Key Factors that cause people to take up expatriate positions
What are the key factors?
There are some factors that people take into consideration when approached with a proposal of an expatriate position. These factors consist of attractive prospects, across all boards, and thus are able to motivate the person to make the decision to move to a foreign land.
Some people are motivated to take up an expatriate position because of financial factors. They look forward to the larger salary package that comes with it. This is one of the more important reasons that lead one to make the choice to work overseas (Lomax, 2001).
Personal factors are the next type of factors that can influence an individual to take up an expatriate position. These are factors that revolve around an individualÐ²Ð‚â„¢s personal reasons for wanting to take up the position (Perkins and Shortland, 2006), and is also a major consideration when one is offered such a position.
Last but not least, career prospects. To wider their horizons, and step up to new challenges to better themselves, people take up expatriate positions for the opportunity to hold different posts and attend to a variety of challenges (Lane et al, 2005). All these will result in a personal growth in their work and management skills, as well as achievements and a good track record, which will open many paths for them in the future.
In the sections to follow, these factors, as well as how they attract an individual, will be discussed further in detail.
Objectives and Outcomes
In the effort to gather more information about the factors and how they motivate individuals, primary research was carried out in the form of interviews with real life expatriates. This was done to collect more solid data that would substantiate the factors mentioned, and add credibility to how they motivate people in the world today.
The profiles of the interviewees are:
i. Miss Harvonne Yap Ð²Ð‚â€œ Malaysian Citizen working in London, UK
ii. Miss Verena Lim Ð²Ð‚â€œ Australian Citizen working in Singapore
iii. Mrs Joanna Chen Ð²Ð‚â€œ Singaporean Citizen working in California, USA
iv. Miss Tay Sue Joy Ð²Ð‚â€œ Malaysian Citizen working in Melbourne, Victoria, Australia
The interviews gathered much details and insights, which provided the author with sufficient information to discuss about the factors in the sections to follow. These interview transcripts, as well as the details of each individual, are attached in the appendixes section, and will constantly be referred to as examples in this report.
People work because they are being motivated by, primarily, monetary compensation. Even in non-profit and charitable organizations, people are still essentially pursuing a salary, above all other things (Henderson, 2005).
This is true because for survival, the financial compensation received will provide an individual with the ability to feed, clothe and provide shelter for oneself (Arndt H.W, 2001). It is then, concluded, that financial factors are some of the most important factors that attract one to take up an expatriate position.
The financial attractions of an expatriate position can come in many forms. Listed below are the different forms of it:
i. Compensation (salary)
ii. Tax Differentials
iii. Medical / Benefit Costs
Compensation is the salary, or pay package, that is paid out to an employee. It can consist of the base pay, performance-based pay, discretionary income and options, amongst many other components. (Milkivich G and Newman J, 2007). There are a few aspects as to how compensation can attract people to consider being an expatriate.
Firstly, the pay packages itself. If the position on offer is one that has very few short listed people, which shows that the availability of such resources is scarce, the organization would put together a package on a higher pay scale because of the scarcity of such personnel (Scullion, 2006). Taking into consideration that this person has to move off to another country, the organization would easily offer a package that is above the market rate.
Secondly, the exchange rate between the home currency and the host countryÐ²Ð‚â„¢s currency. The disparity in the exchange rates could mean that the person is earning much more in the host country, even though numerically, the pay is close to that of the home country (Appendix 1).
Different countries and states impose different amounts of tax on the workforce and her people as well (Australian Taxation Office, 2007 & Ministry of Finance, 2007). This means that the person can be paying less tax in the new country that he / she is posted to and, in turn, taking home a larger amount of money (Appendix 2).
Medical / Benefit Costs
In recent years, there has been evidence that the cost of medical care is rising annually (Ministry of Health, 2006), and so has the amount of expenses. Medical care bills tend to be very expensive and be a heavy burden on most people.
Many companies have taken to including and offering certain medical benefits and subsidies to their staff, as well as insurance policies and plans (Henderson, 2005). Staffs also look at these benefits offered by companies and it is one of the considerations they take into account before making a decision on whether to join the company.
Being the most common factors that influence an individual in making decisions, personal factors revolve around the individual himself (Perkins and Shortland, 2006). In this case, the individual would decide to take up the expatriate position because of certain reasons that would revolve around his personal life and benefits. Some of the main factors are listed below, and will be discussed:
i. Family and friends
iii. Preference of lifestyle and culture
Family and friends
Family and friends are the closest people around an individual. And the fact is that family and friends have the biggest influence on an individual more than any other groups of people around him/her (Brooks R, 2004).
Family and friends are a major consideration, especially where the person has family and/or friends in the country that he/she is going to work in (Appendix 3). Because of the familiarity present, it is some sort of comfort, and will help him / her adapt and settle down quickly. He/she would also want to be around these people.
Colleagues and/or work partners are one of the most important people in oneÐ²Ð‚â„¢s work life and career. Having the right people to work with, usually results in the person/team being more efficient, and thus increasing the productivity (Rogers B, 2003). Hence, the entire working experience would be one that is much smoother and more enjoyable.
Some people take up an expatriate position because of the preference for a certain team of workers and colleagues in another country. They find it easier to work and communicate with the team in another country because their working styles are similar and he / she identifies with them (Appendix 3).
Preference of lifestyle and culture
Individuals, who go overseas to pursue further studies, usually tend to spend a significant amount of time in the new country. On the average, majority of these people spend about 4 years in the foreign land. In these 4 years, they have to cope with adapting into the lifestyles of the people there, as well as the local culture (Appendix 4).
Once that has been accomplished, they settle down and blend into the people. Over time, they accept themselves as a part of that country and its culture. They begin to feel a sense of belonging to this new land, and develop a preference for its lifestyle and culture as compared to where they come from (Castle S & Miller M. J, 2003). These people choose to take up a working position in this new country in the end, because of this reason (Appendix 4).
Taking up an expatriate position could also aid in speeding up the personÐ²Ð‚â„¢s process of attaining citizenship in the country that he / she is relocated to.
Depending on the nature of the type of expatriate position, most of these positions would be for a long period of time, eg; 1 year or more. Because of this, they would be residing in the country for a significant amount of time, and could contribute to fulfilling the requirements for attaining Permanent Residence / Citizen Status in that country (Castles S & Miller M. J, 2003).
Also, if the field of work is one that is valued highly by the country, together with the amount of time spent there, all these could easily boost the personÐ²Ð‚â„¢s chance of attaining the status he / she wants (Appendix 4).
Career advancements and opportunities are often part of a companyÐ²Ð‚â„¢s plan and offer for an expatriate position. The prospects of taking up an expatriate position are very good and can make the individual more decorated and marketable in the future.
Some of these opportunities include:
i. New projects / businesses start-ups
ii. Higher Management Positions
New Businesses / Start-ups
Companies/organizations are constantly looking for new avenues to generate businesses to increase their marketability and position in the industry, new start-ups exhibit creativity and innovation, displaying a companyÐ²Ð‚â„¢s potential and hunger for growth (Roberts et al, 2006). This could result in more investments from private individuals and/or corporate organizations.
For an individual, to be part of a new business group/team, it shows his/her capabilities shine out amongst the others to be chosen to be involved in a new business. In a way, it is some kind of recognition, but more importantly, the prospects of performing in this new business would open up many doors in the future (Appendix 2).
Higher Management Positions
Staffs that have shown the potential and ability in the company can be pushed to a higher management position, to be put in charge of a new, larger team (Konopaske & Ivancevich, 2003). This would allow the staff to improve their management skills as well as ensure that he / she does not stagnate in terms of skills and job satisfaction.
Likewise, this is true in reverse. An individual might choose to take up an expatriate position for the same reasons mentioned above. He / she might want and need greater exposure, and positions like these would serve that purpose (Appendix 1).
The current labour trend
With the rapid growth of the Internet and more advance development and application of technology, local and global communication became an ease. Such revolutionary developments in technologies provide greater flexibility and contribute greatly to the way organization function. More companies and organizations have since then gone international or decide to globalize their business operations, this in turn gave birth to a new form of labour market known as labour mobility.
Who are expatriates?
Expatriates are people who voluntary or involuntary been arranged to be relocated temporary or permanently to a foreign country for assignments or job position.
Impacts expatriates have on organizations and local staffs
In this section, the author will discuss some of the positive and negative impacts induce by the expatriateÐ²Ð‚â„¢s attitude. Attitude is an important attribute at work, any negative attitude display by an expatriate can greatly affect the local staffs, in turn affecting the organization. As positive attitude produce positive result the same theory goes for negative attitude.
For instant, an expatriate showing sign of un-cooperativeness and bad attitude can induce a negative environment for the local employees, team spirit will be destroy, employeesÐ²Ð‚â„¢ moral will be low and thus not motivated to perform and commit. As a result, employeesÐ²Ð‚â„¢ become less efficiency and productivity, producing lesser quantity and lower quality outputs. Employees will also be less tolerant to each other thus creating a hostile climate; such climate cause employees to developed less enthusiasm in work, contributing to higher absenteeism and turnover rate loss. All such negative impacts will eventually caused the organization to incur great economics loss and suffer negative reputation and lost standing in the employment market as a result of the unfavorable working environment induce by negative attitude. The next session, the author will be touching on how will expatriatesÐ²Ð‚â„¢ communication and commitments style affect the local staffs and organization.
Communication and Commitments Style
Communication is central to all organizations; it binds and creates a bond for all employees, from simple daily operations such as explaining tasks to more complex tasks like resolving an ad-hoc crisis. An organization with a well established communication system will create a positive climate for the employees, which will promote healthy individuals who generate high productivity and who feel more committed to the organization whom they work for. However, if communication breakdown and barriers surface frequently, the employeesÐ²Ð‚â„¢ well being would be affected and stress level increases and job satisfactory decreases. Such communication issues not only affect the expatriates alone, instead negative impacts were created for the organizations that they work for and the local staffs of the organization as well. The most commonly known communication issue is the language barrier; nonetheless this is not the only aspect that causes communication challenge.
In this section the author will discuss on one of such aspect contributing to the challenges encountered by employees. People often tend to assume language is the only barrier, however, in most cases it the non-verbal communication styles that form the barrier. For example, a project manager from U.S has been assigned an assignment in Japan, when the project manager explains the project requirements to the local staffs in Japan, the project manager often thought the local employees understand when they nod their head and reply Ð²Ð‚?HaiÐ²Ð‚â„¢ however, the project manager only realize their nodding and Ð²Ð‚?HaiÐ²Ð‚â„¢ just meant Ð²Ð‚?IÐ²Ð‚?am listening to youÐ²Ð‚ÑœÐ²Ð‚â„¢ when project issues arise. Such misunderstandings often leads to unpleasant outcomes, such as creating confusion and uncertainty between expatriate and local employees, work relationship ruined, moral of local employees diminish; causing local employees job satisfaction, job involvement and organization commitment to decrease. On a more serious note, company image might be perished, business relationship between two companies might worsen, future co-operations or projects might be put in jeopardy and companies might incur financial lost which may in turn lead to the downfall of the company. In the next segment, expatriatesÐ²Ð‚â„¢ decision making style will be discussed.
Cultures differ greatly when it comes to decision making. For instance, U.S managers tend to make decisions quickly and with relatively little analysis done however, most Asian managers prefer to perform a more detailed research and analysis before making any decisions. Therefore, if a Chinese company in Republic of China hired an expatriate from U.S, the local employees will probably feel uncomfortable with the rapidly way the U.S expatriate makes an decision and the U.S expatriate on the other hand might feel frustrated by the inefficiency work style and reserved thinking of the local. Hence, conflicts might trigger between the local employees and the expatriate, such conflicts will caused working relationships to become strain, cohesiveness among employees no longer exist, back-stabbing occurred when mistakes were made, application for medical leaves increased and the organization become an in conducive working and learning environment. Organization also suffers from low productivity and high turnover rate. Follow next, discussion will be on group cohesion between the expatriates and the local employees and how will it affect the organization and local employees.
Team spirit and group cohesiveness are important traits employers look for in employees. These are the desire traits effective work groups possess. However, having said that, not everyone likes to work in group, some by character prefer to work independently. Where else, some by culture are taught to valued cohesiveness; mostly the Asian and Latin America countries. Therefore, if an expatriate from Middle East was been assigned to work in Latin America, the expatriate may experience discomfort while working with the local employees from Latin America, as team orientation is highly value in Latin America but not in Middle East. When the expatriate appear uncomfortable and display hostile behaviour, the local staffs may feel offended. Both parties will be given out negative vibes and conflicts can be sparkled off easily. Esprit de corps perish; group productivity decrease and creativity of group reduce. How managerial role of an expatriate affects the organization and local employees will be discuss next.
In most case, when an expatriate resumed a senior management position in a foreign country, the company will likely undergo a change in the organization culture. However, if these changes are not dealt with the right approach or if the changes are too drastic and sudden, these implementations often end up backfire. As a result, negative impacts will be induced upon the organization and local employees. Some of the negative impacts experienced by the local employees; employeesÐ²Ð‚â„¢ moral decrease, experience uncertainty toward the new changes, commitment toward the organization decrease, job satisfactory reduce causing performance to deteriorate and stress level of the employees to mount. Organization suffer the risk of losing valued employees as well as customers, planned project might be postponed or cancelled and suffer from a financial loss and productivity of the organization reduce and in some case organization will loss their creditability causing organizationÐ²Ð‚â„¢s share price plunged. Next the author will be discussing how monitoring issues can cause negative impacts to both local employees and organization.
When an organization sends the expatriate for temporary assignment in a foreign country, monitoring the performance of the expatriate can become an issue; especially if expatriate is send to those less developed countries as communication will be the barrier. It is difficult to access the expatriateÐ²Ð‚â„¢s performance and with no fair assessment done for the expatriateÐ²Ð‚â„¢s performance, the organization experience difficulty exercising rewards and punishment program. In such case, the higher authorities will be left clueless regarding the progress of the project, advice and feedback cannot be provided to the expatriate when crisis arise, thus affecting the progress of the project. Higher authorities will not be able to communicate the important changes regarding the organization key performance indicators (KPI) or re-align project goals and targets with the expatriate. Such issues might lead to mega projects delayed and incurring unnecessary expenses for the organization. The next following discussion is about how the negative stress cause by the expatriate can affect organization and local staffs.
Stress is a form of an emotion dysfunction experience by most expatriates, the perceptions, expectations and judgments expatriates developed toward the organization that they work for and the local employees who they work with are the few factors that might have been the cause. Commonly developed during the initial stage, while expatriates try to adapt to a new environment; such stress will normally subsided when expatriates start to familiarize with the new environment and culture however, not all were able to overcome them. In the event, when stress become too high for the expatriates, it can lead to negative impacts on the expatriates; for example expatriate will develop poor moral, low job satisfaction, high absenteeism and illness. In cases when people lost their ability to think clearly when under stress, unintentional sparkles might be created and in turn trigger greater interpersonal conflicts between expatriates and the local employees. Such wide range of negative impacts will upset the harmony of the work place thus creating a hostile and treacherous environment. Such environment affects employeesÐ²Ð‚â„¢ moral and employees become less motivated to perform, leading to a drop in productivity rate, this will eventually affect the organization greatly as organization losses their competitive edge.
The purpose of this report is to identify what are the negative impacts an expatriate have on the organization and the local employees of that organization the expatriate is working for. In this report, the author has selected only seven factors and attributes of the expatriate for further researched and discussion. In the process of researching a wide range of positive and negative impacts were identified however, as this report focus only on the negative outcomes therefore only negative consequences were documented.
Due to technology advancement, most organizations are breaking out of their native country and heading toward other part of the world. This resulting in globalization, a new type of labour market was born; labour mobility meaning employees no longer station or work within their hometown, they are required to travel to foreign countries. This group of employees who will be sent for overseas assignments will be known as expatriates, in most cases expatriates are expected to develop traits such as adaptability and flexibility. Most of the time, company tend to perceive expatriates as a value added members as they are well travelled and have seen the world, at such broadening very aspects such as experiences and knowledge, however, it is not always true.
From the research made, companies hiring and having unsuitable expatriates are most likely to be affected by the negative impacts brought upon by the expatriates. Most of the time, employees are the one who experience these impacts first, employees will experience stress, demoralize, unmotivated, productivity and efficiency of employees decrease, high absenteeism, low commitment, group cohesiveness diminished and more. Such negative impacts experience by the local employees at micro level can also greatly affect the organizations. Some of the negative impacts the organization suffer are great financial and economical lost, lost of creditability among customers and stakeholders, organizationÐ²Ð‚â„¢s share price plunged, organization culture change, unnecessary expenses incur from delayed and/or cancelled projects, organization losing their competitive edge and organization are at risk of losing valuable clients, good prospects and even worthy employees.
Hence as we can see, negative impacts induced by unsuitable expatriates, can cause serious consequences to the local employees and organizations. Recommendations for such issues will be discuss in the group report along with the other expatriate issues mentioned earlier in the introduction session.