Expatriates-to Have or Not to Have?

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  • Topic: Culture shock, Expatriate, Management
  • Pages : 6 (2297 words )
  • Download(s) : 335
  • Published : September 21, 2008
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This essay discusses about expatriates and their pros and cons. It also is an attempt to ascertain whether MNCs really have the need for them. We start with the definition of expatriates and why they are needed. Furthermore, we have described as to why MNCs use expatriates for their international assignments in spite of the exorbitant costs involved. The advantages and disadvantages of expatriation and repatriation in today’s global world have also been pinpointed. We have also discussed whether MNCs should continue using expatriates in their international assignments. In today’s global world, most big companies have their offices or business in many different countries. This results in more and more foreign assignments for the workforce and new challenges. Thus, there is a need for expatriation. International Human Resource Management (IHRM) has gained utmost importance in recent years due to the hiring of a multi-cultural staff. Domestic HRM wouldn’t be effective because expatriation involves different cultures and procedures altogether. MNCs have resorted to expatriates and have realised their importance in organisations. But, there are two sides to a coin. MNCs also have to deal with the problems that come along with the advantages. So, what do we mean by the term ‘expatriate’? An expatriate is an employee who has been assigned an international assignment and has been working and living in a foreign country. (Dowling et al. 2008) A typical successful expatriate will have traits such as empathy respect, interest in local culture, tolerance, flexibility, initiative, open-mindedness, sociability and positive self-image. (Grove & Hallowell 1998) There is a growing acknowledgment that the success of MNCs is determined by the recruitment of specialised managers. (Stahl & Bjorkman 2006) Expatriation is a common way of getting specialised employees in today’s world. The expatriate has many roles to play in the MNC. If the MNC follows an Ethnocentric approach, there is lack of qualified Host Country Nationals (HCNs). Parent Country Nationals (PCNs) occupy all key positions in the foreign operation, which means that the subsidiary is highly dependent on the headquarters' decisions. Some drawbacks from this approach could be limited promotion opportunities for HCNs, income gaps between PCNs and HCNs, and that PCNs cannot be involved in local matters. In a Polycentric approach, HCNs occupy positions in the foreign subsidiary. Some transfers of HCNs to headquarters also take place. The approach eliminates the language barriers, and typically HCNs are less expensive. Some drawbacks from this approach could be communication problems between headquarter and subsidiary and limited career opportunities for HCNs as they cannot be promoted to headquarter. In a Geocentric approach, the best people are selected for key positions regardless of their nationality. Nationality is not taken into account and a worldwide integration of employees takes place. In this approach an international team of managers is developed. Some drawbacks from this approach may be related to situations, where host governments prefer employment of locals because of i.e. labour issues. In a Regiocentric approach, a company's international business is divided into international geographic regions (for example within a continent). The staff can only transfer within these regions. Therefore, according to the staffing approach of the MNC, the expatriate’s roles and opportunities are determined. (Dowling et al. 2008) An expatriate is a very huge investment and requires to be chosen very carefully. An expatriate assignment cost is estimated to be in the range from $300,000 to $1 million annually. (Vance & Paik 2006) IHRM needs to conduct selection, preparation, management, and repatriation of their personnel. (Anderson 2005) There are many advantages of using expatriates despite of the huge investment costs to employ them. So, why do MNCs select expatriates for...
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