Special Topic 4

INTERNATIONALIZATION OF HUMAN RESOURCE MANAGEMENT

A4.1 CONTEXT

There are broadly three frameworks or perspectives which are used while discussing International Human Resource Management (IHRM). They are:

• The universalist perspective
• The culturalist perspective
• The institutionalist perspective

The universalist perspective assumes that although Human Resource Management (HRM) might be in different stages of evolution in different countries, at the end all would rise to develop into a set of standard Human Resource practices across the world.

The culturalist perspective is in disagreement with the universalist perspective and it argues that there are inherent differences between nations and states and that these differences are enduring and therefore have to be recognized.

The institutionalist perspective recognizes the difference between societies but does not agree with the prescriptive approach of the culturalist perspective. It believes that the differences in HR practices between countries owe more to the institutional forces which shape society than to any supposed national culture.

A4.1.1 Defining International HR

In general, HRM is the management of human resources in an organization. The question which arises is what makes international HR different or more specialized. While domestic HRM pursues HR activities of procurement, allocation and utilization of resources within one national boundary, IHRM goes beyond the national boundary to encompass the complex country factors too.

 

Figure A4.1 A model of IHRM

 

 

We shall take the help of a model propounded by Morgan (1986) to understand how (Figure A4.1).

Morgan defines IHRM as the interplay among three dimensions:

1. Human resource activities: These would typically mean the procurement, allocation and utilization of resources.
2. Countries: The nations or states where the operations of the firm are located. They may be:
   1. Host country: Where the firm's subsidiary is located.
   2. Home country: Where the firm's headquarters are located.
   3. Other countries: Which may serve as the source of talent, finance and other inputs.
3. Type of employees: There are three categories of employees of an international firm:
   1. Host country nationals (HCN): Employees who are nationals of the country where the subsidiary has its operations
   2. Parent country nationals (PCN): Employees who are nationals of the home country of the firm
   3. Third country nationals (TCN): Employees who are neither from the home nor the host country

For example, an Indian multinational Infosys employs US citizens in its US operations (HCNs), often sends Indian citizens to its South East operations (PCNs) on an assignment and may send some of its Chinese employees on a project to Taiwan (TCNs).

A4.1.2 Difference Between Domestic and International Human Resources

While the activities of HR necessarily stay the same, the complexity of operating in diverse countries with a diverse mix of people in a variety of engagements makes IHRM different from normal HRM in practice. The complexity of IHRM can be attributed to six factors and they are:

1. More HR activities: Besides all that a domestic HR department does, the International HR departments have to engage in a new set of activities. These would mean handling international taxation (taking care of home and host country tax liabilities), international relocation and orientation (pre-departure training, immigration help, providing housing) and various administrative support services such as provision of translation services for internal and external correspondence etc.
2. The need for a broader perspective: When policies and procedures have to be designed for locations across the world, it needs to be done with a broad perspective which fits in as widely as possible. Where customization of policies is done, they have to be done in a way that it follows the grain of justice and logic. For example, an American oil major pays its employees (PCNs) a hardship allowance when posted to Vietnam, but it is not clear whether the hardship allowance applies to someone who moves from Angola to Vietnam (TCNs).
3. More involvement in employees’ personal lives: An international relocation facilitation by the HR department would require it to be involved in seemingly minor issues in the personal lives of the employees. It would be involved in housing arrangements, schooling arrangements, visa facilitation for the family, organizing leave passage trips and also with final repatriation of an employee back to the home country.
4. Changes in emphasis as the workforce mix of expatriates and local varies: As operations in a foreign location mature the mix of PCN, HCN and TCNs would change with the tilt towards HCNs. With these changing ratios the HR department has to continuously work on developing programmes and initiatives to strengthen the local base of the subsidiary. These would involve sending HCNs to headquarters for development programmes and staying in touch with HR at the headquarters to use the subsidiary as a training base for TCNs.
5. Risk exposure: The cost of going wrong in international HR is very high. For example, an expatriate's failure to perform or adjust would mean a huge financial loss which would include direct cost such as their salary, relocation costs, training costs and indirect costs such as loss of opportunity and souring of relationships at the host country's end. While some of the risks such as international selection can be managed, there are other risks such as those of safety of the expatriate employee. Consider a terrorist strike (like those in India), civil strife (Egypt and Libya) and even natural disasters (Tsunami in Japan)—these are potentially extremely risky situations for international HR departments to manage.
6. Broader external influences: The rules and regulations of the host country regarding employment and affirmative action have to be adhered to, to operate in the country. For example, some Arab countries require a firm to give a minimum percentage of jobs to local Arabs. Besides this labour in developing and lesser developed countries is cheaper, as well as, less organized whereas, in the developed countries it is more organized and the government regulations are more pervasive.

The above factors generically describe how IHRM is different from HRM. The extent of the difference will depend on:

• The cultural environment of the host and parent country and the difference between them.
• The industry (or the industries) that the multinational is involved in.
• The extent of the reliance that the subsidiary firm has on the home country domestic market.
• Attitudes of the senior management.

A4.1.3 Place of the HR function in Various Structural Forms of the Organization

The HR function also grows and transforms with the growth of the organization. Depending on the requirement the HR function can be either centralized or decentralized or a mix of both. Centralized would mean that the Corporate HR at the headquarters is well resourced and handles a wide range of functions. It keeps and maintains control over the key resources. Decentralized would mean the HR function at the headquarters is devolved to be a small team to take care of senior management issues only.

The place that the HR function has within an international organization depends on three factors:

1. Mode of operation and the stage of development of the transnational organization.
2. Organizational structure of the business.
3. Kind of control the headquarters want to exercise.

When an organization chooses to enter a new territory, it has a variety of options—let us take a simplistic look at the chart below to understand how the decision-making on the mode of entry into a new market is done (Figure A4.2).

Apart from the structure of the operation, another important hit is the stage of development that the organization is in towards becoming a transnational organization. The expanse of the operations would then dictate the kind of an organizational structure that the firm adopts.

 

Figure A4.2 Modes of entry into the international market

 

Table A4.1 Stages of development of the transnational corporation

 

As an organization develops into a transnational organization, it goes through various changes of expansion (summarized in Table A4.1). While its expanding, it also chooses its structure to best suit the requirements of business and the necessities of the business environment. Consequently, in the initial phase it might seek to pursue its international business through an export manager or through a sales subsidiary. On the basis of the business, it might opt for a product structure, a geographical structure, a matrix structure or a network structure.

A firm exercises control through various formal and informal mechanisms. Formal mechanisms would mean organizational structure, reporting systems, budgets, performance targets, formal communication and informal mechanisms would include use of personal relationships, informal communication and the company culture. Depending on the level of control that a firm wants to exercise, it will choose informal or formal methods. For example, formal methods would require direct participation and control by the parent country HR and hence a more centralized HR function.

A4.2 MANAGING AND SUPPORTING INTERNATIONAL ASSIGNMENTS

A4.2.1 Approaches to Staffing

The international firms face a different kind of a challenge owing to the international nature of business. It has the option to hire from its parent operations (i.e., a PCN), hire from the local market (i.e., a HCN) or seek the right person from a third country (i.e., a TCN). How it responds to this question would depend on its general staffing policy on key positions, constraints placed by the host government on hiring and availability of talent. Each has its own advantages and disadvantages as discussed in Table A4.2.

The general staffing policy of an organization can be dictated by any of the following four approaches:

1. Ethnocentric: Ethnocentricity (ethnocentrism) is a belief in the superiority of one's own ethnic group. The firm basically believes that parent-country nationals are better qualified and more trustworthy than host country nationals.
2. Polycentric: Polycentricity (polycentrism) is a belief that local people know the local environment better than outsiders.
3. Geocentric: Geocentricity (geocentrism) is the notion that the best people should be employed, regardless of their nationality.
4. Regiocentric: Regiocentricity is the variation of staffing policy to suit particular geographic areas.

A4.2.2 Types of International Assignments

There are primarily three reasons why people are sent on international assignments:

1. Position filling: To take the services of a person not available locally.
2. Management development: To develop employees’ perspective by having them work out of a different location from their home location or drive corporate values in a subsidiary by have PCNs work there for a while.
3. Organizational development: Employees may be transferred for a variety of strategic reasons such as to gain increased control, knowledge transfer, development of policies and procedures.

Table A4.2 Staffing options

Parent Country Nationals	Host Country Nationals	Third-Country Nationals
Advantages Organizational control facilitated Development opportunity for resources Skill and knowledge transfer can done Compliance to company objectives facilitated	Advantages No cultural adjustment problem No administrative hassles (work permit, support to settle down) Encouraging for other HCNs Continuity of management	Advantages May be less expensive than PCNs and HCNs May be better suited to culturally adjust than PCNs
Disadvantages Growth opportunities limited for HCNs Adaptation to culture may take time Host country subsidiary denied opportunity to contribute to processes Differential compensation between PCN and HCN	Disadvantages Exposure outside home location limited PCNs denied opportunity to gain perspective May lead to national units rather than a global corporation	Disadvantages Host country might not encourage TCNs Possible national animosities have to be considered before transfers

Whatever the reason for the transfer of an employee on an international assignment may be, the ways in which their assignment may be structured are varied. Broadly, these are classified as short-, medium- and long-term assignments depending on the period of the assignment. The long-term assignment (ranging from one to five years) is the traditional expatriate assignment. Other than these standard arrangements now there are various non-standard methods of structuring assignments too. Here is a list of the popular types of international assignments:

• Commuter assignments: Employee commutes from home country on a weekly or a bi-weekly basis to the place of work in another country.
• Rotational assignments: Employee commutes from home country to a place of work in another country for a short-set period, comes back to home location before proceeding on to another place of work.
• Contractual assignments: Employees are sent on an assignment for a fixed time period, usually 6–12 months.
• Virtual assignments: Employees do not relocate to the host location but manage, from the home-base, international responsibilities.

A4.3 RECRUITMENT AND SELECTION OF EMPLOYEE FOR INTERNATIONAL ASSIGNMENTS

A4.3.1 Issues in Employee Selection

Recruitment and selection remain same in essence, whether it is for domestic assignments or international assignments. What changes or adds on when hiring for an international assignment is a set of competencies not essentially required for a domestic position. There have been many myths about hiring for an international assignment. Some of them are:

• Myth # 1: A universal approach to management works—This means what work in country A has to work in country B.
• Myth # 2: It is possible to acquire multicultural adaptability and behaviours in a short time—If the skills are in place then building adaptability to a multicultural environment is a non-issue. The fact is that most expatriates fail because of their inability to adjust culturally.
• Myth # 3: All successful international managers are of one kind—A manager who is successful in a country A, a similar manager if hired will be successful in country B.
• Myth # 4: Mobility is unquestionable—More often than not people are always ready to move.

A4.3.2 Factors Moderating Performance of an Expatriate

Inability to Adjust to Foreign Culture

Research over many years have proved that the primary reason for expat assignments to be cut short is inability to adjust to foreign culture and the components of this are—spouse/partner dissatisfaction, inability to adapt, difficulties with family adjustment in the new location, difficulties associated with different management styles, culture and language difficulties and issue associated with the accompanying partner's career development (Figure A4.3). The term used to describe this state was called ‘Culture Shock’ and was first named by Kalervo Oberg (1960) who described it as ‘precipitated by the anxiety that results from losing all our familiar signs and symbols of social intercourse’ (1960).

The process of adjustment (as shown in Figure A4.4) constitutes of four phases:

• Phase 1—Honeymooner or tourist (Fun): When the positive attitudes and expectations, excitement and a tourist feeling prevail (which may last up to several weeks).
• Phase 2—Culture shock (Flight): The crisis stage when cultural differences result in problems at work, at home and in daily living. Expatriates and family members feel homesick and disoriented. Many never pass this stage.
• Phase 3—Recovery (Fight): The temptation to judge people and things that are different as bad or foolish. This later on gives way to a period of recovery in which the expatriate gradually becomes able to understand and predict patterns of behaviours use the language, and deal with daily activities, and the family starts to accept their new life.
• Phase 4—Adjustment (Fit): The stage in which the expatriate and family members grow to accept and appreciate local people and practices and are able to function effectively in two cultures.

Figure A4.3 Moderators of expatriate performance

Length of Assignment

It has been generally observed that the longer the assignment (usually four to five years) the easier it is for them to adjust. There is a major difference between American and Japanese companies in this regards. While American companies have a term for two to three years, Japanese expatriates have a term of close to five years and thus they get the time to adjust and perform up to their optimum level.

 

Figure A4.4 Culture shock

 

Willingness to Move

It has been seen that those employees who move in willingly and also have a willing family accompanying them are less likely to face a problem of adjustment than the others. The top five incentives to relocate are: (1) improved financial situation, (2) improved career opportunities, (3) attractive location, (4) spouse/partner willing to relocate abroad and (5) availability of cross cultural and language training.

Work Environment-related Factors

Certain factors related to the commitment of the parent company to the host-country operations, level of support from management in the home and host country, job satisfaction are some of the factors which moderate expatriate performance.

The Employment Relationship

This refers to the level of trust between the employer and the employee regarding the employment contract.

Some of the best practices followed by firms to help the family cope with the change are:

1. Intercompany networking: Multinational companies network among themselves to explore employment opportunities with one another to help place the family members of a relocating expatriate.
2. Job hunting assistance: This would mean helping the spouse/partner find a job. The assistance might be in the form of career counselling, reimbursement of employment agency fee or simply assistance with the kind of visa.
3. Intra-company employment: Not practised by a lot of organizations this means sending the husband and wife both to work for the organization at the same location.
4. On-assignment career support: Some organizations help the spouse or partner improve career skills through either counselling or a lump sum payment to pursue either a course or a seminar or pick up a skill.

A4.3.3 Selection Criteria

The factors to be considered in expatriate selection are:

1. Technical ability: These are the functional or technical skills that are required for the job and which should be assessed in the person before selection. Since these skills are the easiest to measure they end up being the only skills that are verified in a candidate. Though much has already been written about it, these are not the only skills which can ensure the success of an expatriate at their job.
2. Cross-cultural suitability: Along with technical skills, the candidate should also be assessed for cross-cultural skills to operate in a new environment. These would include cultural empathy, adaptability, diplomacy, language abilities, positive attitude and emotional stability and maturity.
3. Family requirement: If candidates have technical and cross-cultural skills it still does not mean that they would succeed until their family is able to adjust and support their stay in the country. While the employee works it is usually the spouse who has to ensure the adjustment of the family in the foreign location. It has been seen many a times that expats cut short their stay due to family considerations like child's education or infirm parents that need to be taken care of.
4. Country/cultural requirement: The host country might not issue a work permit or a work visa until and unless it is convinced that the skills required are not available locally. In addition, for dual working couples it is important to get a visa which allows the spouse to work. These become important considerations to encourage or discourage an employee's mobility. International HR executives have to be up to date with the country legislation in all these areas.
5. Firm's requirements: At times, the firm has its own imperatives whether it wants to hire PCNs, TCNs or HCNs for a given position. Besides these, there might be other situational factors too. If the mode of operation is such that the local partner has a say on the hiring, then the firm has to comply. If the assignment is of a short nature (say 6–9 months), then family need not be essentially concerned because in such a situation the family does not usually move. If the expatriate hire is meant to transfer knowledge and build local competence then an essential criteria for assessment shall be the candidate's training skills.
6. Language: Differences in language often prove to be a big hurdle in the optimum performance of an expatriate employee. It is, therefore, important to assess the language skills of the employee.

A4.4 TRAINING AND DEVELOPMENT

The HR managers must assess the training needs of host-country workers and devise training programmes that ensure that they can do their job well. The expatriates, however, need focussed attention. Expatriates are sent on an international assignment either for contribution by the expat to the location (i.e., for transfer of their skills to the local employees or for ensuring process adherence in line with the company objectives) or for the expat to gain a broader perspective (for development) by working in a foreign location with culturally diverse people. In both the cases the expats have to be trained to prepare them for the assignment.

A4.4.1 Preparation and Training for International Assignment

The generic goal of the effort is to increase the manager's effectiveness in the new environment. The specific outcomes desired are (Figure A4.5):

• Knowledge about cultural, political, economic, business, legal and social factors of the host country.
• Awareness of needs and expectations of the different parties interested in international operations.
• Awareness of the problems of family relationships in the host country.

 

Figure A4.5 Key features of preparation and training for international assignments

 

Employees sent on international assignment need focussed trainings on three areas:

1. Area studies: Factual knowledge of the historical, political and economic environment of the host country.
2. Practical information: Knowledge and skills necessary to function effectively in a country, including housing, health care, education and daily living. These would include reviewing understanding of terms and conditions of assignment, increasing knowledge of host country, imparting working knowledge of the foreign language. All this can also be achieved with the help of a ‘look and see’ trip.
3. Cross cultural awareness: Ability to interact effectively and appropriately with people from different language and cultural backgrounds to increase cultural awareness.

In addition to the usual methods of training, organizations also use a ‘look and see’ trip to acclimatize the employee and their family to the impending changes in their lives. They can also be allocated a relocation agent who introduces them to the practical aspects of the living experience such as housing, healthcare, shopping, schooling etc. till the family gets settled. After this a cultural buddy or a mentor from within the organization may be given to the employee to turn to in case of any difficulty or to seek guidance on aspects of daily life…

A4.4.2 Developing Employees Through International Assignments

John Pepper, the former CEO of Proctor and Gamble, stated: ‘Of all the career changes that I have had, the international assignment was the most important and developmental. It changed me as a person’.

Individual management development is what an expatriate gains from such an assignment. It can also be viewed from an angle of ‘job rotation’. It gives the employee a chance to enhance their abilities and in turn exposes them to a range of jobs, tasks and challenges.

A4.5 COMPENSATION IN THE INTERNATIONAL ENVIRONMENT

The challenges of international compensation lies in two facts—keeping up with the demands of the host environment (changing compensation rules in a country, levels of compensation, peculiarities of taxation and social security requirements etc.) while maintaining a strategic seemingly uniform pattern of compensation policies, practices and values in the organization across international locations.

When developing international compensation, the organization wants to:

• Maintain a policy consistent with the overall strategy and structure of the organization
• Attract and retain the best of talent
• Facilitate a seamless moving of people across borders
• Keep it easy to reduce administrative hassles

A4.5.2 Components of International Compensation

The key components of an international compensation programme are:

1. Base salary: The base salary is the primary component of the salary because all other allowances (e.g., hardship allowance) and benefits (e.g., housing, healthcare benefits) are a function of the base salary. There are two approaches to deciding the base salary:
   1. Going rate approach: According to this the salary is based on the local market rates. This rate is determined by surveying local nationals (HCNs), expatriates of same nationality, as well as expatriates of all nationalities. If the pay in the host country is very low, then the base pay will be adjusted by supplementing with additional payments. While the advantage is that there is parity between employees at the location, this can lead to parity problems between employees with the same or similar job profile across diverse international locations of the organization. This may specially pose a problem when the expatriate has to return to the home location.
   2. Balance sheet approach: Commonly used by multinational corporations, the basic objective of the balance sheet approach is maintenance of home country living standard plus a financial inducement. The home country pay and benefits form the foundation of the approach. Adjustments to home package to balance additional expenditure in host country are done. Financial incentives (like a hardship allowance) are added to make the package attractive. While this approach covers up all the disadvantages of the going rate approach it can lead to disparities locally and also be complex to administer.
2. Allowances: There are different kinds of allowances which are given as a part of expatriate compensation. Some of them are:
   1. Cost of living allowance (COLA): This is given to compensate for the differences in expenditure between home and host country. Data for this is very difficult to source and often corporations have to take the help of specialist consulting firms.
   2. Housing allowance: The endeavour is to help the expat maintain the standard of housing from their home country. For this either the company provides accommodation or the company provides for a housing allowance in which the employee selects where they want to live.
   3. Home leave allowance (also known as leave passage): Most multinationals pay for one round trip a year for the expat and their family to meet friends and relatives at the home location.
   4. Educational allowance: This allowance is for the education of the children and is a standard part of expat compensation. This is usually in the form of reimbursement of tuition fee for the children's education, reimbursement of expenses towards uniform, books and transportation to and from school.
   5. Relocation allowance: This covers moving, shipping and storage charges, temporary living expenses, down payments for housing lease, expenses for a look and see trip etc. Allowances regarding perquisites (car, club membership, domestic help and nannies for the children) are also considered at times. However, that would depend entirely on case-to-case basis.

Benefits

The complexity inherent in international benefits often brings more difficulties than when dealing with other elements of the compensation. It is very difficult to deal with insurances (personal, accident, medical), social security (provident fund, superannuation, gratuity) etc. because none of these are transportable across borders. Various decisions that the organization has to take are whether to continue the home-country programmes or enrol fresh in the host country (if it is allowed) or give a combination of both. Mostly corporations tend to continue the social security programmes at the home locations and treat the others the same as on a short- or long-term contract at the host location.

Taxation

Taxation is a big issue in compensation for expatriates. Often the expatriates have to file their taxes in the home and host country and this can be an onerous task. If the tax liability to the employee is very high it can make the pay and benefits not look very attractive. Corporations adopt two kinds of approaches to handle the taxation problem:

1. Tax equalization: The organization withholds an amount equal to the home-country tax obligation of the PCN and pay all taxes in the host country.
2. Tax protection: The employee pays up the amount of taxes they would pay on compensation in the home country. In such a situation, the employee is entitled to any windfall received if the total taxes are less in the foreign country than in the home country.

A4.6 PERFORMANCE MANAGEMENT

Performance management is a process that enables the multinational to evaluate and continuously improve individual, subsidiary unit and corporate performance, against clearly predefined, preset goals and targets. The international nature of the business does add complexity to this process.

A4.6.1 Challenges

1. Whole versus part: In spite of being one organization, each subsidiary of the multinational is a separate unit on its own. Hence, there is fine line of being one whole, and yet a part has to be recognized in the performance management process especially during goal setting and then evaluation too.
2. Non-comparable data: Data across subsidiaries regarding performance cannot and should not be compared because each has a context against which it is set and the context in one country can be vastly different from another country.
3. Volatility of the global environment: The turbulence in the global environment regarding financial crises, terrorist attacks, natural calamities are such that goals can never be looked as cast in stone. Depending on the situation the enterprise within logical limit should be flexible about the goals set.
4. Separation by time and distance: Though information technology has done a lot to bridge the gaps, but physical distances, time-zone differences and frequency on contact between the subsidiary and the parent company are limitations which can never be overcome fully and thus do have a bearing on the performance management process too.
5. Variable levels of maturity: People across the world are different and performance standards, work ethic of each country is different on the maturity scale of professionalism. Hence, the same yardstick cannot be used to measure the performance of employees across subsidiaries.

A4.6.2 Performance Management of International Employees

The variables affecting expatriate performance are:

• Compensation package: Remuneration and reward is an important component in the performance equation. More often than not employees take up expatriate positions either for the financial rewards it would reap or as a natural step for career progression. If these expectations are not met then the motivation to perform shall also be dampened.
• Task: There are four categories of task which an international assignment might mean. They are: (1) the chief executive officer or the subsidiary manager, (2) the structure reproducer who is assigned the job of building or reproducing within the subsidiary a structure similar to that in the parent nation, (3) the trouble-shooter who is sent to analyse and solve a particular operational problem and (4) the operative, a person who is sent to perform a functional job. The performance management method or technique would be diverse in each of these categories.

The tricky bit lies in the fact that the role giver is the headquarters, the role is performed in the subsidiary and the role interacts with the local employees. If the role perception between all concerned is not uniform, it will lead to role stress.

• Headquarters’ support: Though financial rewards and career progression are reason enough for an employee to perform well, the fact that they are moving with their family puts a certain kind of stress in their life. At this time support from the headquarters would make the adjustment to local conditions faster and help them with a smooth landing into their new assignment.
• Host environment: With its differing societal, legal, economic, technical and physical demands, the host environment can be a major determinant of expatriate performance. Apart from this the stage of international business, relationship between the organization and the JV partner, maturity of operations are all factors which have to be taken into account while managing the performance of the employee.
• Cultural adjustment—self and family: Though enough has been said about this yet it is never enough. The cultural adjustment of not only the employee but also the spouse or partner as well as the children affects the performance of the employee.

A4.7 REPATRIATION

Though a lot is discussed about expatriation, another important aspect of international assignments ‘Repatriation’ always gets a step sisterly treatment. Organizations assume that going home is about picking up where you left off prior to moving. However, this way of thinking totally ignores the effects of the passage of time and the impact of change. An expatriate is always irrevocably changed by the experience of living abroad. Re-entry stress or reverse culture shock occurs when what is anticipated as known or given is experienced as new and incomprehensible—when expectations do not match reality. Given the ‘taken for granted’ treatment that repatriation gets from the organization and the society at large leads to a lot of stress for the employee. Repatriation thus is a challenge for not only the employee but also the enterprise. Let us examine each one by one

Individual Reaction to Re-entry

Individual reactions can be clubbed under two heads:

1. Job-related factors: Returning always has its share of career anxiety. This can be due to many reasons. There might be no post assignment guarantee of employment. Where there is a guarantee the employees might not be sure whether their new role is a good one or not. They might be anxious that a period overseas might have caused a loss of visibility and hence might impede the process of being assigned to a good job. They might have anxieties stemming from what they have heard their home-based colleagues talking about changes at the workplace or leadership or processes. When there is work-on-return there might be problems about adjusting to the work. They might feel that their overseas stint has not exactly resulted in career progression. They might have problems adjusting to the new work style and the kind of work assigned to them. They might start perceiving their pay to be not adjusted well and interpret it as a loss of status too.
2. Social factors: Adjusting to a social life which looks like new can be a strain especially when everyone in the environment feels that you are returning home and expects you to behave just in the same way as you did when you left.

Organizational Response to Re-entry

Managing the process of repatriation is of concern to multinationals that desire to maximize the benefits of international assignments. A well-designed repatriation process helps in enhancing talent availability, return-on-investment and knowledge transfer.

1. Talent availability: If repatriated employees are promoted or given positions which capitalize on their international assignment then taking on an international assignment will be looked upon as a positive career move. On the other hand, if repatriated employees leave, there taking on an international assignment would be perceived as a risky move and would hamper the organization's ability to attract high-calibre staff for international assignments.
2. Return-on-investment: It is beyond doubt that sending an expatriate is an expensive proposition and the organization invests in it to reap some benefits. A well-designed repatriation process will help the organization do so.
3. Knowledge transfer: When expatriates work at a foreign location they develop skills and gain experience, knowledge and network relationships that can be used upon repatriation in some way or the other. In addition, to this repatriated employees can transfer their knowledge gained at the host location to develop others.

A4.7.1 The Repatriation Process

The repatriation process can be seen as four related phases quite similar to the expatriation process:

1. Preparation: This would mean developing plan for the future including finding out the role in the new position. The organization can help the employee with a checklist of items to be considered before returning home.
2. Physical relocation: This refers to the removing of personal effects, breaking ties with colleagues and friends and travelling to the next posting (in the case of repatriation) to the home country.
3. Transition: This refers to the period spent in temporary accommodation while making permanent arrangements for school, housing, banking etc.
4. Re-adjustment: This involves coping with company changes, reverse culture shock and renewed and different social demands.

A4.8 INTERPRETING CULTURES

Most challenges in IHRM emanate from the differences in cultures of different countries and societies. This is a problem which has faced generations and increasingly will continue to as business tends to become more and more internationalized. Jawaharlal Nehru in his ‘Visit to America’ had written:

If we seek to understand a people, we have to try to put ourselves, as far as we can, in that particular historical and cultural background. … It is not easy for a person of one country to enter into the background of another country. So there is great irritation, because one fact that seems obvious to us is not immediately accepted by the other party or does not seem obvious to him at all. … But that extreme irritation will go when we think … that he is just differently conditioned and simply can't get out of that condition. One has to recognize that whatever the future may hold, countries and people differ … in their approach to life and their ways of living and thinking. In order to understand them, we have to understand their way of life and approach. If we wish to convince them, we have to use their language as far as we can, not language in the narrow sense of the word, but the language of the mind. That is one necessity, something that goes even much further than that is not the appeal to logic and reason, but some kind of emotional awareness of other people.

This lack of awareness leads to gross misinterpretation of different cultures. Misinterpretations may emanate from:

1. Subconscious cultural blinders: Assumptions about other cultures depending on stereotypes and limited information.
2. Lack of cultural self-awareness: Lack of awareness about why we behave the way we behave.
3. Projected similarity and parochialism: Assumption that people are more similar to you than they actually are, or that a situation is more similar to yours when in fact it is not.

A4.8.1 Hofstede and Hall's Model of Culture

Hofstede (1994) and Hall (1959) sought to build a framework to become emotionally more aware of diverse cultures. Hofstede (from the late 1980s to the early 1990s) gathered extensive data on the world's cultures and generated his impressions of that data into charts and graphs that help to better understand the many subtle implications contained in his raw data. Based on his studies he identified five dimensions along which all cultures can be defined:

1. Power distance index (PDI): It is defined as ‘the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally’. (Hofstede 1994). A high power distance ranking indicates that inequalities of power and wealth exist within the society and that the less powerful members of the society accept this situation. A low power distance ranking indicates that the society de-emphasizes the differences between citizen's power and wealth. In these societies equality and opportunity for everyone is stressed.
2. Individualism (IDV): Hofstede (1994) defines this dimension as follows: ‘individualism pertains to societies in which the ties between individuals are loose: everyone is expected to look after himself or herself and his or her immediate family.’ A high individualism ranking indicates that individuality and individual rights are paramount within the society. A low individualism ranking typifies societies of a more collectivist nature with close ties among its members. In these societies ‘…people from birth onwards are integrated into strong, cohesive in-groups, which throughout people's lifetime continue to protect them in exchange for unquestioning loyalty.’ (Hofstede 1994).
3. Masculinity (MAS): This dimension focuses on the degree to which ‘masculine’ values like competitiveness and the acquisition of wealth are valued over ‘feminine’ values like relationship building and quality of life. A high masculinity ranking indicates the society values assertive and aggressive or ‘masculine’ traits. A low masculinity ranking describes societies in which nurturing and caring ‘feminine’ characteristics predominate.
4. Uncertainty avoidance index (UAI): It focuses on the level of tolerance for uncertainty and ambiguity that exists within the society. A high uncertainty avoidance ranking indicates the country culture is not comfortable with uncertainty and ambiguity. This creates a rule-oriented society that institutes laws, rules, regulations and controls in order to reduce the amount of uncertainty. On the other hand, a low uncertainty avoidance ranking indicates the country has less concern about ambiguity and uncertainty and has more tolerance for a diversity of opinions. This is reflected in a society that is less rule-oriented, more readily accepts change and takes more and greater risks.
5. Long-term orientation (LTO) (formerly called ‘Confucian Dynamism’): It focuses on the degree the society embraces, or does not embrace, long-term devotion to traditional values. A high long-term orientation ranking indicates the country prescribes to the values of long-term commitments and respect for tradition and where long-term rewards are expected as a result of today's hard work. A low long-term orientation ranking indicates the country does not reinforce the concept of a long-term, traditional orientation and people expect short-term rewards from their work.

Anthropologist Edward T. Hall (1959) made early discoveries of key cultural factors. In particular he is known for his high- and low-context cultural factors and Monochronic and Polychronic time orientation.

1. Context (high context–low context): In a high-context culture, too much has to be read between the lines. This can be very confusing for persons who does not understand the ‘unwritten rules’ of the culture. In a low-context culture, very little is taken for granted. Whilst this means that more explanation is needed, it also means there is less chance of misunderstanding, particularly, when visitors are present. Therefore, French contracts tend to be short (in physical length) as much of the information is available within the high-context French culture. American content, on the other hand, is low-context and so contracts tend to be longer in order to explain the detail.
2. Time (monochronic–polychronic): Monochronic time, M-Time, as it is called, means doing one thing at a time. It assumes careful planning and scheduling and is a familiar Western approach that appears in disciplines such as ‘time management’. Monochronic people tend also to be low context. In polychronic cultures, human interaction is valued over time and material things, leading to a lesser concern for ‘getting things done’, but more in their own time. Western cultures vary in their focus on monochronic or polychronic time. Americans are strongly monochronic whilst the Arabs have a much greater polychronic tendency—thus an Arab may turn up to a meeting late and think nothing of it (much to the annoyance of a German or American co-worker).

 

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http://www.geert-hofstede.com/index.shtml