1984).

However there are various challenges facing Multinational Corporations in the realisation of these goals. These challenges are two fold involving the attitudes of two groups of people, namely the multinational corporation who are instigating the international assignment and the expatriate and their family.

In international assignments there are three phases of transition and adjustment that must be managed for successful integration to a new culture and re-orientation to the old one. These phases are:

1. The exit transition form the home country

2. The entry transition to the host country,

3. The entry transition back to the home country or to a new host country (Asheghian and Ebrahimi 1990)

The first stage requires appropriate selection and recruitment procedures, the second adequate pre-assignment training and mentoring and the final, preparation by the company for the homecoming and procedures put in place to maximise on the increase in expertise.

If these phases are not dealt with effectively by the corporation then there is a high chance that the assignment will fail the costs of failure of international assignments is far greater than those of failure on a domestic level (Forster 1997) The average cost of expatriate failures varies between $65,000 up to $300,000 (Zeira and Banai, 1985) some estimates reaching as high as $1 million or more (Shannonhouse 1996), with an estimate of total losses for American expatriate firms exceeding $2 billion a year (Punnet 1997)

Up to 40% of expatriate managers and their foreign assignments finish early because of poor performance or an inability to adjust to the local environment (Black 1988). About half of those who did remain function at a low level of effectiveness. Indirect costs may be far greater depending on the expats position. Relations with the host country government may be damaged resulting in a loss of market share and a poor reception for future PCN’s.

Research into recruitment and selection has concentrated on the criteria used to asses the suitability of the candidate. (Mendenhall and Oddou 1985) identified that a major problem area was the ingrained practice of using the domestic equal’s overseas performance equation. Technical expertise and domestic track record are by far the most popular selection criteria. Factors such as language skills and international adaptability are often overlooked; however there is some evidence that these are more widely used in European organisations (Brewster 1991). This may mean that it is not the �brightest and best’ or those most suitable for the job which are selected, meaning that the right talent is not harnessed.

It is important to asses whether potential expatriates have the necessary cross-cultural awareness and interpersonal skills, before sending them on international assignments. There are five categories of success for an expatriate manager; job factors, relational dimensions such as cultural empathy and flexibility, motivational state, family situation and language skills.

Jack Welch’s statement above suggest that its the brightest and best employees who are the ones who should be sent on international assignment in order to gain international experience however finding people willing to accept global assignments is one of the greatest HR challenges, according to many managers. One such manager was James McCarthy from Motorola, who said “One of the most difficult aspects of developing global leaders is getting people to move on international assignments. Dealing with dual careers is often one of the greatest challenges.” (Stroh and Caligiuri 1998). Many companies report that while the desire to go on international assignments remains flat, the demand for them is steadily increasing.

Being that the costs of failed international assignments are so high and the failure rate is so high the importance of getting it right is obvious, however in many ways it is the attitudes of the multinational corporations themselves whose money is in jeopardy that largely contribute to these failures. “While 89% of companies formally asses a candidates job skills prior to a foreign posting, less than half go through the same process for cultural suitability” (www.FT.com)

In order to ensure that phase 2 goes smoothly the best preparation is largely believed to be cross-cultural training. This is complex and deals with deep-rooted behaviours. This training should result in the expatriate learning both content and skills that will improve interactions with host country individuals by reducing mis-understandings and inappropriate behaviours. The result is a state of adjustment representing the ability to effectively