International Human Resource Management

Analysis of the case study: Management of Expatriation and repatriation for novice global player prepared by Yehuda Baruch

Akua Serwaa Ansah Grenoble Graduate School of Business MIB 31 Group A

INTRODUCTION Sending company executives and employees abroad to manage company subsidiaries and other operations is a very hectic duty for most companies and the HR staff who man such operations. Every growing company with oversees operations without doubt needs to expatriate some of its employees to oversee other operations and ensure that the original goal and strategy is firmly being pursued. However expatriation tends to be a complex and expensive issue that requires that attention is given to several aspects of the life of the individual that goes beyond work related issues. This includes cultural training, family adjustments, costs of moving and settling, language training and personal attitudes, needs and goals, etc. it is in this regard that this case is being assessed to illustrate some of the problems companies and their Human Resource divisions face when managing expatriation and the measure they take to regulate these issues to ensure that the overseas assignments embarked upon by their employees are a success for the company. ILLUSTRATION OF HR PROBLEM The case entitled Management of Expatriation and Repatriation (Yehuda Barach 2002) assesses the need for expatriation for growing companies and the issues to address when managing it. One of the main areas identified is expatriate adjustment which lies at the heart of all the structures being put in place in the case as a means of managing expatriates. The case tends to elaborate on the possible strategies that can foster the satisfaction of potential expatriates especially in small sized companies who are new to the global front. Again with reference to the case, the author makes an interesting indication that such companies cannot merely jump to following the steps of already established MNCs who have clearly had years of experience in implementing such strategies. They therefore need to improvise to find strategies that as new comers suit their company goals. As a medium sized firm with the intention of becoming a global player in the finance industry, the company studied in the case is seen to be confronted with difficulties in the face of managing expatriate satisfaction and adjustment. This comprised the inability to implement strategies to sustain the interest of expatriate executives in pursuing the international positions. In fact from the start there is the difficulty in attracting potential expatriates to very important international assignments. The reduction in the interest or zeal to pursue expatriate assignments was attributed to the difficulties in adjusting to the new environment which tends to affect the performance of the individuals in their overseas duties. Therefore it is the intention of the company to continuously improve upon HR processes to be able to properly control this problem as the company grows. This is by reviewing their compensation packages, adjustment programmes and involving the potential candidates in the entire process to allow knowing exactly what their needs are and attempting to structure some of their policies in line with this.

COMPANY BACKGROUND FinCorp is a promising company that provides financial services to its clients. This includes loans and insurance services. It began its operations in the UK as a local firm and for more than two centuries managed to grow into a national firm by expanding its operations within and without the UK. It has over 12000 employees in the UK, however in the face of the fierce competition which has penetrated the UK market over the years, FinCorp has set as one of its main targets to become an international leader and expand its operations to the international front. It has therefore established small subsidiaries in the far and Middle East and intends to focus on the European Union as a major target market. This clearly indicates that it is new to the global market and is therefore working on strategies that vary from the usual path taken by most already experienced MNCs. COMPANY STRATEGY The main strategic focus of the company is to become an international competitor in the financial industry and be a leader in insurance services. Its strategies are therefore aimed at supporting its further expansion overseas. To begin with the company has established to target the European Union as its home market rather than focus only on the UK and the Middle Eastern countries where it currently has offices. Aside from that, it is also their intention to reexamine the existing operations that they have in the other parts of the world to ensure that they are coherent with their current strategy. One of the strongholds of the company is its culture of placing strong value on its employees to emphasize their importance as assets to the company. This enabled them to make compromises for their expatriates to ensure that they are able to adjust to the international assignments that they are given. Another strategy that they adopted in the light of the difficulties in encouraging their employees to undertake expatriate assignments was to employ people from outside for specific positions. FinCorp also took the initiative to have guidelines structured for their expatriation recruitment processes. One of the distinct measures highlighted was to ensure the selection of candidates who possessed the specific skills and experiences to suit the requirements of the positions they are to assume in the locations to which they were to be posted. FinCorp also ensured that the appointed candidates possessed the potential of becoming good managers. The idea was to enable these managers to build on their skills and capabilities by gaining experience in the management roles that they assume overseas. This would add value to the individual which would serve as a form of incentive and in addition add value for the company as well. To add to that, in order for them to maintain control over their overseas operations and keep the subsidiaries in line with the operational direction expatriates from the UK send overseas serve as senior managers in the subsidiaries.

HR PRACTICES FOR EXPATRIATION MANAGEMENT One of the initial directions that FinCorp took was to sell expatriation to candidates to persuade them to accept. As a result selection ended up with those who were willing to go and not necessarily individuals who were suitable for the position. This was due to the fact that it was a novice to global expansion and targeted countries which were considered as undesirable. Over the years, FinCorp has grown to adopt and implement specific HR practices in the management of the various issues that need to be taken into consideration for expatriation assignments. The overall selection process involves interviews and internal testing methods to guide them in making the right choices for the positions abroad. These methods enable them to assess very important qualities which range from the personality of the candidate to his or her openness to cross cultural abilities. To be specific, some of these abilities include communication skills and the ability to speak foreign languages, or an individuals interest in learning new languages. Although from the case there is a clear indication that the company is not highly confronted with complicated dual career issues, they still take them into account and make provisions in the face of such challenges. They have policies which direct them to offer jobs to the spouses of expatriate mangers when need be. With regard to remuneration, they instilled fairness by considering employees who were sent to less desirable locations. These locations were considered as less desirable in terms of living conditions and other benefits. For Example, those sent to the Middle East received more generous packages because of the environmental conditions and issues concerning local taxation. It was their intention to keep expatriates and deserving employees at similar earning level in terms of standard of living, pension schemes, and savings. The balance sheet approach was employed in remunerating their expatriates and preparing the expatriate compensation packages. Like many other multinational firms who apply the balance sheet approach in their compensations programs, FinCorp did likewise by providing their international employees with compensation packages that equalizes the cost differences between the expatriation position and the same type of assignment in the home country of the corporation or the individual. In this case, factors taken into account comprise taxation, social security, living expenses, and local salaries for similar jobs in the destinations country. Aside this, FinCorp made it a practice to present their expatriates with the opportunity to have consultation with one of the Big Five consultancy firms in relation to the tax implications of their packages. Furthermore the compensation packages presented to the expatriates include the continuation of some of the incentives which are then reduced gradually to avoid the sudden shock of change. In cases where agreed, upon repatriation contribution for certain incentives are maintained and then reduced gradually to avoid the sudden shock of change. Repatriates are given the option to make the choice between the fore mentioned and the reimbursement of certain expenses made like education fees.

Training sessions were conducted for potential expatriates and their spouses. They also sent candidates for pre-visits to familiarize them with their new destination and as well instituted means where expatriates were called to visit home once a year. The company also has set up a committee for managing career development for the returning expatriates to help them reintegrate into their home country and community. Other measures include having performance appraisals prepared by the mentors of the expatriates and the local office as well. HR STRATEGIES OF A KEY PLAYER IN THE INDUSTRY In order to have an overview of the general practices of companies which pertain to the finance industry, FinCorp will be compared with one of the big players in the UK when it comes to the finance sector. HSBC is a banking and finance company which has numerous services including loans and insurance which are the highlights of FinCorp. A comparison between these two different sized companies will show the ups and downs of new players and those with experience. HSBC has upheld a reputation of having impressive HR strategies and has managed to be elected on several occasions as the best place to work. The company has a great deal of experience with expatriate management and these shows in its provision of expatriate management financial packages to many corporations and individuals on international assignments. To give an overview of the selection policies adopted by the bank, it mainly begins from provision of notice of positions available to the employees for those interested in the development of their careers to present themselves as candidates for the assignment. Just like many other companies, to ensure that the right individuals are selected, they are taken through a series of interviews and tests to assess the innate and outer qualities of the individual. The company also attaches great importance to the provision of pre-expatriation workshops and training sessions to help develop any essential formal skills required as well as management training for intercultural environments. Mentoring and performance monitoring is also conducted to ensure that the individuals are on track. With regard to compensation HSBC has a distinct difference from FinCorp in the sense that the former increases the compensation of expatriate executives who are working in fast growing emerging markets which include China, India and Brazil. This has been said to drastically increase the overseas pay costs. However for the company it is a strategy to invest in these countries which have the potential of boosting profits, by increasing the pay of employees in those areas to ensure that the services delivered are impeccable. In order to ensure the comfort and easy adjustment of their international manager, HSBC also adopts a very competitive benefits package which includes, tax free salary, a performance-related bonus, 30 working-day holidays per annum, accommodation allowance, relocation assistance private medical care and a Pension scheme. To add to that, individuals are coached by providing all the necessary information about the living standards and the culture of the new location to prepare them for what lies ahead. For the sake of security and excellence financial companies need to ensure the satisfaction of their employees in general. As FinCorp grows it will be able to initiate more ambitious strategies which will demand more investment in their expatriates.

LINKS WITH OTHER HRM DIMENSIONS The overall general idea of holding their human resource in high esteem and thus trying to make sacrifices to ensure that they get the people they need to help establish their overseas operations, can be linked with the policies that they have generated over the years to ensure satisfaction. The listed policies show a conscious effort to increase the satisfaction of the expatriates to enable them to properly adjust during their terms. Aside having good compensations packages the repatriation policies enables the expatriates to have some confidence in knowing that their return will be properly managed to cushion the fears of dissatisfaction upon return to their home country. The possibility of gaining more experience and returning to a properly organized career development program to ensure that finding a new position or being able to fit in to the old company will have support from the company. Trainings conducted for expatriates including their spouses will facilitate the process of adjustment by ensuring that the spouses do not have problems with integrating into the new country. The companys step in supporting their spouses leads to the sacrifice of their own careers therefore they face much more difficulties in getting used to the new environments where they are often idle. The further step of the company in sometimes finding jobs for these individuals will definitely promote their ability to settle in. The initial recruitment phases help to tailor the choices of the people they select to suit the assignments that they present to ensure easy adjustment. Going through issues of personality and cultural attribution would help to facilitate adjustment by showing that the individuals already possess the attributes that will enable them to cope much better with foreign environments.

CONCLUSION To sum it all up, from the study conducted in FinCorp showed that the three main factors were considered as important when deciding to accept or reject an international assignment. In the view of the employees these were remuneration, language and position. However the variations in the responses showed that the view points of expatriation are different and relative to the status of the individual. Therefore those who are single thought differently from those who had families and indicated that it would serve as a deterrent to them accepting international assignments. It is in this regard that FirmCorp adopted various strategies to help promote its ultimate goal of ensuring expatriation satisfaction as it pursues its international expansion. It therefore applies recruitments policies, efforts to efficiently prepare expatriates and the spouses for their new location. With the aid of these good compensation packages and the continuous support of the company from expatriation till repatriation, FinCorp is likely to succeed in becoming a competitor in global financial services. .

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