Expatriation Meaning, Reasons for Expatriation, Factors in Selection of Expatriates

2nd December 2021 0 By indiafreenotes

An expatriate (often shortened to expat) is a person residing in a country other than their native country. In common usage, the term often refers to professionals, skilled workers, or artists taking positions outside their home country, either independently or sent abroad by their employers. However, the term ‘expatriate’ is also used for retirees and others who have chosen to live outside their native country. Historically, it has also referred to exiles.

Some multinational corporations send employees to foreign countries to work in branch offices or subsidiaries. Expatriate employees allow a parent company to more closely control its foreign subsidiaries. They can also improve global coordination.

A 2007 study found the key drivers for expatriates to pursue international careers were: breadth of responsibilities, nature of the international environment (risk and challenge), high levels of autonomy of international posts, and cultural differences (rethinking old ways).

However, expatriate professionals and independent expatriate hires are often more expensive than local employees. Expatriate salaries are usually augmented with allowances to compensate for a higher cost of living or hardships associated with a foreign posting. Other expenses may need to be paid, such as health care, housing, or fees at an international school. There is also the cost of moving a family and their belongings. Another problem can be government restrictions in the foreign country.

Spouses may have trouble adjusting due to culture shock, loss of their usual social network, interruptions to their own career, and helping children cope with a new school. These are chief reasons given for foreign assignments ending early. However, a spouse can also act as a source of support for an expatriate professional. Families with children help to bridge the language and culture aspect of the host and home country, while the spouse plays a critical role in balancing the families integration into the culture. Some corporations have begun to include spouses earlier when making decisions about a foreign posting, and offer coaching or adjustment training before a family departs. Research suggests that tailoring pre-departure cross-cultural training and its specific relevance positively influence the fulfilment of expectations in expatriates’ adjustment. According to the 2012 Global Relocation Trends Survey Report, 88 per cent of spouses resist a proposed move. The most common reasons for refusing an assignment are family concerns and the spouse’s career.

Expatriate failure is a term which has been coined for an employee returning prematurely to their home country, or resigning. About 7% of expatriates return early, but this figure does not include those who perform poorly while on assignment or resign entirely from a company. When asked the cost of a premature expatriate’s return, a survey of 57 multinational companies reported an average cost of about US$225,000.

Reasons and motivations for expatriation

People move abroad for many different reasons. The realisation of what makes people move is the first step in the expatriation process. People could be ‘pushed’ away as a reaction to specific socio-economic or political conditions in the home country, or ‘pulled’ towards a destination country because of better work opportunities/conditions. The ‘pull’ can also include personal preferences, such as climate, a better quality of life, or the fact that family/friends are living there.

For some people, moving abroad is a conscious, thoroughly planned decision, while for others it could be a ‘spur of the moment’, spontaneous decision. This decision, of course, is influenced by the individual’s geographic, socioeconomic and political environment; as well as their personal circumstances. The motivation for moving (or staying) abroad also gets adjusted with the different life changes the person experiences. For example, if they get married, have children, etc. Also, different personalities (or personality types) have diverse reactions to the challenges of adjusting to a host-country culture; and these reactions affect their motivations to continue (or not) living abroad.

In this era of international competition, it is important for companies, as well as for countries, to understand what is that motivates people to move to another country to work. Understanding expatriates’ motivations for international mobility allows organisations to tailor work packages to match expatriates’ expectations in order to attract and/or retain skilled workers from abroad.

Recent trends

Trends in recent years among business expatriates have included:

  • Reluctance by employees to accept foreign assignments, due to spouses also having a career.
  • Reluctance by multinational corporations to sponsor overseas assignments, due to increased sensitivity both to costs and to local cultures. It is common for an expat to cost at least three times more than a comparable local employee.
  • Short-term assignments becoming more common. These are assignments of several months to a year which rarely require the expatriate family to move. They can include specific projects, technology transfer, or problem-solving tasks. In 2008, nearly two-thirds of international assignments consisted of long-term assignments (greater than one year, typically three years). In 2014, that number fell to just over half.
  • Self-initiated expatriation, where individuals themselves arrange a contract to work overseas, rather than being sent by a parent company to a subsidiary. An ‘SIE’ typically does not require as big a compensation package as does a traditional business expatriate. Also, spouses of SIEs are less reluctant to interrupt their own careers, at a time when dual-career issues are arguably shrinking the pool of willing expatriates.
  • Local companies in emerging markets hiring Western managers directly.
  • Commuter assignments which involve employees living in one country but travelling to another for work. This usually occurs on a weekly or biweekly rotation, with weekends spent at home.
  • Flexpatriates, international business travellers who take a plethora of short trips to locations around the globe for negotiations, meetings, training and conferences. These assignments are usually of several weeks duration each. Their irregular nature can cause stress within a family.
  • Diversity is becoming more of an issue. Consulting firm Mercer reported in 2017 that women made up only 14 per cent of the expatriate workforce globally.

Factors in Selection of Expatriates

Technical Ability

A person’s ability to perform the required tasks is an important consideration and so technical and managerial skills are therefore an essential criterion in selecting expatriates. Indeed, research findings consistently indicate that multinationals place heavy reliance on relevant technical skills during the expatriate selection process.

Cross-cultural Suitability

The cultural environment in which expatriates operate is an important factor in determining successful performance. Apart from the obvious technical ability and managerial skills, expatriates require cross-cultural abilities that enable the person to operate in a new environment.

An American manager who is considered an excellent communicator by his US colleagues because of his face-to-face and to-the-point style may be a disaster when required to communicate with say, Chinese or Japanese subordinates who value subtle, indirect forms of communication. Hence, the country where the posting is to be and its culture are likely influences in the selection of the candidates.

Family Requirements

The contribution that the family, particularly the spouse, makes to the success of the overseas assignment is now well documented. For example, Black and Stephens (1989) examined the influence of the spouse on an American expatriate’s adjustment. They found that the adjustment of the spouse was highly correlated to the adjustment of the expatriate manager.

Hence, firms interview the spouse as an essential part of the selection process. Answers are sought to questions like, Will you be interrupting a career to accompany your spouse on an international assignment? If a formal interview evokes resistance, then the spouse is contacted informally and attitudes ascertained indirectly thorough friends.

Apart from the accompanying partner’s career, there are family considerations that can cause a potential expatriate to decline the international assignment. Disruption to children’s education is an important consideration, and the selected candidate may reject the offered assignment on the grounds that a move at this particular stage in his or her child’s life is inappropriate. The care of aging or invalid parents is another consideration.

Cross Cultural

Requirements In some cases, the multinational may wish to use an expatriate and has selected a candidate for the international assignment, but may find that the local Government do not allow it. Many developed countries are changing their legislation to facilitate employment related immigration which will make international transfers somewhat easier –for example the European Union Social Charter allows for free movement of citizens of member countries within the EU. It is important that HR staff keep up-to-date with relevant legislative changes in the countries in which the MNC is involved.

Further, the host country may be an important determinant. Some regions and countries are considered ‘hardship postings’: remote areas away from major cities or modern facilities; or war-torn regions with high physical risk. Accompanying family members may be an additional responsibility that the multinational does not want to bear. There may be a reluctance to select females for certain Middle East or South East Asian regions and in some countries a work permit for a female expatriate will not be issued.

These aspects may result in the selection of HCNs rather than expatriates. To overcome this problem, a group of more than 20 large multinationals (including Shell, British Airways, Unilever, Pricewaterhouse Coopers and Siemens) has established an organisation called ‘Permits Foundation’in an attempt to promote the improvement of work permit regulations for spouses of expatriates. It also aims to raise government awareness of the connection between work permits and employee mobility.

MNCs Requirements

Apart from expatriate related factors, there are contextual factors, such as management philosophy and approach of the MNC- whether it is ethnocentric, polycentric, region-centric or geocentric. The status of the MNC-whether it is an international, multi-domestic, transnational or global company-also influences this decision to a great extent. Other situational factors include:

  • The mode of operation involved: Selecting staff to work in an international joint venture may involve major input from the local partner and constraints imposed by the JV agreement terms.
  • The duration of the assignment: Family members tend not to accompany an expatriate when the assignment is for a short duration, so family may not be a strong factor in the selection.
  • The amount of knowledge transfer inherent in the expatriate’s job in foreign operation: If the nature of the job is to train local staff, then the MNC many include training skills as one of the selection criterions.

Language

Language skills are be considered as of critical importance for some expatriate positions, but lesser in others, though some would argue that knowledge of the host country’s language is an important aspect of expatriate performance, regardless of the level of position.

Differences in language are recognised as a major barrier to effective cross-cultural communication. Yet, in terms of the other selection criteria we have examined above, from the multinational’s perspective, language is placed lower down the list of desirable attributes.

In the past, US multinationals have tended to place relatively low importance on foreign language skills. For example, in a 1990 study of US multinationals, Fixman found that foreign language skills were rarely considered an important part of international business success. She comments: ‘Language problems were largely viewed as mechanical and manageable problems that could be solved individually’.

This view is also consumed by the consistent and relatively poor performance of young Americans on polls of geographic literacy sponsored by the National Geographic Education Foundation. In the most recent 2006 poll of young American adults between the ages of 18 and 24 the following results were reported:

  • 50 per cent of the sample thought it was ‘important but not absolutely necessary’ to know where countries in the news are located.
  • 75 per cent did not know that a majority of Indonesia’s population of 245 million is Muslim (making it the largest Muslim country in the world).
  • 74 per cent of the sample thought that English was the most commonly spoken language in the world, rather than Mandarin Chinese.