Docstoc

file

Document Sample
file Powered By Docstoc
					                            Introduction
The trend of globalization is providing opportunities for Indian firms to reach foreign
markets.   The business model of many upcoming industries like information technology
sector is heavily dependent on foreign markets. This increases the need of professionals
working in foreign cultural settings.   The merger and acquisition activity especially the
cross border acquisitions have reached much higher level. The trend of acquisition is not
only restricted to new sectors like Information Technology, Telecom and Business Process
Outsourcing, but core sector companies like Manufacturing (For Example Bharat Forge
acquiring Carl Dang Peddinghaus in Germany) and Mining (For Example Sterlite group
acquiring mines in Australia) have observed spurt in activities too.     The sheer size of
certain deals in the range of 200-300 Million dollars (acquisition of Tetley, UK, Flag
Telecom in Bermuda) indicates global aspirations of the Indian firms. The Pharmaceutical
companies have widened their reach in world market with examples like Ranbaxy and DRL
having presence in many countries. The globalization dreams present a new challenge for
Indian firms; the challenge to develop competent managers who would be able to work in
new environments efficiently and will act as a bridge between parent company and its
subsidiaries. The globalization will also bring new employees to the Indian firms, the ones
with different origin, language and national culture adding complexities to the culture of
Indian organizations. The firms thus need to develop systems and processes not only to
train managers for expatriate assignments but also to handle cultural diversity. This task
can be achieved by well designed cross-cultural training programs which will help
employees in coping up with the stress and cultural shock while dealing with a new culture.
The need for cross-cultural training will be for both: Indian expatriates and employees
dealing with expatriates of other origins. The cross-cultural training will also be required
for the Indian companies getting into Business Process Outsourcing as the clients belong to
culturally different environments.      Working effectively in cross-cultural context is
becoming vital competence for aspiring managers. The project report attempts to define
the expatriates and various issues like competencies required by expatriates, Managing



                                                                                               1
across borders, Training and development, Evaluation, Compensation. The project also
includes study of expatriates of various sectors like Pharmacy, Banking, KPO.




                                                                                       2
              Defining International Employees
There are three basic sources the MNCs can tap for overseas positions.

   1) Home/ Parent Country Nationals ( PCNs)
   2) Host Country Nationals ( HCNs)
   3) Third Country Nationals ( TCNs)


   1) Parent Country Nationals ( PCNs) :

PCNs are managers who are citizens of the country where the MNC is headquartered. In
fact, sometimes the term ‘Head quarter’s National’ is also used.         These managers are
commonly called Expatriates or, simply, exports, which refers to those who live and work
away from their parent country. There are a variety of reasons for using PCNs. The most
common reason was to start up operations. MNCs prefer to have their own people launch
a new venture. The second most common reason was that the parent country people had
the necessary managerial and technical expertise.



   2) Host Country Nationals ( HCNs) :

HCNs are local managers who are hired by the MNC. There are many reasons for hiring
them at the lower or middle-level ranks. Many countries require the MNC to hire the local
talent as part of opening their markets to MNCs.       For example, in Brazil, two-thirds of
employees in any foreign subsidiary have to be Brazilian nationals.       In India too, before
approving joint venture agreements, the government restricts the number of expatriates to
be employed, primarily to limit the foreign exchange outflow and to prepare Indian
nationals to undertake the responsibility at a future time.



   3) Third Country Nationals (TCNs) :

TCNs are managers who are citizens of countries other than the one in which the MNC is
headquartered or the one in which it is assigned to work by the MNC.         TCNs are found
                                                                                                 3
typically in large MNCs in advanced stages of growth. A number of advantages are cited
for using them. One is that there salary package is usually less than that of a PCN. The
knowledge of local language, like English was the reason for choosing British managers by
US companies in former British colonies like India, Jamaica, West Indies and Kenya.




                                                                                            4
                            Defining Expatriates
An expatriate (in abbreviated form, expat) is a person temporarily or permanently residing
in a country and culture other than that of the person's upbringing or legal residence. The
word comes from the Latin ex (out of) and patria (country, fatherland).

Richardson and McKenna (2002) defined the expats are the professionals who are living in
an overseas country on a temporary basis, but normally for more than one year.             In
general, besides monitoring and controlling the financial distribution and profit gain on the
company, an expatriate is expected to extend their skill and knowledge in technology
transfer. An expatriate is expected to offer new knowledge to the locals to adapt thus the
later has high respect towards the former at the workplace. The role of an expatriate is
regarded as distinctively significant since the main task is to act upon maintaining the
organizational structure and philosophy of MNCs while following the rules and regulations
of work within the host country.        In the public sector, the expatriates mainly hold
diplomatic posts in foreign embassies or as a consultant in government agencies; while in
private sector, the expatriate managers are mostly positioned in MNCs that run business
operations.

During the later half of the 20th century expatriation was dominated by professionals sent
by their employers to foreign subsidiaries or headquarters. Starting at the end of the 20th
century globalization created a global market for skilled professionals and leveled the
income of skilled professionals relative to cost of living while the income differences of the
unskilled remained large. Cost of intercontinental travel had become sufficiently low, such
that employers not finding the skill in a local market could effectively turn to recruitment
on a global scale.

This has created a different type of expatriate where commuter and short-term
assignments are becoming the norm, and are gradually replacing the traditional long term.
Private motivation is becoming more relevant than company assignment. Families might
often stay behind when work opportunities amount to months instead of years. The
cultural impact of this trend is more significant. Traditional corporate expatriates did not

                                                                                                 5
integrate and commonly only associated with the elite of the country they were living in.
Modern expatriates form a global middle class with shared work experiences in
Multinational Corporation and working and living the global financial and economical
centers. Integration is incomplete but strong cultural influences are transmitted. Middle
class expatriates contain many re-migrants from emigration movements one or two
generations earlier.

In Dubai the population is predominantly expatriates, from countries such as India,
Pakistan, Bangladesh and the Philippines, with only 3% of the population made up of
Western expatriates.


Advantages of Expatriates:
    1. Expatriates usually have the necessary technical and managerial skills.
    2. Expatriates enhance communication between the parent company and the foreign
        subsidiary.
    3. Expatriates are more familiar with corporate culture, enhancing parent-subsidiary
        relations.
    4. Assigning expatriates to foreign posts is an essential ingredient of their
        management development programme and their progress towards becoming an
        International manager.

Disadvantages of Expatriates:
   1. The total compensation paid to the expatriate is usually much greater than that paid
       to a host country national.
   2. Host country nationals do not require special training in adaptation to the local
       culture.
   3. The use of host country nationals is consistent with promote-from-within policies
       espoused by many MNCs.
   4. Host country nationals do not require work permits.
   5. Using host country nationals enhances the firm’s local image.


                                                                                             6
                     Expatriates in India
The Indian job market is full of attractive opportunities, not only for domestic talents but
for foreign workforce as well. The number of foreigners seeking jobs in India is increasing
every year.   Not only are the middle and senior level expats are coming to India, young
graduates, who are on threshold of beginning a new career are taking up jobs in Indian
sectors other than IT like Pharmacy, Retail, Telecom, Hospitality. Media. Around 30,000 to
40,000 expats are working in India presently and the number is still growing. That’s the
fraction of 1,00,000 foreigners working in China, and even more in Hong Kong and
Singapore, the Asian destinations of choice for expatriates.     Job portals like Times Jobs,
Monster India has more than 3,000 resumes of foreigners, who look for jobs in India, in
their database.

Even major IT companies like Infosys are having special programs for getting students for
premier universities like Stanford and Harvard to work with them. Recognizing the fact
that India is a growing economy, foreign universities are sending their students to work in
India so that they can have an understanding of the Indian markets an environment, work
practices and culture of the Indian organizations.

Why are expats ready to work in India? What attracts these expatriates fly to India? Some
of the reasons that add to the trend of expats looking for more jobs in India are as follows:

   •   Growth Opportunities: India, being one of the fastest growing economies in the
       world, offers a large number of growth opportunities to expats. More expats seek
       jobs in India on account of job cuts, outsourcing, and high taxes in western nations.
   •   Compensation: The compensation provided by Indian companies maintain external
       equity and are almost at par with what is being paid in foreign countries. Expats
       with specialized skills which are unavailable in India, due to financial and
       technology constraint like molecular research are being offered highly attractive
       packages.




                                                                                                7
  •   Attractive Positions: Companies are offering attractive leadership positions to
      experienced expatriates. Key roles ranging from middle level managerial roles to
      Departmental Heads are also being offered to specialized expat.
  •   Adds value to resume: There are no second thoughts about how Indian experience
      adds values to ones resume.      It reflects an individual's hard work and ability to
      adapt and deal with diversity.     One gets to know the different cultures, improve
      networking skills, and knows how to deal with people.
  •   Increasing Unemployment: The rate of unemployment is increasing in
      industrialized economies while the growth opportunities are increasing in South
      Asian countries. As a result of this fact, many expats who have saturation in their
      careers in their countries are heading towards Indian markets to grab the
      opportunities here and move ahead in their careers.        Apart for the advantages of
      working in India, there are certain factors that reduce the chance of an expat to
      become successful in India. Difficulties in communication and difference in cultures
      are two main factors for the same.


Views of expats working in India:

         1) McArthur Mille, language trainer from Canada, currently living in Bangalore,
             says, "I was interested in working here, as there was an opportunity
             available. I just jumped at it. What brought me here was the kind of work
             that I could do here."
         2) Sheila O'Hara first came to India as a tourist while still in college. Now she
             works with Microsoft as a language and culture trainer.               "I did not
             specifically ask to come here, but since India is an interesting place to work
             in if you are in the IT industry, I just took the plunge," she says. "There is a
             technology boom taking place. Certain parts of India are developing quickly,
             and it is interesting to notice all these changes at such close quarters."




                                                                                                8
    Challenges while dealing with Expats
•   Having one department in four or more—and sometimes, a great deal more—
    locations is not unusual.      However, this fact requires not only appropriate
    management, but also people who can rise to the occasion and be comfortable with
    not having the boss in an office just down the corridor.
•   The matrix reporting line is one of the solutions to distant management. This means
    a firm reporting line to a remote functional or business head and a dotted line to the
    local general manager. The matrix reporting line does keep management tight and
    involved with as much contact as necessary, so goals can be set, processes planned,
    activities organized, staff motivated and events controlled—but with the sort of
    quasi or fuzzy matrix common in some organizations, close management
    involvement is not consistently present.
•   This apparent lack of immediate supervisory support is one of the reasons for a high
    staff turnover rate. The nature of such a structure imposes extra obligations on
    managers to maintain regular and frequent contact with all direct reports. It is not
    about a phone call whenever a crisis blows up, but a weekly conversation to check
    signals, steer and affirm.
•   The best managers and supervisors in the organization are those that are constantly
    available, guiding, supporting and coaching. Constant management makes the staff
    feel sustained. The results, needless to say, are better employee retention and
    consequently, higher productivity.
•   Managing over a distance needs an even greater effort because we no longer can do
    it by walking about, but have to find the frequent time, in days of interruptions, to
    ensure that contacts are repeated and strong. Managers could also help themselves
    by screening hires for a degree of comfort with low maintenance when remote
    reporting goes with the job. Employees in turn are encouraged to develop a habit of
    self-motivation. Taken together, we can enhance the working environment across
    the organization.



                                                                                             9
              Expats in various sectors in India
•   Pharmacy Sector:

There is a huge dearth of clinical research professional in pharmacy sector in India. There
is a need for core skills in drug research. Expats with such superior skills are adding value
to the drug pharma sector with their expertise. They have experience in high end research
and thus prove to be strength for the company who hire them.

•   Banking Sector:

Expats, especially from South East Asian countries are keen to work in Indian banks.
Private banks like ICICI, ABN AMRO and Standard Chartered are already having expats
working with them. Since, there is a dearth of skilled persons in financial markets today;
the banks are hiring increasing number of expats. As India is emerging as a global player,
expats see huge professional growth opportunities in India.     The foreign candidates are
also comfortable in working with Indian finance sector as the lacunae between the salary
structure in India and other countries have considerably reduced.

•   KPO Sector:

Companies hire specialized business analysts expats to add value to their work and
benchmark its employees so that they perform with same efficiency. Evalueserve has 40
expats among total workforce of 900 employees. Moreover to deal with cultural issues,
companies are actively arranging training programs to help expats understand the
company culture better.




                                                                                                10
Threat to Indian Workforce:

The trend of expats occupying key positions and leadership roles is hitting the Indian
corporates these days. According to a recent study by Credence Research and Analytics
(CRA), there are 40,000 expats in India presently; and out of them, almost 15% are in
leadership roles. It is believed that expat managers have more abilities when compared to
their Indian counterparts. Though Indian leadership has been long known for its passion,
commitment and ability to tackle diverse situations, expats demonstrate a higher risk
taking ability, transparency and accountability.   Expat managers act as key source of
innovations for the company and help in maintaining harmony throughout the company.
While some companies see this trend as a threat for Indian talents, others see it as a
sourcing strategy wherein companies look out for the right candidate for a right job. Such
companies debate that while searching for a right candidate, skills and attitude should be
given more weightage and factors like nationality should be ignored.




                                                                                             11
                             Selecting Expats
Selection of expatriate is a two way process.     A prospective candidate may reject the
expatriate assignment, either for individual reasons, such as family considerations, or for
situational factors, such as the perceived toughness of a particular culture.    Following
factors are involved in expatriate selection.




   1) Technical Ability: Reinforcing the emphasis on technical skills is the relative ease
       with which the multinational may assess the potential candidate’s potential, since
       technical and managerial competence can be determined on the basis of past
       performance.     Since expatriates are usually internal recruits personal evaluation
       records can be examined and checked with the candidate’s past and present
       superiors.




                                                                                              12
2) Cross-Cultural Suitability: It includes cultural empathy, adaptability, diplomacy,
   language ability, positive attitude, emotional stability, maturity which expatriate
   must possess in order to determine successful performance.



3) Family Requirements: The contribution that the family, particularly the spouse
   makes to the success of the international assignment.


4) Country Cultural Requirements: Some regions and countries are considered
   “Hardship Postings” – remote areas away from major cities or modern facilities. Or
   war-torn regions with high physical risk.     There may be a reluctance to select
   females for certain Middle East or South East Asian regions. Indeed, some countries
   will not issue a work permit for a female.



5) MNC Requirements: The multinationals may consider the proportion of expatriates
   to local staff when making selection decision, mainly as an outcome of its staffing
   philosophy.


6) Language: The ability to speak a second language is an aspect often linked with
   cross-cultural ability. Language skills may be regarded as of critical importance for
   some expatriate positions. Some would argue that knowledge of the host-country’s
   language is an important aspect of expatriate performance, regardless of the level of
   position.




                                                                                           13
                     Expatriate Compensation
There are two main options in the area of Expatriate compensation- The Going Rate
approach (also referred to as the market rate approach) and The Balance Sheet
approach (sometimes known as the build-up approach).



The Going Rate Approach
The key characteristics of this approach are the base salary for international transfer is
linked to the salary structure in the host country.       The multinational usually obtains
information from local compensation surveys and must decide whether local nationals
(HCNs), expatriates of the same nationality, or expatriates of all nationalities will be the
reference point in terms of benchmarking.
For example, a Japanese bank operating in New York would need to decide whether its
reference point would be local U.S. salaries, other Japanese competitors in New York, or all
foreign banks operating in New York. With the Going Rate approach, if the location is in a
low-pay country, the multinational usually supplements base pay with additional benefits
and payments.
There are advantages and disadvantages of the Going Rate approach


Advantages:
Equality with local nationals (very effective in attracting PCNs or TCNs to a location that
pays higher salaries than those received in the home country), approach is simple and easy
for expatriates to understand, expatriates are able to identify with the host country, and
there is often equality among expatriates of different nationalities.


Disadvantages:
First, there can be variation between assignments for the same employees most obviously
when we compare an assignment in an advanced economy with one in a developing
country, but also between assignments in various advanced economies where differences
in managerial salaries and the effect of local taxation can significantly influence an

                                                                                               14
employee's compensation level using the Going Rate approach.             Not surprisingly,
individual employees are very sensitive to this issue.      Second, there can be variation
between expatriates of the same nationality in different locations.
A strict interpretation of the Going Rate approach can lead to rivalry for assignments to
locations that are financially attractive and little interest in locations considered to be
financially unattractive.    Finally, the Going Rate approach can pose problems upon
repatriation when the employee's salary reverts to a home country level that is below that
of the host country.


The Balance Sheet Approach
• Basic objective is maintenance of home-country living standard, plus financial
  inducement
• Home-country pay and benefits are the foundations of this approach
• Adjustments to home package to balance additional expenditure in host country
• Financial incentives (expatriate/hardship premium) added to make the package
  attractive
• Most common system in usage by multinational firms The Balance Sheet Approach
The basic objective is to "keep the expatriate whole" (i.e., maintaining relativity to PCN
colleagues, and compensating for the costs of an international assignment) through
maintenance of home-country living standard, plus a financial inducement to make the
package attractive.    The approach links the base salary for PCNs and TCNs to the salary
structure of the relevant home country. For example, a U.S. executive taking up a national
position would have his or her compensation package built on the U.S. base-salary level
rather than that applicable to the host country. The key assumption of the approach is that
foreign assignees should not suffer a material loss due to their transfer, and this is
accomplished through the utilization of what is generally referred to as the balance sheet
approach.
The balance-sheet approach to international compensation is a system designed to equalize
the purchasing power of employees at comparable position levels living abroad and in the
home country, and to provide incentives to offset qualitative differences between

                                                                                              15
assignment locations.
There are four major categories of outlays incurred by expatriates that are incorporated in
the balance sheet approach.
1.    Goods and services: Home country outlays for items such as food, personal care,
     clothing household furnishings, recreation, transportation and medical care.
2. Housing: Major costs associated with housing in the hose country.
3. Income taxes: Parent-country and host-country income taxes.
4. Reserve: Contributes to savings, payments for benefits, pension contributions,
     Investments, education expenses, social security taxes, and so on.
     Where costs associated with the host-country assignment exceed equivalent costs in the
     parent country, these costs are met by both the firm and the expatriate to ensure that
     parent-country equivalent purchasing power is achieved.


There are advantages and disadvantages of the balance sheet approach,


Advantages:
1) The balance sheet approach provides equity between foreign assignments and between
     expatriates of the same nationality.
2) Repatriation of expatriates is facilitated by this emphasis on equity with the parent
     country since expatriate compensation remains anchored to the compensation system
     in the parent country.
3) This approach is easy to communicate.


Disadvantages:
1) This approach can result in considerable disparities - both between expatriates of
     different nationalities and between PCNs and HCNs. Problems arise when international
     staffs are paid different amounts for performing the same (or very similar) job in the
     host location, according to their different home base salary.        For example, in the
     Singapore regional headquarters of a U.S. bank, a U.S. PCN and a New Zealand TCN may
     perform the same banking duties but the American will receive higher salary than the
     New Zealander because of the differences in U.S. and New Zealand Base-salary Levels
                                                                                                16
   As noted above, differences in base-salary levels can also cause difficulties between
   expatriates and HCNs.     Traditionally, this has referred to the problem of highly paid
   PCNs being resented by local HCN employees because these "foreigners" are perceived
   as being excessively compensated (and because they are blocking career opportunities
   for locals).   However, feelings of resentment and inequity can also run in the other
   direction. For instance, as indicated above, the United States has the highest level of
   managerial compensation in the world. Thus, a firm that establishes a subsidiary in the
   United States (or acquires a U.S. business) may find that if it uses a balance sheet
   approach, its expatriates may be substantially underpaid compared to local American
   employees.     While the logic of the balance sheet states that being tied to the home
   country assists in repatriation because the expatriate identifies with the home country,
   research in equity theory suggests that employees do not always assess compensation
   issues in a detached and rational way.      Perceived insufficiency of support may be
   interpreted as a violation of the psychological contract and have a negative impact on
   expatriate adjustment and performance. The issue of base salary differences is also a
   concern for U.S. employees working for foreign firms operating in the United States.
   Many non-U.S. multinationals are reluctant to pay high U.S. salaries to U.S. employees
   who are offered international assignments (as HCNs in the firm's home-country
   operations or as TCNs).     U.S. employees are equally reluctant to accept the lower
   salaries paid in the firm's home country. Thus, the balance sheet approach not only can
   produce disparities, but also may act as a barrier to staff acceptance of international
   assignments.


2) While this approach is both elegant and simple as a concept, it can become quite
   complex to administer.     Complexities arise in the areas of taxation, living costs, and
   differentiating between PCNs and TCNs.


Taxation :
Taxation probably causes the most concern to HR practitioners and expatriates (both PCNs
and TCNs) since it generally evokes emotional responses. No one enjoys paying taxes and

                                                                                               17
this issue can be very time consuming for both the firm and the expatriate.
Multinationals generally select one of the following approaches to handle international
taxation:
Tax equalization: Firms withhold an amount equal to the home country tax obligation of
the PCN and pay all taxes in the host country.
Tax protection: The employee pays up to the amount of taxes he or she would pay on
compensation in the home country.       In such a situation, the employee is entitled to any
windfall received if total taxes are less in the foreign country than in the home country.


Two other approaches:
1) Ad hoc (each expatriate is handled differently, depending on the individual package
   agreed to with the firm)
2) Laissez-faire (employees are "on their own" in conforming to host-country and home-
   country taxation laws and practices).
Tax equalization is by far the more common taxation policy used by multinationals.
Thus, for a PCN, tax payments equal to the liability of a home country taxpayer with the
same income and family status are imposed on the employee's salary and bonus.
The firm typically pays any additional premium or allowances, tax-free to the employees.
As multinationals operate in more and more countries, they are subject to widely
discrepant income tax rates. It is important to note that just focusing on income tax can be
misleading because the shares of both social security contribution and consumption taxes
are rising in the OECD (Organization for Economic Cooperation and Development)
countries. For example, if we look at total tax revenues as a percentage of
GDP, the "top five" highest taxation countries are Denmark, Sweden, Finland, Belgium, and
France. The United States is 20th, with the other large advanced economies towards the
bottom of the list (Japan, 19th; Britain 14th, and Germany, 11th). Many multinationals have
responded to this complexity and diversity across countries by retaining the services of an
international accounting firm to provide advice and prepare host-country and home-
country tax returns for their expatriates.        When multinationals plan compensation
packages, they need to consider to what extent specific practices can be modified in each
country to provide the most tax-effective, appropriate rewards for PCNs, HCNs and TCNs
                                                                                               18
within the framework of the overall compensation policy of the firm.


International Living Costs Data :
Obtaining up-to-date information on international living costs is a constant issue for
multinationals. The level of local knowledge required in many areas of international HRM
requires specialized advice.    Consequently, many multinationals retain the services of
consulting firms that may offer a broad range of services or provide highly specialized
services relevant to HRM in a multinational context.    A number of consulting firms offer
regular surveys that calculate the COLA index and are undated in terms of currency
exchange rates.     A recent survey of living costs in selected cities ranked the ten most
expensive cities as Tokyo, Reyjavik (Iceland), Geneva, Oslo, Libreville (Gabon), Copenhagen,
Berlin, Helsinki, Stockholm, and Munich. The first U.S. city in the index was New York,

ranked as the 28th most expensive city; the least expensive city was La Paz (Bolivia) ranked
at 90th.   Multinationals using the balance sheet approach must constantly update
compensation packages with new data on living costs, an on-going administrative
requirement.      This is an issue to which expatriate employees pay great attention, and
forms the basis of many complaints if updating substantially lags behind any rise in living
costs. Multinationals must also be able to respond to unexpected events, such as the
currency and stock market crash that suddenly unfolded in a number of Asian countries in
late Some countries, such as Indonesia, faced a devaluation of their currency (the
Indonesian ruphiah) by over 50 percent against the U.S dollar in a matter of weeks which
had a dramatic impact on prices and the cost of living. There is also much debate about
what should be in the "basket of goods" that consulting firms use us the basis for
calculating living costs around the world.       For example, the British magazine The
Economist has developed its own benchmark of living costs based on the cost of a
McDonald's "Big Mac" around the world.         There are also considerable disparities in
purchasing power around the world shows a range of data to illustrate this point with the
purchasing power of working time shown for a range of factors.
For example, while U.S. workers do not have the highest hourly earnings, the purchasing
power of their working time is high in terms of less working time required to pay for items


                                                                                               19
such as petrol (gasoline in the U.S.), income tax liability, consumer durables (e.g., a TV set),
and food items (e.g., bread and coffee). It is also possible to take a wider view and focus
and on business costs rather than living costs for expatriates, because the multinational
firm is interested in the overall cost of doing business in a particular country as well as the
more micro issue of expatriate living costs. A recent study by the Economist Intelligence
Unit calculated an index that measures the relative costs of doing business in 27 economics
by compiling statistics relating to wages, costs for expatriate staff, air travel and
subsistence, corporation taxes, perceived corruption levels, office and industrial rents, and
road transport. The "top ten" most expensive countries in terms of business costs in 1997
were:


1. Germany
2. United States
3. Belgium
4. Britain
5. France
6. The Netherlands

7. Sweden

8. Australia

9. Italy

10. Singapore



As indicated, one of the outcomes of the balance sheet approach is to produce
differentiation between expatriate employees of different nationalities because of the use of
nationality to determine the relevant home-country base salary.            In effect, this is a
differentiation between PCNs and TCNs.        Many TCNs have a great deal of international
experience because they often move from country to country in the employ of one
multinational (or several) headquartered in a country other than their own (e.g., an Indian
banker may work in the Singapore branch of U.S.bank).          There is no doubt that paying

                                                                                                   20
TCNs according to their home-country base salary can be less expensive than paying all
expatriates on a PCN scale (particularly if the multinational is headquartered in a country
such as the United States or Germany, which has both high managerial salaries and a strong
currency), but justifying these differences can be very difficult. Nonetheless, it is common
practice for multinationals to use a home country balance sheet approach for TCNs.
Evidently, the reduction in expenses outweighs the difficulty of justifying any pay
differentials. However, as firms expand internationally, it is likely that TCN employees will
become more valuable and firms may need to rethink their approach to compensating
TCNs.   As a starting point, multinational firms need to match their compensation policies
with their staffing policies and general HR philosophy.
If for example, a firm has an ethnocentric staffing policy, its compensation policy should be
one of keeping the expatriate whole (i.e., maintaining relativity to PCN colleagues plus
compensating for the costs of international service). If however, the staffing policy follows
a geocentric approach (i.e.    staffing a position with the "best person" regardless of
nationality) there may be no clear "home" for the TCN, and the firm will need to consider
establishing a system of international base pay for key managers paid in a major reserve
currency, such as the U.S. dollar or the Deutsche Mark. This system allows firms to deal
with considerable variations in base salaries for managers.




                                                                                                21
                            Expatriate Failure
The expatriates though perceive the foreign assignments as an instrument towards career
progression and financial benefits, often face problems to adjust with the Political,
Economic and Cultural environment of the host countries i.e. the place of assignment. If
ignored, these adjustment problems may result in stress, both in professional and personal
lives of an expatriate which may lead to high turnover, low productivity, low morale and
decreased effectiveness.   It also damages the firm’s reputation in international context.
The failure of expatriate assignment may also affect the group dynamics by the way of de-
motivation and low commitment etc. The relationship between Host-Parent countries may
also be significantly affected. The productivity of the foreign operations may go down; the
ability to operate in the host country may be lessened, the company may lose its market
share to competitors and also damage its reputation among clients.       Failure can have
profound effects on expats themselves by ruining their careers, causing personal blows to
their self-esteem and ego; and may be taxing on their family life both physically and
psychologically.




                                                                                              22
                     Adjustment of Expatriates
Expatriates differ in their causes of failure of the assignment.      It has already been
established that the stress, job related and personal, is one of the major reason for
expatriate failure. The dysfunctional consequences of a stress in foreign assignment can
take on a number of negative implications such as absenteeism, alcohol, drug abuse,
turnover, early return to the domestic organization, aggression to other within and outside
the organization, extended leaves or any combination of these negative behaviours.

Stress Process in Expatriates:
Four stages of expatriate Stress can be identified : Pre-alarm, Alarm, Resistance and
Exhaustion stage.




                                                                                              23
The stages are as follows:
   1. Pre-alarm- Expatriate is totally unprepared for the foreign assignment at this stage.
       Training is given to the expatriate in the parent country to cope with the cross-
       cultural differences and to face the Challenges existing in the host country.


   2. Alarm-The stage of alarm starts when an expatriate actually land in the host
       country. In spite of the training given, he identifies the differences in culture and
       experience unfamiliarity of situation, people, Etc. Hence he/she may find that other
       people's behavior does not match with one's own behavior and one's own behavior
       does not produce expected results. He/she will find that the environment makes
       new demands for which he/she has neither ready-made answers nor the ability to
       develop new and culturally appropriate responses.


   3. Resistance- In this stage, to overcome the difficulty of adjustment and adaptation,
       expatriate uses all physical and psychological resources to meet the environmental
       demand and to reduce the discrepancies.


   4. Exhaustion- If the expatriate is able to adjust in the host country's culture; it leads
       to effective performance and increased productivity.       Otherwise, he/she will be
       unable to adjust to the host country's culture and feel exhausted and looses interest
       in work and completing the assignment and tries to come back to the parent
       country.




                                                                                                24
Stressors in Expatriate assignment:
In spite of the training given in the parent country, when the expatriate actually lands in the
foreign country, there are various factors causing stress like unfamiliarity of the foreign
place, the people, and the doubts of acceptance by the host country and the relationships
with the boss or subordinates, etc. which gradually affect his/her performance in the
assignment. Some of the problems are mentioned below.


       Job-related Stressors:
Cultural adjustment/Shock: Cross cultural adjustment is adjustment of expatriate with
the job, host country nationals, and to general work and non work environment. Most of
the effective global managers often suffer the most severe culture shock which is a natural
response to the stress of immersing oneself in a new environment. The following personal
characteristics are exhibited by well adjusted expatriate managers:
       Being culturally prepared for assignment
       Being a culturally sensitive person
       Ability to recognize complexities in host nationals
       Liking to mix with host nationals
       Being a people person
       Willingness to accept the challenges of intercultural experiences
       Enjoy social interactions
       Having empathy for others
       Effectiveness at resolving conflicts
       Being realistic in One’s expectations.


Job/Task Characteristic: Job/task characteristics and organizational variables are also
believed to affect the expatriate adjustment like role ambiguity/ clarity, role discretion,
role overload, role novelty and organizational culture and size.



Tension between parent and host country work set-up: Formal support systems that


                                                                                                  25
are provided by the organization might be of particular value to the expatriate manager
who is facing short, intermediate, and long-term stress associated with their foreign
position. The level of stress could accumulate to a point where it would be difficult, if not
impossible, for the expatriate manager to fulfill their role in the foreign assignment.
Without such support, the expatriate manager may attempt to address the mounting stress
in a number of ways leading to failure or dropping of the assignment. Most expatriates
believe that accepting foreign assignments gives them an advantage over their colleagues in
similar positions in the home country. However, others fear that they will suffer from "out
of sight, out of mind" syndrome, and be left out of important communication loops in the
corporate office in parent country.



Communication Problems: The possibilities for communication and interactions are
considerably enhanced if managers are proficient in the language of the culture in which an
expatriate is operating.   An expatriate manager should be aware of the foreign country
language despite which it forms hurdle for his/ her existent.

Following are the aspects of the communication toughness:

       Differences in the norms and rule for communication
       Frequency of communication
       Difficulty in learning the host country language
       Length of the foreign assignment
       Mode of communication - face to face or by phone or memo only
       Formality of communication required



Gender issues: Gender issue is a stress or particularly to women expatriates.         Women
expatriates have to be more resilient and resourceful if they wish to be successful in foreign
cultures. Women irrespective of their culture face resistance by some men, when they try
to advance in their careers. It is a fact that women expatriates have to be more skilled and
adjusting to foreign culture than their counterparts.



                                                                                                 26
Blocked career progression: Majority of expatriates lack effective career management
processes to support repatriation and may even face by-passed for promotions.           Two-
thirds of expatriates identified repatriation and career issues, such as anticipated re-entry
problems of lack of career planning as troublesome problems.



Differences in Compensation: Substantial differences exist in the compensation of the
expatriates at the same level in various countries.     These differences in compensation
practices lead to stress among expatriates.



Quality of superior-subordinate relationship: Quality of work relationships act as a
potential Stressor.     Relationships between superiors and subordinates who are from
different cultures form the significant aspect of multi-national organization effectiveness.
Subordinates who effectively use influence strategies can secure desired outcomes and
resources from their superiors in the expatriate assignment.


       Personal Stressors:
Family issues: Family of expatriate also experience stress similar to cultural shock which
the expatriate face. Adjustment of the expatriate spouse and family to host country may be
potential problem despite affecting the expatriate and may even lead to assignment failure.
Lack of support from expatriate families may be responsible for failure in the assignment.
Unlike expatriate, his/her family doesn't undergo training which would help in their
adjustment in host country. Especially, the children find themselves strange in school and
face unfamiliarity of the situations but, must cope with all social traumas which can actually
cause extreme stress.    Moving across vast oceans or between continents, far from
family, friends, community, country also creates a more deeply felt and unique kind of
stress to the expatriates and their families.


Dual Career Couple: The case in which an expatriate family is dual-career couple and in
which the spouse has left a good job in the home country leads to stress in the couple.
International relocation is one of the potential stressors that affects various members of
                                                                                                 27
the family differently. This is particularly evident in non-traditional family configurations
such as dual-career couple.



Psychological acceptance: The psychological acceptance of the expatriate in the host
country is another difficult proposition leading psychological disorientation.     The non-
acceptance of the expatriate by the colleagues, boss, subordinates and the organization as a
whole is a potential Stressor for an expatriate.




                                                                                                28
             Managing Stress among Expatriates
Expatriate stress cost to both organization and to the individual.              Hence, both
organizations and the expatriates need to manage stress for organizational and individual
well-being.   One of the best strategies that can be adopted by the organization may be
choosing the right person for the foreign assignment.         There exist differences in the
effectiveness of coping strategies used across different countries. Expatriates can be active
participants in their own adjustment processes, and their adjustment to new cultures rests
as much on what they do to help themselves and as on what companies do to assist them.
The coping strategies of expatriates stress can be classified into two types:
       Organizational coping strategies

       Individual coping strategies



                       Organizational Coping Strategies
The failure of an expatriate can be disastrous to the organizations. In order to make the
expatriate assignment successful, organizations have to adopt some strategies and help in
declining stress among expatriates.     The very nature of the expatriate selection process
(e.g., different candidate pools for different situations) has significant implications for
training, compensation, and other Human Resource Management policies and practices
integrated together form effective high performance work practices for global managers.
Following are some of the strategies which organizations can implement to overcome the
expatriate stress.


(1) Promoting interaction with the host country nationals: Interpersonal contacts with
the host country nationals teach the expatriate how to behave and act during the
assignment. Thus, when expatriate is sent for the assignment to the host country, he will
be better adjusted and will be less frustrated by the cultural difference compared to the
expatriates who are isolated and who have less communication with the host country
nationals.



                                                                                                29
(2) Not letting the expatriates discouraged in the early days of the assignment: Early
decline in satisfaction and discouragement of the expatriate leads to loss of confidence and
ability to succeed in the assignment. Expatriate if stays in unhappy stage is less likely that
he/she will ever adjust. Therefore, it is essential to help expatriates to manage stress in
the early stages of their assignment to avoid discouragement.



(3) Helping hand from HR professionals: HR professionals having an intimate knowledge
of host countries, their customs, language, cost of living, education alternatives and spouse
employment opportunities, etc; can help the expatriates in overcoming the problems in the
host country. Ford uses international human resource teams with local representatives, to
Conduct assessments and prepare expatriates for their overseas assignments.


(4) Testing the personality of the expatriate: Expatriate agreeableness, indication of
collaboration, sincerity, respect and empathy for others, may promote showing tolerance
and patience as well as solving problems responsibly.       Conscientiousness and emotional
stability may show expatriate tolerance to stress.        Intellectual openneness shows the
cultural acceptance, flexibility to the culture and open-mindedness. Hence the personality
of the expatriate need to be tested before selecting him/her for the assignment.


(5) Selection of the candidates: Selecting candidates with professional competence, and
who is a low risk for being able to adjust to another culture is another important issue.
Screening candidates for expatriate assignments so as to "care enough to send only the best
qualified," both in the job requirements, and in their being able to adjust to the host cultural
requirements. Following criteria used by the companies for expatriate selection:
   a. Ability to adapt
   b. Technical competence
   c. Spouse and family adaptability,
   d. Human relations skill,
   e. Desire to serve overseas,

                                                                                                   30
   f. Previous overseas experience,
   g. Understanding of host country culture,
   h. Academic qualifications,
   i.   Knowledge of language of country
   j.    Understanding of company culture.


(6) Pre-assignment orientation: Pre-assignment orientation for the expatriate is
essential. European companies such as British Petroleum, ABB Unilever, Volkswagen and
BayerA      Goperate   regional   assessment   centers    comprising   both   host   country
representatives and specialists to select and orient expatriates.


(7) Organizational Training strategies to cope with expatriates stress: Psychologists
have proposed two approaches to cope with expatriate stress: Symptom-focused strategies
and problem-focused strategies.       Symptom- focused strategies are used to diminish
emotional distress by attending to behavior and expression, physiological disturbance,
subjective distress, or all these.   Problem-focused coping strategies are efforts to take
constructive action to change the situation creating the stress and address the problem and
minimize the anxiety and distress.       Expatriates who use the problem-focused coping
strategy will be able to cope better with the stress than the symptom-focused coping
strategy.    Hence expatriates should be trained in using the constructive coping strategy.
The following figure explains the two types of strategies, which an organization may adopt
in its training module.




                                                                                               31
(a)Pre-departure training programs: Pre-departure training programs administered by
the parent company can ease the transition of the expatriates and facilitate expatriate
adjustment to amenities, general living conditions and social interactions.   Expatriate
should undergo the following training programs and counseling sessions before leaving the
parent country:


                                                                                            32
(b) Cross-cultural training before and after arrival in the foreign country: Imparting
cultural training to the expatriates before and after arrival to the foreign country fosters an

    1. Knowing and exploring the expectations, concerns of each member in
         the family
    2. Managing relationships across globe
    3. Briefing the culture of the host country
    4. Teaching effective communication styles
    5.   Providing insight of stress management strategies
    6.   Teaching expatriate how to work in teams and to manage conflicts
appreciation for the host country’s culture.       This workshop helps in providing basic
information about the host country and parent country organizations.            However this
training should focus on challenges before expatriates in adjusting to the host culture like
steps one can take to progress through the process of cultural adjustment, careful
examination of culture shock and how expatriates can deal with.


(c) Coaching and Mentoring: Coaching and mentoring expatriates is a vital organization
coping strategy.      Coach has to know the expatriate’s desired outcomes and help in
improving the level of performance.        In the process, underdeveloped process of the
expatriate will be assessed. In order to make expatriates well anchored in the bordered
organization, and to prevent professional isolation each expatriate can be assigned to a
mentor who periodically touches base and provide information on about the events at the
home country and the head office, as well as advice expatriate in career development.




                                                                                                  33
(d) Language Training: Despite the prevalence of English, an exclusive reliance on the same
diminishes an expatriate manager's ability to interact with host country nationals.
Knowledge and fluency in local language enable expatriate to understand and communicate
effectively.   Expatriate should be definitely trained in the foreign languages in view of the
future need effectively.


(e)Practical Training: Practical training is aimed at helping the expatriate and his/her
family ease themselves into day-to-day life in the host country.


(f)Job training and Strategic training: Job training helps the expatriate in new operational
skills or supervisory skills that are needed in foreign assignment and strategic training helps
in giving a big picture of the global business strategy of the organization.


(g) Training local supervisors: Companies which are successful in assimilating non-natives
Into their workforces provide training not only to the expatriates but also to their local
supervisors.


(h) Management Development Programs: Management development programs can be
designed to increase the overall skill levels of expatriates through a mix of on going
management education and rotations of expatriates through a number of jobs within the firm
to give them varied experience. Management development programs can be often used as a
strategic tool to build a strong unifying culture and informal management network which
support transnational and global strategy.




                                                                                                  34
(8) Organizational support at the new locale: The host country organization should
provide the necessary support           to the    expatriate emotionally,        physically   and
psychologically.


(9) Repatriation programs: A largely overlooked but critical and important issue in the
training and development of expatriates is to prepare them for re-entry into their home
country organization.       To help expatriates focus their energies on their foreign
assignments, organizations need to create "repatriation" programs as well.           The Human
Resource Management function should develop a good              program    for     re-integrating
expatriates back into work life within their home country organization and can also
utilize the knowledge expatriate had acquired while abroad.


(10) Coaching on career progression: Expatriate training programs should include
career implications and repatriation concerns. The parent company should clearly explain
the expatriates the career value of the foreign assignment and discuss the career track
following the repatriation. Expatriates should be made aware of where an international
assignment fits into their overall career pattern.         If the expatriate thinks that the
international assignment is a signal of important change in their career he/she may be
highly motivated, committed, more involved and may work whole heartedly in their new
role and this can further help the expatriate to take initiatives in the host country leading to
effective performance


(11) Knowing the family circumstances: Thorough knowledge about the expatriate
family circumstances, commitments, and family adjustment capabilities by the parent
country organization is essential before selecting and sending the expatriate for the foreign
assignment, which will help in reduction of the failure in the assignments.


(12) Keeping Expatriates well connected with the parent country: The parent country
organization should accept some responsibility for ensuring that the expatriate families are

                                                                                                    35
happy in the host country and the expatriates themselves should remain well connected to
the parent country organization.




(13) Proper compensation practices: Equalizing expatriate pay on a global basis to
reduce the Substantial difference in the pay.        Substantial differences exist in the
compensation of expatriates at the same level in various countries. These differences in
compensation practices create dissatisfaction and distress in the expatriates.   The firm
should pay executives in different countries according to the prevailing standards in each
country, or should equalize pay on a global basis.




                                                                                             36
                         Individual Coping Strategies
1) Appropriate coping strategy
   Expatriate can adapt individual coping strategy to overcome stress.        The coping
   strategies can be classified into four categories according to expatriate adaptive
   function in an international assignment:


  a) Task-oriented strategies: such as planned problem-solving and implementing
      organizational change.
  b) Learning and adjustment strategies: such as modifying inaccurate expectations
     and learning more about the culture.
  c) Interpersonal strategies: such as relationship building and seeking task help.
  d) Avoidance and defense strategies: such as ethnocentric behavior withdrawal.


   The findings of this study further revealed that the cultural distance is a critical
   determinant of how expatriates deal with the problems that they encounter overseas.



2) Learning how to behave
   Expatriates should thoroughly observe, discretely inquire and should try to learn what
   principles are lying beneath behaviors of the host country nationals which at first may
   appear to be unusual. This can pertain to such actions as whether to bow, shake hands
   with the one you meet, etc. By learning to appreciate the cultural norms of the host
   country expatriates will be able to adjust to the host country culture.


3) Spouse support
   Spouse support and adjustment can help the expatriate as a great stress reliever.
   Adjustment of the spouse predicted the expatriates 'intention to remain in the
   international assignment.


4) Exercising
   Regular physical exercise, some practice of meditation and relaxation techniques can

                                                                                             37
     help in relieving expatriate stress.
5)     Recreation
       Recreational activities like watching movies, listening to music, etc. can be taken
       according to expatriates ' interest to relieve stress.




                                                                                             38
      Cultural Factors in International Career Choice
Determinants of cultural differences:
There have been many attempts to define cultures and what differentiates them. Cultures
can be defined and differentiated on various dimensions - viz.                     collectivism vs.
individualism, power distance, uncertainty avoidance, masculinity vs. feminism and long
vs.        short term orientation.     The author classified a number of countries on these
parameters. These parameters can be defined as:
      1.     Power distance: Degree of inequality in power between a less powerful individual
           and a more powerful one in which they belong to same social system.
      2.     Masculinity vs.     feminism: Refers to the distribution of emotional roles
            between the genders. It opposes a tough masculine to tender feminine society.
      3. Uncertainty avoidance: is the extent to which a culture programs its members to
            feel either comfortable or uncomfortable in unstructured situations.
      4.     Individualism vs. collectivism: is the degree to which individuals are supposed to
            look after themselves or remain integrated into groups usually around the family
      5. Long term vs. short-term orientation: refers to the extent to which a culture
            programs its members to accept delayed gratification of their material, social and
            emotional needs.
The differences in cultural values were shown by the study of Hofstede (2001), which
involves 60, plus countries where each one of them was classified on these parameters.
These cultural differences may effect motivational factors, collectivism at work place,
organizational structure design etc. Various studies have tried to study these differences.
The difference in cultures has been associated with perceptions and paradoxes. The study
by Osland and Bird (2000) lists down the paradoxes and the reasons for them.                   The
paradoxes arise because of perceptual schemas (cultural myopia and lack of experience),
theoretical limitations emic and etic studies which present one sided views of the cultures
(From inside and outside the culture while ignoring the other ones.). The other reasons for
misunderstandings are tendency for observers to confuse individual and group values,
unresolved cultural issues, role differences and real vs. espoused values.            The cultural

                                                                                                      39
differences and varying approaches lead to significant difference in business practices
which must be recognized by the trainers and employees receiving expatriate assignment

Impact of dealing with different culture:
The cultural change leads to cultural shock, which is mental state of stress caused by acute
changes in the culture. The expatriates tend to feel lonely because all of sudden everything
changes including work environment, peers, processes and to a large extent organizational
culture and value system. The employees react by comparing the new culture to their own
values and beliefs and at times are unable to accept the vast difference between the two.
The process of encountering and accepting the new changes or in other words process of
acculturation can be classified in four stages:
       1.   Initial stage of elation and optimism
       2.   Period of frustration, depression and confusion
       3.   Gradual improvement of mood leading to optimism and satisfaction
       4.   Mastery stage
There are four stages of adjustment: Stage I, the initial, or honeymoon stage; Stage II,
the disillusionment, or culture shock stage; Stage III, the adjustment, or adaptation
stage; and Stage IV, the mastery stage. The honeymoon stage is a period lasting less
than two months.     Here the employee is thrilled with the new experience.        The culture
shock stage occurs as the individual copes seriously with living in the new culture on a
daily basis, as a lack of understanding of the culture inhibits awareness of what is
appropriate, or inappropriate, behavior in the new cultural environment, resulting in
confusion, frustration, tension and depression.     The frustration occurs as the person
begins to realize that past behaviors are inappropriate in the host culture but has not
yet learned what behaviors to substitute. The adjustment stage is characterized by
increased ability to adapt in the new culture; and, in the mastery stage, adjustment is
about as complete as possible, and anxiety is largely gone.                 Rhinesmith (1970),
classified reactions to a different culture in three categories that are flight, fight and
adaptation. The flight here characterizes reactions like rejecting new culture and people
and   withdrawing     from    any   opportunity   of   interacting   with    new   people   or
situations that cause discomfort.    The Fight is approaching new culture with hostility and

                                                                                                 40
term adaptation is used for people who undertake the process of understanding the
difference and adjusting to the new culture.



Defining Cross-cultural training and its objectives
The cross-cultural training in general can be defined as "Any intervention aimed at
increasing an individual's capability to cope with and work in foreign environment".
Hence crosscultural training involves all the methods like lectures, simulation etc. used to
make the person familiar with a different culture. The term cross-cultural training
hence is broad enough to include differences in areas like language abilities, business
etiquettes, beliefs and values, social system, negotiating styles etc. of any culture.    The
cross-cultural has also been defined as "Formal methods to prepare people for more
effective interpersonal relations and job success when they interact extensively with
individuals from cultures other than their own". The term job success here seems to be
slightly ambiguous, as the factors defining success on an expatriate assignment can
include organizational values, earning respect from peers and subordinates, technical
skills, interpersonal and relationship management skills etc. The advantages from cross
cultural training have been listed as following:
   1. A means for constant switching from an automatic, home culture international
         management mode to a culturally adaptable and acceptable one
   2.   An aid to improve coping with unexpected events and cultural shock in a
        new culture
   3. A means to reduce uncertainty of interactions with foreign nationals
   4. A means for enhancing expatriates coping abilities
Hence cross-cultural training can be seen as a tool for improving the corporate
culture and    practices   by    constantly    learning   through    induction   of   foreign
nationals in the organizations. Further the cross-cultural training will help to reduce
the psychological stress and cultural shock which often lead to failure of expatriates.




                                                                                                41
  The Process of Expatriation- the cultural issues: A model for analysis




                                                    Foreign                   Cultural
                                                    Country                   Shock, Coping
                                                    Culture                   Problems,
                                                                              Confusion
                  Role of Cross cultural
                  Training




                     Employees Beliefs
                                                                                Coping with
Domestic             and Values, Work
                                                Expatriate                      change,
Country Culture      culture and Work
                                                                                transition
                     styles
                                                                                to normalcy




                               Organizational                Foreign
                               Culture                       Organizational
                                                             Culture




                                                                                              42
Design of cross-cultural training:
The issues or focus points are very important in the cross-cultural as it is required to
choose between culture specific or culture general training, which areas of the culture to
focus upon and what are the personal requirements of the person who might have to deal
with a situation like this or who is shifting to a different culture for work. Following issues
for the cross-cultural training can be identified:
       Different aspects of time like punctuality- The time factor here involve two
       dimensions that are punctuality and relationship dimension. While in some
       cultures like USA starting and ending on time are very important in others
       like South American countries that may be considered exceptional.                 Some
       cultures prefer to take time for relationship building, which may not be acceptable at
       all in others. Hence cross-cultural barriers related to time need to be taken care of.
       Linguistic barriers- The English is being used for most transactions but then usage of
       English tends to change with the country contexts. For example the pronunciation
       in India is significantly different from the American way.     Secondly certain terms
       may have different meaning in different languages;hence context also plays an
       important role. In case of countries with different language the expatriates
       must be trained in opening dialogues and discussions with the help of translators.
       Different business practices, like conduct in meeting and unstructured and open
       discussion.   Power distance can play an important role in situations like conduct
       during the meetings.     In cultures with lower power distance the employees may
       tend to call their bosses with their first names while this may be impossible in
       cultures with higher power distances.         Hence developing a firsthand knowledge
       about the practices is very important.
       Cultural stress (ambiguity and difference of perceptions)- The training should also
       involve methods to counter stress and to interpret situations. The expatriates will
       have to understand the situations on their own and then form perceptions.
       The training should avoid any kind of stereotyping where trainees may be lead
       to believe certain things about any culture. The culture may broadly explain
       value system of a community or country but every individual is different.

                                                                                                  43
      Hence any individual with a pre-formed notion about the culture will be
      shocked to see people different from his beliefs leading to lot of confusion and
      stress.
      Body language and greetings- The way emotions are expressed in the various
      cultures may differ, for example the face expressions and hand gestures may
      convey different meanings in different culture. The cross-cultural training should
      have components related to both general orientation and specific skill
      development (Harrison, 1994).       The component of general orientation here
      consists of self assessment (dealing with change, stress management and identifying
      attributes) and cultural awareness (general dimensions, national values and
      work place incidents). The specific development on the other hand consists of
      knowledge acquisition (area studies, language studies and host attitudes) and
      skills training (case studies, area simulation and behavior modeling). Hence the
      training should focus on providing trainee the knowledge about national cultures
      and attitudes in the host country in the first phase while in second phase the
      trainee should be made to go through a rigorous process of handling the
      situations in a simulated environment. This will help the trainee to acquire hands-
      on experience. The paper by Nicola (1993) suggests following issues for cross-
      cultural training:
      Feed back
      Getting beyond culturally determined stereotypes
      How to raise and deal with cultural stereotype
      How to counsel employees
      Coaching and team building
      Resolving conflicts (those including various ethnic groups at work place)
      Counseling so as to go beyond all kinds of stereotypes and perceptions.


After the internet revolution things have vastly changed for various organizations.
For example many firms use internet as a medium to coordinate between different
employees working in different locations as a team like one of the team members would be
in India, other one might be in Europe and third one in North America. The group
                                                                                            44
dynamics in these situations becomes very important; hence the employees must also
be trained at handling people from diverse cultures at the same time ensuring equal
treatment and opportunities for all. One of the most important factors that is often
forgotten while designing the training programs is the requirement of the employees,
the design of training program should be made keeping in mind the length of stay in the
host country, type of function he will have to perform,              degree of socialization
required by the employee and the personal characteristics of the employees
(extraversion, interpersonal skills     etc.).   Hence   cross-cultural   training      program
should     be   customized    for   each employee to certain extend.      It's not only the
employee who needs to be trained; the family of employee should also be trained on
certain issues like cultural differences. Many firms have started giving due
importance to the training of spouse because the socialization of expatriate and job
success to a large extent will depend upon socialization of his family.


The training methods:
The cross-cultural training evolved with usage of lecture method (originated from
university of Illinois- as referred by Bhawuk and Brislin, 2000). This development
was followed by usage of contrast American method which was named as this
method was used to train for contrasting cultural experiences. The scenarios and cultural
assimilators were later additions to the methods. The self reference criterion method
was developed from cultural analysis system developed in 1966. The first usage
of the cultural assimilators was on the American soldiers in 1972. The existence of
cultural general assimilator is relatively new with usage starting in 1986.                The
experiential and area simulation were developed in 70's.
The various cross-cultural training methods can be explained as follows (as described by
Bhawuk and Brislin, 2000):




o        Cultural assimilator: The cultural assimilator is a tool that consists of a number of
real life scenarios describing puzzling cross-cultural interactions and expectations.

                                                                                                  45
The scenarios here can be defined as critical incidents which describe interactions between
host and expatriates which involve misunderstanding related to cultural differences.




o      Contrast American method: This method involves demonstration of behaviors
that are completely opposed to what is seen in the current context of culture.This
was used by Stewart in America to train people going abroad hence was named
contrast American.


o      Self reference criterion (SRC): Unconscious reference to one's own cultural
values in communication with people who are from other cultures. This method
was developed by Lee (1966), who proposed 4 step procedure to overcome self
reference criteria. The first step involves defining any problem of situation in
terms of the expatriate's own culture, followed by definition in the terms of host culture.
The bias created by SRC is analyzed and removed in third stage which is followed by
solution of the simplified business problem.


o      Area simulation: The simulation is creating natural situation of interaction
with people from other culture. This can be achieved using some actors who will
interact with the trainee according to some predefined script.


o      Cultural self awareness model: The cultural awareness model includes usage
of video tapes with themes and role plays. If the trainee is able to understand how his
culture is different he would be able to accept the differences encountered in the real life
interactions in a better manner.




                                                                                               46
                             Repatriation
Typically, on completion of the foreign assignment, the multinational brings the expatriates
back to the home country, not all the international assignments end with a transfer home-
rather the expatriate is re-assigned to another international post




Re-entry into the home country presents new challenges as the repatriate (returning
person) copes with what has been terns re-entry shock, or reverse cultural shock. While
people frequently expect life in a new country to be different, they may be less prepaid for
homecoming to present problems of adjustment. As a consequence, it can be a traumatic
experience for some even more than what was encountered in the foreign location. From
the multinational’s perspective, repatriation is frequently considered to be final stage of the
expatriation process.




                                                                                                  47
The Repatriation Process
Repatriation process can be divided into four related phases:




   1) Preparation involves developing plans for the future and gathering information
       about the new position. The firm may provide a checklist of items to be considered
       before the return home (i.e Closure of Bank Account and setting bills).



   2) Physical Relocation refers to removing personal effects, breaking ties with
       colleagues and friends, and travelling to the next posting, usually the home country.
       Most of the multinational use removal firms or relocation consultants to handle the
       physical relocation, both for the movement out and the return home of the
       employee and family, and this may be formalized in their HR policies.



                                                                                               48
   3) Transition means settling into temporary accommodation where necessary, making
       arrangements for housing and schooling and carrying out other administrative
       tasks.


   4) Readjustment involves coping with reverse cultural shock and career demands.



Designing a Repatriation Programme
While there is no simple, quick solution, preparing the repatriate and family for re-entry
appears to have some value.     The potential for mismatch of expectations regarding the
future may be addressed as part pre-repatriation training before the return, and discussed
during re-entry counseling sessions( sometimes referred to as debriefing) between the
receiving organization in the home country and the repatriate. A list of topics covered in
formal repatriation programme is as follows:

       Preparing, physical relocation, and transition information ( What the company will
       help with)
       Financial and tax assistance (Including benefit and tax changes, loss of overseas
       allowance)
       Re-entry position and career path assistance
       Reverse cultural shock ( Including family disorientation )
       Workplace changes
       Stress management, communication-related training
       Establishing networking opportunities
       Help in forming new social contacts



Some companies assign the expatriate a mentor (also referred to as a company contact,
sponsor or godfather). The mentor is usually in a more senior position than the expatriate,
from the sending work unit, and knows the expatriate personally. The rationale behind
the use of a mentor is to alleviate the “out-of-sight, out-of-mind” feeling.   So that the
expatriate is more prepared for conditions faced upon re-entry.     A mentor should also
                                                                                              49
ensure that the expatriate is not forgotten when important decisions are made regarding
positions, promotions and so on.




                                                                                          50
                     Current Expatriate Issues
              Indian Companies lay off Expat Executives
As part of cutting costs in a tough economic situation, Indian companies have started
showing door to highly-paid expat executives. Most of the companies now seek people for
higher positions from inside the country itself as it would be less expensive compared to
hiring expats, reported The Economic Times.
K Sudarshan, Managing Director, executive search firm EMA Partners' India unit said,
"Many of the expatriate executives, who have been asked to leave, are subject experts.
Their value diminishes in a downturn as companies are no more expanding, and thus don't
need people to guide in a new venture."

Since last few months, some companies have replaced their expat executives by Indian
ones at the senior level. For instance, Aviva Life Insurance removed Bert Paterson and
appointed former Citibank executive TR Ramachandran as the CEO for its Indian operation.
Another Insurance firm Metlife replaced its CFO Nick Paket with an Indian hire. Aditya
Birla Retail is reportedly hiring an Indian executive from a beverage company to head its
supermarket chain, More, which was earlier led by Andrew Denby. Dabur Retail replaced
its three expats, including CEO Peter Baker with Indians.

Expats were in big demand during the boom period of 2003-07, as Indian companies
expanded rapidly and diversified into new sectors.

Most of these expatriates drew high salaries as compared to their Indian counterparts. "At
least in one case, an expat CEO who was heading a sunrise foray of an Indian company was
getting paid Rs 4 crore per annum, twice the amount that was being paid to his Indian
counterparts," said an executive search professional, who requested not to be named.



Source:

Economic Times

(28/01/2009)

                                                                                             51
  Indian MNCs face challenges in overseas staff postings

Indian-origin multinationals are facing various challenges while posting an employee
abroad including competitive salary packages, taxation and even spouse
dissatisfaction, says a survey. In one of the first surveys of homegrown companies
that are expanding globally, human resource consultancy firm Mercer has identified
the latest international assignment policies for managing a globally mobile group of
employees and the challenges faced by employers. "Some of the most common
challenges faced by employers of international assignees are those regarding
competitiveness of expatriate packages, issues with different tax structures and of
overall cost containment. "Companies of Indian origin find themselves challenged by
significant costs borne to offset international compensation inequity," said Rupam
Mishra, Mercer India's global mobility practice leader. The 'Expatriate Management
Survey-India' report found that less than half (44 per cent) of companies compensate
their international assignees for tax differentials. The survey also found that 44 per
cent of companies use the home country balance sheet approach to determine
expatriate pay. The approach is based on maintaining parity in the standard of living
across     the    international    assignee's    'home'     and     'host'    country.
"Organizations are cognizant that international assignments... which include family
relocation call for significant investments... (and) would like to ensure that their
investments deliver an acceptable return by carefully choosing only the best
people...," said Gangapriya Chakraverti, Mercer India's business leader for information
product solutions division.

Source:

Zee News




                                                                                          52
                            Telecom Sector Buzzing with Expats
The global slowdown may be forcing Indian companies to freeze hiring and send back expat
executives, but the telecom sector, which is adding 13-15 million users every month, has kept
 its headhunters in the roaming mode.
 Among the latest is Marten Pieters, who leaves Africa’s secondlargest mobile operator Celtel,
to take over Asim Ghosh’s mantle at Vodafone Essar. At least three more companies - Shyam
Telelink-Sistema , Unitech Wireless-Telenor and Swan Telecom-Etisalat will soon have foreign
nationals heading them. Vodafone Essar already has 10 expats in top positions, including its
CFO and COO. The country’s largest telco Bharti Airtel recently poached T-Mobile’s CTO
Joachim Horn to help expand its global footprint and interface with strategic partners. Bharti’s
enterprise services division, which accounts for about 20% of its revenues, is headed by
American David Nishball, the former head of France Telecom’s Asia Pacific operations. Just two
years ago, telcos were not allowed to have expat CEOs. Even today, they need special clearance
from the home ministry for foreigners to take up key positions. Yet, there’s a rush. The prime
reason is that most companies that bagged telecom licences last year have no experience in the
industry.

Source:

Economic Times

(26/03/09)




                                                                                                   53
                           Conclusion
Technology and business pressures have led to more and more managers needing to lead
teams that work off site, in a different state, or are constantly in the field. Though a
manager can no longer simply walk down the hall to talk to team members, the employee's
need for management is no less real. In fact, good management is even more important in
remote environments than in traditional cubicles, conference rooms, and break rooms.

A distributed workforce requires different management techniques and skills to keep
motivated, productive, on track, and trained. Although many management techniques and
skills parallel those used in managing a centrally based workforce, there are some
additional techniques a manager needs to be successful in the remote environment like
Better Communication, Establishing Respect, Training, Discipline and managing conflicts.

Therefore study of Expatriate management becomes extremely important in today’s
business world.




                                                                                           54

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:33
posted:4/7/2012
language:English
pages:54