Effects on Expatriate Failure in MNC

 1.1 Expatriate Failure

When the Multi National Corporation enter the international assignments, they generally focus on knowledge creation and global leadership development, assign people with technical skills and cross- cultural abilities to the key positions in foreign country, provide career guide about repatriation process. To be success in globally, having a competent workforce is essential. MNCs have to bear huge additional cost for international assignments. Sometimes it is over 3-4 times of local employees in the same designation in parent country because it has to cover benefits, cost of living as well as cost of adjustments. But unfortunately most of MNCs don’t get expected return due to either poor selection process or ineffective expatriate management policies. (Dowling, Festing and Engle, 2013; Black and Gregersen, 1999). Most of selections of expats, training and supports are done by HR managers who have poor understanding about global assignments and procedures. Therefore selection process can be poor and ineffective one. (Black and Gregersen, 1999)

Earlier it was said that expatriate failure as return of home without completing assignment time period. Although expatriate was ineffective, poorly adjusted to the new country and culture or inability in fulfilling his responsibilities if he was not recalled it was not considered as the Expatriate failure. (Dowling, Festing and Engle, 2013). Recent literature Expatriate failure is broadly defined as the premature return, poor performance and adjustment problems. According to Naumann (1992) it is the expatriate turnover and transfer. Whatever the definition for expat failure, it is the inability to perform as per organizational aspects. (Harzing and Claus, 2004) This kind of situation lead the organization to diminish its performance and negative effects for a long time period.

The US research had found that 10-20% expats leave the MNC due to job dissatisfaction or poor adjustment to the new country and culture, one third leave due to poor performance and one forth leave the organization after completing assignment period. Leaving the organization after international assignment to joint to the competitor, for a better employment is the most intolerant reason for a business organization because leaving person is one of the best in MNC and person who has great knowledge about organization’s strategies and policies. Because this may damage or disfunction the organization it is considered as organizational failure. (Normann, 1992 cited in Harzing and Claus, 2004) The premature returns can be due to employee is assigned to another position within the organization.  These reasons increase expatriate turnover compared to the inpatriate turnover. (Black and Gregersen, 1999).

 Expatriate failure can cost to the MNCs directly or indirectly. The airfares, re-locational expenses, salary and training  considered as direct cost and loss of market share, difficulties with host government officials and key clients, morale and productivity losses and requirments to replace key positions with HCN can be considered as indirect costs involved with expatriate failure. (Dowling, Festing and Engle, 2013).

 

1.2 Employer Responsibility in Expatriate failures:

The MNCs send their expatriates to fill the business need, fight with competitor or business expansion. Offering international assignments is a biased procedure towards favored employees in most organization. The employer has a huge responsibility to select expats with a long- term vision and sending process should not just the solution for urgently derived business problem. Selected expatriates should have cultural literate and flexibility, communication skills, sociability skills, collaborative negotiation skills.  (Black and Gregersen, 1999).

Most of executives in parent country overestimate themselves ignoring negotiation and marketing strategies under different cultures. They believe providing expensive cross- cultural training and high financial packages and aids for settlement in another country effect in every expatriate in same way. But adjusting to different culture and country is challenging task. Obviously showing high performance with completely different team is more challenging. Those expatriates need empathetical concern more than others. Introducing pre-defined repatriation procedures and time period make them comfortable. Re-adjusting to the mother country’s culture after staying in outside of country for a long time period is also required special attention. Ignoring these facts may cause for losing important employee to the MNC. (Black and Gregersen, 1999)

                                                (Latiff, 2021)

The MNCs who have strategy to capture global opportunities have compiled winning track record in managing expatriates. Those organizations have reported high degree of job satisfaction, high performance level and low expats turnover ratio. ’GE’ medical system, Google, IBM, Procter and Gamble McDonalds’, Intel are some of the globally successful MNCs. The MNCs can win the international markets ignoring MNCs’ size or type of business industry following quality selection process an effective global management policy. (Black and Gregersen, 1999; Dowling, Festing and Engle, 2013).

 

 

Reference

Black, S. and Gregersen, H. (1999) The right way to manage expats. Harvard Business Review,99(3)

Dowling, P.J., Festing, M., Engle, A.D. (2013) International human resource management. Cengage learning EMEA, India

Harzing, A.W. and Claus, C. (2004) Expatriate failure: time to abandon the concept. Career development international ,9(7), pp 616-626 [online] available at https://www.academia.edu/28903582/Expatriate_failure_time_to_abandon_the_concept accessed on 22nd April 2022

Latiff, F.A.N.,(2021) Expatriate failure [online video] available at https://www.youtube.com/watch?v=lsb4_ABISEA. [Accessed on 22nd April 2022]