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Expatriate Failure, Its Factors and Risks Essay

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Updated: Jul 9th, 2020

Nowadays the sphere of business develops extremely quickly that is why it is investigated thoroughly by many scholars. Numbers of organizations occur every year, and the majority of them tend to expand to other countries to become prosperous. Needless to say that they need a sufficient workforce to provide the customers with the high-quality services and maintain the activities that are targeted at the achievement of the companies’ objectives. Today’s business faces global competition and needs to be ready to work in different countries with a variety of nations. The expatriates are trained in the local area and sent to other locations in order to enhance the connection between the head company and its branch as well as to enhance the performance of the second one. Unfortunately, sometimes they fail to meet the superiors’ expectations and return home earlier. Still, it is only the outcome of the problem is much more serious.

Expatriate – is an employee who is working on terms that differ from those generally accepted in the working place; mainly, it means that the person is not working in the home country and is sent to work abroad (Bussin, 2015). As a rule, the workers are expatriated if the organization creates or already has a branch in another country, or because it becomes involved in the cross-border merger (occurs when two organizations agree to join), acquisition (presupposes that one organization buys another) or alliance (cooperation of two or more organizations) (Dowling, Festing, & Engle, 2008).

Anyway, the worker who is sent to another location enters the unknown environment, which influences one’s personal and professional life greatly. Rather often the employees are not able to cope with stress and pressure, and expatriate failure occurs. Commonly, it is thought to be seen as an early and unscheduled return; but the issue is more complex. The failure does not mean that the company is to blame this individual for being a bad professional. It shows that the departments responsible for the preparation of this operation made a mistake, which is likely to be repeated unless the problem is investigated and improvements are made. The complexity of the issue occurs due to the involvement of individual, cultural and organizational context in the host and expat.

For one to work efficiently, companies consider strategies managed by IHRM. The fact that IHRM is extremely important for firm’s togetherness became vivid at the end of the 20th century when it was understood that the structure of a company itself is not enough to cope with the difficulties of coordination (Rao, 2008). So to avoid expatriate failure, in the perspective of IHRM, the needs of the businesses can be met if the immense attention is paid to the workforce planning, selection of the employees, their training and motivation, duty performance and interaction.

Realizing the risks of expatriate failure, some tend to believe that it is better to rely on the local employees, but they are not able to deal with the expected tasks efficiently. Expatriates are to make sure that the operations managed by the branch company coincide with the way the parent company does business. They help to transfer knowledge and best practices to set the branch on the right track. When the venture is already experienced, the need for expatriates depends on the nature of the business, country and culture of the company, etc.

It is crucial for the companies to remember that expatriates are expensive. Expatriation entails large expenditures that “include an individual’s salary, preparatory costs (e.g. training, coursework), travel expenses for both the expatriate and his or her family, housing, as well as other compensation expenses” (Josien, 2012). The costs may be up to a million dollars, so if expatriate failure appears, they are wasted. That is why it is essential to choose the right employee for this mission, which is the task of IHRM department.

Many employees are also not willing to change the location, which can be seen in Figure 1. Today housing is already not as crucial as it was several years ago; however, the fact that the relatives find relocation a great problem makes them decline the offer of a new position. People tend to value their families more than a job that is why the IHR managers are to do their best to make the position look advantageous not only for the employee but also for one’s nearest and dearest. It also underlines the fact that the pre-departure preparation should not be concentrated on the expatriate only but should involve the members of one’s family.

Atlas corporate relocation survey results, 2015.
Figure 1 Atlas corporate relocation survey results, 2015.

This idea can be supported by the fact that the majority of the expatriate failures happen due to the problems the family faces being abroad. In case, if the employee moved alone similar issues are also critical, as the distance makes it hard to find a common language among the family members. The spouse career is the thing that makes the family refuse to move or separates them. It is rather hard for the couple to come to the agreement while trying to define whose job is of greater value. So organization should consider such perspectives to reduce the possibility of expatriate failure.

It is possible to predict the expatriate failure considering such factors as individual, cultural and organizational (Przytuła, 2009). IHR managers should evaluate the employees in regard to them to see if one fits the position. For example, introverts are rather reserved, and it is hard for them to make new social contacts. So when a person starts working in the venture, local employees will feel uncomfortable and will not contact with the individual good enough to manage efficient cooperation and share knowledge and values. Lack of optimism and tendency to spend time alone often make a person hostile and confused while communicating with others. Unwillingness to accept new experiences is a quality of conservative people, who are not likely to implement any changes and adapt to them even if they are advantageous.

Egocentrism also makes the merge into a new team more complex, and the employee may face resentment. Low motivation for achievements means that a person is not willing to be engaged in continuous learning, and there may be no performance improvement. It means that the superiors’ expectations and desired goals will not be achieved. The ability to cope with stress is essential for the expatriate, as a new environment, separation with family and problems with housing are very tensive. If one have low resistance to stress, he/she is likely to suffer from depression, which has an adverse influence on the health condition affects job performance. It is also significant for one to have control over one’s own life. When a person yields to circumstances, he/she will not face any success and will not be motivated to work hard.

Expatriates should be proactive and make the first step so that they will become active team members who are determined to accomplish all planned activities. As all these traits are inborn, they can be hardly changed that is why the HR managers are to make sure that the individual is not going to face troubles because of personal characteristics while selecting one. Moreover, they are to be considered as the main features that can cause expatriate failure as they cannot be altered by dint of training and education. Even though it is not the company’s initiation and the expatriate wants to gain overseas experience, one should be warned that the issues are likely to occur.

In cultural perspective, HR managers are to assess individual’s background. It means that the way sex, age, language, religion, and other aspects influence the performance abroad are to be considered. The expatriate failure may take place if the HR managers believe one’s home country and nationality to be the crucial points that affect the employee performance in a branch company more than others. In fact, while preparing for the operation, the most important elements are “getting to know the cultural and organization standards of the country where the headquarters is based and the knowledge of sociocultural, legal and political aspect of the country to which the expat will be transferred” (Przytuła, 2009, p. 129).

It means that the employee changes not only one’s organizational culture but also a national one. It is critical, as people are generally more influenced by their living environment than working one. Except for that, cultural differences are more influential in the perspective of international context, as the expatriate faces the issues caused by the diversity based on such personal things as age, sex, religion being in the home country also. That is why one is prepared to cope with them and already have substantial experience, which cannot be said about the culture.

Organizational factors that affect the performance of the expatriate and may lead to the failure deals with the structure of the organization and the dependence of the branch or subsidiary on headquarter. While a branch is a relatively independent entity, which is set by creating a new firm or buying the one that already exists, a subsidiary depends on the headquarter completely. In this way, the range of duties and responsibilities, which are to be undertaken by the expatriate, change in regard to the organizational structure. The multiplicity of headquarters also impacts the working environment, as one is to adapt to different leadership styles, attitudes towards job, values, etc.

Among the organizational factors refer to the main IHRM concerns and include “selection process, adaptation programs preparing an expat and his/her family to leave the county and remigration, motivating and remuneration of managers, programs prepared for expats’ development” (Przytuła, 2009, p. 131). Here the selection of expatriates is the first thing to pay attention to, as the right choice at the very beginning may streamline all other processes as well as the wrong one is likely to cause failure.

In order to choose the expatriate, IHR managers refer to the Tucker’s Overseas Assignment Inventory, which includes such components of assessment:

  • Open-mindedness (the preparedness of the individual to treat the representatives of other country and nation with respect and take into account one’s thoughts and ideas);
  • Expectations (employee’s ability to move to another location without issues and communicate utilizing the foreign language);
  • Respect for other beliefs (the way the expatriate can treat religious and political beliefs that differ from one’s own);
  • Trust in people (the employee’s attitude towards other people and capacity to trust them and readiness to create new personal and professional relationships);
  • Tolerance (the wish and ability to merge into the new environment and working group and to adapt to unknown circumstances);
  • Locus of control (the extent to which the expatriate have control over one’s life including the ability to change and regulate the events, in which one is involved or those that influence him/her in a particular way);
  • Flexibility (the readiness to accept the decision-making model different to the usual one and the capability to solve problems);
  • Patience (one’s ability to be calm and resists stress that occur due to some events or people);
  • Social adaptability (the way the individual feels in a social situation;
  • Initiative (one’s wish and determination to work hard, cope with difficult issues, be a leader and make steps to enhance performance);
  • Risk taking (one’s attitude towards new things and concepts that were not earlier implemented and the ability to take responsibility for their utilizing);
  • Sense of humor (the ability of the employee to cope with difficulties with reference to humor, which is likely to enhance the relations between the personnel);
  • Interpersonal interest (creation of new valuable relations);
  • Spousal communication (the interaction between the spouses whose lives changed due to the expatriation) (Josien, 2012).

Thus, it can be seen that the selection procedures are conducted in the host company but their effectiveness is usually seen when the expatriate is already abroad. That is why the fact that the person is sent back earlier does not mean that the only reason for failure is that one neglects his/her duties and is not experienced enough. The cause of the expatriate failure is hidden much deeper, and it is the mistake made during the selection.

To make sure that the employee will manage one’s duties effectively and will not face lots of difficulties, the company is to provide pre-departure training for one to realize new responsibilities and adapt to the peculiarities of the culture. Thus, the individual is to practice the language, get familiar with the culture and find out the most appropriate ways to manage personal life. That is why the involvement into the life of employees in the international organizations is much higher than in the domestic ones (Harzing & Ruysseveldt, 2004). Thus, the employees will learn rules of communication accepted by the representatives of the foreign culture and avoid misunderstanding. They will also enhance their skills of communication with the help of technologies (E-mail, Video conferences, etc.).

According to the researchers, the most frequent problems that prevent the worker from successful accomplishment of the international assignments are related to family issues. It was concluded that the responders treated “family adjustment (65%), spousal resistance (53%) and spouse’s career (45%) as the most critical roadblocks to acceptance and success of international assignments” (Chew, 2004). In this way, it is seen that the employee is highly affected by the family members, and if the spouse or/and children feel uncomfortable in the new country, the worker will also be under the pressure. That is why it is significant to involve the family in the training.

With the help of pre-departure training, the expatriate improves relational skills that are essential for the interaction with relatives, new co-workers, and many citizens. It is aimed at alteration and improvement of the way the employee behaves and treats individuals, concepts, and events. Training can help the person to find a common language with others, encourage to search for new acquaintances, resist to stress and adapt to other issues.

So it can be concluded that the expatriate failure is more than just an unplanned return of the employee. It entails tremendous expenses and occurs mostly not due to the inefficiency of the employee when one works abroad but because of the mistakes made by IHRM department in the host. The issue deals mainly with the gaps made during the selection of the employee and one’s training. To deal with them the IHR managers are to utilize specific tools for the personnel’s selection that help to evaluate possible outcomes of the expatriate’s work. They also should make sure that the training improves the worker’s ability to adapt to new environment and interact with other people as well as his/her family’s.

References

Atlas corporate relocation survey results. (2015). Web.

Bussin, M. (2015). Expatriate compensation. Randburg, Republic of South Africa: Knowres Publishing.

Chew, J. (2004). Managing MNC expatriates through crises: a challenge for international human resource management, Research and Practice in Human Resource Management, 12(2), 1-30.

Dowling, P., Festing, M., & Engle, A. (2008). International human resource management: managing people in a multinational context. Boston, MA: Cengage Learning.

Harzing, A., & Ruysseveldt, J. (2004). International human resource management. Thousand Oaks, CA: SAGE Publications.

Josien, Laurent. (2012). Enhancing expatriate selection: measuring the strength of acculturation. Journal of International Business Research, 11(1), 83-92.

Przytuła, S. (2009). The reasons for managers – expatriates’ failure and their problems at work. Journal of Intercultural Management, 1(2), 122–134.

Rao, P. (2008). International human resource management. New Delhi, India: Excel Books India.

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