A Literature Study on the Matter of Global Mobility in the Context of an Oil & Gas Company
Info: 10438 words (42 pages) Example Literature Review
Published: 9th Dec 2019
Tagged: International StudiesEnergy
The University of Twente’s minor ‘Innovation & Entrepreneurship Internship’ was conducted at a subsidiary of a big Oil & Gas company (hereafter Lateralus ). During the eight weeks as Summer Intern, a variety of tasks and training were provided to me to increase, not only my academic portfolio but also to have a more realistic overview of the working environment. I was able to closely work on projects such as the review of the Global Compensation Management Project, between Lateralus’ subsidiaries and the Tax Provider, for foreign tax credit modelling of expatriates; I took part in the Business Operation and Supplier Management, with one day at the Tax Provider UK’s headquarter to have a greater insight on the tax & social security challenges of Lateralus mobility company. I assisted Lateralus’ Internal Communication and Change Management department with the content analysis of their monthly newsletter, which has been published in the second week of August. I participated in the review of requirements for a new CRM software. Towards the end of my internship, I supported the project on the introduction of a new & enhanced retirement offering through its Pension Provider. It was during these eight weeks that I have realised that managing expatriate around the world is a challenging operation, whether you are an SME or an MNE, such as Lateralus’ mother company. When you have to manage people from different countries to complete an assignment in an another country, there are variables to be taken into consideration (i.e. Cost projections, relocation assistance, family support) and the literature does not present a single model that suits all organisations. As Olivier Meier said “Sending the right people, to the right place, at the right cost, and at the right time is more complex than ever. Global Mobility is changing, as companies increasingly look for smarter ways to manage expatriates.” ( Meier, 2014, p. 4).
In this Internship paper, which will present an introduction to the company, there will be a literature research by analysing the most efficient way of manage expatriates.
Lateralus was set up in the first years of 2000 to meet the demand for international resources of the mother’s business. With more than 750 International Employees, from 66 different citizenship, and a programme of 240 new hires and reassignments, Lateralus provides a broad range of HR services to its stakeholders and employees. They seek to attract, mobilise, manage, advise, develop, engage and retain the best international talent in the oil and gas industry, to add value to the mother company’s projects around the world.
With 60 employees, Lateralus delivers services in Recruitment and employer branding; Global mobility, contract management and reassignment; Legal and Immigration; Finance, Tax and Payroll; Training and career development; Compensation and benefits.
As described in the book Organisational Theory (Robbins and Barnwell, 2006) Transnational strategy can be defined as companies striving to expand their global footprint in the selling of their goods, people, and services, while taking into account cultural and socioeconomic differences that shape consumers in their native environment. This strategy can also be found at Lateralus as the transfer of people, knowledge and development around the world is their core activity.
To further analyse a company, apart from a strategic point of view, different dimensions of organisation structure can be used. Complexity, formalisation, centralisation, and coordination of Lateralus will be elaborated to have a theoretical framework on its structure. A previous paper on an organisational study of another subsidiary conducted by Beyer, de Virgilio, and Degener (2015) is used to assess the methodology on the operationalisation of the structure of a subsidiary. (appendix A.).
The complexity will be analysed first, as it divides into the components: horizontal differentiation, vertical differentiation, and spatial dispersion. Lateralus is classified into seven departments: Compensation & Benefits; Finance; Global Resourcing; HSE & Health; HR Management, Internal Communication & Change Management, Tax & Payroll, and Training & Development, creating a high horizontal differentiation. With three hierarchical level per department divided into top (Managing Director), middle (Head of Department), and Team Leader, it is possible to assume that the vertical differentiation is low. In a context of spatial dispersion, the company is located in one building with all employees on one floor, though operates with 750 International employees in more than 36 countries increasing the complexity of spatial dispersion.
One of the key factors of the company’s reputation is its ability to conduct business with loyalty, transparency, fairness, honesty and integrity and in compliance with the laws, regulations, similar mandatory requirements, international norms and guidelines, both domestic and foreign, that apply to Lateralus’ business. The Management System Guidelines (MSGs), define the rules of conduct and the principles to be observed in the execution of the activities. It identifies the roles and responsibilities of the company’s employees. The Compliance & Regulatory System of the company contains Model 231 and Code of Ethics; Anti-Corruption; Anti-Trust; Market Abuse; Post-Award Contract Management; Internal Control System; Anti-Discrimination; Human Rights & Business. It is in the last point that the core business takes place. It is split into three main processes: Resourcing, Compensation, and Onboarding & Mobilisation. Concerning these macro processes, each of them is further articulated creating a frame of 13 steps that range from ‘Vacant position activation’ until ‘Hiring’. Taking into consideration all the points mentioned above, and also the joining the ISO 26000 Global Guidelines in November 2010, it can be stated that the company has a high Formalisation.
In the business, the day-to-day decisions are taken by the Managing Director, and any decisions that exceed £3 Mio will be passed to the CdA (Board of Directors). Theory on this point would suggest a limited, decentralized approach as some decisions are delegated to the Managing Director.
Operating in a volatile environment such as the Oil & Gas one, the strategy should reflect a reacting attitude to the constant changing factors. For this reason, regular meetings with the first line managers are scheduled by the Managing Director to discuss the current situation. Situated on one floor the communication between departments is fluid and transparent, creating a high coordination level.
Through the operationalisation of Beyer, de Virgilio, and Degener (2015) ,and the literature from Robbins and Barnwell (2006) it can be concluded that the structure that best relates to the afore presented data on Lateralus is a Divisional structure, which shows factors such as moderate complexity, high formalisation, low centralisation and a high coordination.
Research: Determinants of International Assignments and their impact on human resource practices in multinational enterprises: a literature study.
The research, which is based on a literature study, will address the new challenges arising in a new globalising world, and the managing of an intangible asset as the International Assignees (IA). This subject was decided as Lateralus’ core business is managing expatriate, and because in the past four decades a review seems to be required to provide a theoretical framework for the evolving research on the expatriate and their impact on business performance. (Dabic et al., 2013)
The result of this research will present, in addition to a comparison to the management of expatriates at Lateralus, arguments and hypothesis striving to stimulate further research in Global Mobility. Dealing with such challenges means that most employers have had to develop HR policies and procedures just for handling global assignments.
At first, an introduction to the definition of what International Assignee is will be presented with the different approaches to International Assignment to create an encompassment of the research. Then an overview of the global HR challenges will be given through the use of theory. The issues regarding managing IA will be addressed to present a theoretical framework which will include a description of which possible procedures could be taken into account or are plausible in the environment of an Oil & Gas Company like Lateralus.
The management of International Assignees, employees from the headquarter (HQ) working in one of the company’s subsidiaries for a defined period, varying from 2 to 5 years, takes a dominant part in the context of International Human Resource Management. Research on the latter topic may be framed into two different but complementary research themes: human research management (HRM) and practices, and international business administration (IBA) ( Dabic et al., 2013).
To this end, the work of Perlmutter (1969) will be used to assess the different international orientations that MNEs use in expatriating their assignees. Perlmutter identified three distinct global directions of staffing policy (ethnocentric, polycentric, and geocentric). MNEs following the first, ethnocentric staffing policy, would, in the majority of the cases, appoint a high-rank position in their subsidiary by assigning a parent country national (PCNs). In opposition to this view, a more polycentric policy would assign a host country national (HCNs). In the juxtaposition of the latter ones, a geocentric view would choose the best candidate to appoint which could include a third country national (TCNs). A classification of international staffing can be found in Box 1 in the Appendix.
A fourth approach has been defined in a posthumous study by Heenan and Perlmutter (1979) which they named region-centric. This method is seen as an intermediate step between a mere ethnocentric/polycentric approach and a full geocentric approach. In this process, managers are transferred by culture resemblance, for instance, managers of European countries are sent to other European countries.
It is imperative to state that the theory mentioned above has its limitation, this said by applying these staffing policies to the leading positions in MNE subsidiaries only. This view will be further discussed with an actuation process of the staffing procedures of Lateralus.
As previous studies on any conceptual theory prove that advantages do not arise without disadvantages, so have choices between PCNs, HCNs, and TCNs. In Table 1, found in the Appendix, it is possible to see the main benefits and drawbacks (Negandhi, 1987; Phatak, 1989; Dowling, Festing, and Engle, 2008) of those above.
To further expand the understanding of the choices of the international staff, a study (Harzing, 2001) based on the data of 2’689 subsidiaries from 250 distinct MNEs for the managing director position is used. (see Table 2 in appendix for relevant data) In her study, Harzing found out that 40.8% of the subsidiaries had a PCN as managing director, and in the Oil & Gas industry the % of PCN rises to 48.0%. Results may vary according to regional cluster and industry section. As of a matter of validity and statistical significance the sample size for some industry is too small, and for such, results should be handled with care (Harzing, 2008).
To have a better technical clarification on the reasons why companies rely on international transfer, the study by Edström and Galbraith (1977)- which is widely acknowledged in the literature (Borg, 1988:41) -will be taken into consideration. In their journal, three general motives, undertaken by companies for transferring employees, are proposed. The first, which concerns the transfer of technical and managerial knowledge, is fill position. The second being management development, which regards the development of the expatriate in the context of the international experience of the employee in other countries. In antithesis to the personal evolution of the management development the third, and last concerns the organisation development. (Coordination and Control is an alternative term to Edström & Galbraith’s organisation development (Kenter, 1985)).
It must be stated that the three aforementioned motives of international transfer are not mutually exclusive (Edström and Galbraith, 1977), and by being such, the expatriation can be seen as a strategic tool to achieve an organisational goal.
A study performed by Harzing and Reiche (2009), it is revealed that the number of German studies on the matter is substantial, whether conceptual or empirical. The lack of a translation of the latter ones seems to have blocked their dissemination within the Anglophone research community (Harzing and Reiche, 2009). In the Appendix (Table 3) a summary of the studies mentioned above and their comparison to the theory of Edström and Galbraith can be found with the translations of Harzing and Reiche. In these translations, it can be analysed how the list of reasons for international transfers, by different researchers, lacks resemblance from the view of Edström and Galbraith, but can all be drawn back to their three motives: filling position, management development, and coordination.
Macharzina and Wolf (1996), in their study, conclude that the most important functions of international transfers, between all the German authors, are those elaborated by Edström and Galbraith. In addition to that, they also further expand the encompass of coordination by dividing it into two spheres, the direct aspect of control and the indirect aspect of control. By direct is intended the role of the IA as the extended arm of the HQs management, and by indirect the improvement of the communication channel and the creation of corporate culture (Macharzina and Wolf, 1996).
Their theory can be further elaborated by adding that the act of international transfer as a control mechanism has to be taken into consideration as regard of HQ-subsidiary relationship. In argument to that, Merchant (1985:4) defines control with one main feature, which is to help ensure the decent behaviours of people in the organisation. In our context of MNEs, this definition can be seen as how the HQ establishes that the subsidiaries behave under the policies set by the mother company.
As stated by Gregersen et al. (1998) managing global talent and career paths is a critical challenge, concerning the three transfer motives. Present research, regarding the impact of International Assignments on overseas jobs, has revealed a drift regarding individuals perceiving their values to benefit in developing personal competencies to spread in the organisations (DeFilippi and Arthur, 1996; Parker and Inkson, 1999; Stahl, Miller, and Tung, 2002). Indeed, Dickman and Harris (2005:400) theorise: ‘‘the link between an IA and the organization’s benefits in career capital augmentation is . . . tenuous’’, which further reflects the fact that international assignments may be more beneficial from an individual career perspective and in the construction of individual social capital than in building organisational capital. This literature resounds with the literature on the boundary-less career (Arthur and Rousseau, 1996).
In contrast to the point above, a study of Larsen (2004), which based itself on a previous study of Reichlin (2004), would put the focus in understanding individuals’ perception of International Assignment as in developing a global career. By further elaborating this point a dual-dependency proposal (Larsen, 2004) is necessary, which allows for a synergy between personal and impersonal organisational norms regarding career progression and the individual viewpoint of what he feels necessary for progress.
International transfer as medium of control
In advocacy of the points from Macharzina and Wolf, and Larsen a review on control mechanisms (Harzing, 1999) led to a classification of the latter on two dimensions: direct vs. indirect and personal vs. impersonal. Table 3 in the Appendix outlines this classification.
International Assignees can be seen as the agent of two unique types of personal control. They can serve as mini-HQs in foreign subsidiaries and in doing so can replace or supplement centralisation of decision-making at HQs or straight shadowing of subsidiaries by HQs managers (Harzing, 2001). Many German studies would refer to this kind of control which reflect a substantial degree of dominance and threat. Edström and Galbraith’s, and some other German studies view on control can be interpreted as the International Assignees basing their power through socialisation and the creation of an informal communication network. These views of expatriate control are argued as Bear, Bumble-bee, and spider (Harzing, 2001): the bear is the view of a centralised personal control, organisational bumble-bees fly “from flower to flower” and create cross pollination between subsidiaries (Morgan, 1993) reflecting more the image of socialisation. The spider is an analogy to the creation of an informal communication network.
The role of expatriates, in an informal type of control, is based more on assumptions than on empirical evidence, stating Edström and Galbraith on behalf of their paper:” the result of our speculations” (Edström and Galbraith, 1977:249). The few empirical studies are characterised by a small sample size, often centralised on the same group of companies, to this end the words of Fenwick, De Cieri and Welch (1999) “[…] the role played by expatriate assignments [in achieving cultural control] has yet to be rigorously tested, especially in mature, geographically diverse MNEs” (Fenwick, De Cieri and Welch, 1999:112)
Due to developments such as the increasing internationalisation of companies, the emancipation of foreign subsidiaries, the shortening product life cycles and the necessity of building strategic alliances, control mechanisms such as centralization, formalisation and standardisation have to give way to more flexible, personal and informal control mechanism (Novicevic and Harvey, 2001).
Alternatives to Expatriation
As discussed above it can be stated that international transfers can serve many functions in MNEs. The increase of barriers to mobility, although, are becoming progressively more relevant, leading to a decline in the willingness to accept an abroad assignment (Forster, 2000; Harvey, 1998). Although research suggests there is little evidence of a significant decrease in the use of long-term assignments, it does though identify the growing use of alternative forms of international assignments, which range from inpatriate, short-term, self-initiated and virtual transfer (Dowling and Welch, 2004; Fenwick, 2004; Mayerhofer, Hartmann, Michelitsch-Riedl, and Kollinger, 2004; PricewaterhouseCoopers, 2005; Scullion and Collings, 2006; Tahvanainen, Welch, and Worm, 2005).
One alternative to the traditional transfer is inpatriate, which consists in the transfer of the subsidiary manager to the HQ for a determined amount of time (Harvey et al.,2000). This would not only create informal communication networks but let the subsidiary managers get to know the workings and procedures of the mother company, and from the HQ perspective instruct the manager into the HQ’s culture in a more direct way than an expatriate would have. Inpatriation is also a valuable opportunity if tacit knowledge needs to be shifted from branches to the HQ and it has the added benefit of exposing parent company managers to an international standpoint (Harzing, 2009). A study conducted by Oddou, Gregersen, Black and Derr (2001) shows a speculation on the increase of inpatriates in European and U.S. MNE. (Box 2, in Appendix)
Short-term assignment is an alternative to expatriation that found its attention between researchers and can help contain costs to the MNEs. It is ordinarily mentioned as short-term assignments transfers between 1 to 12 months in length (Collings, Scullion, and Morley, 2007). It differs to other practices as the assignee is usually unaccompanied by his/her family, and the selection and preparation practices tend to be more informal and ad hoc. This method is useful when specific skills need to be transferred, for example for a multinational project work, or for a particular problem-solving need. It ca be stated that, apart from the cost effectiveness impact, this type of assignment requires less bureaucratic procedures and can be implemented in a more flexible and timely manner (Harzing and Reiche, 2009). It has to be stated that, studies have highlighted that short-term assignees may fail to build effective relationships with locals while also facing increased risks of marital problems (Tahvanainen, Worm, and Welch, 2005). Given the increased levels of stress associated with this assignment type, it is questionable to be sustained over an extended period (Collings et al., 2007).
It can be argued that a growing number of assignees make their arrangements to find work abroad, in contrast to a more traditional view of international assignments, this is also smoothed by the admittance of free movement of labour in the European Union and other economic areas. Contradictory from other types of assignments, these so-called self-initiated assignees are employed on local work contracts. This alternative transfer, taking into consideration the increasing need for international and cross-culturally personnel, serve as an important complementary staffing option for both domestic and international organisations (Harzing, 2009).
The last alternative to traditional transfer is virtual assignments, which is starting to be used by companies to tackle the uprising needs for decentralisation and boundary-less work processes. A virtual assignment, as it can be derived from the name, does not require the physical relocation of the individual to a foreign subsidiary but rather distributes international responsibilities as managed from the person’s home base (Welch, Worm, and Fenwick, 2003). The growth of this type of assignment finds its foundations in the improvements in, in the past decade, in information technology to the point where entire teams can communicate through use of e-mails, telephone, and video-conferencing. Regardless of the advantages, that might surpass those of short-term assignments, face-to-face communication remains decisive in numerous circumstances, hence restricting the use of virtual assignments.
As discussed in this paper, expatriation can achieve many roles, and these alternatives are questionable to replace international assignees entirely. However, they are often a cheaper alternative to expatriation, especially in the case of virtual transfers, and it is much easier to involve a significant number of executives through short-term placements or virtual transfers than it is through a more traditional approach (Harzing, Reiche, 2009). But it needs to be stated that each of these alternatives to expatriation could serve distinctive purposes to achieve organisational goals successfully, and should be part of any MNEs portfolio.
Implication of International Assignees on Human Resource Management
With the increase of boundary-less processes, companies must be managed globally, which faces managers with numerous challenges. First, the number of their workers abroad has grown, with more employees overseas; HR departments have had to tackle new global challenges (Dessler et al., 2005). These difficulties can be classified into three macro subjects: Knowledge and innovation dissemination; Identifying and developing talent on global basis; Deployment.
Due to the limitations of this report, the last two points will be further analysed with the developed HR policies and procedure to handling International Assignments.
Identifying and developing talent, and Deployment address issues such as determining who has the ability and skills to work effectively in a global context and developing these abilities, and getting the right skills to where they are needed regardless of geographical location. These issues can be perceived as a three-phase process including pre-departure, actual assignment, and repatriation.
The pre-departure phase
In this step, two critical processes of managing international HR can be identified, which involve an ad-hoc selection and suitable preparation for the IA
Selection of an international assignee in MNEs occurs most often from within the corporation (Ashamalla, 1998). Progressive businesses, however, have realised that an expatriate needs more than technical proficiencies to thrive overseas (McDonald, 1993). To this point, it is possible to invest in an incessant strive to build a global workforce, which has a global awareness, a belief in the company’s tenets and a commitment to expand the business. For firms looking to reach this goal, selection of IA starts at recruitment.
During this process, a systematic screening for international competencies occurs. Some of the qualities that MNEs seek are:
1) Cultural empathy: this quality is certainly on the top of the list as the ability to appreciate and respect beliefs, values, behaviours and business practices of individuals and groups from other culture is highly desirable (Marguardt and Engle, 1993).
2) Interpersonal skills: These skills involve formal and informal, as verbal and non-verbal, communication, the ability to build trust, and capacity to apply referent control within a foreign environment. These skills also contain the grasping of the values identified by Geert Hofstede(1980) such as the power distance.
3) Awareness of environmental constraints: In an oversea country, an international assignee is faced with unfamiliar sets of environmental forces that can be very dissimilar from those of the countries of origin. Active attempts to identify these contingencies under their constraints, becomes a contributory asset to the assignee (Feldman and Tompson, 1993).
4) Managerial and Decision-Making abilities: these skills are required when the expatriate position is a manager operating under conditions of confinement or physical distances from the core of decision making in the home office. These abilities are essential in situation of full autonomy of the assignee’s position oversea (Marquardt and Engel, 1993).
5) Some other crucial KSAO (knowledges, skills, abilities, and others) for a successful oversea assignment include a proficiency in foreign language, versatility, flexibility, self-motivation, entrepreneurial mind set, tolerance for ambiguity, and empathy to the contingencies of world events and their possible impact on the long run of the business (McEnery and DesHarnais, 1990).
Through the constant sight of long-term goals as early as in the recruitment stage, a firm can have a constant pipeline of possible employees who can contribute to the international growth (Ashamalla, 1998).
A meticulous selection program should also include the following considerations:
1) The utilisation of appropriate screening devices: a battery of instruments and tests coupled with interviews and assessment centre evaluation can be used to better predict the likelihood of successful placement (McDonald, 1993). Where applicable also a peer evaluation by a repatriate, who just returned, may help in asses the candidate’s suitability for the assignment (Ashamalla, 1998).
2) Time devoted to the selection processes: with this point is meant that often expatriates are selected impulsively due to an urgent need to fill a position in an oversea country (Mendenhall and Oddou, 1985).
Another important point to be added to the selection plan is the awareness of the expatriate family. One of the leading reason for an assignee failure has been related to the incapability of the spouse and children to adapt to the new environment (Black, 1988; Solomon, 1995). This strongly points to the need for screening the adaptability potential of the spouse and children (Ashamalla, 1998). Such screening should be an embedded process of the selection for an international transfer (Dowling and Schuler, 1990; Guzzo, Noonan and Elron, 1994). However, it has been reported that only 40-52 percent of U.S. corporations have included the spouse in the selection process (Mendenhall, Dunbar and Oddou, 1987). Behind this point is the need to assure that the family perceives the assignment as an opportunity to mature, professionally and personally, and is willing to take the oversea assignment (Engen, 1995).
Tung (1988) proposed a selection approach, that merits attention, this is said because it integrates variable that have been linked to the assignment success. In relation to Tung’s study, the selection approach should involve the following aspects. First, clear specification of the job and an assessment of the KSAO required by the possible assigned expatriate. Second, adequate information concerning the differences between the political, legal, social, and cultural forces of the home country and the country of foreign assignment. Third, evaluation of the candidate’s willingness to serve in the international operation, actual preparation to do so, and the ability to serve effectively in what could be a considerably different culture. Fourth, assessment of the candidate and family’s ability and willingness to live abroad. Finally, for some of the overseas jobs, local nationals should be considered, given they have adequate qualities and the professional competence required for the job.
Recent empirical studies have confirmed that expatriate selection is an ambidextrous subject and that personality characteristics, as well as interpersonal skills, are fundamental (Caligiuri, 2000; Spreitzer, McCall, and Mahoney, 1997). In practice, however, most companies still use technical competence and knowledge of business systems as selection criteria (Harris and Brewster, 1999a; Morley and Flynn, 2003; Sparrow, Brewster, and Harris, 2004). There are several reasons for this practice (see Bonache et al., 2001): First, it is challenging to identify and measure the relevant interpersonal and cross-cultural competencies. Second, selection choices are frequently made by line managers who avoid selection criteria set out by the HR department, increasing the incoherence of the selection process (Harzing and Reiche, 2009). Third, there is also the self-interest of the selectors, who will try to minimise the personal risk involved in selecting a candidate who might not thrive on the assignment. Technical competence will almost always prevent immediate failure on the job.
Research findings indicate that pre-departure preparation is positively related to general adjustment and efficient functioning of expatriates in their new environments (McDonald, 1993). In contrast to the above argument, facts indicate that with an overseas assignment, the manager is not only changing jobs but also a way of life. This new changes and demands, placed on the assignee and his/her family, must be addressed adequately in this phase. Appropriate preparation is, thus, crucial and should extend beyond just a realistic job preview. It is here suggested that pre-departure preparation efforts continue to include adequate briefing, cross cultural training, foreign language training, and orientation for the family.
Briefing An early activity in the pre-departure efforts should be a briefing program designed to provide the expatriate with necessary information about the work and social related issues in the new job. Such information should cover company’s transfer policy, compensation and benefits package, taxes, travel, housing and schools in the host country, vacation and home leave, and repatriation after completion of assignment. Besides, information should include data concerning living conditions, socioeconomic circumstances, cultural values, and acceptable business and social norms in the country of transfer. Approaches suggested for such briefings vary and can include audio/video presentations, meeting with area advisors, sessions with former expatriates who have served in the same region, and even a visit to the country of assignment before the final transfer by the expatriate and spouse (Blocklyn, 1989). This knowledge can be influential in serving the expatriate’s assessment of his/her suitability for the assignment (Raffael, 1982).
Training To be cost effective, the pre-departure preparation effort do not have to stop at briefing but should provide a specific training to tackle the specifics needs of the assignee. Evidence indicates that U.S. companies have to start putting more weight on the assignee training, expressing their commitment to the success of the transfer (McDonald, 1993). Two forms of intervention that is believed to be crucial in the preparation of the pre-departure phase are cross-cultural and foreign language training. These trainings help in equipping the expatriate with the necessary KSAO to handle the cultural shock that is possible to take place after the arrival in the new country. Concerning cross-cultural training, probably one of its primary outcomes is cultural awareness which facilitates working with people who have different social values and behavioural patterns. Practical skills are necessary, but, the ability to work with different cultural values and different corporate standards is remarkable for international assignees (McDonald, 1993).
Literature lacks for a size-fit-all methodology for cultural training to be recommended in helping companies in training their expatriates. Some content matters, however, could be useful if considered. These include: 1.) Looking at how culture affects work relationships. 2.) Viewing how understanding differences can lead to teamwork and productivity. 3.) Reviewing parent country’s values and assumptions, concerning g issues such as individualism/collectivism, power/distance, infrastructures and individuality and how these values and assumptions relate to those of the transfer country. 4.) Another possibility forma cultural training is to provide basic information about the host country (Ashamalla, 1998).
Cross-cultural training should be coupled with foreign language training. This is said because the knowledge of the language of the host country is crucial to live and work. Language ability facilitates fast and smooth adjustment to the local environment. Foreign language knowledge, is also found to be related to the effectiveness of dealing with governmental bodies, banks, labour organisations, suppliers and customers. In summary it can be stated that the knowledge of the host country language by the expatriate and his/her family is crucial for an enjoyable and for a maturing experience abroad (Hogan and Goodson, 1990). Even though the potential benefits of cross cultural training is firmly acknowledged, this type of training is not yet well provided by many U.S. corporations. A survey on 500 firms, conducted on Fortune, shows that only 30-45 percent of the respondents offer training to their expatriates before the relocation. Also, most of the corporations who provide such training tend to confine their efforts to a narrow briefing, which provides limited information on the host country’s political, economic and general living conditions. (Dunbar and Katchen, 1990).
Family Orientation An activity that not all companies face in the preparation of its expatriates is the consideration of his/her family. Empirical evidence shows that the expatriate’s success is positively correlated to family adjustment in the new environment (Engen, 1995; Solomon, 1995; Solomon, 1996; Thornton and Thornton, 1995). However, studies, that have empirically looked at the family issues, came to the conclusion that only a few companies have programs for the expatriate’s spouse and children (Von Glinow and Milliman, 1990). While the expatriate becomes involved in his/her new assignment, it is the family that faces the difficult process of coping with the unfamiliarity of the new country (Baliga and Baker, 1995). To the family, adaptability can be substantially reduced through the use of well-thought-out pre-departure preparation programs (Harvey, 1985). As emphasised by some researchers, no matter how time-consuming and costly it is, the expatriate’s and his family preparation is a prerogative for transfer success (Baliga and Baker, 1995). A study estimated that U.S. companies’ costs from failed overseas assignments range up to $2.5 billion a year, and this does not cover the unidentifiable costs (Thornton and Thornton, 1995).
Superiors and HR experts in the HQ need to give adequate consideration to the importance of remaining in close touch with their expatriates and providing them and their families with the necessary support (Croft, 1995). Adler (1987) found out that a primary concern of expatriates is the loss of visibility from the home office, this is called the out of sight phenomenon.
During the assignment, support may involve a broad range of formal and informal activities. The development of communication channels, for example, is crucial. Ongoing contacts with the department in the headquarters, request for guidance and receiving of advice, frequent visits to the home office. Advanced technology can facilitate communication and compact isolation. Electronic mail, video conferencing, online information, are possible ways to keep the assignee linked to their home country (Croft, 1995).
A performance review could allow for a bilateral communication, and can be seen as a motivational factor for the expatriate, as his efforts can be recognised (Croft, 1995). A study conducted by Harvey (1985) supports the idea of giving the spouses of the expatriates a work, as office space for welcoming other spouses or as mentors. The same could be applied to the children, as to comfort their change of school and social system. The idea behind Harvey’s study is to provide the all the assistance and support possible to the assignee and its family to provide a pleasant and productive experience abroad.
While the issues associated with expatriation are significant, those related to repatriation are equally important (Tung, 1988). Just as a foreign environment can cause challenges when transferred oversea, so can the professional transition back into the home office cause distress. Adler (1991) contends that moving from one set of organisational norms and behaviour to another can be difficult and stressful. Evidence, however, indicate that repatriation is not straightforward and that a repatriate manager may experience professional, as well as personal, re-entry problems. Repatriation problems are affected by such factors as the number of years spent abroad, the location of the assignment, the age and qualifications of expatriate, and the attitude of top management toward the international experience (Tung, 1988).
First: Expatriation is too often thought of as a one-way street. In most cases, a manager is selected to be sent on an overseas assignment under urgent circumstances, and no careful attention is paid at this point to how this person can best be repatriated, or what assignment he/she will get upon returning. This can be very demoralising and can urge the repatriated to leave the company (McDonald 1993).
Second: Because of inadequate communication during the overseas assignment, an expatriate loses touch with changes that take place in the corporation. An expatriate can return, for example, to find that the company has changed beyond recognition because of downsizing or restructuring. This can render the expatriate a career disaster (Thornton and Thornton 1995).
Third: It appears that many U.S. global firms do not assign much value to the international experience. Which is in contrast with the emphasis on the value of expatriates from European and Japanese MNEs. These companies greatest commitment is to address the new skills of the expatriate obtained on the assignment, on jobs where they can implement them (Engen, 1995). If expatriate’s loyalty and international skills are not acknowledged, the result is dissatisfaction with the company and high turnover (Shilling, 1993).
Fourth: Expatriate expectations of upward career advancement are not usually realised. This is magnified in corporations that do not consider international experience an important criterion for promotion to high-level management positions (Adler, 1991).
Fifth: Reversed cultural shock experienced by the expatriate and family; living in a different environment for several years, their home country environment is no longer familiar to them (Dowling and Schuler, 1990).
Repatriation should be prepared for in much the same way as expatriation is, to be able to benefit from their investment abroad. At least six months before repatriation, HR managers should start an internal search to find a position that suits the expatriate’s skills after the transfer (Richardson and Rullo, 1992).
It is undoubtedly necessary to state that repatriate revenue not only results in a loss of workforce speculation for the MNE in general but also risks the possibility of losing this investment to a direct competitor. Furthermore, repatriate turnover is likely to have adverse consequences for the willingness of colleague workers within the organization to accept an international transfer (Kamoche, 1997). However, this requires handling the actual assignment and repatriation not as isolated events but rather linking the transfer experience to the expatriate’s overall career (Harzing and Reiche, 2009).
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- Methodology from Beyer, de Virgilio, Degener
- OPERATIONALISATION OF STRUCTURE
To operationalise the structure of SGA we asked some questions regarding the different aspects that build up a structure. To measure the horizontal differentiation, we assume that when a large company has more than four departments it is high in horizontal differentiation. Vertical differentiation is high when there are more than three hierarchical levels and the span of control is wide when “managers will have a large number of subordinates” (Robbins & Barnwell, 2006, p.107). In this case we assume that a number greater than four will be defined as wide. At last spatial dispersion “would be low if one building held all organisational members” (Robbins & Barnwell, 2006, p.108).
During the visit at company facility and asking Mr. Diepenmaat it was possible to better understand SGA formalisation. SGA is certificated according to the ISO 9001, which “sets out the criteria for a quality management system”, and ISO 14001, which “specifies requirements for an environmental management system”. Therefore, it can be assumed that mostly every company which is certified after both of ISO norms are high in formalisation.
To measure the centralisation SGA was compared to the definition of centralisation from Robbins & Barnwell which states that “decision making is concentrated in a single point in the organisation” (Robbins & Barnwell, 2006, p.115). Even though they defined decentralisation as the “transfer of decision making” (Robbins & Barnwell, 2006, p.117). At SGA the day-to-day decision making takes place in the plant and the major decisions are made at the headquarters.
To measure coordination, it can be said that if there is a free flow of information and meetings on regular basis to discuss the operations then coordination is high.
- OPERATIONALISATION OF ENVIRONMENT
In order to analyse the fit between the structure of SGA and its environment, it is important to look at different environmental factors which influence the structure of an organization.
In this case the focus is on the rate of change in the environment and the complexity of the environment. The rate of change is divided into the amount of innovation and a stable amount of customers. Complexity is divided into the amount of uncertainty, the different elements of the environment and the number of markets.
In this analysis the amount of innovation is high when a company clearly states that they scan the environment in order to be ahead of the competition in terms of innovation.
The amount of customers is stable if the there is no more than 15% differences in seasonal sales.
Regarding the complexity, it’s defined as high, if the uncertainty is high and a great number of markets exists. Moreover, complexity also takes into account the number of different elements an organisation faces in its environment. If the number of elements is three or higher, high environmental complexity is given.
- OPERATIONALISATION OF TECHNOLOGY
To find a link between Perrow’s theory and the structure of SGA it was necessary to identify how the employees relate to their job. For measuring task variability SGA is compared to the definition of it from Robbins & Barnwell that states “jobs that normally have few exceptions […] include those on a(n) […] assembly line” (Robbins & Barnwell, 2006, p.217). To measure if problem analysability is well-defined or rather easy-to-analyse problems, we have to find out if “the mechanic works through a series of well-defined procedures to identify the cause” (Robbins & Barnwell, 2006, p.217).
- OPERATIONALISATION STRATEGY
In terms of operationalise the fit between the structure given by Porter’s theory and the actual structure of SGA in Eibergen the interviewee (J. Diepenmaat) were asked for their long- and also short-term goals, also for the way they deal with their customers and how these two facts are related to their internal structure by using the following questions:
Which strategy do Saint-Gobain follows with acting with its customers and how does this strategy fits together with your production process?
What are Saint-Gobain’s future goals?
What are your short term goals?
How are your strategy and structure related
- OPERATIONALISATION OF SIZE
To measure size, we rely on the EU Norm which states that a company is considered large if the total number of employees exceeds 250.
Box 1 Classification of International staff
Table 1 Advantages and disadvantages of using PCNs, HCNs or TCNs
Table 2. Motives for internationalisation transfers according to various German authors
Table 3 Classification of control mechanism on two dimensions
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