What are the key aspects of effective performance management of expatriates? (Using examples). (2500-3000 words) Introduction Living in this modern era of globalization, expatriation plays a significant and Important role as an international staffing option for most Multi-Notational Enterprises (MEN) and in the development of International Human Resource Management (IHRAM). Effective performance management of expatriates is essential to ensure successful International assignments as failures would be extremely costly to the organization and the organization will lose competitive advantage In the global arrest.
To ensure effective performance management, a few key aspects must be taken Into consideration. This paper will explore the key aspects affecting performance management of expatriates. Performance Management performance management Is a process to enable Mines to evaluate and Improve Individual, subsidiary and corporate performance continuously against pre-set goals and targets.
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The five key aspects affecting the effectiveness of performance management are Cultural adjustment (self and family Host environment, Headquarters’ support, Task and Compensation package. This paper will focus on Cultural adjustment (self and family), Headquarters’ support and Compensation package. Cultural Adjustment (self and family) When moving an expatriate to a foreign country, it is necessary for expatriates to be given pre-departure training so as to ensure that cultural shock will be minimized when they move to the host country.
Time taken for themselves and their family to adjust to the foreign environment can also be significantly reduced if they are cross- culturally prepared and this will aid the company in reaping greater benefits as the horror the time taken for the expatriate to adjust to the host environment the faster he/she will be able to work productively (Fenwick, 2005). The adjustment process for the expatriate and his/her family can be projected by a U-curve (Figure 1).
Figure 1 (Black & Maidenhead, 1991) adjustment will be the “honeymoon” period, where the new and unique culture of the host country will be enjoyed by the expatriate and he/she will enjoy being treated with great respect and graciousness as a very important person. For instance, when the individual arrives at the host country for the first time, he/she may be presented tit flowers and have dinner treats at fancy restaurants. This phrase usually lasts from a few days till six months depending on different circumstances. Then the curve dips down to the second phrase; Culture shock.
Expatriates may experience culture shock due to stress as a result of feeling obliged to make many adjustments; a sense of loss in regard to friends, status or possessions; rejection by people of the host country; confusion in self- identity, roles and expectations; surprise, anxiety and even disgust over cultural differences; and feeling incapable of coping with the new environment. For example, when an American expatriate is posted to Japan for assignment, he/she may find it uncomfortable to dine with chopsticks and consume raw fish or to greet with a bow and not a handshake.
There are a few ways expatriate react to this issue, to remain in culture shock phase and stay hostile towards the host nationals throughout the time of the assignment, never learn to cope with the situation return home earlier, choose to only socialize with other expatriates until their departure or to stay and learn to adjust which leads to the third phrase; adjustment phrase. In this phrase, expatriates learns the local language, norms in behavior and social patterns typical for the host culture.
However, the expatriate is not completely well adjusted to the foreign cultures at this stage, there are still residual anxiety and fear. Only at the fourth and final stage, the “Mastery” phrase. At this phrase, the expatriate is well adjusted and instead of accepting the local food, drinks, habits and customs, the expatriate may actually start to enjoy them. When the assignment is finished, the expatriate may miss the culture and the people so much that it will be a difficult time o readjust back to their home country (H;never and Г?Stendhal, 2009).
This is commonly known as reverse cultural shock and companies must put in place repatriation programs to aid the assignee in adjusting back to the home culture. Failure to recognize the issues of cultural adjustments will result in the expatriate to stay in the “culture shock” phase and cause early termination of assignment, or low performance from the expatriate due to low interactions or cooperation between the individual and the host country workers, or psychological discomfort arising from adaptation issues and yield minimal results from the assignment.
All these causes will bring about heavy losses to the company and can be prevented by providing proper and adequate support by the headquarters to ease the expatriate in adaptation of the local culture. Headquarters support and its importance will be elaborated on the next page. To solve the issues of cultural shocks, and minimize the impact it brings upon the expatriate, it is important that the parent company provides adequate support for the expatriate and his/her family. There are three essential steps to minimize the kiss of assignment failure and premature return of the expatriate.
The first step will be pre-departure training. It provides essential knowledge that is required by the expatriate right after arrival at host country. These essential knowledge includes business etiquette of the host country, cultural diaphanous, language training and simulated ambiguous situation that may be faced by the expatriate during the assignment and how should they handle it. This step is also essential to building up the confidence and satisfaction level of the expatriate.
For example, upon arriving at he host country, if the expatriate is able to order food in the local language and to converse with the locals fluently, it will bring about a sense of accomplishment and satisfaction unknown to someone living and working in their native country. The next step will be the pre-departure visit of the host country. It is to provide the expatriate with first-hand information about the host country culture and helps to reduce uncertainties attached with foreign environment and reduce culture shock.
It is recommended that the family of the expatriate tag along also so as to be more repaired and to develop a more realistic expectation of the foreign location. For example, the company Ericson has a pre-departure briefing for Swedish expatriates. It is a full day of lectures conveying essential information about policies, practices, insurance, security, health issues and an overview of the cultural adaptations. During coffee break, the expatriates also get the chance to have chats with the Area Manager (H;never and Г?Stendhal, 2009).
This training is essential as it will aid the individual and their family with solving problems they face during their assignment. It is also helpful to minimize culture shock and cross-cultural adjustments (dress and Saved et al. , 2011). Companies must also know the importance of providing the equal amount of support for the expatriates family too, because lack of family readiness will affect the pool of potential expatriates. Family support is a critical factor in determining if the expatriate will accept the assignment. Early termination of assignment due to family readjustment issues is costly for both the expatriate and the company.
Therefore, the human resource managers in charge must investigate problems such s spousal adjustment and schooling issues with the expatriate and family so as to help them manage the expectations and when the issues surface, they will be more prepared to solve it (Wilson and Dalton, 1998). Therefore, supports that the company should provide when the expatriate and his/her family is there includes tax issue, schooling of children, opening local bank account and other general counseling regarding issues of the host country (Maidenhead & Wiley, 1994).
Failures in giving essential support from the headquarters can bring about unhappiness and dissatisfaction to the expatriates and their families. For example, if there is inadequateness from the headquarters to aid the spouse into fitting into the local community or finding a Job or the children to be provided with a proper education, expatriates may not even accept the assignment or will terminate their assignments earlier due to the emotional distress and discomforts and possible complains coming from their family members (Wilson and Dalton, 1998).
So to give additional incentives dissatisfaction during the assignment, companies must draft out a compensation package designed to fit the requirements of the expatriates and their assignments. Compensation Package There are four requirements for organizations to create the right compensation program. The requirements are, Optimize its reward spend; Ensure that pay is commensurate with performance and drives the right results; Make sure rewards programs are above reproach; Use employee mobility effectively to meet business needs (Mercer. Mom, 2014). It is important for the company to design a compensation package that is fair to the expatriate and at the same time cost effective for the organization achieving the mobility and staffing goals. There are three approaches seed commonly to determine global compensation. These three approaches are the home-based or also known as balance sheet approach, the host based approach and the global market approach. The home-based or balance sheet approach is the most popular approach among the three.
It provides a compensation package that equalizes cosec differences between the international assignment and the same assignment in the expatriates home country. It is designed to protect the individual from cost differences between his/her parent and host countries. In the host based approach, the assignee transfers to host country payroll and receives incentives, pay and other compensation based on the host country’s practices and regulations. The payroll usually delivers base pay and incentive pay and some other allowances.
This approach may be a cost effective option versus the traditional home-based approach. However, there are downsides to this approach. There may be difficulties in repatriating assignees because the expatriates may be used to the local host salary structure and they may refuse to move to another country or even back home. The last approach is the global market approach. In this approach, an international assignment needs to be continuous though it may be for different length and country of assignment.
All the expatriates are on the same compensation scale regardless of home country and main benefits are provided (Too and Denies, 2003). While choosing which approach to use, the company must take careful measures and analyses each detail thoroughly before choosing the most suitable compensation approach. Factors such as laws, living costs, tax policies and currency fluctuations must be considered in establishing the compensation package. Failures in providing a suitable insemination package will greatly affect the decision as to whether the expatriate will accept the assignment.
This is because usually during a long term assignment, the expatriate, and most of the time, their family will leave their comfort zone in their home country and shift their lives to a foreign place that is full of uncertainties for them. Only when a compensation package seems feasible, then the assignee will be more likely to accept the assignment and move to the host country, at the same time ensuring that they themselves and their family will be given what is worth for leaving heir home country for the length of the assignment.
Also when they are ready to return home, the company will provide them with the support they need either financially, emotionally or mentally. This will be covered in repatriation and its issues in the next section. Repatriation gets treated fairly and be guaranteed a position when they come back. There are a few reasons as to why it is crucial for the organization to ensure the above. The first reason is talent ordainment.
If the expatriate returns home and is not guaranteed back a position in the company or gets unfair treatment, the other future expatriates ill have second thoughts about accepting the assignment and the current expatriate may quit so the company will lose talents. The second reason is that when the company ignores the experience of expatriates when they come back they actually lose valuable competitive business insights from that particular host country, the company will also lose strategic information about globalization.
Also, it is essential for the company to provide support for the expatriate and family when they move back home as they may find it difficult to adjust back to the local culture after pending too much time abroad, this is also known as reverse culture shock. They have to restart their lives back home as they gave up most of their assets when they shifted abroad such as cars and their houses (Wilson and Dalton, 1998). For example, AT, an American telecommunications company has a three step repatriation program that ensures that their expatriates and families will not feel the impact of reverse culture shock and ease them in moving back home.
The first part of the program is conducted even before the expatriate moves to the host country, this part of the program is called safety net. Expatriates and their families meets a psychologist specialized in repatriation issues. The psychologist guide them on problems and issues that they may meet during expatriation, for example, spouses searching for new Jobs or children fitting into new schools. During the length of the assignment, the expatriates and their families can contact the psychologist anytime when in need. The second part of the program is conducted during their stay.
AT offers a mentor programmer that aids expatriates in connecting with their colleagues and company. They also organize home visits to the office for the expatriates periodically. The last phrase of the program happens six months before the end of the assignment. It is called the “Journeying home” program. In the program, the psychologist and human resource representative travels over to pay a visit to the expatriate and their families and help the expatriate to update his/her resume, plans career advancements and arrange housing, schools and other logistics to aid the expatriates and their families in moving back home.
After the whole program, AT also conducts a “welcome home” seminar and provides bonuses for expatriates who stay put in the company for more than six months after their return. It is found that with such repatriation programs put in place, only 5% of expatriates resigned within a year in the company as compared to 22% of those companies who do not have such programs (Sims, 2007). Therefore, this example shows the importance of having a repatriation program in the company.
From this essay, we can conclude that both the organization and assignee plays an equally important part in ensuring the success of the international assignment. The company must take careful steps and measures to aid the expatriate in achieving optimal performance during the time of the assignment as failures or early orientation of assignments is usually costly to the company in terms of both time and financial. The expatriate himself/herself must also gain maximum knowledge from the various training that is provided by the company so that he/she will not feel the immense impact of culture shock.
The expatriates family also plays an important factor in deciding the results of the international assignment and how the expatriate performs. If the family of the expatriate finds it hard to fit in, the expatriate may experience tremendous stress and pressure from the family and yield minimal or zero results from the assignment. Therefore, it is essential for the company to take the expatriates family member’s welfare into the equal level of importance as that of the expatriate.
Also, it is essential for the company to give the equal amount of support for repatriation as expatriation to retain talent for the company and protect the well-being of their employees. To sum this up, the expatriate, their family and the company must put in the equal amount of effort in ensuring the success of the international assignment so to reap maximum competitive, globalization and other benefits from the assignment. (word count : 2679)