Why Do Expatriates Fail Management Essay

Published Date: 23 Mar 2015

In a transfiguring, international markets, where opposition is continuously growing organisations should generate and extend their competitive advantage by making use of more diverse, international strategic, methods, such as creating a local existence in markets. The parent organisations need to create a local presence, by staffing employees from the parent organisation in the contributory, in a foreign country. This is the responsibility of the International Human Resource Management sector. "International human resource management (IHRM) is a branch of management studies that investigate the design and effects of organizational, human resource practices in the cross-cultural context. (Stahl 2006, 523)." The International Human Resource Management sector (IHRM) is those who select and assign employees in different working positions. "According to (Scullion 1999) International Human Resource experts play a vital role in facilitating the success of an expatriate assignment by selecting and training expatriates that are capable to adjust cross-culturally to the host country environment."

In order for an expatriate, to recognise and switch to diverse culture dimensions that was introduced by Geert Hofstede the human resource manager need to focus on training the expatriate. "According to the web site of Geert Hofstede, his research gives us insights into other cultures so that we can be more effective when interacting with people in other countries." (Hofstede 1967-2009) If an organisation want a better chance at the success of the international assignment, it is necessary for both the parent and host country nationals to understand the culture and background of each other. "According to (Cox 1994) Cross-cultural training for the host organisations workforce will generate higher cultural acceptance which may increase the job success of the expatriate." The oversupply of the organisations domestic markets and high overheads drive organisations to escalate into international markets. The potential manager that is sent abroad plays a vital role in the host contributory. The challenges that the Multinational Enterprise (MNE) face can be extremely expensive when expatriates fail. The cost of failure can be in various forms such as the damage of the organisation\'s reputation, decrease or sometimes the lost of market share and the organisation can lose the perfect business opportunity. This study examines the probable cause of expatriate failure, where the expatriates find themselves in an unfamiliar place to what they are use to in their home country.

1. Reasons for Expatriate Failure.

The reasons for the failure of an assignment abroad and the pre-return of an employee are different, and it depends on the foreign contributor's culture and the persona of the expatriate. Expatriation can be an extremely expensive staffing strategy for multinational enterprises (MNE's), although it is a feasible process for enhancing the organisations' understanding of their international operations. "Expatriates are employees / managers who move from the home country to an overseas location." (Tanner 2009, 360) One factor that determines the success of an assignment abroad is when an organisation has the ability to transfer there core competencies on an international basis to the host contributor. This takes place as expatriation. Exploitation of inadequate selection methods of expatriates is a reason why expatriates fail. "According to (Burning 2005), expatriate failure is when an expatriate premature return from the international assignment."  Research material shows that the most repeated reason for expatriate failure, is the inability of the spouse to adjust to the foreign country, this put stress on the family.

There are also other reasons such as the assigned employees' inability to form a relation with the people that have different cultures and beliefs in the host country. The employee can also not adjust to the new environment and has poor personal adjustment issues. "According to (Briscoe 2004) the early return of the expatriate where mainly caused by poor performance in the foreign assignment, personal dissatisfaction of the expatriates experience, inability to adjust to the new environment, and not being accepted by the host-country subordinates and people." Organisations need to be aware of their function as well as the significance of the spouse and family when managing expatriates successfully. As from the above, it can be concluded that the main reasons for expatriate failure is, international cultural intransigence, incapability of spouse and family to adjust, responsibility overload and the inability to adjust to host- country peers ,which leads to, physical breakdown.

1.1 International Cultural Intransigence.

International organisations need to have a comprehensible perception of the different cultures they are doing business with, what work in the home country might not work in the host-country. As an international human resource manager, it is vital to have the familiarity of culture matters within the organisation to guarantee success. Organisational culture can be distinguished as it has an influence on the change and development of the organisation's strategy. "Organisational culture is the basic assumptions and beliefs that will be shared by members of an organisation that operate unconsciously and define in a basic taken-for-granted fashion an organisation's view of it and its environment." (Johnson 2008) "Geert Hofstede an eminent writer, have publicized how attitudes to work, authority, equality and more vital factors that influence the culture differences from one country to another (G. Hofstede 1991)." Geert Hofstede has a darned principled approach to have a decent understanding of culture diversity; he provides insights into national culture differences. "He defined culture as a collective programming of people's minds, which influence how they react to events in the workplace." (Boddy 2005) Geert Hofstede identified five culture dimensions that will be described below; he was also able to determine how these differ between people from various countries.

1.1.1 Geert Hofstede five cultural dimensions.

1.1.1.1 Individualism versus Collectivism.

"Individualism is the degree to which the people in a country prefer to act as individuals rather than as members of groups." (Robbins 2007, 105) "Collectivism describes societies in which people, form birth onwards, are integrated into strong, cohesive in-groups which protect them in exchange for unquestioning loyalty."(Hofstede 1991, 51) Employees who seek challenges in the working environment are epitomized by high individualism, and their prime motivator is self-actualization. The need for security, the desire, for a safe emotional and physical environment is often personified by high collectivism. The degree of collectivism and individualism as an influence on interaction between employees, for example, concerning the role of work groups, Japan has a more collectivist culture than the individualist of the United States. (Daniels 2009) Such differences can affect the organisation in various ways. The social and security needs of an employee can be met more easily in the parent country work environment, when human resource managers send employees abroad; it means that the employee needs to relocate. Relocating means that the family members must also relocate and find new jobs; thus the employee's geographic mobility can be restricted.

1.1.1.2 Uncertainty avoidance.

"Uncertainty avoidance relates to actions members of societies take in respect of ambiguous and uncertain situations." (Millmore 2007, 108). This identify to what level a culture can encode its associates to feel both comfortable and uncomfortable in amorphous situations. Amorphous situations are unique, unidentified, astonishing, and distinctive from what they use to. These situations are often minimised, by uncertainty avoiding cultures, they avoid the situations by creating austere rules and laws, and they belief in the 'truth' on a religious basis. Uncertainty avoiding employees are more motivated by their personal anxious energy and are more emotional. An example of a high uncertainty avoiding country can be Germany. To avoid the uncertainty the Germans carefully plan everything, and they rely mostly on rules, regulations and laws. Employees with low-uncertainty avoidance are more understanding and have different opinions of what they are use to, they only have a few rules. These employees are more easy-going and thoughtful, and they do not show emotion in their environment, for example, the United States has low-uncertainty avoidance, they are more zealous on trying out new things.

1.1.1.3 Power Distance.

"Power distance refers to this general relationship between superiors and subordinates." (Daniels 2009, 111) The way an employee interacts with his/her superiors may vary from organisation to organisation. When the nature of interaction fits the employee, they tend to perform better. Organisations are counselled to support management styles taking into consideration, the employee's preference of interaction when dealing with superiors. Power distance is the degree to which the employees with less power, believe and presume that power in the organisation is unequally spread. This can be symbolized as unfairness, inequality and power are primary factors in a society. In international business, it can be noted that societies can be more unequal than others, although all societies are unequal. Having strong credence in equality for every civilian, Germany does not have a significant gap among the affluent and the poor. The Germans have the opportunity for augmentation in society. Where the power distance is higher, for example, the United States, it can be noted that the gap among the poor and affluent is colossal.

1.1.1.4 Masculinity versus Femininity.

"Masculinity pertains to societies in which social gender roles are clearly distinct, femininity pertains to societies in which social gender roles overlap." (Boddy 2005, 119) The roles among the sexes differ from society. "According to Hofstede's study, women's values differ less than those of men in society." (Hofstede 1991) The values of men are incredible aggressive and competitive from one country to another. The more aggressive and competitive employees are known as 'masculine' and the caring, self-effacing employees is known as 'feminine'. Most women in feminine organisations have the same caring and self-effacing values as the men; feminine employees in the masculine organisations seem to be somewhat more aggressive and competitive. To indicate a difference among the men's and women's value, the women are not as aggressive and competitive as the men in a masculine organisation. Acquaintance of these dimensions presents a baseline for employees to envisage and recognize culture-based performance, so that the experiential behaviours are not alleged as individual slur. This dimension refers to traits that are allied with the male and the female sexes and embody the principal values of life; for example, success and achievement (masculinity) or cultivation and affairs (femininity). As an example to an international country, German and United States has a higher masculine culture than Netherlands, so these cultures share values alike in stipulations of masculinity.

1.1.1.5 Long-Term versus short-term orientation.

Long-term-short-term orientation can be defined as "A cultural orientation that relates to the attitude that people have about long-term decisions, such as investment in training and development." (Millmore 2007, 528) Most organisations are focused on the future, which relates to a long-term orientation; frugality and persistence are values that can be connected with long-term orientation. Admiration for customs and social responsibility is values related to short-term orientation. Individuals can be socially concentrated and can demonstrate their point of view extremely well, for social groups to function properly is a basic necessity to survive in society. The teaching of Confucius can have both negative and positive values related to this dimension, although the dimension can be applied to countries (Brazil) without a Confucius tradition. According to the Oxford dictionary "Confucius is a relating to a Chinese philosopher "Master Kong" 479 BC, and his philosophy." (Oxford 1993, 300) The key thought of Confucianism is the fostering of acceptable values and the improvement of ethical rightness. Confucianism stands that an individual should give up his/her life, if required, either unreceptively or enthusiastically, for the sake of protecting the key values. This dimension can be applicable for the trade among East Asia and United States, formalization and reproduction on the intensity of individuals taking part in international business, has transmitted on the micro-level. The success of the employee will depend on their view on the future and in the past, and how they define religion as well as their moral values.

It can be normal for new expatriate managers to be utterly shocked by the significant culture differences in the organisation and country abroad. Expatriate managers in Asia will need to study how and familiarize themselves with various situations, for example, the "saving face" can be the reason for the local manager not to show up for work. The human resource manager should not try to transform their employees into Americans or Europeans, as they may find it difficult accepting local settlements on one side and seek international principles on the other. Geert Hofstede's dimensions do not entirely foretell any occurrence or go-ahead. Taking factors into consideration such as culture and applying Hofstede's dimensions make sense of what happens in the world. When the dimensions are well understood, one can predict better what is likely going to happen. Knowing culture will not necessarily determine what colour shirt one are going to buy; but the trend of your fellow citizens will buy, will fairly predict your decision. Researching Hofsted's dimensions can help international managers create and decipher policies at various corporate levels, with a higher success rate across international boundaries.

Managers should have both empathy that and knowledge about the local environment, to understand proper management in international organisations. Hofstede's framework suggest that everyone should know that people in different countries feel, think and act differently from oneself. Managers should constantly keep in mind that Hofstede's lessons of dimensions is that individuals think, feel differently and act on what they have experienced in the working/social environment, especially when selected for an international assignment.

1.2 Spouse / Family Stress.

The success, of the expatriate abroad can be influenced by spouse/family, human resource managers sometimes focuses too little on the impact that family may have on the expatriate. Families find it difficult to adjust as they can suffer from segregation due to the subjection to integrate into new environments. In international assignments, the next of kin has the most arduous part of any family member. While employees hold the organisation and employee structure that remain from the home country to the pristine country, and offspring have the permanence and routine of education, spouses frequently set aside countless aspects of their lives, such as relatives and friends. In the assignment abroad the spouse usually turn out to be more engrossed in the pristine culture than the expatriate manager; the dispute of amending successfully are different, thus, the cultural originality will have an even larger influence on the spouse than on the expatriate manager. 

The majority expatriate managers are confronted and thrilled to start their new job abroad. Their overall responsibilities are often much more than what they are use to, this put them under a lot of pressure as they have to spend much time at work and the same time adapt to new culture. This leaves the family / spouse to spend most of the time on their own, which cuts them of from family and friends. The family members at home now have to deal with unwanted situations that they are not use to, for example, the water pipe breaks, and there is no one to fix it, they have to call a plumber. The expatriate's wife will discover that there is no employment that suits her if they are in a developing country, this can damage her career. The effect can be an unhappy spouse who does her best to damage the working of the expatriate manager. Total marriage breakdown is not an uncommon result. Not only the idea of extent effects between the different dimensions of expatriate change but also a intersect effect from one family member to another, mostly the spouse is the most influential; thus, it is true to say that the stress of family members / spouse are a reason why expatriates return earlier / fail.

1.3 Responsibility Overload

The new position that the expatriate fill abroad, will be much bigger than what he/she is used to. If the expatriate work in a developing country he/she can manage 4 to 8 times more people than what he/she is used to in the home country organisation. This makes it difficult for the expatriate manager to manage the large responsibility, because he/she may not have experienced the work load before. The result and performance of the expatriate can be influenced by the new contest of managing prospects of head office and clientele in countries that does not understand the culture. One of many problems expatriates face is stress; stress can be caused by responsibility overload, by having too many commitments and to much to do.

1.4 Physical Breakdown

Expatriates are normally encouraged to be successful and thrilled about acquiring international experience. The expatriate normally put in extra hours of work I the first few weeks of their assignment abroad to be successful. They try to adapt to the different culture of the domestic staff and increase their responsibilities. At their new home, the family of the expatriate is also trying to adapt to the new environment and culture; the family maybe screeching for the expatriate manager's attention to help them through it. The permutation of poignant hopelessness and corporal fatigue from high stress levels and overburden is a usual difficulty for inexperienced expatriates. If not eased, the consequence can considerably reduce success. 

International Cultural Intransigence and family / spouse stress is the two factors that affect the success of the expatriate the most. The inability of the spouse to adjust to the new culture and environment can create dissatisfaction in the expatriate's life, this leads to pre-mature return or weak job performance. The organisation has to deal with the cost of failure, and loses market share and potential job opportunities; the organisation should take these factors into good consideration to increase the success of expatriates.

2. Recommendations to decrease the rate of expatriate failure.

Many organisations attempt to recognize the cause of expatriate failure, and acquire preventative training and grounding programs. The evaluation of expatriate failure have focused on the inability of expatriate coping with responsibilities abroad, international cultural intransigence, family / spouse stress and physical breakdown. The growth of international business, organisation that tries to spread their product/service internationally, has increased the number of expatriate assignments. The failure of expatriate assignments can be very expensive for both the organisation and employee. To reduce the rate of expatriate failure (Burning 2005) "suggests that organisations should consider three areas affecting the expatriate performance and failure. These three areas are; individual adjustment, environmental issues and position-related issues." To control these three areas and reduce the expatriate failure rate the Multinational enterprise (MNE) should apply three diverse strategies. The organisation can work out modified preparation strategies for the expatriate to help him / her to adjust more easily.

The organisation can create assignment support strategies that can support the expatriate, this can be to have contact with members at home or have local mentors to help the expatriate to adjust to the new working environment. Repatriation strategies will ensure the organisation that the expatriate will not resign once back at home (Burning 2005). "According to Harzing & Ruysseveldt, 2004, when addressing expatriate failure the organisation should focus on clear directions about the expatriates posting abroad and well training programmes for the family / spouse as well as the expatriate." (Harzing 2004) The ability of the expatriate to live and work successfully in the host country can be done by the organisation, by supporting the expatriate and his / her family, training and improve selection approaches. (Forster 1996) Culture training and adjustment strategies can be very important for the expatriate and the family / spouse; the home organisation (before departure) as well as the host organisation (during assignment) should help them with these issues.

2.1 Give training to reduce expatriate failure.

2.1.1 Cross-Cultural training.

The cross-cultural training can be defined as "Any intervention aimed at increasing an individual's capability to cope with and work in foreign environment. (Zakaria 2000)" Cross-culture training is created to teach the expatriate about the culture in the host country, how to successfully live and work in the new domestic country. Cross-cultural differences can and do hinder interpersonal relationships and communication, this can happen in the everyday business environment where employees have to interact with different cultures and are expected to make decisions. The cross-cultural has also been defined as "Formal methods to prepare people for more effective interpersonal relations and job success when they interact extensively with individuals from cultures other than their own.(Brislin 1994)" The purpose of this training method is to create awareness among members where a common cultural framework is not in order to create clear communication and relations. The term cross-cultural training is therefore necessary to include dissimilarities in matters like language abilities, business etiquettes, beliefs and values, social system, negotiating styles etc. of any culture. (Brislin 1994).

This training method can help the expatriate to easily adjust to managing international culture; help to cope with unexpected events and culture shock in the new business environment; this can help reducing the uncertainty of the expatriate when he / she have to interact with the foreign nationals and it can improve the expatriate's ability to cope with all the new happenings, culture shocks and adjustments. Cross-cultural training can be perceived as an apparatus for improving the organisations culture and practices by continuously learning through induction of foreign nationals in the organisations.

2.1.2 Language training.

To successful manage a business the manager need to know that communication is vital, both with employees and customers. To communicate effectively the manager / expatriate need to study / learn the language of the international business environment. The way in which a person view the world can be affected and reflected by a language, culture and language form a dimension, undividable and unified. Employees who study / learn the foreign language can be subliminally influenced and adapt the culture while studying the culture language. "According to Liu, 1995 if the expatriate knows the values and rules of the culture, does not mean that the expatriate apply them in communication. (Liu 1995)" "Dolanski, 1997 suggest that expatriates should view the learning / study of the host countries language, where English is not the norm language, as part of the expatriation process. (Dolainski 1997)" The expatriate need to make an effort to understand the basic communication skill, it is not necessary to master the language. Regrettably, language training, which should be a part of preparations for expatriate sending abroad, must be viewed as being necessary for successful adjustment as well as being poorly derelict by international organisations. Multinational enterprises (MNEs) have make use of strategy by adopting a corporate language as solution to this problem, which is often focused on a long-term orientation. Regardless of the fact that improved language ability and the succeeding improved adjustment might lead to a range of optimistic outcomes, such as augmented contentment and a reduced amount of turnover as well as improved implementation.

A language programme can be given to the expatriate and family / spouse, which will help them to learn at faster pace they can be thought to speak, write, read and listen the to the foreign language. The home country employer who sends the expatriate abroad, can provide the family / spouse with language training, not just the expatriate, this could help the family / spouse to adapt more easily to the new culture environment. It is extremely vital for the human resource manager to take language training seriously and incorporate it into the pre-departure preparation; this will ease the expatriate and family / spouse adjustment to the new environment, whish leads to success of the assignment abroad.

2.1.3 Management briefing training.

This training strategy is used to update the expatriates with the management issues of the host country organisation, it also inform them about the environment they are about to enter and the relationship with business colleagues. The expatriates are the key to the success of the assignment, if managed effectively; they will acquire remarkable benefits for the home country organisation. The benefits the organisation may require can be, knowledge about the international business environment, power in local investments and stipulation for employees regarding career enhancement. It is very important that employees who are to be sent abroad are properly knowledgeable and managed by the human resource practitioner, regarding the challenges they might tolerate in the host country. Dealing with an unknown culture, the organisation should manage the expatriate preparation training very well. To reduce physical breakdown the organisation can mange the expatriate success, by help finding schools for the children, if there is any involved, help finding a place to stay, provide part of health care and help learn the local language. It is vital for the employer to match the expatriates job to more or less what he/she is used to do in the home country organisation; this will make them feel at ease in the working environment which makes the adaption process easier.

A considerable amount of uncertainty which an expatriate manager can face while relocating to the host country and culture can be abridged through organisational assistance in stipulations of training. Training the expatriate for the international assignment is equally valuable to the organisation and the expatriate. Training can assist in managing with the pristine situations, while for the organisation this assist in getting pre-eminent work productivity through continuing the expatriates self-esteem and enthusiasm. It is extremely important for an organisation to prepare the assigned expatriate for what is expected of them in the host country / organisational environment; this will help them to be fit for the international assignment, which leads to success for both the organisation and the expatriate.

3. Does expatriate failure have an affect on the multinational enterprise (MNE)?

Preventing expatriate failure is extremely vital for the home country national / multinational enterprise (MNE) in the growing international business environment. The result of expatriate failure can have a disastrous effect on the multinational enterprise (MNE). There is a huge monetary cost involved when sending expatriates abroad as well as bringing them back and finding replacements. These costs can be direct cost of failure, for training (cross-cultural training, language training), compensation packages and there can be relocation cost involved for relocating the whole family; indirectly these costs can break up good relationships with the host country, domestic organisations, loss of market share and clientele. Expatriate failure carries the costs of poor job performance, recruitment costs and repatriation, these that have pre-mature return from the host country may face consequences such as lost of self-esteem and self-confidence. The consequences the expatriate face can effect the multinational enterprise; problems such as disinclination between other colleagues to accept international assignments and the reduction of productivity.

To answer the question of, does expatriate failure have an affect on the multinational enterprise (MNE)? Yes, it does the multinational enterprise (MNE) / home country organisation will not be able to perform to the high standards of international business when expatriates fail, as this can ruin the organisations brand, image and international business opportunities. If the expatriate fail due to cross-culture inability such as language, the expatriate manger can not communicate effectively with the local managers and misunderstandings may arise and the expatriate can have low negotiation skills, which will cost the organisation opportunities. The non adjustment of the family / spouse can also damage the expatriate assignment, which can cost the organisation a great business deal or potential new product market. The multinational enterprise (MNE) / home country organisation should select and recruit the appropriate candidate for the assignment abroad, by choosing the appropriate staffing selection approach and to prepare the expatriate for the assignment abroad; preparation can save the organisation all the cost of repatriation and premature return.

Conclusion

The need for expatriate employees is increasing rapidly as it becomes essential for firms to expand internationally in order to create and maintain a competitive advantage in their trade. Rewardingly managing an international organisation will need compassion and insight. Human resource managers will need to modify their leadership styles and management approaches. The study of Geert Hofstede has shown that no country or individual are the same, individuals and countries have different moral values, cultures and attitudes. These differences have been shaped by history; cultural beliefs, religion and even the climate have an affect on people. The organisations that enter an international trade market will need to have the knowledge and will need to learn to cope with these differences in order to be successful. An organisation can not trade internationally without an expatriate manager, the manager is needed to assist local employees and manage the organisation abroad. The reasons for expatriate failure are international cultural intransigence, spouse / family stress, responsibility overload and physical breakdown. To overcome these failure factors, the human resource managers need to assist the expatriate before he / she is sent abroad. The human resource managers can assist the expatriate with preparation training such as cross-cultural training, language training and management briefing training. The capability of expatriates to maintain obliging relationships with local employees and society will shape the long-term success, even feasibility, of the operation. The failure of expatriates can determine harm the multinational enterprise (MNE), by expensive repatriation, hurt organisational image, lose business opportunities and even product market share. The cost of failure can bring the entire organisation to the ground. Overall an organisations international framework, symbolize its most precious resource. Hands-on management of that resource by head office will outcome in having the right employee in the right place at the right time, properly trained, primed, and supported. Multinational enterprise (MNE) should make use of international human resource management approaches that can predict successful expatriate management of the host country organisation.