Expatriation and Repatriation

By: Fiona Chawla Garima Arora

Sources of Human Resources

Home

country nationals Host country nationals Third-country nationals Inpatriates

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Home-country Nationals
Are

citizens of the country where the MNC is headquartered but live & work elsewhere Often used
To

start up operations (most common reason) To provide technical expertise To help the MNC maintain financial control over the operation In top management positions to give promising home-country managers international experience
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Host-country Nationals
Citizens of the country where they live & work They are familiar with the culture and know the

language They can often do a better job than home-country nationals They are less expensive than home-country personnel Host-country governments often prefer use of hostcountry nationals and some require it Hiring them is good public relations U. S. companies tend to rely heavily on host-country nationals

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Third-country Nationals
People

who are citizens of neither the home country or the host country
Example:

A Mexican, employed by an American company, working in Argentina The employee's native country and the country where he works are often in the same geographic region

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Inpatriates
Persons

who work in the home country and are citizens of a different country Advantages of inpatriates
Help

to develop global core competencies Provide diversity and an international perspective in the home office Improve career opportunities for company managers who are not from the home country

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EXPATRIATION

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Expatriate
Any

person who lives and works outside the country of which he/she is a citizen. home-country nationals, thirdcountry nationals, and inpatriates. most cases, expatriates must have work visas from the government of the country where they live and work
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Includes

In

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Factors in Selection of Expatriates

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Adaptability to Cultural Change

Work

experiences with cultures other than ones own Previous overseas travel Knowledge of foreign languages Recent immigration background or heritage Ability to integrate with different people, cultures, and types of business organizations
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Adaptability to Cultural Change

Ability

to sense and accurately evaluate events in the host country Ability to solve problems within different frameworks and perspectives Sensitivity to differences of culture, politics, religion, and ethics Flexibility in managing operations on a continuous basis despite lack of assistance and gaps in information
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Willingness to Take an Overseas Assignment

Unmarried

employees are more willing than other groups to work overseas. Married employees with teenage children are usually the least willing to work overseas. Employees with prior international experience are more likely to accept an overseas assignment.

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Willingness to Take an Overseas Assignment

People

who are most committed to their careers are more likely to work overseas Careers and attitudes of spouses have a significant impact on employee willingness to work overseas. Employee and spouse perceptions of company support are crucial to employee willingness to work overseas.

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Compensation Details Base Salary

Base

salary: the amount of money that an expatriate would receive for doing the same job in the home country
Used

as a basis to establish salary in the host country Salary may be paid in home country currency, host country currency, or a combination of the two

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Compensation Details Allowances

Relocation

Examples:

Cost-of-living allowances are paid when the employee must incur extra costs that he would not pay in the home country

allowance

housing allowance, and the costs of private schools for the employee's children

Hardship

allowance: Often paid to employees who work in a country with difficult living conditions

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Compensation Details Taxes

An

expatriate may be required to pay income taxes to both the host country and his/her native country company compensates the employee for the extra amount of tax

The

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Compensation Details Summary

The cost of an expatriate employee =

salary costs+ benefit costs+ allowance costs+

tax costs

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Compensation Approaches
The

compensation package must be costeffective and should be seen as fair Balance-sheet approach: ensure that the expatriate does not lose money from the foreign assignment Negotiation approach: Negotiate compensation with each employee Localization: Pay the expatriate a salary comparable to local nationals
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Compensation Approaches
Lump

sum method: give expatriate a pre-determined amount of money. Employee decides how to spend it. Cafeteria approach: Offer the employee a choice among various compensation options, with a limit on total costs Regional system: Set up a compensation system for all expatriates who are assigned to a particular region

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Success Factors for Expatriates

They

must :

Be Willing and motivated to go overseas Be Technically able to do the job Be Adaptable Have good interpersonal skills and be able to form relationships Have good communication ability Have supportive family

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Reasons why expatriates fail in foreign assignments

Spouse

cannot adjust to new physical or cultural surroundings Expatriate cannot adapt to new physical or cultural surroundings Family problems Manager is emotionally immature Manager cannot cope with foreign duties Manager is not technically competent Manager lacks proper motivation for foreign assignment 14-22

REPATRIATION

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Repatriation of Expatriates
Refers

to the termination of the overseas assignment and coming back to the home country to the country where the HQ is located or to the home country subsidiary from where he/she was expatriated. Repatriation is the final step in the expatriation process Repatriation is important because with it are associated a number of severe challenges for the expatriate which may significantly determine his or her performance prior to the return to the home country, and which hinder the expatriate reintegration due to adjustment problems culture shock (re-entry shock).

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Repatriation of Expatriates
Reasons

for returning home Readjustment problems Transition strategies

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Repatriation of Expatriates
Reasons
Most

for returning to the home country

expatriates return home when their agreed-on tour of duty is over Some want their children educated in a homecountry school Some are not happy in the overseas assignment Some return early because they failed to do a good job

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Repatriation of Expatriates
Readjustment
Out

problems

of sight, out of mind syndrome: the expatriate may not have been considered for jobs that he/she could do well Organizational changes may have: eliminated the jobs for which the expatriate is well-qualified reduced the importance of the expatriate's position or department The new job may be seen as a demotion.

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Repatriation of Expatriates
Readjustment
Technological

problems

advances may have made the expatriate's skills obsolete The former expatriate may not have an opportunity to use skills gained abroad. The former expatriate's salary and benefits may be lower than they were abroad. The former expatriate has to readjust to homecountry culture and adjust to a new job

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Effectiveness of Returning Expatriates

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Repatriation of Expatriates
Transition

strategies: Help smooth the adjustment from an overseas to a home-country assignment Repatriation agreement: addresses the concerns of the individual and the company before the foreign assignment begins. Keep the expat involved in home office communication and projects during the foreign assignment. Appoint a higher-level manager as a career mentor for the expatriate (helps to avoid "out of sight, out of mind" problem).

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Repatriation Process

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Repatriation Phases
Preparation

- developing plans for the future; gathering information about the new position
relocation

Physical

Transition Readjustment

- coping with change

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Individual reactions: jobrelated

Career
No

anxiety

post-assignment guarantee of employment Loss of visibility and isolation Changes in the home workplace
Work
The

adjustment

employment relationship and career expectation Re-entry position Devaluing of international experience
Coping

with new role demands Loss of status and pay

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Readjustment Challenges

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Managing Repatriation

Treat as re-expatriation : similar to expatriation plan and execute systematically Repatriation program : provide mentoring for finding a new role, information on the challenges as a result of the repatriation, provide assistance Repatriation strategies : time-bound expatriation helps provide better preparedness where the expat is aware from the beginning when his/her assignment ends and can plan for next steps supported by the organization
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