Sustainable Expatriation Management

What is sustainable expatriation management in your view?

l How do MNEs develop sustainable expatriation management?

l Why is sustainable expatriation management crucial for their internationalization?

Sustainable Expatriation Management

With growing advancements in information and technology, Globalisation is an occurrence that is inevitable. Every country in today’s age is somehow affected by it. Globalisation is defined as” the flow of technology, economy, knowledge, people, values, and ideas across borders.” (Knight and de Wit, 1997). Thus, in this growing economy, success earned in the national context would not be considered enough.

Because of globalization, many investments, mergers and acquisitions occur regularly in international context. Due to these undertakings, companies and businesses are demanded to produce new schemes to stay competitive in the globalised economy. This very necessity of movement of information, knowledge and extending international management has exponentially grown.  Given the companies’ need to grow and succeed, expatriation has become a crucial element of International Management in the global market.

Expatriation is “the process of sending managers to another country to run a subsidiary of a multinational organization. Before departure, the process should include an extensive period of training and preparation to ensure that the managers are familiar with cultural differences, and to reduce the likelihood of culture shock” (Dictionary of Human Resource Management 2001, p. 120). After the successful completion of expatriates’ international job, they return to their respective countries and then the process of repatriation starts.

On average, it costs two to three times more than having the same employee working in his home country. Since the companies are investing such huge sum of money on their expatriates, the whole repatriation process has to be examined meticulously in order to better retain their employees (Black and Gregersen, 1999). Many researchers have concluded that companies tend to underestimate the repatriation process as the employees are just “returning home” so there are necessarily no complications in getting used to their home environment (Stroh et al. 1998; Adler, 1981; Tung, 1997).  

There seems to be a pattern that employees who have been sent to work as expatriates are more inclined to seeking for new job opportunities than the ones who have not been sent (Stroh, 1995). According to (Black and Gregersen, 1999), 25% of the expatriated employees leave their companies within one year of repatriation. This number is almost twice as much for the ones who have not been expatriated. There are a multitude of reasons for the employees leaving their companies. (Paik, Segaud & Malinowski, 2002) suggest that the repatriates do not see any career advancements in the companies they are working. (Hurn, 1999) claims that the main reason is the lack of a repatriation program. Another major reason seems that, during the employees’ expatriation period, many changes happen in the home countries and also in the companies. These employees are not been kept up-to-date with these changes and furthermore, the employees themselves have changed due to exposure to a foreign culture and setting. Hence, these employees have certain expectations and if these expectations are not met there is a possibility of the employee leaving the company (Stroh et al. 1998).

A company’s inability to retain employees after repatriation can be a huge issue as these companies invest large amount of money on these employees. Thus, the companies need to work more on the management of the employees so as to make it sustainable. The higher the turnover of the employees, the lower the sustainability. Sustainable Expatriation Management can be defined as “a system of managing employees throughout their expatriation to repatriation phases so as the retention of employee in the company is maximised”.   In order to make the Expatriation Management sustainable, companies need to focus on phases before employees’ departure and after their arrival. Pre-departure phase of expatriation is very crucial, so the company needs to focus mostly on proper recruitment/selection and training of the employees. The selection process of an expatriate includes Human Resource managers exploring and finding most suitable candidates that can fulfill the expatriate assignment (Johnsson & Lennbro, 2008).

This given process is designed very carefully depending on the company’s needs, goals and modus operandi. Thus, different companies may use different processes. A company needs to consider essential factors like policies of the host country, cultural internationalization and finding a candidate perfectly compatible and available for the position (Andersson, Johansson, & Pettersson, 2004). Expatriates are required to be up a notch than the parent company’s employees. They are expected to possess different skills than parent company’s employees. Understanding and implementing the business culture and business practice of the host country is of utmost importance. Moreover, the expatriated employees also need to be prepared for adapting to difficulties, both at workplace and in their social life, since they are working in a foreign setting that is different culturally, politically and economically from their home country and parent company (Andersson, Johansson, & Pettersson, 2004).

Interviewing each applicant is a very common method among companies to finalising the right candidates. HR managers use frameworks for formally assessing the applicant’s compatibility. Company can use other assessment tools and conditions of the company as well. A candidate needs to be technically competent as well in order to qualify. Furthermore, many companies focus on the candidate’s skill to maintain relationship with people of different cultures, mostly international. Selectionxof candidatexforxthexinternationalxassignment,xalsoxdependsxonxotherxfactorsxasxthe candidate’sxconflictxresolutionxskills,xteamworkxskills,xleadershipxskills, communicationxskills,xtechnicalxability,xlanguagexproficiency,xMNEsxrequirements, socialxskill,xcross-culturalxsuitabilityx(Brynningsen, 2009; Gerhart, 2009).