Real World of Management
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The Real World of Management
Introduction
the competitiveness of the business environment has increased. The number of multinational
companies (MNCs) coming into existence is higher than ever before. These factors have
changed the way businesses are managed as with internationalisation, business is being
conducted with different countries with distinguished socio-cultural, economic and political
environment and adapting to different institutional and cultural factors in the host country. In the
global context the success factors of organisations lie in their ability to strategically adapt
resources to the cross cultural environment (Ling and Jaw, 2006). Managing human resources
Starkey, 2000) to ensure that effective balance is maintained between strategic and economic
aspects and the human resources practices (Taylor et al., 1996). Expatriation is one such crucial
human resources practice important for meeting the strategic goals of an organisation (Novicevic
and Harvey, 2004). The report starts with discussing the increasing importance of expatriates in
the cross cultural business environment. This analysis will focus on the aspects of evaluating the
success of expatriate assignments and effective management practices that can improve
expatriate management.
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A key reason for recruiting expatriates by the MNCs is growing complexity of external
environmental factors influencing the business and the need to have a higher preparedness of
managers to operate in the global level cross cultural environment. A study by MNC identified
companies and their bottom line. So, it is imperative to recruit expatriate with a better
The article “The great expatriate hiring boom” from Fortune written in 2013 notes that
though the overall recruitment by US firms has been slow in the recent years, recruitment of
managers for emerging economies like China has been on focus. A survey conducted by Ernst &
Young in 2011 noted that the leadership of 42% of companies surveyed recognised expatriate
recruitment as a key challenge. Another survey by global staffing company ManPower revealed
that in India, 67 percent of the managers faced difficulties in expatriate recruitment. Global
challenge as competitors in the host country often poach them for higher salaries. To mitigate
but without much success (Alsever, 2013). On the contrary, in opinion of Mark Murphy, CEO of
Atlanta research firm identified that often local managers with a better understanding of national
cultures and markets play a more positive role in long term sustainability of businesses. The
technology company iGate adapted this strategy and identified local employees from within the
company and focused on grooming then to enable them take up top management level positions
in the company’s Indian operations. Similarly, Control Risks firm after losing top management
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employees to competitors in China, the company has adopted a more strategic approach to retain
the human resources, the most important asset of the company (Alsever, 2013).
Yves Doz from INSEAD Emeritus noted that multicultural managers at critical positions
in an organisation can contribute positively to a company’s success in the global markets. But it
requires the company to invest time and efforts to develop and deploy multicultural managers
appropriately. In the article titled “How L’Oreal masters multiculturalism” (2013) the authors
identified five roles that the multicultural managers play in better was as compared to host
country local managers and helped L’Oreal to succeed in its international operations. These roles
include being able to differentiate between home country and host country cultures and develop a
global brand with due consideration to the local sensibilities, being able to interpret complex
knowledge as for marketing cosmetics knowledge to be used is tacit and culture dependent,
being able to manage cross cultural conflicts better to ensure effective global teams, being able to
readily internalize the new recruits from diverse cultural background and develop strong team
identity, and communicating effectively with the global culturally diverse teams and the senior
management (Hong and Doz, 2013). Researcher Maddux, et.al. (2010) noted that cross cultural
cognitive integration induces a high level of creativity for innovations and adaptable leadership
upbringing i.e. being exposed to different cultures is not sufficient; it is important to perform
“rotational assignments” in MNCs to be able to develop multicultural skills (Doz, 2013). In the
research titled “Once a Frenchman, always a Frenchman”, author André Laurent (1980), based
on the research on a sample of executives from MNCs recognised that experienced executives
reflect being “global” managers, but such managers experience a strong conflict between their
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social identity (“global” managers) and inner personal identity (“local” national culture to which
the executive belongs) as their cross cultural learning process is influenced by their identification
of culture of origin. In this context, Carlos Ghosn, CEO of Nissan, in his speech in 2012
accepted that being a multinational executive with a cultural combination of being Lebanese
(often at wars due to religious conflicts) and being Brazilian (a peaceful culture with high
internal multiculturalism) has been a key determinant in his success as the CEO of Nissan (Doz,
2013).
Researchers have often found that it is difficult to measure the success of expatriate
performance because of several external influences (Bussin, 2015). One of the most common
approaches to measure expatriate failure has been premature return from assignment. Harzing
(1995) in her studies noted that past literature lacked empirical evidence of large scale cross
cultural study on the subject. The researcher has historically reflected that the expatriate failure
rates in the US, companies measured based on premature return from assignment is much higher
than that of the Japanese and European companies; though more recent studies by Peterson et al.
(2000) reflect a lower failure rate in US companies. But premature return fails to include the
expatriates who return midway through their assignments and those who completed the tenure of
the assignment but failed to produce the desired outcome. Such failures may lead to loss of
business relation of the company, poor customer experience, and disrupted performance (Zeira
and Banai, 1984). Some of the impacts of a failed expatriate assignment on the expatriates
personally are strain, negative career impact, increased stress level, and conflicts with family
members (Hechanova, et.al., 2003). To overcome the issue in measuring success of expatriate
assignments, Caligiuri and Tung (1999) suggested the use of a three-faceted construct: (1)
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premature termination of the assignment, (2) cross-cultural adjustment, and (3) actual job
performance on the assignment. The third point of succeeding in the job, performance is the most
obvious measure of appraising performance of employees in any job role. With the help of the
portfolio, the other two aspects (typical solely of expatriate assignments) are discussed below.
Premature termination of the assignment is one of the key measures to evaluate the
success of expatriates. Research by Black and Gregersen (1999) identifies that about 80 percent
of the companies in the mid and large segment send employees and managers to host location
subsidiaries and the number of employees these companies plan to send abroad is only stated to
increase. A lot of cost is involved when the companies plan to send the expatriates. The
compensation package of expatriates is usually much higher than what they would have earned
in a same position held in their home country. So, companies often view expenses on expatriates
as an investment. But in reality, when receive poor returns on such investments. Black and
Gregersen (1999) in their research studied US, UK and Japanese companies based on a sample
comprising of expatriates and their managers in the home counties from 750 companies. The
research considered the evaluated the success of an expatriate assignment and its contribution to
the organisation and the individual employee and what happened after repatriation. The
outcomes of the research found that about 20 percent of the expatiates returned early due to job
dissatisfaction and failing to adjust in the host country. About 33 percent of the expatriates who
stayed in the host country through their complete tenure of the assignment could live up to the
expectations of the company. Also, the heightened turnover rate was found among expatriates
Cross-cultural adjustment:
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Cross cultural adjustment refers to the degree of the psychological comfort that expats
experience in a different culture in the host country (Gregersen and Black, 1990). Existing
literatures identify three aspects related to adjustment. These are adjusting to the general
environment i.e. the living condition like climate, housing, food, healthcare, children’s
education, etc. in the host country, adjustment to the host country nationals and engage in
effective interaction with them, and adjusting to work environment (Black and Stephens, 1989).
Researchers have also indicated that a cross cultural adjustment is the primary outcome in the
expatriate assignment with will, in turn, be instrumental in the secondary outcomes important for
secondary outcomes. Being unable to adjust may lead to consequences in the personal as well as
An article by Armin Bruck, MD & CEO, Siemens India, published in Forbes in 2013 can
be discussed in this context. The 50 years old PhD in operations research from the University of
Mannheim shifted to India permanently after a number of expatriate assignments to India over
the past 15 years. His key insights on mistakes by people of home country about the cross
cultural aspects in India are considering India to be a larger and a cheaper adaptation of their
home market, failure to capitalise on “frugal innovation” that has the potential to improve cost
effectiveness of the company and failing to understand that India not only produces a number of
engineers as compared to several developed countries but also produces engineers who are more
ambitious and creative. He recognises that there has been a paradigm shift in India in terms of
business environment, internationalisation and entrepreneurship and this overturns the cross
cultural beliefs that people of developed countries have about Indian culture and food. He notes
that due to lack of understanding of the environment in India, several expatriates from
developing countries opt for assignments in other countries but not India. According to him,
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when a person visits India for the first time, he might note the negative aspects like
infrastructural issues, environmental issues etc. But once an expatriate comes to the location on
and managing a dynamic country like India, considering the business environment and the
cultural environment, require active involvement of expatriates. He also identified that language
plays an important role in effectively adjusting to the cross cultural environment and being
successful in a long term expatriate assignment as in India interpersonal relationships are valued
even in a business context and being able to speak the local language helps people perceive that
the expatriate has higher commitment level to the business in the host country. Moreover, India
being a collective society, unlike the western countries, expatriates need to be open to accept
different cultural facets, cultural norms and practices which are strikingly different from that in
The above example of the article, though reflecting that adjustment to cross cultural
aspects is a result of an expatriate’s perspective and ability to adjust to the cultural environment,
a news article in Dutch Daily News (2011) reflected on the role that national culture of the
countries plays in facilitating cross cultural adjustment by expatiates. The article noted that
Forbes magazine rated Canada to be to be the most expatriate friendly country while Netherlands
to be the least friendly. According to HSBC Bank International’s Expat Explorer survey, the top
four expat friendly countries are Canada, Bermuda, South Africa and US because of the local
language being English and the ease of communicating with local people and internalise with the
culture. Other countries with friendly national culture are Australia, Germany, Malaysia, and UK
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In most cases the failure of the expatriates can be related to the failure of developing
effective strategies and practices for managing expatriates. The HR department is often assigned
the job of selecting, training and supporting expatriates. But ironically, the HR managers have
very little practical experience of being an expatriate to understand the real life issues that
expatriates may face and their implications as less than 10 percent of the HR managers from the
sample studied by Stewart Black and Hal Gregersen (1999) had taken up overseas assignments.
As a result, they fail to contribute to expatriate management at a strategic level and perform only
related administrative jobs. They fail to realise that the expats after they return from their
assignments need support to adjust to the jobs in the home country (MacDonald and Arthur,
2005). At the same time, there are companies that have been successful in expatriate
management and could retain the expatriates even years after their repatriation. Some of the
common practices of such companies are increased focus on knowledge transfer, and developing
global leadership skills, considering fit of technical skills and cross cultural abilities when
identifying employees for overseas assignments and designing an effective deliberate repatriation
process to support expats manage the personal and professional upheaval during repatriation and
enabling them to be in the correct career path and put the overseas experience at work (Caligiuri
and Lazarova, 2001). Based on this understanding, the following section attempts to outline
effective expatriate management strategies by supporting them with real life examples.
perspective and should go beyond addressing a short term business problem. Often companies
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are found to place expatriates in posh foreign locations like Paris and London as rewards to
privileged employees as rewards. But it is important to note that such foreign assignments have
very addition to the business of the company. Instead placement of expatriates to crucial
developing economies like Brazil, India or China makes more business sense; though such
assignments for long have been considered to be assigned to the unfavourable employees who
are dumped at these locations (Black and Gregersen, 1999). It is important that expatriates strive
to overcome pressing issues in the foreign location and ensure success of the foreign subsidiaries
A case in point is Nokia, one of the largest mobile phone manufacturers globally, which
has effectively gained knowledge through foreign assignments of expatriates. The company has
manufacturing facilities across the US, Europe and Asian countries where they conduct research
and development for new product development (Official website of Nokia, n.d.). These facilities
employ engineers from across the globe that work together with the expatriates and generate
In lines with the perspective of Bruck (2013), Jack Welch, CEO of GE identifies that in a
truly globalised world, it is important that leaders develop a global perspective by staying at
foreign locations for extended periods and not by staying at the company headquarters and
making short visits to the foreign locations (Rao, 2014). For improved performance of the
expatriates, the mental maps and assumptions of the people about different foreign locations
expatriate assignment is Stephen Burke, Vice President, posting at EuroDisney helped the
company to revive the theme park by implementing the knowledge about French culture gained
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by him. This helped the company make necessary changes and register profits at EuroDisney
(later renamed as Disneyland Paris) for the first time (Stewart, 2008).
It is of significance that the expatriates are clearly explained about the job roles and
objectives of their foreign assignments (Joerres, 2011). This will help them work in the correct
direction and ensure that the company gains from such expatriate assignment. Companies with
international companies are expected to face issues and challenges from time to time. To resolve
such problems the focus of such companies should not be to send expatriates to address the
immediate problems but to ensure a sustainable long term solution for the issue (Caligiuri and
Colakoglu, 2007).
Often managers are found to ensure technical fitment of the employees with the
expatriate assignment, but fail to evaluate the abilities of the employees to adapt to new
environment and the gauge their cultural literacy. A report by Ghemawat (2012) published in
McKinsey Quarterly emphasises the issue of lack of global-leadership capacity as a major aspect
that the companies need to evaluate in an employee at this may lead to failure of expatriate
assignment. Some of the aspects that the companies need to evaluate in employees before
selecting them in the talent pool for overseas assignments include enthusiastic and extrovert in
conversation who are not shy to communicate in their fractured local language, broad based
socialisation skills so that expatriates do not remain confined to their small group of fellow
expatriates (Johnson, et.al., 2006), cultural flexibility to be able to adapt to local food habits like
dal and chapatis in India or local jai alai in Brazil instead of sticking on to McDonald’s for meal
options, cosmopolitan orientation that allows employees to be open to diversity and respect other
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people’s culture, and collective approach to management to avoid potential conflicts (Gregersen
At Korean electronic goods company, LG, uses a formal method of evaluating employees
for foreign assignments by asking them to fill a 100 question questionnaire that will assess the
cross-cultural skills of the employees and their readiness to take up foreign assignments. Based
on the analysis of the questionnaire, the managers discuss with the employees and develop
training programs to develop skills needed for successful expatriate assignment Atkinson, et.al.,
2010). Colgate-Palmolive, earning more than 20 percent of its profits outside the home country,
adopts a different strategy to evaluate the employees. The company recruits employees at entry
level marketing positions from universities based on their ability to handle cross-cultural
situations evaluated based on the pre-set parameters of the company. They try to identify
candidates who had exposure to foreign markets earlier and capitalize on the previous employer
investments on the candidate. On recruitment, they are sent on a series of training with short term
stints in the foreign location and when they gain adequate knowledge, they are assigned long
knowledge put to good use, 2003). Thus, through the process of the companies try to strike a
balance between costs incurred on expatriates and their success and ensure high return on
In another article published in McKinsey Quarterly by Joerres (2011) notes that reverse
expatriation can help companies ensure right employees are placed in the foreign assignments.
Reverse expatriates, local employees at the foreign subsidiary locations, spend a predefined span
of time in the company’s other established operations to help the expatriates gain insight into the
functions and operations of the other units. Based on the learning, they are expected to develop a
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plan to implement some knowledge gained in this way to the host country operations. When
effectively implemented, this strategy can ensure increased competitiveness of the company.
Conclusion
In summary, the paper identified the growing importance of cross cultural employees in a
business environment. The aspects of premature termination of the assignment and cross-cultural
Following this, identifying right reasons for expatriate assignments and assigning the right
employees to expatriate assignments are discussed as the key ways of effective expatriate
management. Taking up an assignment at a foreign location has always fascinated me. So, under
the broad topic of cross cultural management, I chose to work on the aspect of expatriate
management. The portfolio development and preparation of the critical evaluation report allowed
me to develop an understanding of how the concept of expatriate management has been similar
or different to the existing literature on the subject and how the concepts are applied by different
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Do What They Do: How Multicultural Learning Experiences Facilitate Creativity, Personality
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http://www4.ncsu.edu/~jlnietfe/Creativity_&_Critical_Thinking_Articles_files/Maddux,
%20Adam,%20%26%20Galinsky%20(2010).pdf Date accessed: 25 April 2015
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