Research Paper By Allison Everest
(Expatriate Coach, UNITED KINGDOM)
This paper seeks to examine the role that coaching can play in promoting and supporting successful overseas assignments within the corporate world.
As multinational companies (MNCs) become increasingly globalised, the demand for skilled expatriates to be made available for overseas assignments continues to increase, particularly in the developing and newly industrialized countries. Many organizations see great benefit in using existing, home-trained staff to fill managerial positions in growing or new subsidiaries, overcoming the lack of available local talent whilst also introducing a level of corporate control and expertise vital to these new ventures. In addition, skills transfer and an increase in local management competencies is hoped to accrue. For an employee within an MNC, accepting an expatriate assignment has become an almost non-negotiable stepping stone within their career.
It is not only the large MNCs who are sending staff overseas. Increasingly, smaller and more recently internationalized companies are also seeking to position staff overseas to increase sales and to oversee quality issues.
Most companies, big and small, recognize that appropriate compensation needs to be given to entice their executives overseas (particularly to areas of the world which are unstable either politically or economically) and so put together attractive expatriate packages in order to attract personnel. For many executives, then, the lure of an overseas assignment can seem very enticing; the typical expatriate package often includes a higher level of (tax-free) pay and a higher level of responsibility within the workplace than available in the home country. On top of this, free accommodation, healthcare, private schooling and generous home leave and travel “allowances” make such opportunities hard to turn down.
However, despite the “win-win” scenario envisaged by both sides, many companies struggle to adequately and, more importantly, successfully fill expatriate positions.
Although expatriate failure is oft the subject of discussion within MNCs, reliable and up-to-date statistics regarding the actual level of expatriate failures are hard to come by. It is not within the scope of this paper to undertake a large-scale piece of empirical research and so reference is made to a number of studies by R.L Tung, which formed the bedrock of research into this topic. These suggested that American MNCs have significant rates of failure, with 76% of American MNCs having failure rates above 10% (compared to 3% and 14% for Japanese and Europeans companies respectively). 7% of the American MNCs studied had a failure rate of 20%. (Tung, R.L. 1981, 1982, 1984, 1987)
What Constitutes Failure of the Assignment and Why it Happens
What Constitutes Failure?
Failure of an expatriate assignment can be counted in several ways:
1. The premature return of the expatriate
Several studies (Black and Gregersen 1991 & 1997) have identified the premature return of the expatriate with mainly a) dissatisfaction with the job or b) the failure of the expat and/or the accompanying family to adjust to the culture of the host country. Indeed, the inability of the accompanying spouse and children to adapt to their new life has been identified as one of the leading reasons for expatriate failure.
2. Poor performance of expatriates who do remain for their full duration.
According to Black and Gregersen (1997), one third of those who did remain in place did not perform to the standard expected by the company. Inadequate support of the employee during the assignment has been highlighted as a reason, along with the employees failure to bridge the cross-cultural gap .
3. Inability of companies to retain employees within the corporation upon their return to the home country
An often-overlooked aspect of “failure” is the issue of the re-integration of the returning expatriate, with 20% of repatriated managers leaving within one year of return to the home country, rising to 40-50% within three years (Schneider and Asakawa 1995).
Why Failure Happens
There are many reasons why an international placement ends in failure. However the most common reason cited by numerous early studies (Adler 1981, Tung 1981, Arthur & Bennet 1995, Harvey & Noviceivic 2001) relates to errors in the selection process.
In the early years of burgeoning numbers of expatriate assignments, many Human Resources (HR) departments struggled to put in place adequate HR practices to support an appropriate selection and pre-departure process. Highest emphasis was historically placed on finding candidates who were, primarily, technically well equipped to do the job (Katz & Seifer 1996), and the suitability of the personal qualities and aspirations of the candidates was placed low on the list (Mendenhall, Dunbar & Oddou 1987).
Further studies in that early era (McDonald 1993, Rafael 1982) have assisted in highlighting those issues that needed to be addressed for best practice in the selection process. These included the need for successful candidates to possess the qualities of cultural empathy, interpersonal skills, managerial and decision-making skills, language capability, adaptability, tolerance for ambiguity and sensitivity to world events.