Advantages and Disadvantages of Using Expatriates

2nd December 2021 0 By indiafreenotes

Companies appoint the expatriate as he is likely to have tacit knowledge of global operations and help the local employees to identify and meet the company’s objectives. They are the means of applying the strategic control over the subsidiary.

Expatriate helps in improving the business performance in the host country. They help in breakdown the barrier between the parent company and subsidiaries. They are helpful in reducing risks, technical problems. Moreover, they are very helpful in developing good relation with the suppliers. Expatriates are not only used for coordination but also for the knowledge transfer, improving business relation to dominate the international market.

Since, headquarter has at least one person in the subsidiary branch who thinks, behave & follow the culture in the similar manner, that of home company. This helps headquarter to develop better relation with the employees of the host country and also help them to understand their needs. This is helpful to provide security to the employee. Working with an expatriate, can be a motivational factor for the local employees.

Management style. Expatriate help the subsidiary to follow the same management style with that of Home Company. They will make the local employee to follow the same culture.

Control and Coordinate. Posting an expatriate in the subsidiary, help the MNEs and gives them the opportunity to control and coordinate the new subsidiary. Since, the host company has may have the people with different attitude and behaviour with that to home company.

Better recruitment chances: If you have just started your business in a relatively unknown or small job market abroad, you may find it difficult to recruit the right candidate within your geographical area. Although there are many ways to look for local candidates (social media, word of mouth, local recruitment agency, etc.), there’s always the risk that the hard or soft skills you are looking for aren’t available or are very limited in the country you are operating. In this case, opening your horizons to global talent gives you more chances to find the ideal candidate from a variety of professional and educational backgrounds.

International experience: Depending on the role, an expat may have a set of professional skills, which will make them the best candidate for the position. However, expats (and especially serial expats) bear some unique personal qualities, which will contribute to the overall, successful completion of tasks and execution of projects. We are referring to characteristics such as resilience, adaptability, and problem solving, which are often cultivated during the times of living abroad and can be an asset to the company. Is there an employer who wouldn’t like to work with an independent person who reacts quickly to change and adapts as required?

Inner motivation: Expats tend to be self-motivated, daring people, who look at life’s bigger picture. Not everyone can be as courageous to leave their comfort zone in search of new opportunities and adventures, far away from the familiarity of home. The process of moving abroad comes with many rewards but also challenges, which make the expat a stronger and often a better version of who they are. The expat has left home for a reason whether it is professional or personal development and will work hard to make their expat project a success regardless of the obstacles that come along the way.

Appropriate expertise: If you are an entrepreneur who is doing something pioneering in a country that has no previous experience of such a product or service, it will be difficult and maybe impossible to achieve 100 percent engagement of local employees with your business’ methods, values, and vision for the future. However, an international candidate may have worked in a similar field before and may be ready not only to execute your plan, but also to bring new ideas in, expertise, and knowledge to move your concept forward.

Disadvantages of Expats

There are many disadvantages associated with the expatriates, such as, they can misunderstand the political situation which can give rise to the political risk and can heavily cost the company. Misunderstanding of the political situation in the host country can even lead to the ban of the company in the host country.

Expatriate has to look for the local market to build up the relation and increase the business for the company, but neither he does not have command over the local language nor he has much experience to manage and work with the local staff (Mendenhall et. al, 1995).

The training and rewarding of an expatriate are highly costly. The extraordinary awards for an expatriate can lead to ill feeling in the local employees and can work as a de-motivational factor for them.

Expatriate Failure

Expatriate failure means premature return of an expatriate, i.e. an expatriate returns back to his home country before the completion of international assignment or if an expatriate resign from his job position before the completion of the assignment assigned to him. However, it can also be defined as the poor job performance or the prolong extension of the assignment.

Reasons of Expatriate Failure

There are several reasons associated with the failure of an expatriate. Various researchers have given different reason for an expat failure. There were number of surveys conducted across the globe and found the different failure rates in different countries. It is found that US with 10% – 40% has the maximum failure rate and Japanese MNEs with less than 5% has the minimum failure rate.