Academic journal article Review of Business

Successful Expatriation and Organizational Strategies

Academic journal article Review of Business

Successful Expatriation and Organizational Strategies

Article excerpt

With more American companies going global, managers need to focus on overseas operations and employees who are sent abroad. This article addresses three key areas for improving expatriate performance: 1) tying it to international operations; 2) tying training and development to overall goals; and 3) capturing/managing expatriates' international knowledge.

Introduction

American companies have made their presence felt in most countries around the globe--through exports, direct investments and joint ventures. And international operations are making a growing contribution to the bottom line of major U.S. organizations. In 1999, for example, 57 percent of Motorola's total sales, 50 percent of Caterpillar's and 54 percent of Baxter's came from outside the United States (respective 1999 annual reports).

The growth of the international sector means more and more American managers need to have some knowledge of operations that extend beyond our borders. One way is through working abroad and "expatriation." An expatriate is an employee who moves from one country to another while remaining on the employing organization's payroll.

While some progress has been made in selecting and training expatriates (13), many of the problems identified in the 1980s are still with us today (2,11). These include: inadequate selection procedures, lack of training, premature departure from foreign assignments, ineffectiveness of expatriates, and family problems and influences on job performance.

This article addresses the question: How can the success of expatriation be improved? We identify three key factors that contribute to current problems, and we discuss ways to improve performance in these areas:

1. Expatriation needs to be tied to the importance of international operations to achieve the firm's strategic objectives.

2. Training and development of expatriates should be tied to overall organizational goals.

3. The organization needs to systematically manage the international knowledge expatriates acquire.

Of course, many factors contribute to the international success of an organization. Among these are the strategic location of markets, competition, financial issues and pricing, and government regulations. In this article, we focus on the role of expatriates, since they play a vital role in all of these areas.

Tie Expatriation to International Operations

Palmer and Varner identify three stages of decisions for determining international staffing (8). In stage 1, the organization determines the importance of international operations. That need ranges from very low to very high. A company that exports to one foreign country using an outside export agency has little need to develop policies and mechanisms for expatriation. At the other end of the spectrum we have companies like Motorola, Coke and Baxter, which have a strong presence in many different markets. Since the international contribution to revenue is high, and since these companies actually operate in foreign countries, successful expatriation becomes crucial to their success.

In stage 2, the organization determines the nature of international assignments. These assignments can range from short-term with focused responsibility, to long-term with broad responsibilities. A company with limited international involvement - where this involvement is not critical to the organization's success - may send employees on short-term assignments abroad (lasting anywhere from a couple of days to several months). These assignments may focus on specific technical issues or negotiation of well-defined issues. On the other hand, a company where international operations are crucial, such as Caterpillar, may send numerous expatriates abroad for several years, giving them broad-ranging authority.

In stage 3, the organization determines what developmental activities are necessary to prepare personnel for foreign assignments. …

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