International Human Resource Management: Subject Code - 430

International Human Resource
Management
Subject Code - 430
Developed by
Prof. Swati Bhatnagar Panchmatia
On behalf of
Prin. L.N. Welingkar Institute of Management Development & Research
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CONTENTS
Contents
Sr. No. Chapter Name Page

1 International HRM: An Introduction 3 - 20
2 Cross-cultural Management 21-47
3 Global Recruitment and Selection 48-98
4 Managing Performance Internationally 99-118
5 International Compensation Management 119-152
6 Training and Development 153-183
7 Managing Expatriates 184-232
8 Managing Diversity 233-276
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INTERNATIONAL COMPENSATION MANAGEMENT
Chapter 5
Objectives
At the end of the chapter, you should be able to understand:
• International compensation management

• What is International HRM?
• How is the current IHRM scenario?
Structure:
5.1 Managing International Compensation

5.2 Challenges in International Compensation
5.3 Conclusion: Is it just about the Money?
5.4 Summary
5.5 Self Assessment Questions
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Pollution Compensation for Expat Workers
Source: www.alchealth.com
April 1, 2014
Japanese electronics giant Panasonic has announced plans to pay expat

workers in China a wage premium to compensate for dangerous air
pollution. Thought to be a global first, Panasonic describes the payment
as a “premium for expatriates to compensate for a difficult and
sometimes harsh living environment.” writes expathealth.org.
The air quality in many Chinese cities is routinely found to be at

hazardous levels, something Panasonic, which operates several factories
in the country, is taking into account for its expat workers. Chinese
government statistics agree that air quality standards are well below
internationally accepted levels in all but three of 74 major cities.
Panasonic declined to say how much the premium would be, or how
many workers may be entitled to it. The move is part of wider deals
reached in Japan’s annual labour talks, reported the Guardian.
Managing compensation internationally is a tricky area. International HR

managers have to think beyond the set theories and be highly aware of
the trends and conditions all over the world. In the article quoted above,
the employer is thinking beyond the traditional expat package and giving
an allowance that shows a high amount of care and the employee is
bound to feel valued. The objective of managing compensation is to
ensure that an organization has an edge in terms of having the right
talent at the right place and the right time. If compensation is not
managed proactively, managing expatriates can prove to be a big
challenge.
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5.1 Managing International Compensation
The economic trends in the world keep swinging between ‘economic

prosperity’ and ‘cost cutting’. In such an environment, many corporates
react with sudden withdrawal of benefits without considering what impact it
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may have on employees. The budgets for HR initiatives for expats are
always restricted.
In such a scenario, how does one put together a sustainable reward

program that survives economic changes and is also effective for growth?
Within that reward program, when you consider the compensation, how do
you manage ensuring that it is well managed? Though money is not the
only factor in retaining talent, it sure does play a big role. How do you
ensure that the package you offer is current and relevant?
Compensation is a tool used by management for a variety of purposes to

further the existence of the company. Compensation may be adjusted
according to the business needs, goals, and available resources.
Compensation may be used to:
• Recruit and retain qualified employees.

• Increase or maintain morale/satisfaction.
• Reward and encourage peak performance.
• Achieve internal and external equity.
• Reduce turnover and encourage company loyalty
Compensation is based on:
• Market research about the worth of similar jobs in the marketplace,

• Employee contributions and accomplishments,
• The availability of employees with like skills in the marketplace,
• The desire of the employer to attract and retain a particular employee for
the value they are perceived to add to the employment relationship, and
• The profitability of the company or the funds available in a non-profit or
public sector setting, and thus, the ability of an employer to pay market-
rate compensation.
International HR is a challenging job for any Human Resource Manager and

an important and complex part of this tough job is managing the
compensation of these international employees. A lot of things have to be
kept in mind. For starters:
1. International Compensation System is understood as provision of

monetary and non-monetary rewards including base salary, benefits,
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perquisites, long and short-term incentives in accordance with their

relative contribution to performance.
2. Attract Individuals who are competent and interested in foreign

assignments.
3. Facilitate movements of expatriates from one subsidiary to another,

from one home country to subsidiaries, from subsidiaries back to home
country
4. Consistent pay levels at headquarters, domestic affiliates, and foreign

subsidiaries.
5. Be cost effective by minimizing unnecessary expenses.
6. Be consistent with the overall strategy, structure and business needs.
Components of an International Compensation Package
Components of international compensation comprises the base salary,

incentives, benefits, allowances, foreign service inducement/ hardship
premium, long-term benefits and taxes etc.
1. Base Salary:  
 
Base salary is the amount of money that an expatriate normally
receives in the home country. In the United States, this was around $
175,000 for upper-middle managers in the late 1990s, and this rate was
similar to that paid to managers in both Japan and Germany. The
exchange rates, of course, also affect the real wage:
(a)Expatriate salaries typically are set according to the base pay of the
home countries. Therefore, a German Manager working for a US MNC
and assigned to Spain would have a base salary that reflects the
salary structure in Germany.
(b)The salaries usually are paid in Home currency, local currency, or a

combination of the two. The base pay also serves as the benchmarks
against which bonuses and benefits are calculated.
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2. Benefits:
(a)Alternatively known as indirect compensation.
(b)Benefits constitute a substantial portion of international compensation

(approx. one third of compensation for regular employees is benefits).
(c)Benefits include a suit of programmes such as: – Entertainment, festival

celebrations, gifts, use of club facilities, provision of hospitality including
food and beverage, employee welfare, use of health club, conveyance
tour and travel, hotel board and lodging, vehicles, telephone and other
telecommunication facilities, sponsorship of children.
(d)Basically an employee tends to join and stay with an organization which

guarantees an attractive benefits programme.
(e)Vacation along with holidays and rest breaks help employees mitigate
fatigue and enhance productivity during the hours employees actually
work.
3. Allowance: 
 
It is an inevitable feature of International compensation. The most
common allowance relates to the cost of living – an adjustment for
difference in the cost of living between the home country and foreign
country assignment. This allowance is designed to provide the
expatriate with the same standard of living that he or she enjoyed in the
home country. 
 
Spouse assistance, housing allowance, home leave allowance, relocation
allowance and educational allowance are popular in expat
compensation. 
 
These allowances are often contingent upon tax – equalization policies
and practices in both the home and the host countries.
4. Incentives:
(a)An additional payment (or other remuneration) to employees as a

means of increasing output. Increasingly, MNCs these days are
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designing special incentive programmes for keeping expatriates

motivated. In the process, a growing number of firms have dropped the
ongoing premium for overseas assignments and replaced it with a one-
time, lump sum premium.
(b)The lump sum payment has at least three advantages:
• First, expatriates realise that they are paid this only once and that too
when they accept an overseas assignment. So the payment tends to
retain its motivational value.
• Second, costs to the company are less because there is only one
payment and no future financial commitment. This is so because
incentive is a separate payment, distinguishable from a regular pay,
and it is more rapidly for saving or spending.
• Third, less chances for premature repatriation.
5. Foreign Service/Hardship Premium: 

 
This is often perceived as an inducement in the form of a salary
premium to accept an overseas assignment. Generally, salary premiums
vary from 5% to 40% of the base salary. Actual salaries depend upon
the assignment, actual hardship, tax consequences and length of
assignment. In addition, if the work-week in the host country is longer
than in the home country, the assignee will be paid for the extra hours
worked. 
 
Certain countries are highly hostile to foreigners staying and working.
Indians engaged in road construction work in Afghanistan, for example,
face constant threat to their lives. In fact, ten such emigrants got killed
in recent times (2006-2007). Expatriates in such environments are paid
2-3 times more than their domestic salaries.
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6. Long-term Benefits: 
 
The most common long-term benefits offered to employees of MNCs are
Employee Stock Option Schemes (ESOS). Traditionally ESOS were
used as means to reward top management or key people of the MNCs.
Some of the commonly used stock option schemes are:
(a)Employee Stock Option Plan (ESOP): A certain number of shares

are reserved for purchase and issuance to key employees. Such
shares serve as incentive for employees to build long term value for
the company.
(b)Restricted Stock Unit (RSU): This is a plan established by a

company, wherein units of stocks are provided with restrictions on
when they can be exercised. It is usually issued as partial
compensation for employees. The restrictions generally lifts in 3-5
years when the stock vests
(c)Employee Stock Purchase Plan (ESPP): This is a plan wherein the

company sells shares to its employees usually, at a discount.
Importantly, the company deducts the purchase price of these shares
every month from the employee’s salary .
Hence, the primary objective for providing stock options is to

reward and improve employee’s performance and/or attract/retain
critical talent in the organization.
7. Taxes: 
 
The final component of the expatriate’s remuneration relates to taxes.
MNCs generally select one of the following approaches to handle
international taxes:
(a)Tax equalization: Firms withhold an amount equal to the home

country tax obligation of the expatriate, and pay all taxes in the host
country.
(b)Tax protection: The employee pays up to the amount of taxes he or

she would pay on remuneration in the home country. In such a
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situation, the employee is entitled to any windfall received if total

taxes are less in the foreign country than in the home country.
Compensation Philosophy
The basis of deciding compensation for any expatriate is the Compensation

Philosophy of the organization. Compensation philosophy is the set of
values and beliefs an organization has with regard to monetary and non-
monetary rewards payable to the employees. This is often combined with a
set of guiding principles that determine the compensation administration.
Differences in compensation philosophies are widespread, some
organizations believe in an extensive use of incentives, while others apply
that to a very narrow set of employees who are said to be ‘directly
contributing to the bottom line”, another variation is to give out
compensation “at the market average”. Some MNCs, in order to attract the
best talent, seek to pay at the top of the market. Some other MNCs are
more generous to certain levels of super performers while others work to
retain equity across all levels and employees.
Therefore, the compensation philosophy of an organization plays a big role

in the sort of remuneration an employee draws from there.
• Theories of Compensation 
 
There are four theories for international compensation – Contingency,
Resource-based, Agency and Equity.
• Contingency Theory 
 
Contingency theory is most popularly followed in international
compensation. According to this theory, expatriate compensation should
be based on particular contingencies or situations prevailing in the host
country. Typically, therefore, these organizations believe that the same
compensation rule cannot apply to expatriates across the globe. The
compensation philosophy in such organizations is normally decentralized
and allows units to localize the compensation structure.
• Resource-based Theory 
 
This theory suggests that an MNC should pay well to attract and train
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competent people who contribute to its competitive advantage. Human

resource consists as the greatest asset of MNC and the firm should do
anything to acquire, retain and use it for organizational effectiveness. It
is a challenge in such organizations to ensure a fixed structure and stay
within clearly defined salary bands. Such organizations remain market
sensitive and are constantly reviewing compensation to retain their
position in hiring and retaining of talent.
• The Agency Theory 

 
This theory focuses on the divergent interests and goals of an
organization’s stakeholders and the way that employee compensation can
be used to align these interests and goals. According to this theory, there
exists a principal-agency relationship between MNC’s headquarters and
subsidiaries, the former being the principal and the latter acting as
agents. Given that the headquarters do not have the unique knowledge
of the subsidiaries, not all decisions in the MNC can be made by the
headquarters. It must depend on the subsidiaries and their goals must
be mutually aligned.
• Equity Theory 
 
Equity theory believes that there should be an equal balance between
what the expatriate contributes and what he receives as compensation.
Inequity between the two will result in low performance. Establishing the
equity principle in a domestic business may be relatively easy but in
international compensation, this is a daunting task. Relativities are much
more difficult to establish in an MNC due to its geographic and cultural
spread and its workforce mix of home, host and third country nationals.  
 
However, organizations need to make sure that they are aware of
potential negative effects of ‘Equity’ on the motivation of other
employees. For example, a study done by Cowherd and Levine (1992)
used a sample 102 business units in 41 corporations to examine whether
the size of the pay differential between lower-level employees and top
management had any impact on product quality. Cowherd and Levine
suggest that individuals often compare their pay to that of people higher
in the organization structure. If lower-level employees feel inequitably
treated, they may seek to reduce their effort to achieve equity. Quality,
in their study, was defined as customer perceptions of the quality of
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goods and services. They hypothesized that extra role, or citizenship

behaviors, such as freely offering to help others, following the spirit
rather than letter of rules, and correcting errors that would ordinarily
escape notice, would be less likely when pay differentials between hourly
and top managerial employees were large. Their results supported this
hypothesis, suggesting that organizations need to take care that they do
not forget the potential adverse motivational consequences of executive
pay for the motivation of other employees.
Compensation Strategy
Ask compensation directors to describe how international compensation

and rewards are managed in their firms, and they typically offer one of two
responses. Some describe their recent efforts to modify the balance sheet
approach for paying expatriates. Most of these efforts attempt to better
align compensation costs with the purposes of different global assignments
by distinguishing between developmental and longer term technology
transfers and leadership roles.
Other compensation directors think in terms of different national cultures.

They point out the importance of localizing compensation decisions within
broad corporate principles. Their purpose is to better align compensation
decisions with differences in national cultures. Usually the broad corporate
principles seem to be relevant only at 10,000 metres, as in "support the
corporate values and global business strategy." The reality is that local
conditions dominate the compensation strategy. Justifications of this
practice inevitably include statements like, "You must understand that the
United States has a highly individualistic national culture. In other places in
the world, particularly Asia, people are comfortable with more collective
values. Security is more important than risk taking. You need to be
sensitive to 'saving face,'" and so on. These executives seem to believe
that something called "national culture" is a critical (perhaps the most
critical) factor when managing international compensation.
Now ask those same executives the question posed above, but delete the
word international, i.e., and “Describe how your organization manages
compensation." Executives now talk about initiatives to create a common
culture of ownership and performance. They say they want to build flexible,
agile cultures through practices such as broadbanding, broad-based stock
option eligibility, 360-degree assessment, and competency-based projects.
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So, on the domestic front, they place emphasis on strategic choice and on
crafting compensation strategies to help create an organization culture
sensitive to markets and performance. Yet internationally, concern with
aligning compensation with different national cultures dominates. Most
managers subscribe to this approach as consistent with the belief that
competitive advantage is achieved via transforming multinationals into
local companies.
This view conforms to the often-heard conventional wisdom that the best,
indeed, the only way to manage international compensation is to tailor it to
local conditions and the national culture to think globally but act locally.
Too often the reality is a matter of reacting, not acting, locally.
1. Nation and region-based strategy:
There is considerable difference in compensation and rewards not only

across nations but also within nations. Recent studies done in China, for
example, show that pay packages provided in state owned enterprises
emphasize benefits like housing, food, health care, childcare, etc. and
relatively lower cash. Joint ventures and wholly foreign owned subsidiaries
use widely divergent approaches, some emphasizing highly risky variable
pay while others emphasizing training, career development and moderate
cash.
Studies of some Japanese companies report differences in compensation

based on organization profitability, size, degree of unionization, exposure
to global competitive forces. For example, Japanese companies within the
country’s protected markets use ability and performance- based pay
schemes. Studies of Hungary and US reward practices suggest political and
economic factors (and not nation’s culture) to be responsible for
differences in compensation.
While the recent studies do not suggest that national boundaries should be
overlooked while planning the compensation strategy, they do suggest that
sufficient discretion for individual organizations exists within these national
systems to allow organizations to customize compensation and reward
systems. Hence, business strategy may be a more appropriate factor than
countries as units of analysis for globalizing compensation.
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2. National culture-based strategy:
Sociologists proposed that each nation has a culture – for example Geert
Hofstede (Power Distance, Individualism-Collectivism, Uncertainty
Avoidance, and Masculinity-Femininity) and some others as well.
Following this view, some argue that compensation strategies differ with
the national cultures - compensation systems in countries where the
culture emphasizes respect for status and hierarchy and thus, produces
higher power distance scores (Malaysia and Mexico) should exhibit more
hierarchical pay structures, while those manifesting low power distance
(Australia and the Netherlands) would choose more egalitarian systems. In
nations identified as individualistic (U.S., U.K., Canada), compensation and
rewards would support employability and individual and performance-based
pay. Those in more collectivist nations (Singapore, Japan) would choose
more group-based approaches, and so on.
This national culture approach prescribes that compensation and reward

policies must be aligned with and reinforce attributes of national culture. It
has long been recognized that compensation and reward systems, because
of their social as well as economic significance, exemplify and reinforce
cultural norms. However, this does not mean that social and cultural norms
necessarily coincide with national boundaries. Clearly, geopolitical
boundaries alone do not determine cultural values and social norms.
Nations comprise a variety of subgroups and subcultures, and anecdotal
and empirical evidence suggests that local cultural values as well as values
within organizations differ significantly.
A recent study of values placed on individualism-collectivism and risk

taking at four companies, two in the U.S. and two in Slovenia. The
averages of these intra-country distributions were slightly different:
Slovenian employees tended to be more individualistic and more inclined to
take risks than U.S. employees. Yet Hofstede's work suggests that
Yugoslavs, of which Slovenia is a former republic, should be risk averse and
collectivistic.
The striking feature, however, was that the variances of the distributions
were virtually the same. Thus, one can find risk averse collectivists and
risk-taking individualists in the U.S., Slovenia, and most likely in many
other nations as well.
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Closer analysis reveals that political, economic, institutional, and other

forces (rather than national culture) explain a significant amount of
variation in the expressed desires of employees from different countries.
For example, U.S. workers may desire two weeks of vacation, not because
of culture, but because that is the norm in the U.S. In Germany, the norm
is one month or more. Transfer a U.S. worker to Germany, and the
employee will likely want the month; two weeks will no longer be sufficient.
3. Organization culture-based strategy:
Compensation and reward systems can become an important signal of an

organization' culture and values. As such, the systems help create cultures
or mind-sets that are different and distinct from the cultures and values of
competing firms. Hewlett-Packard and Microsoft both compete vigorously
for software engineers, yet each company exhibits a different corporate
culture, signaled by and reinforced in their respective compensation
systems. The same logic applies to Toyota and Toshiba-different cultures
and different compensation and reward systems.
Given sufficient variation in values among the people in the labor pools of a
nation, firms can structure compensation policies that are consistent with
the firm's culture and simultaneously attract individuals from the applicant
pool who have similar values. When considered from a strategic
perspective, organizations could customize compensation systems to help
create a culture and attract a workforce that possesses the values,
knowledge, skills, and abilities that support the organization's strategic
goals and objectives.
Current Reality: Strategic Flexibility
Strategic flexibility in global compensation and reward systems starts with

understanding how the company plans to win. What is its strategic intent?
What is its global mindset?
As depicted in Figure 1, strategic flexibility is based on the premise that

understanding and managing total compensation in a global business shifts
thinking away from using a balance sheet to keep expatriates economically
whole or relying on stereotypical notions of differences among nations. The
focus, rather, is on understanding and leveraging differences within and
between nations.
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Traditional to Strategic Flexibility
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Figure 1: Traditional v/s Strategic Flexibility
Source: Cornell University Centre for Advanced Human Resource Studies

Working Paper series.
If the global business strategy involves paying less attention to boundaries,

sharing ideas and intelligence, harmonizing manufacturing and the
distribution process to take advantage of economies of scale, and
presenting one face to the customer, then a global compensation system
should be crafted to signal this-and reward behaviors to achieve it.
Strategic flexibility means that companies achieve advantage by

customizing multiple compensation and reward systems. This is already the
state of practice in companies operating in multiple markets or employing
contingent and core workforces. The art is to avoid the chaos created when
multiple systems go off in multiple directions. This results in numerous
compensation systems, one for each country in which the company
operates. To overcome the chaos, the company must ensure that the
multiple deals signal the organization's global mindset and support its
strategic priorities.
Creating and managing multiple deals to support a global business is

consistent with the current practice of broadening the definition of total
compensation to include the total value of employment. As shown in Figure
2, total compensation includes cash, benefits, and long-term incentives as
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well as employment security conditions, flexible work schedules, learning

opportunities, and so on. There is a growing realization that focusing only
on the financial forms of total compensation creates transactional
relationships that can be easily copied or purchased by competitors.
Financial returns alone cannot extract the unique, value adding ideas and
behaviours possessed by employees. Financial returns alone are ineffective
in creating the common mindset that creates peoples' willingness to share
the insights and tacit knowledge required to achieve and sustain
advantage.
!
Figure 2: Total Value of Employment

Working Paper series
Strategic flexibility also includes a broader thinking that includes both

financial and relational returns. Relational returns may bind individuals
more strongly to the organization because they can answer those special
individual needs that cannot be met as effectively with economic returns
(e.g., providing for childcare via the none-economic return of flexible work
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schedules, versus the financial return of salary to pay for childcare. The
flexible schedule puts a parent, not a caregiver, at home). The total value
of employment, comprising both relational and financial returns, creates
broad, flexible exchanges or deals with employees. Multiple deals
encompass a broad range of exchanges and can help create commitment
to common values, goals, and the pursuit of mutually beneficial long-term
objectives.
Flexibility, choice, and managing risk form the essence of this thinking. It
begins by viewing the employment relationship as an exchange. Under this
view, both the employer and employee make contributions and extract
returns from the relationship. A critical principle is that the returns offered
by the employer are the primary determinants of the contributions
provided by employees. That is, what employees are willing to give to the
organization is determined in large part by what the employer is willing to
give to the employee. The employer's choices come first and determine the
employees' response. However, once this relationship is underway, it
becomes dynamic and recursive.
The objective, then, is to structure the total value of employment so that

employee contributions support organizational goals. The model in Figure 3
groups different forms of total compensation into three sets: core, crafted,
and choice. It includes any return an organization can offer that employees
see as a reward or a return for the contributions they make on the
organization's behalf. 
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Strategic Flexibility: Core, Customize and Choice
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Figure 3: Strategic Flexibility

Working Paper series
The core section of the model includes compensation and reward forms
that signal the corporate global mindset (e.g., creating a performance/
customer service culture or a culture of ownership, insuring a basic level of
services and benefits). Specific practices may vary according to market and
local conditions but must be consistent with the core policies.
The crafted set of compensation elements in Figure 3 assumes that

business unit or regional leaders have discretion to choose among a menu
of total compensation forms that may be important to gain and sustain
advantage in the markets in which they operate. For example, some form
of housing assistance (loans, allowances, dormitories) may make sense in
Shanghai, whereas in London or Tokyo, transportation assistance may
make more sense. The critical focus of the crafted alternatives is to offer
operating units the ability to further customize their total compensation
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package to achieve their business objectives. This crafted portion is created

within the framework of core returns so that it supports and reinforces
corporate priorities and culture as well.
Finally, the alternatives in the choice set offer flexibility for employees to
select among various forms of total compensation. Analogous to flexible
benefits, the choice set shifts the focus of customizing compensation from
managers to employees. Examples here might include opportunities to take
educational leaves to become eligible for regional or global assignments,
wealth creating arrangements, or differing employment security
arrangements (e.g., contract terms for managers and professionals).
So the strategic flexibility model offers managers the opportunity to tailor

the total compensation system to fit the context in which they compete
within a framework of corporate principles. Additionally, the approach
offers some opportunity for employees to select forms of returns that meet
their individual needs as well.
Many companies are already using some of this strategic flexibility model.
In global organizations, the business units or regions often have discretion
to customize their compensation system within corporate guidelines. For
some companies, the strategic flexibility model simply draws existing
practices under one umbrella. For example, it treats expatriates as simply
another group, much like sales disciplines.
At the same time, however, other companies operate with their

international compensation and reward systems pointed in many different
directions. Global mindsets may not be obvious and the global strategic
priorities may not be supported. For these firms, directing compensation
and reward systems strategically provides an opportunity to gain a
competitive advantage.
Compensation Approaches
1. Balance Sheet Approach: This is the most commonly used approach

with the primary objective of keeping the home country standard of
living while providing a financial inducement for expatriates. This
approach integrates the base salary for PCNs and TCNs to the salary
structure of the home country. There are three main advantages of this
approach:
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(a)Provides equity between assignments and between expatriates of the

same nationality.
(b)Ease of communication.
(c)Due to the consistency between the compensation system and the

compensation system in the parent country, the repatriation process
for expatriates is facilitated. 
 
The primary disadvantage of this approach is that it can result in
significant disparities between expatriates from different nationalities
and between expatriates and locals doing the same work. It is also
complex to administer.
2. Going Rate Approach: This approach is primarily based on the local

market rates. It relies heavily on survey comparisons among local
nationals, expatriates of the same nationality and expatriates of all
nationalities. The main advantage of this approach is that pay equality
with local nationals is facilitated. It also promotes equity amongst
different nationalities doing the same work. The approach is simple and
easy for expatriates to understand, and it provides greater identification
with the host nation. The disadvantages of this approach, however,
involve variations in pay between assignments for the same expatriate
and pay discrepancies between expatriates from the same nationality
doing similar work in different nations. This approach also causes
potential re-entry challenges, particularly when expatriates have been
receiving significantly more pay while on assignment as compared to
their home nation.
Quizlet
1. Management can use compensation as a tool to:
(a)Recruit and retain qualified employees

(b)Decrease morale/satisfaction
(c)Encourage competition among employees
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2. Compensation Philosophy of an organization is:
(a)The ideas an expatriate has towards what his compensation should

be
(b)Set of values and beliefs an organization has with regard to the
rewards payable to employees
(c)The managers’ outlook towards the pay their teammates should be
getting
3. Equity theory of compensation believes:
(a)MNC should pay well to attract and train competent people who
contribute to its competitive advantage
(b)There should be an equal balance between what the expatriate
contributes and what he receives as compensation
(c)Expatriate compensation should be based on particular contingencies
or situations prevailing in the host country
4. Strategic flexibility in compensation means:
(a)Compensation should depend on differences in regional and national

cultures
(b)Strategic edge can be achieved when compensation is decided
according to the organizational culture
(c)Companies achieve advantage by customizing multiple compensation
and reward systems
Answers
1. (a) Recruit and retain qualified employees

2. (b) Set of values and beliefs an organization has with regard to the
rewards payable to employees
3. (b) There should be an equal balance between what the expatriate
contributes and what he receives as compensation
4. (c) Companies achieve advantage by customizing multiple compensation
and reward systems
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5.2 Challenges in International Compensation
A constant challenge for companies operating internationally is the need to

balance providing remuneration packages competitive enough to attract
the right people to meet company objectives with keeping costs down,
particularly in the current economic climate. Benchmarking expatriate pay
is integral to finding this balance but as companies operate into and out of
an ever-growing number of locations, these comparisons are becoming
more intricate.
Dynamic growth in regions such as Asia and South America continues to

provide commercial opportunities for companies, generating an even
greater international demand for skilled and talented staff. However, in
recent years, we have increasingly seen countries in these regions also
emerge as expatriating countries and in the future there will be more
movement out of these developing regions into the developed world. This
is creating additional challenges for those trying to establish equitable yet
attractive remuneration practices when sending people into and out of
these locations.
Local Pay Issue
One emerging challenge for anyone managing employees on assignment

into and out of some of these developing countries is the 'local pay issue'.
A consequence of fast economic growth and generally higher inflation in
developing countries is that local salaries there are increasing more rapidly
than expatriate salaries. This is particularly evident in South America and
in many developing Asian economies, such as China. However, in many
developed countries, particularly those in the Eurozone, local salaries have
risen only moderately due to low inflation and restricted GDP growth, and
the same is also true of expatriate salaries there.
Chart 1: Changes in local salaries as a percentage of expat salaries
! !140
Source: MyExpatriate Market Pay/Towers Watson
By way of example, the above chart shows changes in local Middle

Manager salaries as a percentage of expatriate salaries at the same level
over the last five years for China, Chile and France. The steep rises in
Chinese local salaries mean they are now fast approaching expatriate
levels making a host-based salary system a more viable approach for
companies with assignees there. In Chile, as in some other South American
countries, local salaries have recently overtaken those of expatriates. In
France, on the other hand, both local and expatriate salaries remain fairly
stable as is typical of many developed countries.
No matter which salary system is currently used for calculating an

expatriate's salary it is important to keep track of local salaries. This
enables a company to see how these fit relative to its assignees' pay and
assess whether the current remuneration approach continues to meet and
reinforce business objectives. While comparing local and expatriate salaries
is not straightforward, it can certainly give an indication of whether a local
salary system is an appropriate or cost-effective alternative to the home-
! !141
based approach. This is a growing issue, particularly for companies sending

employees into and out of developing countries where, as we have seen in
the earlier examples, salaries can increase considerably over just a few
years and, as we are about to see, can vary significantly with seniority.
When an expatriate employee sees their local counterpart’s salary is

approximately 70% higher than their own, it is easy to understand how
they could feel underpaid. Even though the expatriate may have extra
benefits, such as accommodation, education allowances and more which
might change the comparison – more on that later – the cash element is
still important, even if it is only psychologically.
Depending on how much money the company is prepared to pay to get the
right person into the right place it may look to pay an assignee the local
market rate; other companies may look at paying an extra 'position
allowance' to match the local spendable.
It is evident, then, that what may work at one job level may not work at
another – certainly for companies going into or operating in high growth
markets. Putting an assignee from Western Europe to Chile onto a host-
based system may be suitable at senior level but not at junior level – a
'one size fits all' approach is unlikely to help the company succeed in
attracting talent comprehensively.
Salary Issues when Expatriating from Developing Economies
The large pay differences between seniority levels in the developing

locations highlighted can also cause issues when expatriating out of them –
a trend that is steadily increasing. For example, sending a junior manager
on assignment from Brazil to Western Europe using a build-up approach
may well result in an expatriate salary that is more or less in line with
other expatriates and local pay levels and typical expatriate salaries.
However, to use this approach for a senior employee will result in a huge
cost to the company. An employee from Brazil earning the average
Brazilian executive salary on assignment in London on a typical build-up
package could be earning around 75% more than the expatriate average in
the UK at that seniority. The difficulty for the company in this case is that a
senior Brazilian employee is unlikely to be willing to move to most of the
traditionally high-salary, developed countries on a local package since they
will lose the high buying power they are used to at home.
! !142
Global Differences According to Seniority
Another layer of complexity to be aware of when reviewing local and

expatriate salary options is the ‘seniority’ effect. The difference that may
be seen between average net expatriate and local salaries can vary greatly
according to seniority. Data shows that at junior managerial level,
Switzerland has the highest local national net salaries relative to expatriate
salaries, followed by the USA and Australia (explained in the table below).
Several other western European countries, along with Canada and Hong
Kong, are also at the top end of the scale. This comes as no particular
surprise since these are countries with developed economies where salaries
have traditionally been high.
Chart 2: Local net salaries as a percentage of expat
!
Source: MyExpatriate Market Pay/Towers Watson
However, what can come as a surprise is the way in which this picture
shifts considerably at the executive level. No longer do those traditionally
high-salary locations dominate the top. Instead it is the strong South
American economies of Chile, Brazil, Mexico and Colombia where the
! !143
highest local salaries relative to expatriate salaries are being witnessed.

Local salaries in these countries have been increasing steadily for several
years, but even more so at the executive level; the limited number of
qualified people for the top jobs in these locations means that those who
do have the skills are in a strong position to command very high salaries.
Hence, implementing consistent policies across all employees, no matter

the seniority level or countries of origin and assignment, is likely to create
problems. A flexible policy that can distinguish between the nationalities
and seniority of the assignees is a more pragmatic solution and should be
reinforced by managing expatriate expectations throughout the process.
However, it may be that a company will take the view that if traditionally
expatriates have earned more than locals, why shouldn’t this now apply to
employees being expatriated from developing countries into developed
ones? Another approach also worth considering is to look at sending
employees on assignment earlier in their career when salaries are more
likely to be similar.
5.3 Conclusion: Is it just about the money?
Source: The Compensation Handbook (McGraw Hill Education)
Decades of research about expatriates has assumed that the fundamental

driver for assignees to accept international assignments has been for
financial gain, mostly as a result of the substantial benefits and allowances
they receive over and above their base salary. To be fair, for many years
this was indeed a major reason why expatriates agreed to go: few people
are willing to uproot their lives, families, established networks and
familiarity of home to simply “break even” in terms of home-country
salary. The latest research shows, however, that the five top criteria for
expatriates when making the decision to accept an international
assignment go beyond only financial reasons.
While base salary (71%) and a location bonus (to incentivize the move;
32%) are important, so too is accompanying partner support to assist in
adjustment and the dual-career issue (finding employment; 60%), re-
integration guarantees for an expatriate’s career (58%), and the quality of
schooling for children (whether fully or partially funded by the company;
41%).
! !144
Clearly, money does matter to some extent: expatriates, like everyone

else, need to earn their keep, pay their bills, and support their families.
Expatriation – and global mobility in general – is often a fast track way to
earn more money more quickly to meet this need, and sometimes to save
money as well, making mobility attractive to many employees, at least in
the short term. Employees close to retirement may be especially focused
on money, particularly maintaining home-country retirement plans, yet this
aspect of remuneration remains one of the most challenging aspects
particularly for career expatriates; only 12 per cent of companies in a
Mercer survey had established international pension plans to ensure long-
term expatriates their continuity of benefits.
But money is not everything. As noted above, “job guarantees” upon

returning to the home country, “partner support”, and “children’s
schooling” are also ranked as important criteria. This tells us a lot about
modern expatriation, wherein we are witnessing a change in the drivers
that motivate expatriates to go abroad, with corresponding changes in
company’s strategies to attract the right people into global employment
and to keep them employed over the long-term. For more and more
expatriates, compensation, then, is a “means to an end” – it matters only
to a point. Most organizations are therefore mistaken in their belief that
financial gain is expatriates’ overriding motivation when they go abroad. In
fact, a recent study found that financial gain becomes most important to
expatriates only when a sudden change in remuneration causes them
undue hardship or they are close to retirement.
Furthermore, traditional balance sheet approaches to assignee

compensation cannot be used to the same extent as they have in the past
to motivate expatriates to perform and to remain with an organization. In
accepting this new reality about compensation, it is not then the type of
compensation that matters most to expatriates, but the process by which
compensating them takes place and how they are subsequently treated,
because if the financial ties that bind them to their organizations is
lessened by local-plus, or cut altogether as is the case with localization,
then using only money to retain them seems somewhat futile. This is
particularly true when competitor organizations can match or exceed an
assignees existing remuneration package as a means of poaching them.
The point here is that it’s not just about the money. In fact, for some
millennial expatriates as well as those climbing the ladder to middle
! !145
management, it’s often never about the money. To fully link global mobility
to talent management, companies need to deploy compensation
approaches that engage and motivate their expatriates. This is where the
psychological contract can have real power in terms of:
(a)When and how reductions in expatriate salary are communicated;

(b)When changes in benefits are likely to occur;
(c)The alternatives that are offered to offset the inevitable financial
shortfall in relation to assignee’s financial obligations and responsibilities
as the family breadwinner.
There’s something else here to consider: the power of the psychological

contract is determined not by how much money is spent or thrown at a
problem, but by the intent behind the actions or behaviour. It costs
companies nothing to treat their assignees well, by communicating with
them openly and thereby, fostering harmonious and committed
relationships through mutual respect and understanding.
Fun Exercise: Design Expat Compensation
An American Executive in the computer industry manages a

manufacturing division for the company in Santa Clara, California, USA.
The division has 1000 employees. The executive has been offered an
opportunity to manage a manufacturing division for the company in
Tokyo, Japan. That division too has 1000 employees. This is a career
growth opportunity that will expand the executive’s future growth. The
Executive has a family of 4 – including a spouse and 2 school going
children.
Divide the class into groups of 4 – 5 and using the data given in the table
below, design an appropriate compensation package for the executive.
The group must present a rationale for and specific amounts and items
that it believes the executive must receive. However, the group must
keep in mind the following:
• There are key cultural differences in America and Japan which impact
compensation practices (refer – Hofstede’s cultural dimensions)
!
! !146
• What could be the potential sources of cost associated with

expatriation?
• What are the current housing costs, tax rates, compensation levels,
living expenses in the two cities?
!
International Management – Global Exercise
Total Compensation for Expatriate Employee in Tokyo $0
Total Compensation for $2,26,000

employee if based in the U.S.
U.S Toky Toky

o o
Direct Payments $2,26,000 $0 Support for $0

Adjustment at Foreign
Assignment
Base Salary $1,52,000 Home Leave (every 4-8

(Annual - in U.S.) weeks
Annual Bonus (in $31,000 Personal security

U.S.)
Incentive pay/ $22,000 Car/Driver

stock/etc.
Pension plans $15,000 Domestic help
Vacation (4 weeks) $0 Spouse employment
Personal time off $0 Childcare provider

Language/translation
Recreation/Health $0
services
Housing $0 Cultural training
Transportation $0 Repatriation assistance
Health care $6,000 Social club fees
Tax Reduction/ Imported food and other
$0
Equalization goods
! !147
Home Furnishing
$0
Allowance
Education Allowance $0
Hardship Premium $0
Goods and services
$0
differential
Temporary Living
$0
Allowance
Assignment
$0
completion bonus
Extension Bonus $0
Help Renting U.S.
$0
Home
5.4 Summary
1. Compensation is a tool used by management for a variety of purposes

to further the existence of the company. Compensation may be adjusted
according to the business needs, goals, and available resources.
2. International HR is a challenging job for any Human Resource Manager

and an important and complex part of this tough job is managing the
compensation of employees who are part of these international
employees.
3. International Compensation System is understood as provision of

monetary and non-monetary rewards including base salary, benefits,
perquisites, long and short-term incentives in accordance with their
relative contribution to performance.
4. Components of international compensation comprises the base salary,

incentives, benefits, allowances, foreign service inducement/hardship
premium, long-term benefits and taxes etc.
5. The basis of deciding compensation for any expatriate is the

Compensation Philosophy of the organization. Compensation philosophy
is the set of values and beliefs an organization has with regard to
monetary and non-monetary rewards payable to the employees.
! !148
6. There are four theories for international compensation – Contingency,

Resource-based, Agency and Equity.
7. Contingency theory is most popularly followed in international

compensation. According to this theory, expatriate compensation should
be based on particular contingencies or situations prevailing in the host
country.
8. Resource-based Theory states that an MNC should pay well to attract

and train competent people who contribute to its competitive
advantage.
9. Agency Theory focuses on the divergent interests and goals of an

organization’s stakeholders and the way that employee compensation
can be used to align these interests and goals.
10.Equity theory believes that there should be an equal balance between

what the expatriate contributes and what he receives as compensation.
11.Organizations have varied strategies to manage international

compensation. However, the strategy that currently works best is
Strategic Flexibility.
12.Strategic flexibility is based on the premise that understanding and

managing total compensation in a global business shifts thinking away
from using a balance sheet to keep expatriates economically whole or
relying on stereotypical notions of differences among nations. The focus,
rather, is on understanding and leveraging differences within and
between nations.
13.There are two varied approaches to compensation – Balance Sheet

Approach and Going Rate Approach.
14.The Balance Sheet Approach is the most commonly used approach with
the primary objective of keeping the home country standard of living
while providing a financial inducement for expatriates.
! !149
15.The Going Rate Approach is primarily based on the local market rates.
It relies heavily on survey comparisons among local nationals,
expatriates of the same nationality and expatriates of all nationalities.
16.A constant challenge for companies operating internationally is the need

to balance providing remuneration packages competitive enough to
attract the right people to meet company objectives with keeping costs
down, particularly in the current economic climate.
! !150
1. To manage international compensation, an HR manager has to:
(a)Travel internationally to scout for talent all over the world

(b)Work on attracting individuals who are competent and interested in
foreign assignments
(c)Keep up to date with agents who are experts on global relocations
(d)Overlook expenses and focus on keeping expats happy
2. Base salary of an expat is:
(a)The amount of money that he normally receives in his home country

(b)The allowance relating to the cost of living
(c)The additional payment an expat receives as a means for increasing
output
(d)The monetary inducement to accept a foreign assignment
3. There is considerable difference in compensation:
(a)Across countries
(b)Within Countries
(c)Both a and b
(d)Only a
4. Traditional compensation strategy focuses on:
(a)The balance sheet approach

(b)Leveraging differences within nations
(c)Growing corporate culture
(d)None of the above
5. Relational returns are:
(a)Allowances like housing assistance, hardship allowance, schooling,

etc
(b)Aspects of compensation that cater to special individual needs and
bind an individual to an organization
(c)Perks like ESOPs, that give monetary returns to the expat
(d)All of the above
! !151
6. The local pay issue:
(a)Can be ignored, it is the expat salary levels that are important in

international compensation
(b)Is the large pay difference due to seniority levels in expats
(c)Arises when an expatriate is moving from developing country to
developed country
(d)Is the consequence of fast economic growth & inflation in developing
countries
7. Following are the theories of compensation:
(a)Contingency, Resource-based, Agency and Equality

(b)Contingency, Research-based, Agency and Equity
(c)Contingency, Resource-based, Agency and Equity
(d)Contingency, Resource-based, Agents and Equity 
! !152
REFERENCE MATERIAL
Click on the links below to view additional reference material for this
chapter
Summary
PPT
MCQ
Video Lecture - Part 1
Video Lecture - Part 2 
! !153
TRAINING AND DEVELOPMENT
Chapter 6
Objectives
• What is the need for training at an International level?

• What are the areas of training?
• How can an organization develop leaders who can manage global roles?
Structure:
6.1 Need for Training in International Assignments

6.2 Cultural Adjustment
6.3 Cross-cultural Training Methods
6.4 Impact of Cross-cultural Training
6.5 The Role of HR in Expat Training
6.6 Developing Leaders to Manage Global Roles
6.7 Summary
! !154
Training: The Solution to the Expat Challenge
Article Author: Lorri Freifeld
EXCERPT
“.... When Jane accepted her husband entering the growing international
pool of potential expatriates at his company, she was excited. She
envisioned her family living in Rome, London, or Paris. A year later, when
Jack was offered a position in Bangalore, India, Jane refused to go. It took
lots of convincing on Jack’s part for Jane to finally agree, but their five-year
assignment ended after 13 months because Jane had given up. Moving
Jack’s household to Bangaluru and back cost the company a fortune. I
believe the absence of training for Jack’s family was a significant factor in
these failures.
On the other hand, Michelle’s husband was assigned to Seoul, South Korea.
With twin toddlers in tow, it made for an intimidating move. Michelle, a
world traveler, was excited, but she also had lots of apprehension. Moving
with children was something they had never done. She decided to request
cultural training from the employer, which granted it.
The training Michelle and her family received had an immediate payoff.
Michelle was able to remain calm and controlled upon landing at the airport
while locals grabbed her blond, blue-eyed children to show them to their
Korean relatives. The children were photographed and given candies while
the parents watched, amused. Without cultural training, Michelle confessed
she would have been all BUT amused. She would have panicked and
probably requested the next flight back to the States. Informed, she knew
her toddlers would be a huge attraction, and she had been made aware
that the risk of being kidnapped or poisoned was close to non-existent.
Michelle and her family loved living in South Korea and are eagerly
awaiting their next international assignment.
While it may not appear worthwhile to invest in cross-cultural training to
executives who have never experienced culture shock, these examples
show the difference it makes.”
! !155
6.1 Need for training in International Assignments
Increased globalization has raised the movement of human capital.

However, several expat assignments see early termination. According to
the 2012 Brookfield Relocation Trends Survey, despite periodic industry
reports of large percentages of assignments ending prematurely,
respondents reported that only 6% of assignments were incomplete due to
the assignee returning early, which is up 2%, from 4%, in 2011, but
almost equal to the historical average. This percentage includes early
completion of the assignment as well as failed assignments. The top reason
for the early returns continues to be family concerns and, although this
decreased slightly from the 2011 report (from 34% to 33%), it has
remained the top reason by at least 10%, and sometimes as high as 15%,
since the question was first asked seven years ago. 2011 also marked the
second year in a row where security concerns increased as a reason for
early return from assignment. Given the widely publicized events in Japan,
Egypt, Tunisia and elsewhere, this increase is not surprising.
Assignment Failure
In a survey done by Brookfield, participants were asked to report the

percentage of failed assignments and according to respondents, only 6% of
assignments fail. This compares to 4% last year and a historical average of
5%.
!
Figure 1: Assignment Failure Rate
! !156
Source: 2012 Brookfield Relocation Trends Survey.
Factors Leading to Assignment Failure
When asked to rank the factors that were most responsible for assignment
failure, respondents cited employee leaves to work for another company (a
new response) as the top reason at 19%. Other factors that were cited
were spouse/partner dissatisfaction (17%) and other family concerns
(11%). Respondents also ranked job does not meet expectations, inability
to adapt and inadequate job performance, all at 10%. The corresponding
percentages for these responses in 2011 were N/A, 18%, 8%, 10%, 12%,
13%.
Causes of Assignment Failure
!
Figure 2: Causes for Assignment Failure
Source: 2012 Brookfield Relocation Trends Survey.
! !157
Reasons for Premature Return from Assignments
Respondents indicated that 7% of assignments were not completed

because international assignees returned prematurely. The historical
average for early return of international assignees was also 7%.
When we asked participants to cite the principal reasons for assignees

returning early from assignments, family concerns (33%) topped the list,
followed by the early completion of the assignment (19%) and transfer to a
new position within the company (17%). The historical averages are 37%,
20% and 27%, respectively. Respondents also cited career concerns (5%),
cultural adjustment challenges (3%) and security concerns (3%). Twenty
per cent (20%) cited other reasons for early returns from assignment.
Reasons for Early Return
!
Figure 3: Reasons for early return from international assignments
Since the cost to send an expatriate on an international assignment is high

– the first year has been estimated to cost at least three times the
employee’s domestic annual salary (Shaffer, Harrison & Gilley, 1999) – a
company will usually expect performance delivered. There is, however,
evidence that many multinational corporations do not offer their
expatriates any form of Cross- cultural Training, neither before departure,
nor after arrival, and for the few companies that do, most of the training
consists of just a short informal briefing session before departure. Due to
this reason, the expat and the family are not prepared to face the culture
! !158
shock and adjustment period at another country. However, the numbers

are encouragingly changing.
The 2012 Brookfield Global Relocation Trends Report shows that 81% of
the companies provided formal cross-cultural preparation for international
assignments, the historical average was 80%. Furthermore, 44% offered
preparation on some assignments and 37% on all assignments (compared
to historical averages of 48% and 32% respectively). At companies where
cross-cultural preparation was offered only on some assignments, 51%
made it available based on the type of assignment, 28% based on host
location and 21% based on other criteria. The corresponding percentages
in 2011 were 29%, 46% and 25%.
At companies where cross-cultural preparation was offered on all

assignments, 60% provided training for the entire family, 27% for
international assignee and spouse and 8% for employees alone.
Historically, 42% of respondents offered this preparation to the entire
family, 29% to the international assignee and spouse alone and 5% to
employees alone. Twenty-four per cent (24%) of respondents indicated
that training was mandatory and 76% responded that it was optional. The
historical average for mandatory training was 24%.
Effectiveness of Cross-culture Programs for International Assignee

Success
When asked to rate the value of cross-cultural preparation for international

assignee success, 85% of respondents rated it as having great or good
value. While 15% rated the value as neutral. The historical average for a
combined good or great value rating was 83%.
! !159
Value of Formal Cross-cultural Training
!
Figure 4: Effectiveness of Cross-cultural Training
Source: 2012 Brookfield Global Relocation Trends Report
Hence, we can see the importance of training for an expatriate and his
family as most assignments fail due to family or spouse issues. And since
most companies do offer training, it is essential that the same is extended
to the family and spouse as well in order to make the training more
effective and for overseas assignments to be more successful.
6.2 Cultural Adjustment
An employee who is sent to a foreign country on a long-term assignment,

an expatriate, will in most cases need time to adjust to the new
circumstances. In many cases the expatriate brings his or her spouse and
children, and since the family will live in the country just as long as the
expatriate, the whole family will have to adjust to the general environment
and learn how to interact with host nationals. In addition, the expatriate
will also have to adjust to new work conditions.
! !160
The U Curve
The adjustment process can be divided into several steps, or phases, very
often displayed as a U-shaped curve (see Figure 5) where the expatriate
first enjoys the situation of being in an “exotic” culture, then realizes the
degree of adjustment that is necessary, before a slow adaptation takes
place.
Oberg (1960) described the first of four phases as a period of fascination,

where little contact is taken with locals and only in a polite and gracious
way. A very important person would often be met with great respect and
treated well, only getting the opportunity to see the good sides of the new
culture. This phase is often called the “honeymoon phase” and only lasts
until the individual starts to experience da -to day life. It is sometimes
referred to as the “tourist phase” or the “spectator phase”. Many
circumstances affect the duration of this phase and it may last from only a
couple of days or weeks to six months, but the honeymoon phase usually
ends around two months after arrival (Black & Gregersen, 1991).
The happy, fascinating and problem-free first period then makes a steep
turn downwards towards a culture shock, where the individual realizes the
difficulties in adjustment. The reasons to why culture shock happens are
many, but they can be concluded as a combination of these factors: stress
as a result of feeling obliged to make many adjustments; a sense of loss in
regard to friends, status or possessions; rejection by (or against) people of
the host country; confusion in self identity, roles and expectations;
surprise, anxiety and even disgust over cultural differences; and feeling
incapable of coping with the new environment.
! !161
Figure 5: The U-curve and the four phases of cultural adjustment 

(Black & Mendenhall, 1991)
The culture shock phase is part of a normal process that a majority of all
expatriates experience, even experienced expatriates who have been on
many international assignments before. What may start as minor things in
the day to day life (e.g., trouble with school, transportation, language) may
altogether evolve into something that can cause symptoms as anxiety,
irritability, feeling of helplessness and a desire to depend on other long-
termers from the same country. Some people never leave the culture shock
phase and stay hostile towards the host nationals throughout the time of
the assignment. Other people who never learn to cope with the situation
return home earlier or choose to only socialize with other expatriates until
it is time to go home.
For the expatriates who decide to stay, a long period of adaptation can be
expected, usually referred to as the “adjustment phase” (Black &
Mendenhall, 1991), the “recovery stage” or the “conformist phase”, which
constitutes the third phase. A good way to cope with the situation is to
! !162
learn the local language, or at least some of it. Knowledge of the local
language does in most cases help the individual to understand “cultural
codes” – norms in behavior and social patterns that can be typical for a
certain culture. The ignorance of these cultural codes is often the reason
for misinterpretations of signals and expectations. Instead of complaining
about the misunderstandings and difficulties, in this phase it is not
uncommon to start joking about the people and the difficulties that arise
due to the cultural differences. Even though the adjustment process has
started, a lot of the feelings and experiences from the culture shock still
remain, which makes it difficult to draw a clear line between the two
phases.
The fourth phase, the “mastery stage”, or “completion phase”, happens

when the individual is so well adjusted that he or she can function
effectively in the new environment. The individual’s cultural skills may
develop further, but are at this stage sufficient to function without a feeling
of anxiety or discomfort. Therefore, Oberg (1960) reasons that there are in
fact two types of complete adjustment, one that is more complete than the
other. Instead of just accepting the local food, drinks, habits and customs,
the expatriate may actually start to enjoy them. When the assignment is
finished, the expatriate may miss the culture and the people so much that
it will be a difficult time to readjust to the home country.
Several variations of the U-curve exist. The U-curve has sometimes been
criticized for not taking the repatriation process into account, and therefore
a W-shaped curve of the whole process has been presented, extending the
U-curve until after the expatriate has returned to his or her home country.
A J-shaped curve has also been suggested; where the basic difference from
the U-curve is that the honeymoon phase is shorter or even non-existent.
The U-curve is, however, the most commonly accepted as well as the most
used model explaining the adjustment process, thus making it the chosen
model for this study.
Adjustment Dimensions
The expatriate acculturation process is affected by many factors and can be

divided into four cultural dimensions:
(a)The “self-oriented” dimension;

(b)The “others-oriented”dimension;
! !163
(c)The “perceptual” dimension; and

(d)The “cultural-toughness” dimension (Mendenhall & Oddou, 1985).
According to Black, Mendenhall & Oddou (1991), the first three dimensions
are components of the individual skills that are important to master in
order to be effective in a new cultural environment.
The “self-oriented” dimension is a term that encompasses skills that

increase the expatriate’s self-esteem, and it can be subdivided into three
sub factors: (1) “reinforcement substitution”, which includes the
substitution of all home country activities that used to bring happiness and
pleasure to similar activities that exist in the new country (i.e., sports,
music, foods, art, etc.); (2) “stress reduction”, since it has been proven
that the ability to deal with stress in day to day life significantly affects the
expatriate adjustment; and (3) “technical competence”, because being
confident in how to accomplish the goal of the assignment is important for
overall adjustment. The opposite has also been shown; expatriates feel a
stronger ability to perform and accomplish goals if they have adjusted well
to the host culture.
The second dimension, the “others-oriented” dimension, deals with the

ability of the expatriate to interact with locals effectively, and it can be
subdivided into the two sub factors: (1) “relationship development”, which
simply is the activities that build friendship with people in the new culture;
and (2) willingness to communicate. The former factor is naturally
important for the overall adjustment, and the latter factor is an important
tool when building a relationship. It is not necessarily the level of language
skills that foster adjustment, but rather the confidence and willingness to
learn and use the host country’s language.
The third dimension that is mentioned,”Perceptual” dimension and the last

one that looks at the individual, is the perceptual dimension. The skills that
are necessary to understand foreign behaviour and to predict future
behavior of host-nationals reduce tension in the cross-cultural relations and
foster adjustment to the local conditions; thus being part of the perceptual
dimension.
The fourth dimension, the “cultural-toughness” dimension or “culture

novelty”, describes the differences in cultural distance. The gender of the
expatriate may also affect the culture distance; certain patriarchic cultures
! !164
may for instance be more difficult for women to adapt to than for men. The
only non-individual dimension thus explains that countries with a large
cultural distance in relation to the expatriate’s home country simply are
tougher to get adjusted to.
6.3 Cross-Cultural Training Methods
Companies use a variety of methods to teach expatriates cross-cultural

skills, aimed at facilitating interactions with a foreign culture. A summary
of different training methods along with their attributes has been compiled
and is presented in Table 1.
Didactic Training
Didactic training is most often provided in informal briefings, which can be

given in a classical lecture form or with less structured methods such as
casual conversations with experts. It can also be provided with
informational booklets, presenting facts on the host country. Didactic
training is the most common form of Cross-cultural Training and more than
two thirds of all multinational corporations offer didactic training in the
form of informal briefings to their expatriates before deployment abroad.
This type of training provides factual information regarding working and
living conditions as well as cultural aspects of the host country. The content
of the cultural aspect does, however, mainly address practical issues, such
as shopping and dress codes in the host country. It represents the
traditional way of learning used in schools and universities, where
information is transferred using one-way communication. The content in
didactic training is often hard facts like requirements for the job, policies,
travel arrangements, etc., but it also contains aspects that help prepare
expatriates to establish a framework for understanding and adapting to a
new culture when they arrive in their host country and facilitate lifestyle
adjustments. Besides pre-departure issues, it can also include information
on repatriation issues. The didactic training can have a more general
culture content or it can be aimed towards understanding a specific culture.  
! !165
Table 1: Overview of the cross-cultural training method, their

focus, timing of implementation and general activities used to
convey the training
Training Focus Timing Activity
Didactic Factual information, culture Pre-departure and/or Culture teaching

geneal and/or culture post-arrival
specific
Experiential Practical learning, culture Pre-departure and/or Look-see trips,

general and/or culture post-arrival workshops,
specific simulations
Attribution Learning to think and act Pre-departure Cultural

as a host national, culture assimilator
specific
Language Facilitating specific Pre-departure and/or Traditional

intercultural communication post-arrival teaching
Cultural Understanding culture as a Pre-departure Role-plays, self-

Awareness concept, culture general assessment
exercises
Interaction Learning from previous Pre-departure and/or Overlaps, on-the-

expatriates, culture specific post-arrival job training
Cognitive Learning to focus on Pre-departure Counselling

Behaviour rewarding activities, culture
Modification general
Sequential Synergies from combined Pre-departure, post Combining

training, culture general arrival, repatriation different training
and culture specific methods
Source: Study on Cross-cultural Training (Uppsala University)
Experiential Training
Experiential training is conveyed using a number of methods including, not

only, practical exercises, workshops and simulations, but also more
genuine concepts such as look-see visits to the host country. Look-see trips
can provide a first real experience of the country for the expatriate and
sometimes his or her family. They give the opportunity to meet people in
the new country and get a view of the new environment and the
workplace. To be effective they need to be well planned, which can make
them costly. The problem can also be that since they are designed to give
! !166
the expatriate a positive view, they may not show the true picture of the
host country. Pre-departure programs have the most effect if they are held
after a look-see trip to the host country, since the expatriates get many of
his or her basic questions answered and can build a sense of the host
location before entering the training program.
Experiential training aims at preparing the expatriate in a more direct way,

building beyond the mere intellectual experience. The experiential training
can also be either culture general or aimed towards a specific culture. The
training is based on the concept of learning by doing and is conveyed by
using practical exercises. This prepares the expatriate intellectually and
emotionally to adapt to the new culture and enables him or her to develop
certain skills that can be used when confronted with the new culture. This
is, one of the most promising training methods.
Attribution Training
Attribution training tries to give the expatriate skills in thinking and acting
as a host national. It is aimed at giving the expatriate an insight into the
cultural point of view in the host country. This enables the expatriate to
explain and understand host national behavior. By teaching such skills, the
aim is to make the expatriate’s attributes more isomorphic to the new
culture. Attribution training is closely connected, but not limited, to a
teaching method called “cultural assimilator”. This method consists of a
series of intercultural short episodes, judged to be critical for the
interactions between members of two cultures. In the episodes, encounters
between members of two different cultures are used to practice
interactions with a new culture.
Language Training
Language training involves teaching the expatriate the native language

and/or the business language of the host country. While fluency can take
months or even years to attain there are still benefits of using this training
method. The method is often used in Cross-cultural Training and is an
effective way of preparing an expatriate, since lack of language skills can
slow down an adjustment process. Even though fluency in the native
language is not attained, the ability to enter informal discussions, use
common courtesies and show cultural empathy can help to facilitate
adaptation to the host culture. Forster (2000) also concludes that some
! !167
knowledge of the local language is important to send visible signals of

politeness and to better understand the culture of the host country.
Language barriers can prevent the expatriate from processing information
posted in the local language, both privately and at a professional level, and
this prevents integration.
Knowledge of the local language does, as mentioned, facilitate cultural

adjustment, researchers also mention language skills as the dimension
with the strongest effect on expatriate adjustment. In a study by Forster
(2000), respondents did not regard pre-departure language training as
very important, but criticism from respondents partly included the short
duration of most of the courses.
Cultural Awareness Training
The goal of cultural awareness training is to give the expatriate insight

about the concept of culture and cultural differences, by teaching
awareness about the home culture. Training activities include self-
awareness building and value ranking charts, but the goals can also be
reached with more culture-general approaches, such as simulation games
and perceptual exercises. Other methods include role-plays and self-
assessments and can be a good way of building self awareness, which
translates into acceptance of oneself and an ability to adapt to the host
culture.
Interaction Training
The method of Interaction training is based on interactions between new

expatriates and expatriates with more experience of the local culture. It
can take place before departure, with previous expatriates or at the arrival
in the host country. Overlaps in expatriate placements are a sometimes-
used training method, which can be very beneficial for the expatriate’s
adjustment process. Benefits with overlaps include the possibility to explain
tasks, introduce contacts and otherwise coach in the management and
operation of the workplace. Families can also benefit in a similar way from
interactions with the outgoing family.
Although the benefits are clear with this model, most expats do not use it.
The reasons are cost issues and doubts in its value. There are also
problems with organizing since the development of expatriate placements
! !168
are hard to predict, and often are the result of short notice. This makes
overlaps hard to manage even for very skilled organizations.
Cognitive Behavior Modification
This method is among the less used training methods when training an
expatriate. The expatriates get to name what activities they find rewarding
or punishing in the home culture context. By making such distinctions, the
expatriate can hopefully apply the same process in the host country and
enable him or her to identify and focus on rewarding activities and feel
positive about facing challenges of the host culture.
6.4 Impact of Cross-cultural Training
A study done on the impact of Cross-cultural Training for expats has shown
three important categories emerging:
Development of Cultural Awareness
Those who attended post-arrival Cross-cultural Training displayed great

ability in recognizing cultural differences, in understanding the need to
acquire knowledge of the local culture, of its norms and regulations, and
then developing appropriate behaviors for cross-cultural interaction. These
skills, in turn, facilitated their cross-cultural adjustment and job-related
performance.
For example, participants who took a one-day post-arrival CCT focused on

a brief introduction to job-related responsibilities and on paying attention
to local norms and value systems. They gradually became aware of the fact
that cultural differences were a major factor in terms of the work behavior
of people in their home country and in the host nation.
Improvement of Communication Skills
Expats who undergo language training have reported that language fluency
facilitated their communication skills, making it possible for them to convey
instructions clearly and accurately, improving their listening ability, and
reducing misunderstandings. Participants also indicated that their language
skills, particularly listening skills, helped them build a bridge with the local
colleagues. Expats who are not fluent in the host country language have
! !169
indicated that they suffer greatly during the first few months of their
assignments. However, once a certain level of language fluency is acquired,
and communication obstacles are removed, performance at work improves
and interaction with colleagues improves greatly.
Facilitating Cross-cultural Adjustment
While working on an expat assignment, what stresses an employee, is the

cultural differences in work attitudes/behaviour plus local norms and
regulations. These pose the main challenges to their overseas assignments
while interacting with the locals and expanding the business interests in
the host country. Expats observe that attending a Cross-cultural Training
makes them understand the differences between them and the local staff
and facilitates their acceptance of these differences in a way that they were
gradually able to adjust to the local work environment.
6.5 The Role of HR in Expat Training
Expatriates can bring valuable cross-cultural skills to business, but

significant time spent in another country also brings some challenges. The
organization’s HR department can play a key role in bridging the gap of
cultural and legal knowledge, but the specific training they need to offer
expatriates varies significantly from business to business.
Teaching Social Norms
Every country has its own social norms for conducting business. A friendly
handshake in one country might be a demeaning or aggressive gesture in
another location. The organization’s HR department can bring expatriates
up to speed on social norms in their new country, and may even offer
seminars or written guidelines on how to interact with foreign co-workers.
Addressing Changing Business Practices
Business practice can change from country to country, even among

different branches of the same business. HR needs to address standards
for conducting business that may be different from the home country. For
example, an expatriate might have focused her efforts on keeping careful
records in her country of origin, but your business might prioritize
! !170
socializing or strong managerial skills. HR needs not only to introduce

expatriates to foreign cultures, but also to the business culture.
Educating About the Law
Even minor variations in the law can radically alter the way one does
business. Expatriates may have to master different record-keeping and
quality control procedures, might have new limitations with which they are
not familiar and may need to know which laws are relevant to clients and
business partners. While an expatriate doesn't have to be a lawyer, she
does need to know the laws that relate directly to her job duties.
Managing Paperwork
Expatriates can have a variety of citizenship and immigration statuses, so

the HR department will need to ensure that the expatriate employees have
the right paperwork. They may need visas or specific licenses, and not all
licenses from a foreign country are valid domestically. In addition to
managing this paperwork, the HR department may educate expatriates
about how to ensure they're legally able to work in the business.
6.6 Developing leaders to manage global roles
As firms reach across borders, global-leadership capacity is surfacing

more and more often as a binding constraint. According to one survey of
senior executives featured in an article by McKinsey Quarterly, 76 per cent
believe their organizations need to develop global-leadership capabilities,
but only 7 per cent think they are currently doing so very effectively. And
some 30 per cent of US companies admit that they have failed to exploit
fully their international business opportunities because of insufficient
internationally competent personnel.
The context in which global leaders operate remains full of complexity,

novelty, variety and even chaos. Nevertheless, global leaders encounter a
common challenge: how to influence individuals, groups and systems
unlike their own to achieve their employer’s strategic goals and objectives.
The single critical success factor in globalizing business lies with an
organization’s pool of highly competent global leaders who have the global
knowledge of production and service capabilities, of consumer demands for
products and services around the world, and who can influence others
! !171
despite diverse cultural, political and institutional backgrounds that make

them think, decide, analyze, act and communicate differently than the
leader. In other words, global leaders with “Global Mindsets” are the key to
sustainable competitive advantage in the global economy. What do we
know about developing global leaders and global mindset? A review of best
practices offers four recommendations for developing global leaders:
1. Organizations need strategic clarity about what kinds of skills a global

leader needs.
2. Prospective global leaders need relevant developmental opportunities.
3. Prospective global leaders need appropriate levels of feedback,
resources and support to help them learn from the experiences they
have.
4. People need international perspectives and exposure starting early in
their careers to maximize the quality of the globally competent expert
pipeline.
The development of expert global leaders is complex. Their capabilities are

developed over time and build on threshold competencies that include a
requisite level of inquisitiveness and openness — natural abilities that are
supported by cross-cultural knowledge — and build on a base of business
or technical skills. International experience contributes to their
development as do international management development programs and
cross-cultural training programs. But these interventions alone do not
make someone an expert global leader. It takes a Global Mindset.
Leaders with high levels of Global Mindset have an enhanced ability to

make sense of their context and behave appropriately as the context
varies. Leaders with high levels of Global Mindset are more expert global
leaders because of their ability to understand and interpret what is going
on in a global situation. They can more effectively interpret verbal and
non-verbal messages and signals from people from different cultures. In
addition, these same expert global leaders demonstrate high levels of
flexibility, which manifests as the ability to act differently in different
situations and contexts. Finally, leaders with high levels of Global Mindset
have the ability to choose the right behavior or approach in different
circumstances or contexts.
The American Management Association’s AMA Enterprise – their newly

rebranded division that offers consultation on business excellence,
! !172
conducted their 3rd annual study of challenges and opportunities for

developing Successful Global Leaders in 2012. They had the following key
findings:
1. Link between global leadership development programs and

overall business performance. 
 
Just under a third (31%) of companies have implemented some form of
formal global leadership development programs. This represents no
movement whatsoever since the first edition of this study (2010), with
31% reporting having global leadership programs. This should also be
contrasted with the 2011 survey in which 16.5% of companies reported
that they planned to implement such a program in 2011, but apparently
did not.  
 
Most (63%) high-performing companies reported having a global
leadership program in 2012, up 5% from 2011. Forty-four percent of
low-performing companies reported having a global leadership program
in place in 2012, a 10% increase over 2011. It is reasonable to conclude
that companies focused on improving their performance are looking at
Global Leadership Programs as an attractive investment.
2. The leading competencies that are the focus of global leadership

development remain remarkably consistent over time. 
 
When asked which competencies were important to include as key
components of their global leadership development programs,
respondents were remarkably consistent from 2011 to 2012. The five
most common competencies included in these programs were as
follows.
! !173
Table 2: Competencies for global leadership development
2011 2012
1 Change management 1 Change management
2 Critical thinking and problem solving 2 Critical thinking and problem solving
3 Strategy development 3 Ability to influence and build

coalitions
4 Execution of global strategies 4 Strategy development
5 Ability to influence and build coalitions 5 Execution of global strategies
With this consistency in mind, the 2012 study delved deeper, examining
not only the level of importance of various competencies, but comparing
that to the degree to which companies believed that their global leaders
had successfully mastered them. This gap identifies key areas for
improvement as well as areas in which companies can capitalize on the fact
they share a common list of competencies they identify as import ant, but
may not be exceptionally successful at delivering programs that help global
leaders master them.
Table 3: Degree of mastering competencies for global leadership

development
Competency % Included % Mastered Gap %
Change management 64.5 34.0 30.5
Ability to influence and build 59.0 36.0 23.0

coalitions
Critical thinking/Problem solving 62.0 42.5 19.5
Leading cross-cultural teams 49.5 31.5 18.0
Managerial agility 51.5 35.5 16.0
Emotional intelligence 43.5 28.5 15.0
Creativity 38.5 23.5 15.0
Strategy execution 57.5 43.0 14.5
Strategy development 58.5 45.5 13.0
! !174
3. Important focus of Global Leadership Development Programs:

Interpersonal influence and Coalition building. 
 
High-performing companies overwhelmingly reported that the top
priority for their global leadership development programs is to develop
leaders’ ability to influence and build coalitions. In fact, just under 30%
of high-performing companies indicated that this is their top priority. To
contrast, 11% of low-performing companies view influence and coalition
building as the central focus of their global leadership development
programs. Among the remaining high-performing companies, strategy
execution (14%) and strategy development (11%) were identified as
the next tier top priorities. There was less of a clear single focus among
low-performing companies—the competency most low-performers
identified as their top priority was managerial agility (18%), followed by
a tie between influencing and building coalitions (14%) and strategy
execution (14%).
Select the Competency listed below that clearly represents the most
central focus of your organization’s global leadership development
program.
!
Figure 6: Important competencies for global leadership
development programs
4. The competencies that will be needed for global leaders over the next
10 years is remaining largely consistent, with a greater focus on cross
cultural innovation and a greater emphasis on the use of technology. 
 
! !175
Eight of the top 10 opportunities for global leadership development are

the same as those that appeared in the 2011 list. Only managerial
agility and mastery of social networking technology emerged in 2012 as
new opportunities for the global leaders of the future. Survey
respondents agreed that managing virtually in more matrixed
organizations will be critical, along with being able to adapt to and
manage in a cross-cultural environment. However, there is also a
growing understanding that mastery of technologies — associated both
with virtual communications and social networking — will also be
important assets in the skill sets of global managers of the next decade.
Table 4: Future Competencies for global leadership development
Future Competency % % Gap

Important Mastered
Managing virtual teams 62.80% 22.30% 40.50%
Managerial agility 72.30% 33.10% 39.20%
Cross-cultural employee engagement 59.50% 23.30% 36.20%
Managing in a matrixed organization 60.80% 27.00% 33.80%
Managing innovation in multicultural setting 57.40% 24.30% 33.10%
Mastery of social network technology 41.90% 12.20% 29.70%
Collaborating with peers from multiple cultures 63.50% 36.50% 27.00%
Mastery of latest advances in virtual 45.30% 19.60% 25.70%

technology
Applying ethical standards in multiple cultures 51.40% 34.50% 16.90%
Multi-country supply chain management 40.50% 23.60% 16.90%
6.7 Summary
1. Increased globalization has raised the movement of human capital.

However, several expat assignments see early termination.
2. Spouse/Partner dissatisfaction and other family concerns were the top

reasons for expat assignment failure.
! !176
3. Since the cost to send an expatriate on an international assignment is

high – the first year has been estimated to cost at least three times the
employee’s domestic annual salary – a company will usually expect
performance delivered.
4. There is, however, evidence that many multinational corporations do not

offer their expatriates any form of Cross-cultural Training, neither before
departure, nor after arrival, and for the few companies that do, most of
the training consists of just a short informal briefing session before
departure.
5. It has been found that, of companies that do offer training, only 60%
extend the training to the entire family.
6. An employee who is sent to a foreign country on a long-term

assignment, an expatriate, will in most cases need time to adjust to the
new circumstances.
7. In many cases the expatriate brings his or her spouse and children, and
since the family will live in the country just as long as the expatriate,
the whole family will have to adjust to the general environment and
learn how to interact with host nationals.
8. The adjustment process can be divided into several steps, or phases,

very often displayed as a U-shaped curve where the expatriate first
enjoys the situation of being in an “exotic” culture, then realizes the
degree of adjustment that is necessary, before a slow adaptation takes
place.
9. Companies use a variety of methods to teach expatriates cross-cultural

skills, aimed at facilitating interactions with a foreign culture.
10.Cross-cultural training develops cultural awareness, improves

communication skills and facilitates cross cultural adjustment.
11.The organization’s HR department can play a key role in bridging the

gap of cultural and legal knowledge, but the specific training they need
to offer expatriates varies significantly from business to business.
! !177
12.Leaders with high levels of Global Mindset are more expert global
leaders because of their ability to understand and interpret what is
going on in a global situation.
Fun Exercise
Overview
• Everyone has a culture. It shapes how we see ourselves, others, and

the world.
• Behavior is affected in large part by cultural beliefs and values.
• Culture is like an iceberg. Some aspects are visible; others are beneath
the surface. Invisible aspects influence and cause the visible ones.
Objectives
• Students will gain skills in observing and describing behaviors.
• Students will develop an understanding of how our cultural values

influence the way we view other groups.
Materials
• Cultural-norms sheets (below) for the Pandya and Chispa cultures (half
of the players will receive Pandya sheets and the other half Chispa
sheets)
Introduction
Science fiction fans will recognize a familiar theme as they participate in

this simulation. Many science fiction authors have explored how humans
will behave when we meet an alien race for the first time. “Brief
Encounters” brings the question closer to home and asks students to
explore the interaction of two cultures—one outgoing and casual, the
other more reserved and formal—with different social norms.
!
! !178
Instructions
1. Remove all furniture from the center of the classroom. Students will
need space to move around. Explain to the class that they will adopt
the cultures of two unfamiliar groups, interact with each other, and
then examine their reactions.
2. Divide the participants into three groups. Two groups should be about
the same size and should have roughly equal numbers of males and
females, if possible. A smaller group of two or three students will act
as observers.
3. Ask the observers to watch closely as two different cultural groups—

the Pandyas and the Chispas—interact. They may move among the
participants, but they may not touch or speak to them. Their
observations will help the class view the lesson with a wider
perspective during debriefing.
4. Send the Pandya and Chispa groups to opposite corners of the room.
Distribute copies of the Pandya cultural-norms sheets to one group
and the Chispa cultural-norms sheets to the other group. Ask the
members of each culture to read these sheets and to discuss their
norms among themselves.
5. Visit the Pandyas and clarify their values. Emphasize the importance of
staying in character. Emphasize that the male students should be
chaperoned at all times. Remind them of the Pandyas’ reluctance to
initiate contacts with people of other cultures.
6. Visit the Chispas and clarify their values. Emphasize the importance of
making several brief contacts rather than a few lengthy ones. Define a
contact as eliciting a verbal or a nonverbal response from a member of
the other culture. Remind them of their friendly, outgoing nature and
their eagerness to meet people from other cultures.
!
! !179
7. The simulation, Announce that the two student groups from

imaginary . countries have been invited to a party sponsored by an
international student- exchange organization. The party organizers hope
the two groups will get acquainted and learn about each other. When
students return to their home schools, they will present culture reports to
their classmates. The students are welcome to mingle, dance, and talk
8. Start the music and let the two cultures interact. The teacher and
student observers should walk among the groups, looking for behaviors
that can be described and discuss ed during debriefing.
9. After 10 to 12 minutes, call time and end the party. Ask the students
to meet once more in opposite corners of the room and to make notes for
their culture reports.
10. Give each group about 10 minutes to create a brief report. The
Chispas’ report will describe Pandya behavior and the values that their
classmates could expect to encounter if they visited the Pandya nation.
The Pandyas will create a similar description of the Chispas’ culture.
11. Ask a representative from the Chispas to present the group’s report
to the class. Then, after providing the Chispas with a copy of the Pandya
cultural norms, ask a representa tive from the Pandyas to read that
group’s norms sheet. Ask the Chispas to note how their report compared
with the Pandyas’ cultural-norms sheet.
12. Repeat with a Pandya representative sharing the group’s report on

the Chispas (and provide the Pandyas with the Chispas’ norm sheet).
Debriefing
Use questions such as the following to guide discussion of how our own
cultural biases influence the way we view other groups. Be sure to ask
the small group of observers for their views on the participants’ attempts
to communicate across cultures and to maintain cultural norms.
!
! !180
1. How did you feel about the behavior of the members of your own
group? Of the other group? Did your group’s culture report use
positive, negative, or neutral terms to describe the other group?
2. How well did your group members observe the norms of their
assigned culture? During the party, what did you do if a member of
your culture did not observe a particular norm?
3. What are the real-world advantages of following cultural norms?
4. Ask students to discuss whether they agree or disagree with each of

the following statements:
• People have difficulty describing the behaviors of other groups in

non-judgmental terms.
• People acquire cultural norms fairly quickly.
• Most of the group’s norms are maintained through peer pressure.
• The same behavior can be perceived differently depending on your
group’s norms. For example, what appears friendly to Chispas seems
pushy to Pandyas
5. What are some real-world situations that were illustrated during the
game?
6. Pandya women were instructed to speak for the Pandya men. In what
real-world situations does one group speak for another?
7. What lessons from this activity would you want to keep in mind if you
were going to spend time in an unfamiliar culture?
You Are a Pandya
• Pandya Cultural Norms:
• Pandyas prefer to interact with members of their own culture.
• Pandyas do not initiate conversation. They speak only when spoken to.
!
! !181
• Pandyas have very formal speech patterns. For example, they always
use “sir” and “ma’am.”
• Among Pandyas, women have more status than men. Men are
chaperoned by Pandya women.
• Pandya men avoid eye contact with women from other cultures.
• Pandya men do not talk directly to women from other cultures. They
respond through their chaperones.
• Pandya men can talk to men from other cultures. They can maintain
eye contact with men from other cultures.
You Are a Chispa
Chispa Cultural Norms:
• Chispas are informal and friendly.
• Among Chispas, there are no gender roles. Men and women behave the
same way.
• Chispas are outgoing. They love to make contact with people from
other cultures.
• Chispa contacts are brief and casual.
• Chispas are democratic and call everyone by his or her first name.
• Chispas value cross-gender contacts more than same-gender contacts.

!
! !182
1. One of the topmost reason for an expatriate assignment failure is:
(a)Inappropriate quality of life

(b)Dissatisfaction with remuneration
(c)Spouse and family concerns
(d)Inability to perform
2. Culture Shock is:
(a)The period of adaptation

(b)Known to cause anxiety, irritability and feeling of helplessness
(c)The happy and fascinating problem-free period
(d)Also known as the ‘tourist phase’
3. Cultural Awareness training:
(a)Aims at giving the expatriate an insight into cultural differences

(b)Involves interaction between new and old expatriates
(c)Helps expatriates identify the activities they find rewarding
(d)Gives the expatriates the skills of thinking and acting like a host
national
4. HR can play a big role in expat adjustment by:
(a)Designing the compensation package

(b)Teaching expats about the cultural norms of the host country
(c)Recruiting the expats on time
(d)Finding the right manager for the expat
5. The “Other’s Orientation” dimension of expat acculturation:
(a)Is the ability to deal with stress in day to day life

(b)Includes the skills necessary to predict the behaviour of host country
nationals
(c)Deals with the ability of the expat to deal with locals effectively
(d)Explains that some countries have cultures that are naturally difficult
to adjust to
! !183
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !184
MANAGING EXPATRIATES
Chapter 7
Objectives
• What is the need for organizations to employ expatriates?

• What are the selection methods for expatriates?
• What are the selection criteria for expatriates?
• How is family readiness important in expatriate selection?
• How to prepare an expatriate and his family for a project in a foreign
country?
• What are the stages an expatriate goes through while adjusting to a new
culture?
• How does an organization manage expatriate performance and
compensation?
• What is repatriation and what is involved in a successful repatriation
process?
Structure:
7.1 Need for Expatriates

7.2 Expatriate Selection
7.3 Expatriate Preparation
7.4 Expatriate Adjustment
7.5 Rewards and Performance Management
7.6 Repatriation
7.7 Summary
! !185
Jack Welch, CEO of General Electric, put it Quite Well
The Jack Welch of the future cannot be like me. I spent my entire career
in the U.S. The next head of General Electric will be somebody who spent
time in Bombay, in Hong Kong, in Buenos Aires. We have to send our
best and brightest overseas and make sure they have the training that
will allow them to be the global leaders who will make GE flourish in the
future”.
!
Jack Welch was quite right. In today’s times, with the world becoming a
smaller place, many corporations are sending expatriates to their overseas
operations. As more and more firms face global competition, the need for
internationally competent managers is on the rise. Organizations are
quickly realizing that their success lies in understanding the local flavour
but also evenly percolating their organizational values in their operations
all over the globe. Expatriates provide a number of benefits for companies,
including greater parent control and particular expertise.
An Expatriate or Expat is an employee sent by his or her employer to

work in a foreign country. The firm is normally referred to as the parent
company, while the country of employment is known as the host country. If
General Motors sent one of its U.S. executives to oversee a new
development in Brazil, the executive would be an expatriate, General
Motors would be the parent company, and Brazil would be the host country.
Equally, if an employee from Brazil was sent to the U.S. or an employee
from Canada were sent to the People's Republic of China, they would be
expatriates.
International experience is also seen as providing opportunities for

personal and professional development and career advancement.
Expatriates are very expensive, however, and this can discourage extensive
use of expatriates. Many companies have also experienced relatively high
failure rates, with failure often being attributed to the family's inability to
adapt.
! !186
7.1 Need for Expatriates
Before an organization begins recruiting Expatriates, it is essential that

they consider whether the Expat role is aligned to the overall business
strategy. This will involve identifying:
• Results, metrics and experiences that are critical to executing the

organization’s overall business strategy,
• Capabilities and competencies that define the ideal candidate and

success, and
• Clear reasoning as to why an expatriate is the best talent source for a

particular role.
In February, 2009, a US consulting firm named Sibson Consulting (a

division of Segal), published an article on the Internet that indicated that
most multinationals are still willing to pay for differentiated talent, citing an
anticipated return on investment (ROI) as a primary driver. Some say that
! !187
expatriates are vital to their business strategy because they have specific
experience, contacts, company knowledge and/or capabilities that
differentiate them demonstrably from local talent and are needed in certain
locations. According to Sibson’s study, operations and research and
development were the top two functions in which respondents are
recruiting, deploying or maintaining expatriates. Further, business/industry
knowledge and strategic leadership were the top capabilities in considering
expatriate candidates, and respondents did not report this changing from
the previous two years, (i.e., 2007-2008).
Average Rank
Current Two Years Ago
Operations 1.53 1.62
Research and Development 2.19 2
Legal 2.2 2.25
Finance 2.23 2.29
Sales 2.27 2.28
Marketing 2.3 2.31
Human Resources 2.54 2.53
Figure 1: Top functions for which expatriates are currently most

often recruited or  
deployed (1 = Recruited most often)
Source: Sibson Consulting’s Expatriate Talent Market Trends Survey 2009.
Expatriate success and job performance is closely related to intercultural

adjustment and the same is true of families. Given this, it is critical that
companies use a rigorous selection process to identify which employees
would likely succeed as expatriates. The selection process should also
include consideration of the family.
Several characteristics determine an expatriate's expected level of success:

job skills, motivational state, language skills, relationship skills, and family
situation. Technical competency is most often used as the selection criteria
for expatriates, but that is rarely the best selection technique. The
technical skills of an expatriate are of course important, but other skills can
! !188
be as important. For example, an expatriate is likely to make more

progress at the overseas location if he or she has effective managerial
skills and administrative competencies. Strong relationships with the host
country and headquarters' operations also make the expatriate's
assignment more productive. Conflict resolution skills are also important to
the expatriate. Expatriates must also have a strong belief in the
assignment if it is to be a success, and they must believe that the
assignment will be advantageous to their careers.
Economic Viability
Although expatriates generally cost an organization significantly more than

local hires, it is important to look at the extent to which the role creates
real economic value, how it affects the company’s strategic intent and
what, if any, corporate objectives would be at risk if this role and the
definitive expertise needed to perform it did not exist. To ensure a strong
ROI, expatriate talent management must be driven by clear
accountabilities, success metrics and cost-effective economics. Whether the
objective is to manufacture products, enter new markets or develop
innovative technologies, multinationals need to regularly review all costs
associated with expatriation to ensure the value/cost ratio remains in
proper balance.
Many organizations that have decided to retain their expatriates are taking
steps to control costs. Unsurprisingly, a significant part of cost control
involves expatriate compensation, which has become increasingly
complicated. A prominent number of multinationals now use a "local plus"
compensation plan, which combines a local package with a one-time lump
sum to cover living and tax expenses. Some have implemented
deceleration clauses in their expatriate pay packages that pertain to
reimbursements for rent, school, transportation and tax equalization.
Others have made the transition to country currencies, locally competitive
pay levels and limited assignment duration. In essence, they are taking
tangible steps to "localize" their expatriates.
In many developing countries, the indigenous workforce may be more

qualified than it was prior to the recent recession. Some countries are even
experiencing a return of highly educated and experienced workers who,
until recently, were working in the U.S. and other developed nations,
further improving the local talent pool. As a result, even multinationals that
! !189
are retaining expatriates are considering long-term plans to replace them

with highly qualified locals.
Most multinational organizations are still willing to pay for the business
capabilities and experience that differentiate expatriates from local talent
when they have identified a clear need. They recognize that certain
functions need expatriate talent and that local talent may not always have
the desired skill set to replace expatriates. Nevertheless, most of these
organizations still have to control costs and improve value. Having a well-
formulated and regularly updated expatriate workforce plan that is linked
to the organization’s strategic business needs will help it to more fully
explore the implications of using expatriates, keep up with changing needs,
improve their ROI, and ultimately help these organizations make the
transition to local talent when the time is right.
7.2 Expatriate Selection
As discussed in the chapter on Recruitment, there are three types of

staffing policies that organizations with international operations follow:
1. The Ethnocentric Approach: An ethnocentric staffing policy is one in

which all key management positions are filled by parent-country
nationals.
2. The Polycentric Approach: This approach recruits host-country

nationals to manage subsidiaries while parent-country nationals occupy
key positions at corporate headquarters.
3. The Geocentric Approach: This approach seeks the best people for
key jobs throughout the organization, regardless of nationality.
International Staffing
Selecting and recruiting good employees is a challenge at home. However,

it becomes more difficult in other countries. For example, until recently in
Russia, very few Russians had resumes available to give to prospective
employers with vacant positions. As a result, resumes or traditional
methods were hardly used and recruitment was done only by word of
mouth. Recently, they have started using more sophisticated methods—
such as structured interviews, testing or work samples to some extent.
! !190
More systematic selection is becoming necessary in Russia and many of the

former Soviet-bloc countries as younger, more highly educated candidates
are being scouted for by international firms.
Another staffing challenge is deciding the mix of local employees,

employees from the home country, and even people from third countries
that will best meet organizational goals. In staffing an overseas operation,
cost is a major factor to be considered. The cost of establishing a manager
or professional in another country can run as high as $1 million for a three-
year job assignment. The actual costs for placing a key manager outside
the United States often are twice the manager’s annual salary. For
instance, if the manager is going to Japan, the costs may be even higher
when housing costs, schooling subsidies and tax equalization payment are
calculated. Further, if a manager or professional executive quits an
international assignment prematurely or insists on a transfer home,
associated costs can equal or exceed the annual salary. “Failure” rates for
managers sent to other countries run as high as 45%.
Selection Methods
Most experts agree on the selection criteria to be used to select

expatriates, however, there’s no consensus on the method to be used to
select them. Personality and Psychological tests have been used for
selection in the past, however, researchers believe that these tests are not
predictors of cultural adjustment or expatriate success at a particular
location. They also highlight the fact that most psychological tests have
been developed in the US and therefore carry the cultural context of that
country. Non US cultures may not fit into the same context.
Another challenge is that in a few countries (UK and Australia for instance),
there is a controversy on using psychological tests. Hence, majority of the
organizations use the traditional formal interview process to select
expatriates. Assessment Centres are also rarely used for this selection.
Expatriate Selection Criteria
While selecting the expatriate candidates, it is essential to remember that

domestic performance is not indicative of overseas performance potential.
Three famous theories exist about successful selection of expatriates:
! !191
A. Tung: (1987 cited by Dowling et al., 1994) examined the expatriate

selection practices in her research. She conducted an empirical study in
eighty U.S. MNCs, and made some significant conclusions, which are still
meaningful today. She identifies four general categories of selection
criteria. They can be seen as useful predictors of expatriate success
(Chew, 2004):
1. Technical Competence on the Job: It is reasonable that MNCs

emphasise on the technical and managerial competences in the
selection process. To select the best qualified person for a task, it is
natural to firstly consider the person’s ability to perform certain
tasks, his/her special knowledge and skills required by the job, so
technical competence, which is equal to job-related factors, is an
essential selection criterion. If the candidates are recruited internally,
companies can rely on their past performance. However, many
researches show that technical competence may be overrated
(Swaak, 1995; Dowling et al., 1999). The Price Waterhouse
(1997-1998) survey of 184 European companies states that technical
competence was the most important selection criteria: 99% of them
used the job-related skills (Dowling et al., 1999).
2. Personal Characteristics: As mentioned above, the inability of

managers and their spouses to adapt to the new culture is one of the
main reasons for expatriate failure. Apart from technical competence,
personal characteristics have been identified as important predictors
of expatriate success (Tung, 1987 cited by Dowling et al., 1994;
Harvey & Novicevic, 2001). When personal characteristics are used in
the selection process, companies usually test the expatriates’ cross-
cultural suitability. But it is difficult to define what personal
characteristics consist of. Another problem is that few MNCs evaluate
a candidate’s personal characteristics through standard tests or
formal interviews (Swaak, 1995). Most MNCs only focus on the
technical competence of the candidate (Dowling et al., 1999). Tung’s
study (1981 cited by Hill, 2005) found that only 5% of the MNCs
carried out tests to evaluate the interpersonal skills and personal
characteristics of their candidates for international assignments.
3. Environmental Variables: Culture novelty is the main part in the

environmental variables. Culture novelty means a gap of differences
exists in the culture between the home and the host country (Shaffer
! !192
& Harrison, 2001 cited by Ali, 2003). Cultures in different countries

cannot be totally the same. If there is a high degree of dissimilarity
between cultures, there might be a clash of different values, norms,
and behaviours. Owing to this, it is better for expatriates to be - 18 -
aware of the culture of the host country before going abroad (Tung,
1981 cited by Mendenhall et al., 1995). Beside culture novelty, there
are some other ordinary environmental variables, such as favourable
living conditions and assignment duration certainty (Shaffer &
Harrison, 2001 cited by Ali, 2003). Although they are not as
important as culture novelty, they can also influence the expatriates’
job performance.
4. Family Situation: Family situation is the last dimension of Tung’s

findings, but not the least. A main reason for expatriate failure is the
inadaptability of the family’s adjustment to the new environment
(Tung, 1982 cited by Hill, 2005). Furthermore, Black and Stephens
(1989 cited by Dowling et al., 1999) made a survey and found that
the adjustment of the spouse was positively related to the
adjustment of the expatriate. However, they indicated that only 30%
of the companies took the spouses’ opinions into consideration
regarding international assignment. Similarly, Harvey (1985 cited by
Ali, 2003) also points out that the most neglected factor in the
expatriate selection process might be the family situation.
B. Mendenhall and Oddou: (1991) identify four dimensions for predicting

success in a foreign posting:
1. Self Orientation: expatriates with high self esteem, self confidence

and mental well-being adapt better to foreign situations. This dimension
includes activities and attributes that serve to strengthen the
expatraite’s self esteem, self confidence and mental hygiene. This
dimension is composed of three sub factors:
(i) Reinforcement substitution: Means replacing activities that bring

pleasure and happiness in the home culture with similar – yet
different – activities that exist in the host culture. For example an
American expatriate may value baseball, steak & potatoes and jazz;
the new culture he is assigned to may value soccer, raw fish and
traditional folk music. The expatriate who is able to find parallel
! !193
substitutes for his interests in the new culture, is more likely to be

successful in adjusting to the new culture
(ii)Stress reduction: Cross-cultural theorists have long believed that

the entrance into an unfamiliar culture produces stress within an
expatriate. Studies, therefore, indicate that the ability to deal with
stress is important to expatriate adjustment. This dealing or coping
involved adapting to new physical environment including limitations
in housing, climate or some others which may cause stress,
(iii)Technical competence: Confidence in one’s ability to accomplish

the oversees assignment and possessing the necessary technical
expertise to do the same seems to be an important part of expatriate
adjustment.
2. Others-orientation Dimension: This dimension encompasses

activities and attributes that enhance the expatriate’s ability to interact
effectively with host nationals. It consists of two sub factors:
(i) Relationship development: The ability to develop long lasting

friendships with host nationals emerged as an important adjustment
factor in oversees adjustment. According to studies, establishing
close relationship with a host national has the same effect on the
expatriate that a mentor has on a new employee.
(ii)Willingness to communicate: Research indicates that the

expatriate’s confidence in using the local language had a greater
influence on successful adjustment than did his fluency in his own
foreign language. Well adjusted expatriates showed a willingness to
engage in considerable observation, listening, experimentation and
risk taking and above all active involvement with others. Being able
to use anecdotes, jokes, poems, proverbs, movie and sports’ stars
history, etc., are known as ‘conversational coins’ and injecting these
into their conversation with the hosts would show that they are ‘one
of them’.
3. The Perceptual Dimension: The ability to understand why foreigners

behave the way they do is important in adjusting to the unfamiliar
culture. This ability allows the expatriate to predict how they would
behave towards him/her in the future, thus reducing uncertainty in
! !194
interpersonal and intercultural relations. Well adjusted expatriates were

non judgemental and non-evaluative when interpreting the behaviour of
host nationals.
4. The Cultural Toughness Dimension: The cultures of some countries

are more difficult to adapt to than some others. Thus how well the
expatriate adjusts to his oversees experience seems to be in part
related to the country of assignment. It also appears that some cultures
may be extra ‘culturally tough’ to adapt for women because of the
inherent ‘male dominated’ value systems in those cultures.  
 
These four dimensions must be considered when selecting expatriates in
addition to performance on the job. Standard psychological tests and a
comparison of cultures can be used to assess an individual on these
dimensions. Cross-cultural ability should be as importance aspect in the
selection process as technical expertise. Employees with a global
mindset and an innate pre-disposition to multiculturism should be
favoured.
C. Ronen’s Model: (1989 cited by Dowling et al., 1994) is based on

Tung’s findings. He describes five categories of attributes as the
predictors of success. Moreover, there are some specific elements
belonging to these attributes respectively as shown in the following
table. 
! !195
Table 1: Categories of Attributes of Expatriate Success
Job Factors Relational Motivational Family Language

Dimensions State Situation Skills
Technical skills Tolerance for Belief in the Willingness Host country

ambiguity mission of spouse to language
live abroad
Familiarity with Behavioural Congruence with Adaptive and Non-verbal

host country flexibility career path supportive communication
and spouse
headquarter’s
operations
Managerial skills Non- Interest in Stable Willingness to

Judgementalis overseas marriage acquire of
m experience patterns of
behavior and
attitudes
Administrative Cultural Interest in specific

competence empathy and host country
low culture
ethnocentrism
Interpersonal Willingness to
skills acquire of
patterns of
behavior and
attitudes
Source: www.diva-portal.org
(i) Job Factors: Job factors are similar to technical competence required
by the job in Tung’s findings. It includes technical skills, managerial
skills, and administrative competence as listed in the table above. These
are basic conditions when MNCs select candidates for international
assignments. In practice, most MNCs rely much on relevant job factors
during the selection process (Swaak, 1995; Chew, 2004).
(ii)Relational Dimensions: This dimension follows the aspect of personal

characteristics in Tung’s framework. Although defining the composition
of personal characteristics is difficult, Ronen brings forward several
components: tolerance for ambiguity, behavioural flexibility, non-
judgementalism, cultural empathy low ethnocentrism, and interpersonal
! !196
skills (Ronen, 1989 cited by Chew, 2004). Tolerance for ambiguity

means that expatriates can endure uncertainty when they stay in a new
country, and keep calm in stressful situations (Ali, 2003). Behavioural
flexibility means that people can change their behaviours to adapt to
different situations (Ali, 2003). In order to have a better job
performance, it is helpful for expatriates to react flexibly to new things
in the new environment, rather than to use the rigid methods only
applicable in the home country. Non-judgementalism means an
unbiased attitude when dealing with different cultures and situations
(Ali, 2003). Non-judgemental expatriates are willing to assimilate
appropriate opinions and ideas from local employees. Cultural empathy
refers to the capacity to be interested in people from other cultures, and
to imagine how others think, feel and act (Ruben, 1976 cited by Ali,
2003). It helps to alleviate expatriate’s culture shock experienced in the
host country. Interpersonal skills are similar to the others-oriented
dimension in Mendenhall and Oddou’s model. It refers to the capability
to get along with people. Hawes and Kealy (1981 cited by Ali, 2003)
emphasise that it is of great importance to interact with host nationals
and form friendships with locals. It is also an effective way to reduce
culture shock.
(iii)Motivational State: Motivational state means willingness to relocate,

interest in working abroad, curiousness about the culture of the host
country and so on. All of them are significant for a successful
international assignment. If expatriates are in a good motivational state,
they will perform the assignment with pleasure, and can be inspired to
work harder. A current survey (1995) conducted by National Foreign
Trade Council (NFTC) shows that 96% of the chosen companies rank
the candidate’s willingness to relocate on the second place (Swaak,
1995).
(iv)Family Situation: In the same way, family situation is also inherited

from Tung’s theory. Family requirements are highly interrelated to the
expatriates’ adjustment (Dowling et al., 1999). MNCs may involve
spouses into the selection process to find out if they are willing to go
abroad. One of the main reasons for expatriate failure is the inability of
spouses to adjust (Tung, 1982 cited by Hill, 2005). So spouses’
adaptability is very important for the success of the assignment. It
means the extent to which spouses are able to change their roles and
actions under new circumstances (Ali, 2003). Normally, the stable
! !197
marriage and harmonious family will ease expatriates and make them
more focus on the job.
(v)Language Skills: Differences in language are considered as a main

obstacle for the communication of people from different countries or
areas, and also a reason for culture shock. Therefore, it is necessary for
MNCs to have enough emphasis on the expatriates’ language ability.
Dowling et al. (1999) mention that knowledge of the host-country’s
language is also very important for the successful international
assignment, no matter what positions the expatriates take up. However,
language ability is ranked lower in the list of predictors of success
(Dowling et al., 1999). Besides host country language, non-verbal
communication is also very important. The social anthropologist Edward
T. Hall claims that 60% of all our communication is nonverbal (Axtell,
1990 cited by Imai, 1996). It will be difficult to communicate without
using facial expressions, gestures, or eye contacts. However, gestures
and expressions are different or even mean totally opposite things in
different countries or areas. In many countries, nodding head up and
down means “yes”, whereas, this gesture means “no” in Bulgaria,
Greece Yugoslavia, Turkey, Iran, and Bengal (Imai, 1996). Therefore,
people having a good mastery of body language can avoid many
misleading situations in the new culture.
These five dimensions above can help expatriates to gain greater success
of international assignments, compared with the previous selection criteria
which are only based on technical competences. However, different from
Mendenhall and Oddou’s-23 -Model (1985 cited by Dowling et al., 1999),
Ronen (1989 cited by Dowling et al., 1994) does not specify which
approach could be used to evaluate candidates according to the selection
criteria.
Family Readiness
Many studies have identified family support as a critical factor in

determining whether the employee will accept an international assignment.
Companies must realize that lack of family readiness inevitably limits the
size of their pool of potential expatriates. Addressing the family readiness
issue requires a long-term orientation on both – the employee and the
organization’s – part.
! !198
Studies done have recommended that five screens need to be used to

assess the family readiness:
1. Life stage of a family: There are times in the life of a family when
they feel they can accept an oversees assignment whereas there are
times that they feel they must say no. These times are highly family
specific. Some families prefer accepting such an assignment when their
children are small rather than when they are in high school whereas
some others feel taking it up during their adolescent years is better.
Some others have elderly or ailing family members due to who they
may be unable to take up an assignment. It is the role of a human
resources professional to talk to the family and gain a realistic
perspective through presenting them with pros and cons of taking up
such an assignment. As much as an organization would want the
employee not to refuse such an assignment, it is essential that the
family does not accept the assignment under pressure as issues
stemming from this may lead to distressed family life.
2. Role of the extended family: Individuals from non U.S. countries may
have strong cultural preferences for extended family and the
expatriate’s spouse may find the assignment to be lonely and isolating.
The situation becomes really tough as the expatriate becomes
preoccupied with the tasks allotted at work, leaving the spouse to fend
for him/herself. The role of the extended family becomes very important
in certain stages of life. If a family has very young children or elderly
parents, the loss will be felt acutely. These emotional conflicts between
family and work definitely affect the work performance.
3. Previous life experiences and temperament of the spouse:
Studies done have found that spouses who adjust easily are described
as educated, open, curious, gregarious, observant about other people’s
culture and flexible. They already know or are interested in learning a
second language. Spouses who adjust well have also had previous travel
experiences. Eventually, they develop the autonomy and self-reliance
needed to live in another country. Spouses that don’t adjust well are so
attached to their family and community that separation is a severe
hardship.
4. Compatibility of spousal roles in home and host cultures: Will the

spouse’s satisfaction with the expatriate life be high, average or low?
For example, many modern women who wish to pursue their own
! !199
careers. This may also be true in the few cases when the so-called
‘trailing spouse’ is a man. The host country may not offer the spouse
many or any choices. Instead, the trailing spouse, especially if female,
may end up with obligations related to the expatriate’s career.
Educational support or job placement for the trailing spouse and official
company recognition for the spouse’s role as a partner in the
assignment – specially when extensive entertainment is required – are
two strategies for working with trailing spouses who have independent
career aspirations.  
 
The reverse situation also occurs. Women or men may wish to maintain
a lifestyle emphasizing family and community life rather than pursue a
career. If a family relocates to a neighbourhood populated with working
couples, and if amenities enjoyed in the past – such as maids,
gardeners or other household help – are not available, this too poses
difficulties with spousal adjustment. Another indicator of adjustment is
mobility – therefore the organization needs to be sensitive about the
transportation facilities.
5. Adequacy of schooling and childcare arrangement: In the

adjustment of children or young adults, there are both challenges and
opportunities. These have to be handled case to case basis. When the
children attend an international or public schools, there are many
benefits like they learn English or the native language, meet youngsters
from many parts of the world, make new friends, learn to participate in
different school activities.
However, there may be drawbacks too. For example, schools may not offer
the courses or subjects offered in the child’s own country, and upon return
the child may have fallen behind his peers. If supplementary tutoring is
necessary, it will take time and effort. Sometimes language barriers can
result in a child being placed in lower grades. In some parts of the world
there are also concerns about the quality of educational institutes and their
security as well.
Hence, early termination of an assignment or poor performance due to

family adjustment issues is a costly affair for any organization. Human
Resource managers must take extra time to converse with prospective
expatriates and provide them support as needed. Using the five screens
! !200
discussed above and talking about them candidly will determine whether
the assignment is likely to work out.
How To Pick the Right People for International Assignments
Source: www.recruiter.com
KAZIM LADIMEJI | August 31, 2012
LinkedInFacebookTwitterGoogle+
International assignments, or the act of sending employees to different

countries on project assignments is a growing trend. A recent study by
Cartus Relocation found that 57% of the companies surveyed predicted
that international assignments will increase over the next two years.But
not only are expatriate assignments on the rise, the actual assignment
destinations are changing. Indeed, the Cartus survey showed (what many
other surveys have pointed to recently), that destinations for
international assignment are shifting towards emerging markets such
as Brazil, India and China – and even Singapore has shown a resurgence
in popularity.
All this change has put strain on the international assignments process,
as highlighted by Chestnut Global Partners survey which revealed that
failure rates for Americans on international assignments are as high as
40% – and this is often linked to a failure to adapt to different cultures
and demanding workloads.
Because international assignments are typically very expensive, and of

strategic importance, failure can have far-reaching impacts on the
business. It is no wonder then that companies are beginning to focus on
factors to increase international assignee ROI, and one of the key
methods being adopted is better candidate selection assessment, which
brings the subject of expatriate hiring right to the door of the recruiter,
the one who will be tasked with finding a suitable candidate.
So, in view of the kind of pressures that corporate talent acquisition may
be facing, that is to hire more reliable and effective international
assignees, I thought it would be a good time to outline several best
!
! !201
practices to help you better select individuals for expatriate assignments.

I have assumed that you have already assessed candidates for technical
skills experience and educational requirements, as you would for any
role, and have focused on selection factors more specific to international
assignments.
❖ Use a selection panel: It is recommended that you use a selection

panel which consists of a manager from the function being recruited for,
staff who have detailed knowledge of living working and conducting
business in the intended assignment destination, HR staff from home
and host country and international HR. Its a large team so the recruiter
will need to to manage them well to get the best out of them.
❖ Choose candidates that have successfully completed similar

international assignments: Recruiters should favor candidates who
have succeeded in the target country, followed next by those who have
excelled in culturally similar countries and your third preference should
be for those who have succeeded in other locations. Failing this, also
consider employees who have studied abroad or performed some other
role in the country, like teaching or voluntary services etc… 
 
What you are looking for are individuals who appreciate the cultural
differences in a practical way and know what it takes to get things done
within that culture and location.
❖ Prioritize candidates who are fluent in the language of the

assignment destination: Assignees will command more respect in
the office and will be far more effective in their dealings with clients,
suppliers and colleagues if they can speak in the local language.
❖ Use intercultural adaptability assessment tools: There are range

of Intercultural Adaptability Tools in the market which will allow you to
assess the potential of candidates to innovate, lead, manage,
collaborate and socialize in different cultures. This should not be used
in isolation to make a decision, but should be one of many selection
factors.
!
! !202
You may want to consider including the potential assignee’s partner in

this assessment process as the failure of partners to adapt is a key
reason for early termination of international assignments.
❖ Provide a realistic job assignment preview: Provide assignees with

a realistic job preview and let them know both the good and bad things
about the assignment destination such as culture, climate, business
practices, safety and security issues so they can make a genuine
assessment of whether the culture will be right for them.
❖ Allow candidates a reconnaissance trip: Possibly after an offer has

been made, and if the destination is culturally very distinct from the
home destination, (and of course if budget permits), you should
consider offering candidates a trip to the assignment destination to see
if they can work and live in the culture. The assignees spouse/partner
should be included in this trip.
By incorporating these measures into your hiring process, employers can

optimize their selection of international assignees, meaning they can
select candidates who are most likely to deliver and maximize the return
on the large investment that comes with expatriate assignments.
!
Class Exercise – Caselet
The organization ABC has never owned any hotels outside the UK before,
and has hired a team of independent management consultants to advise
them on how to proceed. They provided the consultants the following
information during their initial meeting:
• A majority of their existing managers said they would like a chance to

work abroad.
• None of their existing managers speak French fluently.
• They will allow four weeks to rebrand the hotels. The new hotels must
! be ready to open after that time.
! !203
• They expect to recruit a large number of staff for the new French
hotels, because more than 70 percent of the employees from the
acquired organization left.
• They will require their managers to be ﬂ exible and move between

countries if any problems arise.
The hotel management asked you if they should look only at internal
candidates who are parent country nationals (PCNs) or recruit host
country nationals (HCNs). The class should be divided into three groups;
each group should prepare a 3-minute argument based on the following:
• Group 1 believes that only PCNs should be hired.

• Group 2 believes that only HCNs should be hired.
• Group 3 believes that a combination of PCNs and HCNs should be hired.
Present the advantages of the approach your group was allocated to the
class.
!
7.3 Expatriate Preparation
Management in foreign countries is not an easy task for the unprepared.

The expatriate has to face a host of challenges which his non-expatriate
colleagues don’t have to consider.
He faces culture shock, new value systems, social readjustment,

adjustment to the host country’s modus operandi, problems related to
communication differences, inferior levels of training, the interpretation of
unfamiliar body language and, eventually, repatriation.
According to Black and Mendanhall “between 16 and 40 per cent of all

expatriate managers who are given foreign assignments end these
assignments early because of their poor performance or their inability to
adjust to the foreign environment, and as high as 50 per cent of those who
do not return early function at a low level of effectiveness”.
! !204
Caudron suggests that a failure of an expatriate posting can cost a

company between $250, 000 and $300, 000 depending on the expatriate
employee’s salary, the location and whether family transfers were involved.
There are also hidden costs such as loss of customer goodwill, ineffective
product support, poor company morale and friction between the home and
foreign office.
The key to ensuring, that the expatriate’s contract is as successful as

possible depends to a large extent on identifying the factors which can
cause dissatisfaction and low motivation of the expatriate and attempting
to address them as effectively as possible.
Some of these areas can be addressed by the expatriate himself, some by

the company and others through a combined expatriate and company
effort.
1. Intercultural Training 
 
One key area that many businesses ignore is that of intercultural
training. At its most general level intercultural training is about
providing people going to work in foreign countries with the know-how
to ensure they settle in and work well in their new surroundings. As well
as preparing an individual or family for the ups and downs of culture
shock such intercultural courses also prepare people for some of the
weird and wonderful sights, smells and sounds they will be coming
across. For the actual expatriate employee they would also be given an
insight into the working styles, communication preferences, etiquette,
expectations, etc., of the new culture. This helps them understand some
of the issues they will face when working in the new environment. In
essence, intercultural training is about helping people realise a smooth
transition when moving abroad for work. Despite the evidence
suggesting that expatriate assignments often fail due to factors such
poor work performance and the inability to adapt, many businesses still
do not invest in offering their expatriate staff intercultural training. Many
wrongly assume that people will be able to gel and settle in well; many
see intercultural training as a luxury not worth investing in. It could be
suggested that such companies have not properly analysed the financial
impact failed expatriate assignments actually have on a business.
! !205
2. Language Training 
 
Language is the road map of a culture. It tells you where its people
come from and where they are going. Even if English is widely spoken,
learning the native language will give the expatriate a chance to truly
interact with the locals, show respect for the local culture and engage in
the full expat experience. In order to feel “at home”, being able to
understand and speak some of the language – at least daily
conversation, is important. A person can survive in a different country
and culture, but to be relaxed and have a true feeling of “fitting in” and
being aware of the feel of the culture and people’s attitudes, local
language skills are important. 
 
Sadly, many expats either don’t give time to learning the language or do
not get the opportunity to do so. A survey done by workforce provider
Right Management cited on the SHRM site (2013), says that only about
25% of the organizations surveyed provide language training. Many
expats also don’t try enough to learn the local language. As a
consequence, they struggle to fit in, don’t really feel at ease and are
never accepted on a personal level by locals. International research
studies have shown that learning the local language has been rated by
expats as the biggest hurdle to overcome when relocating.  
 
The best way to learn the language is to find a programme that works
best for the individual. Many sign up at a local language school class
and find this an interesting way of meeting other expats in a similar
situation to themselves. There is also the option of having a private
tutor come to your office and teach you there. Nowadays there are also
a number of great language CDs, DVDs and online courses available.
Language-competence definitely reduces culture shock and raises
overall morale and therefore, contributes to the success of the overseas
assignment.
3. Familiarization or Reconnaissance Trips  

 
Some organizations go a step forward and allow prospective expatriates
and their families to go on familiarization trips to foreign locations. For
example – Federal Express, Colgate Palmolive and Apache Corp. send
their prospective expats and their families for such exposures. While at
the locations, they have to live like natives by taking public
! !206
transportation, shopping in local stores, visiting prospective schools and

current expatriates.
4. Documentary and Practical Information on the new Location 

 
Information on key components like: (i) Cultural briefing – Traditions,
history, government, economy, living conditions, clothing & housing
requirements, and visa applications. Also specific information like drug
usage and law (whether or not the expat uses drugs) and alcohol usage
as well. This is covered for the entire family. Alcohol usage gets special
attention when expats are going to Muslim countries such as Saudi
Arabia. (ii) Assignment briefing – Length of assignment, vacations,
salary and allowances, tax consequences, and repatriation policy. (iii)
Relocation requirements – Shipping, packing, storage; home sale or
rental; information about housing at the new location.
5. Arrival Orientation 
 
Final aspect of overseas orientation is post-arrival orientation. Upon
arrival, employees and their families should be met by an assigned
company sponsor. This phase has three levels and a dedicated support
staff is needed for this. The purpose is to reduce the stress stemming
from clashing work and family demands:
(i) Orientation towards the environment: Schools, housing, medical

facilities, transportation, shopping, and other similar subjects like
dealing with local government officials
(ii)Orientation towards work unit and fellow employees: Often a

supervisor or delegate /buddy from the work unit will describe host
office norms and politics, as well as introduce the employee to his co-
workers, discuss expectations of the job, and share his own
experience as an expat. The objective of this is to relieve the feelings
of strangeness or tension that the expat experiences.
(iii)Orientation to the actual job: This may be an extended process

that focuses on cultural differences in the way a job is done.
! !207
Preparing an Expatriate Employee for Success
Source: www.bristolglobal.com
A large manufacturing company in the United States looking to expand

overseas sought help in repatriating a local employee who would oversee
the set-up of a new plant and achieve the company’s global business
objectives.
The Challenge
The client company had offered an employee and his family a three-year
assignment to China. The employee was a native of China but had left
more than 20 years ago and would be repatriating back to his home
culture. His wife and five children were all born in the United States, had
never lived abroad, and did not speak a Chinese dialect.
Solution
Bristol Global developed and delivered a customized cultural program to

address the unique needs presented by this assignment. The focus was
on helping the employee successfully adapt to living and working in the
host culture, prepare the spouse and children for the cultural challenges
they would soon face, and prepare the employee for the sense of reverse
culture shock he might feel upon returning to his native country after
several years’ absence.
The expatriate training and coaching program consisted of:
1. Global business training and coaching for the expatriate to enable him
to reach his business goals
2. Access to a cultural assessment tool that could further identify cultural

gaps and opportuni-ties for intercultural development
3. Ongoing support and coaching for the spouse while on assignment
4. Youth and teen expatriate training programs for the family’s four
school-age children, ages 6-13
!
! !208
5.Numerous additional resources, tools, tips and cultural information to

further help the employee and his family with the transition
The Results
The employee and family stated the Bristol program helped them to more
effectively deal with the cultural obstacles and challenges they
encountered and, in general, feel more productive and positive while on
their assignment. The support directed toward the children’s transition to
the new culture and environment was of tremendous relief to the
parents.
Due to the expatriate’s positive feedback and realization of the value they
derived from a properly constructed cultural training program, the
company requested global workforce and talent development solutions
for the rest of their employees in the United States and China.
!
7.4 Expatriate Adjustment
Intercultural theorists supported by expat testimony testify to the fact that,

regardless of the unique nature of each overseas assignment, there is a
predictable cycle of ups and downs that families tend to go through. The
four phases of the adjustment cycle, symptoms and suggested coping
strategies relating to each, are well documented and are often presented to
transferees during a pre-departure cross-cultural orientation.
The bottom line is, international transferees and their family members who
do not feel supported both professionally and personally by their
sponsoring organization throughout the entire assignment may start to feel
isolated and resentful. This can lead to failed assignments, early
repatriation, high incidents of attrition upon reentry, and bad PR for the
company -- both at home and overseas.
The financial and emotional ROI at stake for all involved should lead HR to
one conclusion: design policies and programs that support the entire family
unit throughout the adjustment lifecycle. An awareness of the specific
! !209
challenges posed by each distinct phase of the adjustment lifecycle can

help HR develop flexible, proactive support programs that anticipate and
address specific needs without adding dollars or manpower to the equation.
The typical phases of adaptation are Preparation, Honeymoon, Culture
Shock, and Adaptation.
Preparation
The pre-departure period is a time of mixed emotions. Usually, there is

excitement at the prospect of "starting over" and experiencing a different
country, culture, and lifestyle.
This is often tempered by the anxiety produced by moving into unfamiliar

territory -- both literally and figuratively. Very often, roles and
responsibilities tend to be polarized -- especially if the employee is
expected to assume the new position and be "in-country" immediately,
leaving the spouse to organize the logistics of the move.
Compounding this is the fact that, while the spouse is trying to manage the
process, the information needed may only be communicated through the
employee. The HR department then becomes the faceless "gatekeeper",
the jet-lagged and overwhelmed employee acts as the informational filter,
and the spouse is left with all the responsibility but none of the information
– and therefore authority – to make decisions and move the process
forward. Factor in time zones, an unforgiving bureaucracy, and the
assignment experience – and positive regard for HR – has already started
to sour for the family.
Honeymoon
Rather like a traditional honeymoon, this is the time when the expatriate
family's relationship to the new environment is viewed through rose-tinted
glasses. Everything seems new, exciting, and exotic. However expatriates
commonly report that initially they adopt the more temporary and
sheltered mindset of a tourist: happy to sample the delights of the local
environment to the extent to which they're comfortable – but not having to
interface with the locals directly, at least, not as long as they're staying in
temporary hotel accommodation.
! !210
Also, to continue the analogy with the start of married life, after the
relocating family has been in the spotlight and been swept along by a wave
of support and good wishes – they can suddenly feel isolated and "stuck":
unable to move their life forward in this new environment.
Culture Shock
Once the family emerges from the cocoon of the honeymoon state, the
rosy hue fades and the reality of life in the new environment sets in. The
downward slide that this precipitates in the adjustment cycle is usually
referred to as "culture shock." Causes can include feelings of isolation,
communication issues, and discomfort with some aspect of the culture or
local environment.
These may be the root causes of culture shock, but they can trigger the
type of physical or emotional symptoms that are normally associated with
stress, or even mild depression. It is important for professionals who
support international staff and their family members to be aware that
expats can be so overwhelmed by the experience of culture shock that they
often fail to recognize the onset or cause of symptoms, or know when and
how they should seek help.
In terms of circumventing or at least minimizing culture shock, it is also

important to note that there is usually a correlation between the amount of
realistic information, and informed support received during the phases and
the degree of severity with which "culture shock" hits.
Adaptation
Six to twelve months into the assignment, the dramatic "ups and downs"
start to diminish and the expatriate family tends to reach a "recovery
plateau" in their adjustment experience. This does not look or feel like the
euphoric "high" of the honeymoon period, nor is it exempt from some
occasional backsliding. Rather, this should be the most comfortable,
productive phase of the assignment when the family as a whole should
reap the rewards for navigating the cultural and emotional challenges of
the previous phases.
However, rather than being a time for everyone to relax, this is the optimal
time for HR to remind families of ongoing support resources, support
! !211
programs or policies that have not yet been utilized, in short, take the
pulse of the assignment.
!
Figure 2: Adjustment: Beyond theory
Norwegian Sociologist Sverre Lysgaard proposed these phases of cross-

cultural adjustment in 1955. Although Lysgaard never produced a diagram
to illustrate his theory, several similar diagrams and theories have
developed over the years. He wrote:
“Adjustment as a process over time seems to follow a U-shaped curve:

adjustment is felt to be easy and successful to begin with; then follows a
‘crisis’ in which one feels less well adjusted, somewhat lonely and
unhappy; finally one begins to feel better adjusted again, becoming more
integrated into the foreign community.”
However, even though most cross cultural studies use this explanation, a
recent article written by an expat wife (2012) refutes this. She writes:
“...we go through the stages in a different order, at different times, or

perhaps not at all. Some expats, for example, never get to enjoy a
honeymoon stage — they’re unhappy with their host culture from Day
1. This was my unfortunate experience the first time I lived in France. I
think I skipped the adaptation stage, too. Most studies, in fact, indicate
that it’s the first few months of expatriation that are the most stressful.
! !212
The path we take to adjustment depends on many factors: our feelings and
expectations about the move, the extent of difference between the two
cultures, the amount of social support available, etc. Personality also plays
a role in adjustment. Bottom line: there is no timetable for integration. It’s
a messy, unpredictable beast with a timeline all its own. We all adapt at
our own pace, in our own way. If I had to draw a diagram of my own
adjustment, it would look something like this:”
!
Figure 3: Expatriate Adjustment diagram
7.5 Rewards and Performance Measurement
There is lots of disparity between cost of living and wage levels in different
parts of the world. Hence, developing a fair system of remuneration for
expatriates requires a great deal of careful thinking. Added to this is
complexity of labour force distinctions. A foreign officer can be staffed by a
home country or host country or third country. Should the remuneration be
home country or host country-based?
There are also related issues like which currency should be used to pay
expatriates? Or should there be some formula to split the pay between
home and host country currencies? Should there be hardship or danger
premiums? What data should be used to determine cost of living
allowances (COLAs)? When there’s a high differential between the home
and host country for housing, transport, educational and medical expenses,
should it be borne by the company or the expatriate? Should special
policies be in place for vacations, home leaves and holidays for foreign
nationals? Does the company have a tax reimbursement policy as they
may be subject to tax in home and host countries? There might be early
termination of an assignment due to personal or family contingency - who
covers the relocation cost?
! !213
Approaches to Pay
There are two basic approaches to developing pay packages for expatriate
– (a) home and (b) host-based pay.
(a)The home-based approach: Aims to ensure that the value of

the package for the expatriate is the same as in the home country. For a
long-term assignment this might have to be notional (working out what
the employee would have been paid if doing the same job in the home
country). For shorter assignments, where the employee is doing a
similar job to the current job, it is likely to be the current package that
the employee receives. 
 
The home-based approach takes the package that the employee
receives in the home country as the foundation for the reward on the
international assignment. A number of items are then added to this
‘foundation’:
• Cost of living adjustment. If the cost of living in the country where

the employee will be working is considerably higher, an adjustment is
made to reflect this (see the section on taxation and cost of living).
• Cost of housing. If the employee will be expected to find his/her own

accommodation then an amount to reflect the cost of this will be
added (some organisations will provide accommodation and hence
this is not included in the calculation of the reward package).
• Adjustment for taxation.
• Allowances relevant to the assignment.
This approach of starting with a foundation and adding elements to the

reward package is known as the ‘build up’ or ‘balance sheet’ approach.
The reward package can be paid in local currency or in home-based

currency. It is usual for an organisation to split the payment, paying a
certain amount in home-based currency that the employee can use for
ongoing financial commitments (such as a mortgage) with the
remainder being paid in host-based currency so that it can be used for
day to day expenses.
! !214
Careful thought needs to be given to the use of home-based pay as it

can cause inequalities between the expatriate and the local employees.
Although it can be argued that the expatriate is partly being
compensated for the disruption of working in a different country, if the
difference in reward is large problems can still arise.
(b)The host-based pay approach: Provides a reward package to

expatriates with is in line with employees doing a similar job in the
country where the expatriate will be working. This approach is attractive
because it ensures parity between the expatriate and local employees.
However, the approach does not have the same incentive for employees
to accept overseas placements and, if the rate of pay is considerably
lower than in the home country, could cause difficulties in meeting
ongoing home financial commitments. It is usual for an expatriate to
receive allowances for things such as school fees, accommodation and
travel in addition to the host based pay. 
 
Home and host-based pay are the most common approaches to
determining reward for expatriates. Other approaches that are
sometimes used include:
(i) Budget system: In this approach the costs incurred by the

expatriate in both the home and host country are assessed. The
combined costs are then expressed in the currency of the host
currency, and grossed up to take account of tax. However, this
approach is very-time consuming to use, due to the listing of all the
costs and the changing nature of costs, and hence, is not very often
used.
(ii)Lump sum: In this approach the employee moves to an expatriate

role with no adjustment to the existing reward package, and accepts
a lump sum in return. This is most commonly used for short-term
placements.
(iii)'Cafeteria' system: This approach works in a similar way to the

flexible benefits (also called 'cafeteria' benefits) used in many UK
organisations. A number of benefits are offered to the expatriate (for
example. housing, school fees) and the employee chooses those that
s/he wants, up to an agreed limit. This approach does address the
! !215
fact that employees have varying needs, but is costly and time
consuming to administrate.
(iv)Negotiation of personal agreements: It is possible that the

organisation and employee agree a personalised package, negotiated
between the employee and head office management. Although this
approach does mean that any personal issues can be addressed it
can be problematic as consistency between expatriates might not be
maintained. This approach is only likely to be successful if the
organisation has very few expatriates on placement.
Types of Allowances Given to Expatriates
Foreign Service Premiums
This is a sum of money that is simply a reward for being willing to move
one's family to a new country. The sum is generally a percentage of one's
base salary—usually between 10 to 25 per cent.
Hardship Allowance
The hardship allowance is actually another foreign service premium added

to the original one. It is based on not just having to go overseas, but
where you go overseas. Hardship allowances are greatest when the
expatriate is sent to places having poor living conditions, a vastly different
culture, less access to good health care, etc.
Cost of Living Allowances
Cost of living allowances (COLAs) enable expatriates to maintain their

standard of living. COLAs are given when the cost of living in the host
country is greater than that in the home country.
Housing Allowances
The cost of housing in various parts of the world is varied. Large

apartments in Tokyo or Hong Kong, for instance, can go for upwards of
$10,000 a month. Housing allowances compensate expatriates for these
higher costs.
! !216
Utility Allowances
Some companies give expatriates a fixed sum of money above their base
salary to pay their utilities bills; other companies try to ascertain the
difference in utility bills between the home and the host countries, and give
an allowance based on that difference.
Furnishing Allowances
Some companies offer to ship all of the expatriate's furnishings overseas. A

second approach is to pay for the lease or purchase of furnishings overseas
by expatriates. A third approach is to just give the expatriate a fixed sum
of money (usually between $8,000 to $10,000) to buy furnishings.
Education Allowances
Most expatriates send their children to private school overseas. Companies

often pay the full cost of tuition, books, and supplies.
Home Leave Allowances
Companies usually provide expatriates and their families with round-trip,

business-class airfare to visit the home country at least once a year.
Relocation Allowances
The allowance makes up for any mistakes made in any of the other
allowances for unforeseen complications. Expatriates receive about one
month's salary.
Medical Allowances
Companies usually pay for all medical expenses. In hardship countries

where medical facilities are inadequate, this includes emergency trips to
other countries to receive medical care.
Car and Driver Allowances
Most companies offer expatriate managers a car allowance. This enables

the expatriate to lease, buy, or rent a car in the host country. In some
cases, the expatriate is given funds to hire a chauffeur.
! !217
Club Membership Allowances
In some countries the only way an expatriate can gain access to

recreational facilities (e.g., tennis courts, swimming pools, country clubs) is
by joining clubs. Also, in many cultures these facilities are important places
in which to develop contacts and conduct business. This type of allowance
is usually made on a case-by-case basis.
Taxes
Many companies reimburse expatriates for taxes they pay in excess of

what they would have paid had they remained in the home country.
Taxation and Cost of living
If an employee is working overseas it is likely that s/he will be required to

pay taxes locally. There are two main approaches used to addressing this
issue:
• Tax equalisation: The employee’s pay is kept in line with the level of
pay that they would have received at home. So, if the taxes are lower in
the host country pay is reduced accordingly, and if the taxes are higher
the pay is increased to reflect this.
• Tax protection: The organisation makes up the difference if expatriates

pay more tax abroad, but if the employee pays less s/he keeps the
difference. This approach is used less commonly than tax equalisation.
The cost of living does vary from country to country. If the cost of living is
higher the appropriate multiplier is applied to bring the overall value of the
reward package to a level at which the employee will be able to maintain
the same standard of living as she enjoyed in the home based country.
Logically, if the cost of living is lower in the host country the reward
package should be reduced – however, many organisations are reluctant to
do this.
In addition to the cost of living the rate of inflation needs to be considered.

If the employee is moving from a country where inflation is relatively low
to one where it is very high, their standard of living will soon decrease. In
such situations it might be appropriate to carry out regular reviews of the
salary, or to account for the expected increase in a cost of living
adjustment.
! !218
The fluctuation exchange rate between currencies also needs to be

considered. One approach to dealing with this is to pay part of the salary in
home-based currency, and part in host- based currency – as suggested
earlier.
New Approach to Expatriate Compensation
Adopting a total reward perspective of expatriate compensation package

means considering their perceptions related to the content of their work as
it embraces everything that employees value in the employment
relationship. Indeed adopting a total reward approach implies that each
aspect of reward, namely base pay, contingent pay, employee benefits and
non-financial rewards, which include intrinsic rewards from the work itself,
are linked together and treated as an integrated and coherent whole.
The theoretical underpinning of this total reward approach can be found in

motivation theories such as the two factor theory by Herzberg (1966). His
model makes the distinction between hygiene factors which prevent
employees from dissatisfaction and motivator factors which, as their names
indicate it, motivate and satisfy employees. Among the first category can
be found the working environment, interpersonal relationship status and
pay while in the second one rewards such as achievement, recognition,
responsibility are included. Other authors such as Armstrong and Stephens
(2005) also make the distinction between relational and transactional
rewards. They define the first ones as tangible rewards arising from
transactions between the employer and employees concerning pay and
benefits whereas the second ones as intangible rewards concerned with
learning and development and the work experience.
Total reward can be considered as including financial rewards and non-

financial rewards if reference is made to the traditional organizational
control approach to compensation. Moreover as described by Guzzo (1979)
rewards have also been distinguished between intrinsic and extrinsic
rewards. The former are obtained when activities are engaged in for their
own sake (De Charms 1968: 74) and induce cognitions of personal
causality of one’s behavior (Guzzo 1979: 81).
Even though these definitions may help in grasping the defining differences
between rewards as well as the content of the total reward bundle from
! !219
different angles and provide answers to very specific questions they also
render the task of researchers extremely complex as they overlap each
other. Moreover the consideration of categories of rewards, out of their
context of the expatriate employment relationship, makes it difficult to
understand the potential consequences of such a total rewards package on
employees’ attitudes and behaviours.
In the past, expats were not the brightest and best employees, in fact,
they were the ones who weren’t really performing well and were therefore
sent off to a remote oversees location to ‘keep a watch’. Expat
compensation therefore was easy. Everyone used the Balance Sheet
Approach wherein there were lots of allowances (hardship, disturbance,
relocation, etc) and there were local expatriate clubs to join and children
were admitted to boarding schools back at home.
Times have changed. Today’s expats are the rising stars or top executives.
Is the Balance Sheet Approach still valid in the 21st century? The basic
principle of the Balance Sheet approach is to keep the assignee whole
when compared to home. But, when you have multiple assignees from
different locations all working together (and of course working with local
hires), should the approach be more focused on Local Pay rather than the
Balance Sheet. It is not a simple challenge and many companies are
exploring hybrid solutions but increasingly leading edge companies are
gradually easing away from a one size fits all Balance Sheet mentality.
Several companies are moving to Local Plus Packages wherein the expat
got paid whatever his contemporaries were getting paid at home and
added to that were the allowances that were relevant to him.
However, here’s a point to ponder on - Is it possible that expatriate

compensation structures are discriminatory in nature and could someday
be a cause for employment legislation? You have two employees, one from
India and one from Switzerland, both on assignment in New York (or
London). The Indian employee is equalized back home to India, the Swiss
back home to Switzerland. So the actual pay they receive in New York (or
London) is very different based primarily not on the work they are doing
for you but on their country of origin. Is that discriminatory? You could go
further and argue that Cost of Living Adjustments themselves can be
discriminatory. Why do we assume that, say, a Japanese expatriate will
want a different basket of goods to say a Swiss or even a local hire. There’s
definitely no litigation on such an aspect yet, but the point to be noted is
! !220
that traditional expatriate reward packages were designed for traditional

expatriates and in very different times. In today’s times, we have to move
towards a deeper, more thorough thinking.
Current Trends in Expatriate Compensation
ORC Worldwide (a consultancy providing services to making organizations

better workplaces by being more engaged and safe) – Now a part of
Mercer, conducts extensive research into trends in expatriate policies and
practices. Their Worldwide Policy and Practices Survey of over 930
companies in Europe, North America and Asia (cited in the 2010 edition of
the magazine for ‘The Forum for Expatriate Management’), concludes that,
despite the search for a “new paradigm”, the Balance Sheet or home-
based compensation approach remains the preferred method of paying
expatriates for the majority of companies and for different assignment
types.
The Balance Sheet’s effectiveness in facilitating expatriate mobility has led

to its popularity with organisations worldwide. It is appropriate both for
companies who send few expatriates on a one-time out and back basis and
for those who have a highly mobile multinational workforce, with a high
volume of employees transferring more frequently on multiple assignments
worldwide. The primary objective of the balance sheet is to ensure that
expatriates neither gain nor lose as a result of an assignment while
maintaining a purchasing power equivalent to that enjoyed at home. This
objective is achieved by applying allowances and deductions so that any
differences in taxes, cost of living, housing, etc., between the home and
host country are equalized.
In recent years, the Balance Sheet has gone through a transformation and
has adapted to today’s more cost driven environment. Companies have
reduced or removed some over-base allowances, such as Foreign Service
Premiums, and use more cost effective housing and COLAs.
! !221
!
Figure 4: Preferred Compensation Approach for Expat Assignments
However, a trend is emerging in certain assignment destinations to use a

Local Plus
Approach, particularly in the Middle East, Singapore and Hong Kong. The
expatriate receives a package that typically includes housing,
transportation, and education. The main driver for the local plus approach
is lower personal income tax in the host location. By giving the tax
advantage to the expatriate, companies are able to cut back on certain
other elements of the assignment package and cost savings can be
achieved. As companies transfer more expatriates from emerging to
developed locations, they are considering using alternative pay
approaches; in some cases the balance sheet, a host plus or local salary, or
possibly a hybrid approach to deal with the issues of moves from low
income countries to potentially higher cost host locations.
Foreign Service Premiums are a common part of expatriate
compensation packages, intended to induce employees and their families
to leave familiar home and working conditions. However, the need for
Foreign Service Premiums or other incentives is being questioned as
companies increasingly expect their employees to be mobile. In many
organisations, no premium is paid for early career or developmental
assignments; for intra-regional transfers, a lower premium may be paid.
Current premium levels are around 10 percent of home country base pay.
An alternative to the traditional Foreign Service Premium is the Mobility
! !222
Allowance, which is being used more commonly in Europe. Typically, the

employer pays it in the form of a lump sum at the start of an assignment,
and it is calculated as a percentage of salary.
!
Figure 5: Payment of foreign service incentive
Hardship or Location Allowances are still a feature of most companies’

assignment packages for locations with particularly difficult or harsh living
conditions. Allowances typically range from 0 to 35 percent. In severe
hardship locations, companies may pay a higher percentage but are more
likely to provide alternative options, such as rest and recreation leave or
more frequent home leave visits. European companies are more likely to
combine Foreign Service Premiums and Hardship allowances and pay them
as a Location Allowance. Nationality specific allowances are also being used
by around 22% of companies.
Cost of living allowances based on preserving home country purchasing

power are still a feature of most expatriate packages. However, the type of
allowance is more likely to be one of the more cost-effective options, such
as an Efficient Purchaser or Modified Index.
Companies are also considering the use of alternative approaches to cost of

living, such as an International Index where there is no link back to the
expatriate’s home country. Employers are more frequently debating the
issue of applying negative index. Around 57% of companies worldwide do
! !223
not take a negative deduction although practice varies between US and

European companies with 73% of US companies not taking a deduction
and 56% of Europeans.
Practices in the provision of housing vary considerably amongst companies.

Forty-nine percent of European companies provide free housing at the
assignment location, whereas only 33% of US companies do. Housing is
one of the “big ticket” items as far as assignment costs go. The current
economic downturn has seen companies focus on better management of
housing; who establishes housing allowances and what level of should be
paid. In many companies, the host country management sets housing
allowances, but increasingly more firms are determining housing standards
centrally and becoming more involved in the choice of housing. Employers
are more likely to set allowances by grade or income level and family size;
differentiation may also made by type of assignee.
When it comes to tax treatment, the majority of companies tax equalise

their employees, which necessitates the deduction of hypothetical home
tax and social security at the level that would have been paid had the
employee remained in the home country. Employers typically base the
hypothetical tax on company earned income and benefits in kind, with net
salary subsequently grossed up for host country taxes. Most companies
now use a worldwide tax provider for tax compliance purposes and to
ensure that their expatriate packages are structured in the most tax
effective manner.
In summary, over the past ten years, there have been no major shifts in
policies and practices but more gradual change.
Expatriate Performance Management
When employees work in their home country, it is simple to determine who

appraises their performance. However, same is not the case with
expatriates. The issue is not about which form to use as most companies
use the same form across locations – this avoids any extra administrative
work. Or some companies have standard criteria on which employees are
evaluated, but the form is left for the local country to draft – local forms
are understood locally and the person rating does not have to work out
how to fill in someone else’s form with no immediate access to advice and
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training. If there is anything significant missing from the local forms, the
home country could request the missing information.
Some other companies create a special form for expatriates. An expat HR

manager of a British product services company claims, “The expat form
should include a section for the evaluation of how well the expat is doing
with regard to “expat-related” items. For example, if the expat is doing the
job because a local national is not yet capable of the task, they must also
provide training to a local national. Therefore, some performance
evaluation should take place as to how well the expat is teaching the
skill(s) to locals.”
The manager adds, “Some “soft” factors should possibly be taken into
account as well –- how well the expat “fits in” with the local culture, is
adapting to the assignment, etc. After all, some of those soft factors can be
more important to the success of the assignment than actual job
performance. This becomes especially crucial when an expat is sent to gain
“overseas experience” to enhance his or her career.”
An international HR consultant Carrie Shearer who has spent 20 years in
international HR, living and working in seven countries, writes about expat
living. She mentions that the evaluation process should be two-tier:
completion of the performance appraisal form in the assignment location
followed by review of the completed form by someone in the home country
with functional oversight for people in a specific discipline. The expatriate
must have a separate line of communication to the home country
functional managers as there could be a difference in how the host country
and home country rate performance. Carrie quotes an expat HR manager
“I have seen expats rated in glowing terms because the assignment
location presumed they were experts in all things and I have seen expats
marked down because the assignment location was disappointed to
discover they were human.” There may be instances where expats have
been sent to handle a problem and a situation appropriate response from
the expat has been “no”, in this case they have been branded difficult or
have been given low performance ratings even though the response was
appropriate for that situation.
Functional involvement provides someone to act as ombudsman for the

expat. This person can add a memo to the appraisal explaining the
circumstances, which would mitigate the negative effects of the appraisal
and allow both sides to be heard. Functional review allows the home
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country to guarantee that all expats are treated fairly and are held to the
same standard of performance.
In terms of expat salary increment, it is essential that the home country

decides. This is because they have employed the expat long-term and they
have to fit the expat into their salary system. Carrie states that in her 20
years’ experience in international HR, she found that when an expat was
promoted, there was usually an issue – the additional cost made him too
expensive for the host country, however, they needed the expertise. Many
companies then developed creative solutions to this issue. One company
has a separate budget in the home country to cover increased costs not
borne by the assignment locations. Another company bears all expat costs
in the home country and charges assignment locations a pro rata basis for
the number of expatriates assigned.
Hence, to measure an expat’s performance fairly, it is essential that the

host and the home country, both assess him, whereas salary increment
decisions must be left solely to the home country.
7.6 Repatriation
Ernst & Young’s 2013 Global Mobility Effectiveness Survey found that 16%
of employees bolted within the first two years after a global assignment
ended, up from 11% in 2012. What’s more, 41% of expatriates returned to
the same position they had before they went abroad. The loss of
employees after they’ve returned from an international assignment
remains all too common at a time when companies need globally minded
managers more than ever to exploit opportunities outside their home
markets. Expats find it sad or demotivating to come back to the same
position after having learnt so much more about the business and
expanding the horizons.
For the company, it’s also a poor return on the costly investment.
Brookfield Global Relocation Services estimates that assignments typically
cost between two and three times the expat’s base salary. For high-cost
locations such as Japan and Hong Kong, or hardship locations with
unusually difficult host country conditions, the expense can total as much
as four times the expat’s salary.
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Repatriation continues to be the weakest point about most Global Mobility

Programs. While employers spend a lot of time and effort on finding the
correct candidate for an expat position, they seldom put in any efforts on
repatriation or transition the expat to a new position Expats come back to
the home country and find themselves to be small fish in a big pond after
being exposed to a much larger world.
Companies have now started realizing this as an important issue and are
taking steps to make repatriation a more positive experience.
A. Strategic Change 
 
A small but growing number of companies are taking a more strategic
route to this change. They are starting to think about the expat’s
assignment on return even before the expat leaves for the assignment.
Brookfield Global Relocation Services conducts a Global Relocation
Trends Survey, and in 2013 they found that 24% of the employers
surveyed said that they had linked a formal repatriation strategy to
career management and retention – the same number was 16% in the
2012 survey.  
 
Energy company Royal Dutch Shell, which typically has 6,000 to 7,000
expats spread around the world at any one time, closely ties its global
mobility programme to its talent management process. The expats at
Shell get assignments which are linked to their long-term career
development. They maintain development plans for every expat and
track them annually at an individual level. Through this program they
also work out what may be the next best assignment for them. Shell
has ‘Global Skill Pool Managers’ and these expats are in touch with
these managers for their next assignments.  
 
Adidas, the athletic apparel and shoemaker, is using a strategic
approach as well towards their expats. They have a ‘mobility team’ that
provides reports from expats to their Talent Centre of Excellence to try
and make the most of the skills these expats acquire after these
assignments.
B. Repatriation Challenges 
 
Employers are now providing social support while the expats and their
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families return. It is common for companies to give expats and their

families culture training when they leave for the host country, however,
companies are now providing similar training to returning expats and
their families for their home countries. They are now re-orienting the
expats to not only changes in the company but also social, political and
technological changes in the home country.  
 
Brookfield Global Relocation Services talks about the expat having
gotten used to the host country culture after the stage of culture shock.
He may take some time getting adjusted to the home country culture
again. For example, the work culture at the host country may be slow
paced as compared to your own home country.  
 
What is also important is that there is a constant communication
between the expat and the home country. Organizations need to appoint
a home mentor, who can connect the expat with the home office
happenings, job opportunities and latest news.  
 
Technology is serving as a big tool in bridging the gap for expats. Many
organizations are building internal social networks to share information
across the corporate empire.
However, having understood all of the above, repatriation continues to be a

challenging process. Businesses change quickly these days – even a couple
of years can see bosses changed or divisions restructured. At the same
time even expats and their expectations about what they want may change
over the years. This process, therefore, needs to be handled with kid
gloves.
7.7 Summary
1. With expanding opportunities and the world becoming a global

conglomerate, the need for expatriates is still booming.
2. Expatriate success and job performance is closely related to intercultural

adjustment and the same is true of families. Given this, it is critical that
companies use a rigorous selection process to identify which employees
would likely succeed as expatriates. The selection process should also
include consideration of the family.
! !228
3. Organizations follow different types of staffing policies like the

Ethnocentric, the Polycentric or the Geocentric Approach.
4. Selecting and recruiting good employees is a challenge at home.

However, it becomes more difficult in other countries.
5. Another staffing challenge is deciding the mix of local employees,

employees from the home country, and even people from third countries
that will best meet organizational goals.
6. Despite hiring expats being a costly affair, “Failure” rates for managers
sent to other countries run as high as 45%.
7. Most experts agree on the selection criteria to be used to select

expatriates, however, there’s no consensus on the method to be used to
select them. Personality and Psychological tests have been used for
selection in the past, however, researchers believe that these tests are
not predictors of cultural adjustment or expatriate success at a
particular location.
8. Three famous theories exist about successful selection of expatriates:
(a)Tung (1987) identifies four general categories of selection criteria

(b)Mendenhall and Oddou (1991) identify four dimensions for predicting
success in a foreign posting
(c)Ronen’s model (1989) based on Tung’s findings, describes five
categories of attributes as the predictors of success.
9. Many studies have identified family support as a critical factor in

determining whether the employee will accept an international
assignment.
10.Studies done have recommended that five screens need to be used to

assess the family readiness – lifestage of a family, role of the extended
family, previous life experiences and temperament of the spouse,
compatibility of spousal roles in home and host country and adequacy of
school and childcare facilities.
11.Expats must undergo preparation before his assignment, like
Intercultural Training, Language Training, Familiarization trips,
Information on the new location and arrival orientation.
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12.Intercultural theorists supported by expat testimony testify to the fact

that, regardless of the unique nature of each overseas assignment,
there is a predictable cycle of ups and downs that families tend to go
through. The four phases of the adjustment cycle, symptoms and
suggested coping strategies relating to each, are well documented and
are often presented to transferees during a pre-departure cross-cultural
orientation.
13.The typical phases of adaptation are Preparation, Honeymoon, Culture

Shock, and Adaptation.
14.There is lots of disparity between cost of living and wage levels in

different parts of the world. Hence, developing a fair system of
remuneration for expatriates requires a great deal of careful thinking.
15.There are two basic approaches to developing pay packages for

expatriate:
(a)Home and
(b)Host-based pay.
16.When employees work in their home country, it is simple to determine

who appraises their performance. However, same is not the case with
expatriates.
17.An international HR consultant Carrie Shearer who has spent 20 years

in international HR, living and working in 7 countries, writes about expat
living. She mentions that the evaluation process should be two-tier:
completion of the performance appraisal form in the assignment location
followed by review of the completed form by someone in the home
country with functional oversight for people in a specific discipline.
18.Repatriation continues to be a challenging process. Some organizations

are using strategic thinking and finding roles to fit expats back into the
system while others are using home mentors and social networks to
ensure that the expat is in sync with the current cultural, political and
technological scenario.
19.Businesses change quickly these days – even a couple of years can see
bosses changed or divisions restructured. At the same time even expats
and their expectations about what they want may change over the
years. This process, therefore, needs to be handled with kid gloves.
! !230
1. Tung’s expatriate selection criteria are:
(a)Technical Competence, Personal Characteristics, Environmental

Variables and Family Situation.
(b)Self Orientation, Others Orientation, Perceptual Dimension, Cultural
Toughness.
(c)Job Factors, Relational Dimensions, Motivational State, Family
Situation, Language Skills.
(d)Technical Competence, Personal Characteristics, Perceptual
Dimension, Family Situation.
2. Expatriate preparation involves:
(a)Expat interviews.
(b)Expat interview, selection and orientation.
(c)Intercultural training, language training, familiarization trip, practical
information and arrival orientation for expat and family.
(d)Arrival orientation.
3. Expat adjustment involves:
(a)Preparation, honeymoon, culture shock and adaptation.

(b)Culture shock and adaptation.
(c)Adaptation throughout their tenure.
(d)Arrival, settlement, adjustment.
4. Host-based approach to expatriate pay:
(a)Aims to ensure that the value of the package for the expatriate is the
same as in the home country.
(b)Is the approach of starting with a foundation and adding elements to
the reward package.
(c)Provides a reward package to expatriates with is in line with
employees doing a similar job in the country where the expatriate will
be working.
(d)Is a compensation approach where the employee moves to an
expatriate role with no adjustment to the existing reward package,
and accepts a lump sum in return.
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5. Repatriation requires:
(a)Booking the expatriate and his family’s tickets back home.

(b)Strategizing the change for the expat by finding a role for him back
home.
(c)Giving the employee the same position when he comes back home.
(d)A relief in the organization’s expenses.
6. The Tax equalization approach to addressing the tax issues for an expat
is:
(a)Keeping the expat’s pay in line with the level of pay that they would
have received at home.
(b)Company reimburses employee for the taxes paid.
(c)Organisation makes up the difference if expatriates pay more tax
abroad, but if the employee pays less s/he keeps the difference.
(d)Taxing an employee more than the home country.
7. Cost of Living Allowances (COLAs) are:
(a)Cost of housing.
(b)Given when cost of living in host country is higher than home
country.
(c)Fixed sum of money for paying for utilities.
(d)Given to expatriates when countries have poor living conditions.
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REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
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MANAGING DIVERSITY
Chapter 8
MANAGING DIVERSITY
Objectives
• How to Manage women in international roles

• How to Manage dual career couples in international assignments
• Impact of international assignments on work life balance
• How to Manage multi cultural teams
Structure:
8.1 Women in International Roles

8.2 Dual Career Couples
8.3 Impact of International Assignments on Work Life Balance
8.4 Managing Cross-cultural teams
8.5 Summary
8.6 Self Assessment Questions 
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MANAGING DIVERSITY
8.1 Women in International roles
Data from the late 1980s, found that only about 5 per cent of American
expatriates were women. By the time Dr. Rosalie Tung, Professor of
International Business Simon Fraser University, conducted her study on
expatriates in 1998, the figure had risen to 13.8%. However, despite these
positive changes, women are still underrepresented on global assignments.
It is important to examine the effectiveness of women in expatriate
assignments, because international experience is increasingly considered a
requirement for promotion to the executive suite.
Even as recently as 2012, the Brookfield Global Relocation Trends Survey

gives the following picture of women in International Assignments:
Female International Assignees
Respondents indicated that 20% of international assignees were female – a

slight increase over the 18% in the 2011 report. The historical average was
16%.
!
Figure 1: International Assignees by Gender
Research conducted on the outcome of women's global assignments has

indicated that female expatriates are successful in their global assignments
(Caligiuri & Tung, 1999; Adler, 1987; Taylor & Napier, 1996) . For example,
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MANAGING DIVERSITY
Nancy J.Adler of the Department of Management Studies at McGill

University reported a 97 per cent success rate for female expatriates. As
Adler admits, one plausible explanation for the women's high success rate
is that the data were self-reported. However, she reports that many women
in her sample were promoted subsequently based on their performance
internationally (Adler, 1987).
To begin a more systematic discussion on understanding female

expatriates' success, Caligiuri & Tung (1999) compared male and female
expatriates on three criteria of success:
• Cross-cultural adjustment
• Supervisor-rated performance
• Desire to terminate the global assignment
Their results indicate that the percentage of men and women who desired
to terminate their global assignments did not differ. Men and women also
did not differ on supervisor-rated performance on the global assignment.
The study did find, however, that women were less well adjusted cross-
culturally than men in countries with low female workforce participation
and low percentages of female managers. It is important to note that
despite the fact that women in some locations reported less effective
adjustment than their male counterparts, men and women were the same
on the two factors most important to the outcome of the global
assignment: whether they would remain on their assignment (vs.
terminating early) and their supervisor-rated performance.
Besides the fact that men and women are the same on these important
outcome measures, there are additional reasons why firms should consider
sending more women on global assignments:
• Multinational companies (MNCs) need competent expatriates who

possess a wide range of technical and interpersonal characteristics.
Expanding the talent pool to include women provides a tactical
advantage for these companies.
• Affording all employees who are interested in a global assignment the

opportunity to be considered for one is consistent with the corporate
value statements and equal employment opportunity (EEO) policies of
many MNCs.
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MANAGING DIVERSITY
As the world becomes more globalized, organizations are increasingly

looking at staffing overseas positions by employing more expats. This trend
is evident and gradual increase is seen in women showing an interest in
improving their career prospects by being open to international
assignments.
Critical Factors in Ensuring the Success of Women in Global Assignments
As the Caligiuri and Tung study suggests, women can be very successful in
global assignments. However, MNCs cannot ignore the fact that it is a
challenge for women to be global assignees in some countries. Thus, in an
article in the Journal of World Business, a framework to better understand
what makes women successful in global assignments was developed. The
four critical factors in the model include:
1. Personality traits
2. Organizational support
3. Family support
4. Host nationals' attitudes toward women expatriates
1. Personality Traits: For both male and female expatriates, personality

traits (such as openness and flexibility) have been associated with
cross-cultural adjustment. The demands on an expatriate's predisposed
personality, however, may be greater for women. Women, for example,
need to possess the stress management skills to cope with possibly
being the only female in a work setting. The expatriate women are often
working in host countries that have lower rates of women as managers.
Thus, women not only need to understand cultural differences, but also
the gender differences that might be present in cultures that see more
traditional roles for women in society . Female expatriates may be
placed in situations where these cultural differences have a more direct
impact on their performance on the job, and the ability to be open to
differences in values, norms and behaviors may be all the more
important. These women will need to be flexible (and tolerant) in their
attitudes toward cultural differences.
2. Organizational Support: It is important to consider the decision

making context of MNCs that send women on global assignments. A
multinational organization, trying to blend into the host country in which
it is operating, might be inclined to follow the social mores of that
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MANAGING DIVERSITY
particular country assuming that by doing so, it will gain a competitive

advantage (Cava & Mayer, 1993; Feltes, Robinson, & Fink, 1993).
Therefore, under the guise of competitive necessity, MNCs may decide
not to send women to countries where women are not accepted in
business settings. These MNCs assume that their businesses would
suffer if they sent a woman to a country where few, if any, women
occupy senior-management positions. Adler (1984) surveyed HR
managers to determine the attitudes of MNC's toward sending women
on global assignments. She sampled 60 HR managers from MNCs in
North America and found that only 35% had selected a woman for a
global assignment, compared with 80% had selected a man 
 
Adler (1984) also found that 72% of these HR managers believed the
number of women they would send on global assignments would
increase in the future, and 82% believed that women are qualified for
global assignments. She followed up with an assessment of the HR
managers' beliefs regarding the barriers for women in obtaining (and
presumably succeeding in) a global assignment. The HR managers
believed that the prejudice of host nationals, expected problems with a
dual-career marriage, and the company's reluctance (not their own) to
send women on global assignments, were all potential barriers for
women.
3. Family Support: The process of moving to an international location

often involves the expatriate's family. Past research has noted that a
family's ability to adjust to a move overseas is related to the
expatriate's ability to adjust and succeed on the global assignment
(Harvey, 1995). In a longitudinal study of families on global
assignments, Caligiuri, Hyland, Joshi and Bross (1998) found that family
characteristics, such as family cohesion, were related to an expatriate's
success on an assignment. For example, female expatriates who are
married will likely have male spouses relocating to the host country.  
 
In societies where men are considered the primary breadwinners, this is
a non-traditional situation where husbands follow their wives for the
sake of their wives' careers. However, with the rise of dual-career
marriages, (i.e., both partners are committed to their careers), this
situation is becoming ever more common. Related to this, but less often
studied, is the role of children on global assignments. In the global
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MANAGING DIVERSITY
context, adaptation may be even more extreme. Two of the most

problematic areas in children's global relocation are:
• Their education and

• Re-establishing social networks.
4. Host nationals' attitudes toward women expatriates: Some key

players in the environment where the female expatriate will be expected
to do her job are the host nationals with whom she will work (e.g..
clients, co-workers, superiors, subordinates). A fundamental concern is
whether or not host nationals will do business with expatriate women.
In her seminal research on the topic of female expatriates, Nancy Adler
(1987) examined female expatriates' perceptions of whether or not host
nationals are prejudiced against them. Using a sample of 52 North
American female expatriates in Asia, she found that 97% of them self-
reported that their assignment had been successful. She noted that
other indicators besides these self-report ratings, (e.g., being offered
another global assignment after completion of the current one)
suggested that these women were successful. Only 20% of her sample
noted that "being female" was a disadvantage. As she noted,
surprisingly, 42% of these expatriate women viewed their "being
female" as an advantage! Adler discovered that female expatriates
perceived that they are not placed in the same "professionally limiting
roles as are local women" in Asian cultures (Adler, 1993; Adler, 1987;
Jelinik & Adler, 1988). Adler concluded that these women were viewed
first as foreigners and second as women (and that the second was a
distant second). The salient information (being foreign) activated an
entirely different stereotype from the group as a whole. Adler's research
also found that these women were all treated as if they were (and in all
likelihood they actually were) very competent. Based on these results
she deduced that the host nationals perceived that `if a woman was
sent by a company, then she must be exceptionally competent'. Of
course, bias against women does exist in many host countries, like in a
study done by Stone (1991), a question was asked “given people of
equal ability, it is preferable to appoint a man to an international
position” – 56% expatriates, 53% Asian managers agreed with this
statement, while 56% Australian managers disagreed with it. These
findings were contrary to Adler’s findings quoted earlier.
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MANAGING DIVERSITY
Strategies for ensuring the success of women in global

Assignments
Strategies HR Tool, Method or Possible Problems/

Intervention Strategies for
Implementing
Select female expatriates Selection based on It may be difficult to find a

who demonstrate the demonstrated person with every necessary
technical or managerial competencies. credential who is willing to
skills for the position. Don't accept the assignment.
send tokens.
Additional technical or The organization should

managerial training prior attempt to identify every
to departure, if needed. skill needed for a given
global assignment
Select women for global Select expatriates based An expatriate who is too
assignments who are self- on their self-confidence in self-confident may come
confident in their their knowledge, skills across as arrogant to the
knowledge, skills and and abilities. host nationals.
abilities.
Finding the balance between

self-confidence and
arrogance may be
challenging.
Select female expatriates Select expatriates based It may be difficult to find

who possess a greater on personality someone with the requisite
perceptual orientation (e.g., characteristics, such as personality characteristics
openness). openness and flexibility. who is willing to accept the
Consider using the SAGE assignment.
(Self-Assessment for
Global Endeavors) or a
similar Instrument.
Select female expatriates Select expatriates based It may be difficult to find

who possess a positive on personality someone with the requisite
orientation toward others characteristics such as personality characteristics
(e.g., sociability). sociability. who is willing to accept the
assignment.
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MANAGING DIVERSITY
Train female expatriates on Offer pre-departure plus All of the possible difficult
the norms, values and on-site culture-specific situations cannot possibly
traditions that the host training for female be anticipated.
nationals possess regarding expatriates.
women, and train them on
deriving solutions for the
challenging situations they
may face.
In order to dispel the Memos of introduction. Some of these initiatives

"token" image, MNCs could be misinterpreted,
should actively promote depending on the cultural
expatriate women as their context.
"best qualified" candidate.
In-person introduction by a The intervention should be
very senior executive. culture-specific.
A statement of qualification
Any other culturally

appropriate
method for establishing
credibility.
Provide female expatriates Have a mentor back home Communication is more

with an in-country support and a method for difficult from a great
network or mentor. communication. distance.
Have an in-country mentor. Provide specific
communication media (e.g.,
video-conferencing, e-
mail), plus training on their
use and protocol.
Have policies worldwide Be sure the policy is The policies can be viewed
regarding the fair and equal communicated through all as culturally ethnocentric if
treatment of all employees. culturally appropriate not communicated
channels. correctly.
Train employees on the

policies.
Reward managers on
promoting the policies.
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MANAGING DIVERSITY
Offer mechanisms to Cross-cultural training for There is always a chance

improve the likelihood that spouses. that the spouse’s needs will
the spouses of female not match what is being
expatriates will adjust well offered.
cross-culturally.
Male-oriented social The spouse may choose not
networks. to use the services.
Language classes The options may not be

available in a given
location.
Re-employment assistance To promote usage, try to
match these services to the
spouse's needs.
Money for professional or

personal development.
Offer free mechanisms to Day care. Some services may not be

improve the likelihood that available for expatriate
the children of female children in a given location.
expatriates will adjust well
cross-culturally.
Educational assistance. Try to find the necessary
services for these
expatriate children.
Language classes.
Cross-cultural training.
Western female Train women on how to cope It may be difficult for the
expatriates should not with being "different" from female expatriate to
attempt to "blend in" with host national women. balance perceptions, (i.e .,
host national women not appear too masculine).
Train women on the Provide role models from
behaviors that could be which expatriate women
misinterpreted (e.g., serving can learn appropriate (and
tea in Japan). professional) behaviors.
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8.2 Dual Career Couples
International expansion is seen by many organisations as the answer for

future business growth and development. Driven by business strategy,
global mobility has also become a talent management priority in many
organisations as they compete to attract, develop and retain the very best
international talent in the most cost effective ways. The challenge is
intensified by the fact that between fifty and sixty per cent of all
international assignees have partners (Brookfield survey 2012) who are
often unwilling to give up or compromise their own careers in exchange for
the “experience” of international living. And so the “difficult issue” of trying
to reconcile international relocation with a partner’s career aspirations
becomes at best a challenge and at worst a frustrating obstacle to many
global mobility specialists international resourcing dilemmas.
Illustrated below is a snapshot from the Brookfield Relocation Survey 2012,

where Spousal Dissatisfaction ranks 2nd in the top most reasons for an
expat assignment failure.
Factors Leading to Assignment Failure
When asked to rank the factor that were most responsible for assignment
failure, respondents cited employee leaves to work for another company (a
new response) as the top reason at 19%. Other factor that were cited were
spouse/partner dissatisfaction (17%) and other family concerns (11%).
Respondents also ranked job does not meet expectations, inability to adapt
and inadequate nob performance, all at 10%. The corresponding
percentages for these responses in 2011 were N/A, 18%, 8%, 10%, 12%,
13%.
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!
Figure 2: Causes for Assignment Failure
Issues in a Dual Career Context
Knowing that their lives are being disrupted, could raise concerns among
expatriate managers, and especially for the dual career couple when the
trailing spouse may have to give up his/her position and in many cases put
their career on ‘hold’. This has lead to an increase in refusal to relocate to
global assignments. Dual career couples add an additional dimension to the
refusal to relocate overseas problem. Several researchers have found an
increase in refusal rates from employees of dual career marriages
(Driessnack 1987, Harvey 1995, Harvey & Buckley 1997). . In addition, the
breakdown of expatriate households that are dual career versus those that
are more of a traditional model mirror the refusal rate and the growth
trend, from 41 per cent in 1992 to 45 per cent in 1994 (Swaak 1995).
Further, studies indicate a direct correlation between refusal/willingness to

expatriate and the type of configuration of the family unit (i.e., traditional
versus dual career). Even with the obvious impact that a spouse’s career
has on both refusal and failure rates, the type of assistance provided by
organizations is less than optimal. When recruiting expatriate candidates,
corporations must recognise that the trailing spouse in the professional
dual career couple will need more assistance than a traditional spouse, due
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to the sacrifices that are being made in his/her own life, and the lack of
focus on non career alternatives. A foreign assignment frequently can
require an interruption in the trailing spouse’s career, or at worst, a
sacrifice of that career to follow the expatriate spouse overseas. A transfer
can also interrupt long-term social relationships.
In addition, like the expatriate, trailing spouses take the risk of returning
home to a less desirable job. The trailing spouse and the expatriate fear
the ‘out of sight, out of mind’ inclination of management, which is
especially fearsome for the trailing spouse, who is not working, so is truly
‘out of mind,’ and may have more time and inclination to dwell on that fact.
Women appear to be less willing to relocate for career enhancement,
company needs or even for job security, but have been more willing to
relocate when it was important to their spouse’s career. Age, children at
home, elderly relatives in the area, community ties, organisational tenure,
and job tenure have been identified as integral variables in the decision
process that negatively impacted the willingness of female candidates to
relocate overseas.
Expatriate compensation during overseas assignments is a primary issue

for refusal among dual career couples. In a survey of human resource
managers, compensation was a source of major discontent. An employee
who feels under compensated may work at less than peak levels, to the
point of considering leaving the global organisation. When the
compensation package must be enough to reciprocate two skilled workers
rather than one, the issue becomes even more critical. The loss of one
income, that of the trailing spouse, makes it problematic that any
compensation programme for the expatriate will adequately satisfy the
dual career family unit. However, with the addition of relocation allowances
and potential initiatives to aid the trailing spouse in obtaining work permits
to work in the foreign country, it may mitigate the initial perceived loss in
compensation.
Strategic windows of opportunity for dual career couples
The concept of ‘strategic windows’ of opportunities was first used in the

academic literature in a strategic planning context, relative to marketing
opportunities that a company could effectively compete to sell their
products (Abell 1978). The basic premise of the strategic window of
opportunity was to identify when opportunities present themselves and to
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prepare the organisation to be ready to act when the occasion occurred.

This same basic logic can be applied to relocating dual career couples
overseas, in that there are times (opportunities) when the dual career
couple would find it more amiable to undertake an international
assignment. What is needed is a means to anticipate when there could be
strategic windows in the family life cycles of dual career couple. The
concept of ‘strategic windows’ of opportunities was first used in the
academic literature in a strategic planning context, relative to marketing
opportunities that a company could effectively compete to sell their
products (Abell 1978). The basic premise of the strategic window of
opportunity was to identify when opportunities present themselves and to
prepare the organisation to be ready to act when the occasion occurred.
This same basic logic can be applied to relocating dual career couples
overseas, in that there are times (opportunities) when the dual career
couple would find it more amiable to undertake an international
assignment. What is needed is a means to anticipate when there could be
strategic windows in the family life cycles of dual career couple.
Family life cycle stages: The family life cycle provides a means to
measure the stages of a family that can provide valuable insights into the
predisposition to, and probable success of, an international relocation of
dual career couples. Just as the career life cycle can be used to understand
the professional roles, obligations and expectations of dual career couples,
the family life cycle provides predictors of the personal needs, time
constraints, and family requirements which could influence willingness to
undertake an overseas relocation (Hall & Chandler 2005).
The family life cycle is divided into at least nine stages. These stages are:
(a)Bachelor Unit,
(b)Newly Married Couple,
(c)Full Nest I: Youngest Child Under Six,
(d)Full Nest II: Youngest Child Over Six,
(e)Full Nest III: Older Married Couples with Dependant Children,
(f) Empty Nest I: Older Married Couples, No Children Living with the
Unit,
(g)Empty Nest II: Older Married Couple, Retired,
(h)Sole Survivor, in Labour Force, and
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(i) Empty Nest III: Sole Survivor, Retired (Kotler & Armstrong 1991).
Each of these stages represents life demands on the dual career
family members that could create work family conflict.
As the pattern of adult development for men and women differ and as
family and career demands fluctuate depending on the stage of family/
career development a person is at individuals may link work and family
roles differently at the various stages of the life. Each of these family
stages has unique characteristics, which makes them useful in analysing
various candidates in dual career couples for overseas assignments.
The developmental theoretical perspective on work family interaction has

gained considerable attention recently and would appear to be applicable to
dual career couples’ relocations internationally (Lambert 1990, Chi-Ching
1995). Instead of a static analysis of the boundary/ transactions between
work and family domains, the approach proposes the longitudinal
assessment of work family linkages in the span of an individual and/or the
dual career couple. The theory assumes that there is a difference in
development of men and women and as family and career demands
fluctuate depending on the stage of family career development a person is
at, individuals may link work and family roles differently at various stages
of their life (Chi-Ching 1995). Therefore, relationships between work and
family roles are dynamic over a person’s life particularly in the dual career
era of the 21st Century.
To simplify the analysis of family/career development stages, it will be

assumed that the trailing spouse is the wife in the dual career couple. It
should be recognised that the number of expatriate women will continue to
grow in the future and a similar analysis of male trailing spouse should be
undertaken (Adler 1993, 1993, 1994, 1997). Each of the stages of the
family/career life cycle will be discussed using the female as an example of
a trailing spouse and alternatives (i.e., strategic windows open to them at
each phase of the career life cycle). Table 1 presents the family/career life
cycle interaction in terms of stage characteristics, critical junctures, and
positive/negative outcomes.
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Table 1: Family/Career life cycle intersection
Stage Characteristics of Critical junctures Positive/Negative

the stage outcomes
Stage I: Family Career exploration Finding trailing Position not

career interaction (both members of spouse overseas necessarily related
and exploration. the dual career position. to trailing spouse’s
couple). ‘career’.
Early family role Solidifying family Lack of attention of
identification. roles for both organisation to
members of the trailing spouses
dual career. career needs.
Stage II: Career solidification Dealing with Increased level of

Crystallisation and for trailing spouse. increasing level of divorce given
implementation. conflict. spillovers stress.
Increasing level of Maintaining career Establishing both

role conflict between to establish career tracks for
dual career professional career dual career couples.
members. path.
Stage III: Seeking promotion Difficulty in One of the most

Establishing for both dual career maintaining career difficult times to
foundation for members. options/visibility. relocation overseas.
professional career.
Less willing to take Willingness Heightened
overseas depended on expenses due to
assignment due to repatriation family needs/
family/demands commitments. expectations.
Stage IV: Transition Potential career Birth of children. Availability of

in career goals. beak due to family quality health care
‘requirements’. for the family
Willingness to serve Career based Heightened stress

based on a number primarily upon for the trailing
of intangible tasks. balancing career spouse.
and family.
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Stage V: Return to Lack of leave for Taking an overseas Shift in balance to

professional career child bearing. assignment. more career
and recognition and orientation.
‘reward.
Rekindling of career Reduced time Potentially ignoring
goals and metrics of addressing family family issues that
career success. issues. can have a negative
impact.
Stage VI: Potential Perceived Quit job upon Loss of overseas

impediments in impediments to repatriation. experience of trailing
career career spouse.
advancement. advancement.
Exploration of Reorientation of Diminished human

career alternatives. balance between capital.
career and family.
Difficulty in
attracting others.
Stage VII: Stability between Absence of children Less stress/tension

Maintaining level of work/family. in the family unit. in the individual and
achievement. family unit.
Clear delineation of Career plateauing. Sense of

work and family professional
roles. accomplishment.
Realistic Global Relocation preview
Since the dual career couple and the organisation will both view the
process and the advantages/disadvantages of relocation through their own
screen of perception, a realistic international relocation preview is
suggested before the couple or the organisation self selects into a training
or international career path programme (Caligiuri & Phillips 2003). A site
visit that includes the family, and is part of a cross-cultural pre-training
programme, could be used as an ‘inoculation’. This serves a dual purpose
of allowing the dual career couple a chance for pre- departure information
gathering and, as a ‘family’, a realistic job preview (Harvey & Fung 2000).
An extended vacation length visit, where the candidate may actually have
a job task, may deflate some unrealistic expectations and ‘vaccinate’ dual
career couples from initial disappointments (Feldman & Thomas 1992).
Since each family is different in their view of negative, neutral or positive
job aspects (Meglino, DeNisi, Youngblood & Williams 1988) a trip would be
the best way to convey information to them, allowing them to determine
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what factors of the relocation will be most important themselves in one of

the most information rich methods available to the organisation. To not
give the family a realistic preview of what relocation entails is even
possibly unethical.
In the light of compounding selection issues in part due to the increasing

rate of dual career couples, it is important to identify opportunities within a
family’s life cycle that will coincide with an organisation’s need for an
international career relocation. It is suggested that an organisation may
increase its chances of such a family/career life cycle intersection by taking
proactive measures to enhance the chance of employing the best candidate
possible. This action is most likely accomplished with the implementation of
a model/process that allows organisations to select dual career expatriate
candidates. Such a process must take into consideration the characteristic
of various stages, critical junctures and the positive as well as negative
outcomes of such endeavours. Needless to say, such modifications of the
HR selection process come at the expense of several implications and
consequences of HRM policies and practices in contemporary organisations.
Despite the expenditure of time and other resources, implementing such
processes is likely to be well worth the effort of selecting such individuals.
8.3 Impact of International Assignments on Work Life

Balance
International HR managers need to start paying serious attention to the

work-life balance challenges of their global managers as they are impacting
on effectiveness and employee retention among other long term business
goals of companies. Whether on long or short-term assignments or even
on extended business travel, managers themselves say they want more
assistance from their employers with work life balance issues while on
assignment.
Longer working hours, late night phone calls from headquarters many time
zones away, and an unhappy spouse who has given up her/his career to
support the manager are just a few of the challenges now combining with
the already well-known adjustment factors of culture shock, working in a
new overseas office, and extensive regional travel to wreak havoc with the
work life balance of the modern day expatriate manager working in a 24/7
global economy.
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“A lot of expat research focuses on the importance of family adjustment for

overall expatriate adjustment and implicitly talking about what research
refers to as ‘personal life (or family) interference with work’,” reports Dr.
Mila Lazarova, a business professor at Simon Fraser University in
Vancouver “What research is not talking about is the interference of
personal life with personal life,” says Dr. Lazarova. “The concept may sound
a little ridiculous in the domestic context where people exist in bubble
rarely interacting with others. But is very much relevant in the expatriate
context where the personal lives of all family members are very much
interrelated.” “Overseas, family members rely on each other a lot more for
support. An unhappy trailing spouse or child affects much more than the
‘work’ of expatriates. Tension in the family may have a negative impact on
all aspects of the life of the expatriate,” she believes.
Besides the obvious advancements in technology which allow for those late
night phone calls and constant barrage of e-mails or text messages which
need to be answered immediately, changing demographics — there are
simply more women in the workforce including more female expatriate
managers — have pushed the work life balance issue to the forefront. But
as well, those longer working hours for expatriates mean more stress not
just for the manager but also for the members of their families.
Says Dr. Lazarova: “In the past, it was a given that if one’s career
demanded it, the family moved. This is no longer the case unless
companies balance the scale somehow. They are discovering that unless
they address work life challenges, they’ll have a serious staffing problem
on their hands.”
Given what a variety of recent surveys have reported, employers should

consider trying to:
1. Ensure the family goes through a pre-assignment self-assessment

process to promote accurate self-knowledge about the capacity to face
assignment challenges;
2. Provide pre-assignment preparation focused on building support and

communication within the family unit since this is the primary resource
employees will turn to when dealing with an assignment’s challenges;
and,
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3. Provide an employee assistance program tailored to meet the needs of

international assignments.
4. Several studies have been conducted on expat work life balance and
certain key findings have emerged:
Expatriates work longer hours abroad than at home
Source: ORC Worldwide Expatriate Work Life Balance Survey
When it comes to working in a foreign location, survey results show a

clear divergence between company policy on work hours and actual
practice. Although it was usual to have a stated hours-of-work policy,
nearly two-thirds of the expatriates surveyed work longer hours abroad
than they did at home. Expatriates worked on average an increase of
13.4 hours per week. Survey respondents cited several contributing
factors, such as the volume of work, lack of local support, cost pressures
to perform well and, in particular, business travel.
International assignments disrupt family life, causing

dissatisfaction among spouses and children
International assignments clearly intrude into family life. Expatriates’

families voiced dissatisfaction with assignees’ travel schedules, long hours
at work, and the limited support given to families during periods of
separation. Nearly 5% reported that their families returned home earlier
than anticipated, and of that number, 30% cited the work and travel
schedules of the expatriate as the reason.
!
Overall, companies have weak work life balance policies
Work life balance initiatives were not, on the whole, available to — or taken
up by —expatriates. Only 21% say that their organisations had either a
formal or an informal policy on work-life balance. Three-quarters of those
surveyed believe that their organisation was not committed to helping
expatriates achieve a healthy balance between work and home. Some
flexible working practices were available to expatriates. For example, 44%
reported having the option of working flexible hours or taking
compensatory time off for working long hours; however, two-thirds believe
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their organisations expect them to work outside of normal hours. Over half
(55%) did not take all of their annual leave entitlement.
Cultural and language differences create specific stress issues for

expatriates
The expatriates in this survey were experienced in terms of the number of

years they had spent on international assignments, the number of locations
in which they had worked, and the lengths of their current assignments.
Yet, having to cope with language and cultural difficulties resulted in major
pressures causing stress. Despite the majority of respondents reporting
being offered language training and half reporting being offered cultural
training, significant proportions of expatriates did not complete their
training. For some this was due to time pressures and travel schedules, but
for a significant majority this was due to lack of interest on their part. On
the whole, expatriates realised that they had a role to play in managing
their own stress and recognised that their employers could not be expected
to take full responsibility. Nevertheless, survey respondents offered
suggestions for how their employers could help to reduce stress. These
ideas included introducing counselling services and demonstrating a
greater understanding of the pressures that working abroad entails.
Female expatriates have higher levels of work-related stress than

their male counterparts
Despite survey data showing that women’s average workweek increased 13

hours while on assignment, only 50% felt overworked and 54% felt
overwhelmed. However, over half of the women (54%) did take their full
vacation entitlement. Family separation appeared to be less of an issue for
women expatriates: only 10% reported that their families returned home
as a result of their work or travel commitments and only 3% reported a
permanent, early return of their families. Yet, female expatriates reported
higher levels of work-related stress than their male counterparts in the
domestic workplace and as expatriates.
Expatriates and HR staff have contradicting views regarding work

life balance policies and practices
The majority of HR personnel in the home country reported that

organisational work life balance policies had affected the workplace
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positively, and had made a difference to organisational performance and to

them personally. Expatriates, on the other hand, believe completely the
opposite, stating that such policies had not had a positive effect on the
workplace, performance, or themselves personally.
Expatriates’ negative views of their organisation’s work life balance policies

are clearly of great significance. The psychological contract between
employers and employees — the unspoken perceptions of reciprocity and
fairness that affect expatriates’ willingness to perform beyond their
contractual requirements and to engage positively with their organisations
— is potentially in jeopardy, affecting their loyalty and commitment to their
organisations and ultimately their intention to stay.
A 2014 survey conducted by Expat Insider (The Inter Nations Survey)

shows the Work Life Balance rankings. The Work Life Balance sub-ranking
looks at expats’ combined satisfaction with their overall work life balance
and their average working hours.
The ranking is topped by Norway, which is particularly popular in terms of

working hours, with 85% positive ratings. Costa Rica scores highly when it
comes to work life balance, and Denmark is strong in both categories.
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!
Figure 3: Working Hours Worldwide (Expat Insider)
Work Life Balance vs. Job Satisfaction
Norway ranks highly in terms of work life balance, with more than 80%
giving the country a positive rating for this factor. Things also look great for
Costa Rica, which has the highest percentage of very satisfied expats
worldwide. Denmark is another top destination for people seeking a good
balance between their personal and their professional life. Overall, 76%
gave the country a positive rating.
However, does a good work life balance also mean that our participants are
satisfied with their job in general? Not necessarily.
Norway only makes it to 13th place on the Job and Career sub-index,
despite the fact that 75% of participants are satisfied with their job there.
Still, the country is doing better than Costa Rica (38th) and Denmark
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(43rd). In all three cases, people are less satisfied with the career
prospects in their country of residence than with their job in general.
However, the question remains, what is it that influences the rankings for
work life balance so positively for these three countries?
Let’s take a look at some other, non-work related factors. Participants in

Denmark, for example, are particularly satisfied with family life in general.
Costa Rica, on the other hand, is among the top ten countries when it
comes to the ease of settling in, and even among the top five for
friendliness.
Like Denmark, Norway also receives positive ratings for its attitude towards
families with children (85%) and for family life in general (84%). However,
the apparent prioritization of family life and leisure activities in Norway
may well be directly related to its strict labor laws, strongly discouraging
unpaid overtime and irregular work schedules.
So does it all boil down to short working hours in the end?
The 37-Hour Work Week
Norway, the most prosperous country among the Scandinavian States,

ranks even better when it comes to the participants’ overall satisfaction
with their working hours. All in all, the vast majority gave it a positive
rating and 49% are very satisfied with their weekly work hours, the highest
percentage worldwide.
The results for Costa Rica and Denmark are similar: 80% of our
participants in both countries rated their working hours positively. However,
a shorter work week does not automatically account for a happier
employee or vice versa, as our overall results show. For example, in
Luxembourg, which has one of the top global rankings for career prospects
and job satisfaction, expats work nearly an average 44 hours per week.
Still, it is worth noting that the number of hours people work in these
countries is at least on the lower end. In Denmark, expats spend 38.7
hours per week at work. In Norway, our participants work 37 hours per
week on average and Costa Rica also has a 37-hour work week. At that
rate, all three are far below the global average of 41 hours.
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According to the OECD Better Life Index, only few employees work very
long hours in Norway (3%) and in Denmark (2%). Unfortunately, the index
does not include Costa Rica in its rating.
Working Hours Worldwide
As mentioned above, Costa Rica, Norway, and Denmark are on the

somewhat lower end of weekly working hours, only underbid by a few
other countries, such as Ecuador with 34.4 hours.
The country on the opposite end of the scale is Nigeria, where expats
spend approximately 48 hours per week at work. In Ghana it’s 47.8 hours
and in the UAE, our survey participants have to dedicate almost 46 hours
of their time to the job.
Interestingly, these countries do not do too poorly when it comes to our

participant’s satisfaction with their work life balance and working hours. In
all three cases more than half rate the working hours in their country of
residence positively. At the same time, Ghana receives 60%, Nigeria and
the UAE 55% positive ratings on work-life balance.
On a global scale, expats between 36 and 40 years of age work the most.
With close to 39 hours per week, women work less than their male
counterparts, who spend approximately 43 hours per week at work.
However, both are similarly satisfied with their situation, with a little over
60% in positive ratings both for working hours and work life balance.
On a global level, expat employees and managers have the highest amount
of working hours with 44.9 hours per week, closely followed by
entrepreneurs and business owners (44.4 hours). Across all countries,
there is a significant discrepancy in terms of working hours between
regular employees (42.5 hours) and middle- or top-management positions
(47-50 hours). Freelancers across the word, on the other hand, only spend
about 31 hours on their job.
Another survey conducted in 2014, HSBC’s Seventh Expat Explorer

Survey, gives the following findings:
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Switzerland comes top for a balanced life abroad
Switzerland is ranked as the number one country by expats looking for a

well balanced,high quality lifestyle-followed by Singapore,China,
Germany and Bahrain.
Expat Explorer League Table 2014
1. Switzerland
2. Singapore
3. China
4. Germany
5. Bahrain
6. New Zealand
7. Thailand
8. Taiwan
9. India
10.Hong Kong
The survey reveals that expats living in Switzerland enjoy the best of expat
life, with the country ranking first out of 34 countries. From a financial
well-being perspective, Switzerland emerges as a destination to advance
career prospects and receive a healthy salary while also maintaining a good
work life balance. One quarter (25%) of expats in Switzerland earn more
than USD200,000 p.a., yet over half (51%) report a better work life
balance since moving.
Expats in Switzerland also have a lot of confidence in the local economy,

with almost half (47%) saying they are very satisfied with the state of the
local economy - the highest proportion for any country included in this
year's survey. Many expats in Switzerland comment on the country's high
quality of air and pleasant surroundings, with three-quarters (75%)
agreeing that this is an improvement on their home country. Expat parents
also report that Switzerland offers benefits for families too, believing their
offspring are now safer (81%), enjoy a better quality of life (77%) and
receive a better education (65%).
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Asia: A hotspot for high-earning expats
Asia emerges from this year's survey as the best region for financial well-
being, with nearly one fifth (19%) of expats earning over USD200,000 p.a.
and 65% saying they have more disposable income since relocating.
China is home to the largest proportion of high-earning expats in the world
- nearly two-fifths (38%) earn over USD200,000 p.a and over three
quarters (76%) have more disposable income than they did at home.
Elsewhere in Asia, around a quarter of expats in India (24%) and Hong
Kong (23%) earn over the USD200,000 p.a. mark, with 56% and 63%
respectively saying they have greater disposable income than before.
New Zealand:Tthe winner for expat experience and family life
Expats this year voted New Zealand as the best destination for expat life
experience and raising a family abroad. The country ranks as the easiest
place for expats to set up a new life, making it a popular option for expats
young and old to enjoy a high quality lifestyle.
New Zealand is the destination where expats are most likely to move in
order to improve their standard of living (54%), as well as benefiting from
the pleasant climate and picturesque scenery (89%), friendly local people
(75%) and a good work life balance (71%). Expat parents living in New
Zealand also commented on the improved health and well-being (78%)
and safety of their children (87%), as well as saying they are bringing up
more confident and well-rounded individuals (58%) since moving.
Hence, work life balance continues to be an area of challenge for expats

and it is essential that the organizations take a keen interest in ensuring
that this area of concern is addressed in time to retain talent.
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Fun Exercise: Wheel of Life for Work Life Balance
Source: www.mindtools.com
When life is busy, or all your energy is focused on a special project, it's all
too easy to find yourself off balance, not paying enough attention to
important areas of your life. While you need to have drive and focus if
you're going to get things done, taking this too far can lead to frustration
and intense stress.
That's when it's time to take a "helicopter view" of your life, so that you
can bring things back into balance.
This is where the Wheel of Life® (or Life Wheel) can help. Commonly
used by professional life coaches, it helps you consider each area of your
life in turn and assess what's off balance. As such, it helps you identify
areas that need more attention.
Create your own Wheel of Life by hand and assess your balance:
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1. Brainstorm Life Areas
Start by brainstorming the six to eight dimensions of your life that are
important for you. Different approaches to this are:
• The roles you play in life, for example: husband/wife, father/mother,

manager, colleague, team member, sports player, community leader, or
friend.
• Areas of life that are important to you, for example: artistic expression,
positive attitude, career, education, family, friends, financial freedom,
physical challenge, pleasure, or public service.
• Your own combination of these (or different) things, reflecting the

things that are your priorities in life.
2. Write These Down on the Wheel 
Write down these dimensions on the diagram, one on each spoke of the
life wheel.
3. Assess Each Area
This approach assumes that you will be happy and fulfilled if you can find
the right balance of attention for each of these dimensions. And different
areas of your life will need different levels of attention at different times.
So the next step is to assess the amount of attention you're currently
devoting to each area.
Consider each dimension in turn, and on a scale of 0 (low) – to 10 (high),

write down the amount of attention you're devoting to that area of your
life. Mark each score on the appropriate spoke of your Life Wheel.
5. Think About Your Ideal Level
Next it's time to consider your ideal level in each area of your life. A
balanced life does not mean getting 5 in each life area: some areas need
more attention and focus than others at any time. And inevitably you will
need to make choices and compromises, as your time and energy are not
in unlimited supply!
!
! !261
MANAGING DIVERSITY
So the question is, what would the ideal level of attention be for you in
each life area?
Plot the "ideal" scores around your life wheel too.
6. Take Action
Now you have a visual representation of your current life balance and
your ideal life balance. What are the gaps? These are the areas of your
life that need attention.
And remember that gaps can go both ways. There are almost certainly
areas that are not getting as much attention as you'd like. However there
may also be areas where you're putting in more effort than you'd ideally
like. These areas are sapping energy and enthusiasm that may better be
directed elsewhere.
Once you have identified the areas that need attention, it's time to plan
the actions needed to work on regaining balance. Starting with the
neglected areas, what things do you need to start doing to regain
balance? In the areas that currently sap your energy and time, what can
you stop doing or reprioritize or delegate to someone else? Make a
commitment to these actions by writing them on your worksheet.
!
8.4 Managing Cross-Cultural teams
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Managing Teamwork in U.S. – China Cross-Cultural Teams
Author: Joy Huang
Source: www.connecteast.net
A client of mine is a large global company with diverse teams made up of

nearly as many Americans as Chinese. Besides the many other
challenges, a typical complaint goes like this: the Chinese think their U.S.
colleagues focus too narrowly on their own jobs and do not help out each
other. And the Americans think the Chinese stretch themselves too thin,
are disorganized and unproductive.
What exactly are they talking about and why is this the case?
Teamwork Style Difference
The below graph highlights the typical differences in teamwork styles

between the U.S. and China.
!
!
Figure 4: Teamwork Style Difference
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MANAGING DIVERSITY
U.S.
The U.S. has a tendency towards a project-oriented style. During the

project, roles and responsibilities are clearly defined and divided among
team members. People meet at regular meetings to provide updates and
exchange information. They then go off and concentrate on their own
particular tasks.
China
China has a tendency towards a people-oriented style. Roles and

responsibilities are not quite as clearly defined. When encountering a
problem, they reach out to their “friends”/colleagues for help regardless
of the person’s role. They themselves are therefore also the recipients of
such requests. As a result, each person can be engaged in multiple
projects that compete for their time and resources.
!
In the article excerpt given above, it is essential to understand the cultural

backgrounds of the two countries to know where this style difference
comes from. The key influencer here is the relationship–oriented culture v/
s task-oriented culture. In the US, tasks take priority, and completing them
in the shortest amount of time is seen as the best way to achieve
productivity. Tasks are clearly defined and each person is allotted a specific
role. Whereas in China, relationships are paramount and taking care of
your network of relationships is seen as the road to success.
In a cross-cultural team, therefore, it is essential for a manager to

understand the impact of culture on an individual’s behaviour and
therefore, build a strategy to ensure he runs a well oiled cross cultural
team.
Impact of Culture on Organizational Behavior
As discussed in Chapter 2 – Cross-cultural Management, we are

programmed by our upbringing, education, environment and language to
respond to people and situations in a particular way. This could be termed
as ‘Culture’, and interpretation of the same is dependent on our Mental
Programming.
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Whether we will find working with someone whose mental programming

differs from ours, frustrating or fascinating depends largely upon our skill
with cross culture orientation.
Culture can impact our organizational behaviour in a variety of ways. Some

significant ways are as follows:
1. Difference in cultures and motivation 

 
Social Psychologist, Geert Hofstede originally suggested four dimensions
along which cultural values could be analysed - individualism-
collectivism; uncertainty avoidance; power distance (strength of social
hierarchy) and masculinity-femininity (task orientation versus person-
orientation). His Masculinity – Femininity dimension also suggests what
could be rewarding for different cultures. According to this, if a culture is
masculine, people prefer to receive – money, titles or other materialistic
or status – oriented rewards. In a Feminine society, meaningful rewards
are time-off, improved benefits, or symbolic rewards (Hofstede, 1997).
In some countries, material items are not perceived as performance
rewards but as gifts. For example: In China, organizations often
distribute food to all employees as holiday gifts. People in higher
positions get better items as gift but they do not perceive any
connection between such gifts and performance.
2. Effect of culture on communication 

 
People in different cultures communicate among themselves differently.
The major differences in how people from different cultures
communicate with each other are language usage, verbal style, and
nonverbal communication. 
 
Two people may speak the same language but speak it quite differently.
For example, people from the United States and England both speak
English, but the meaning of certain words is quite different, sometimes
even opposite, in the two countries. Verbal communication styles also
differ across cultures. There are cultures who use the direct style and
convey their feelings and thoughts by using the exact words whereas in
the indirect style the speaker hides his true feelings by the selection of
words.
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3. The impact of culture on conflict resolution 

 
Anthropologist Edward.T.Hall in his 1976 book “Beyond Culture” refers
to a culture’s tendency to use high-context messages over low-context
messages in routine communication. In a higher-context culture, many
things are left unsaid, letting the culture explain. Words and word choice
become very important in higher-context communication, since a few
words can communicate a complex message very effectively to an in-
group (but less effectively outside that group), while in a low-context
culture, the communicator needs to be much more explicit and the
value of a single word is less important. Cultures also differ in the
reasons for conflict and how people behave in during the conflict. 
 
Therefore, understanding cross-cultural approaches to conflict will
enable an employee to work towards its effective resolution.
4. Culture and organizational change  

 
Different cultures have different approaches to change. Some resist it,
some embrace it whereas some others simultaneously embrace, resist
and fear it. One way to understand the relationship between culture and
organizational change is its orientation towards time. There are cultures
that are past oriented and value traditions and history. There are other
cultures who are present oriented and focus on the moment. They
neither view history as important, nor are concerned about the future.
Whereas a third set of cultures is future oriented and emphasize on
future planning and are concerned about the future generation. In this
context, past-oriented cultures resist change, present-oriented show
reluctance to accept change but future-oriented cultures embrace
change and see it as inevitable.
Challenges in Cross-cultural Teams
Multicultural teams often generate frustrating management dilemmas.

Cultural differences can create substantial obstacles to effective teamwork
—but these may be subtle and difficult to recognize until significant
damage has already been done. he challenge in managing multicultural
teams effectively is to recognize underlying cultural causes of conflict, and
to intervene in ways that both get the team back on track and empower its
members to deal with future challenges themselves.
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MANAGING DIVERSITY
The Harvard Business Review has featured a study wherein Prof. Jeanne
Brett, Kristin Behfar and Mary.C.Kern interviewed managers and members
of multicultural teams from all over the world. They have put together the
following cross-cultural team challenges that can arise –
1. Direct versus indirect communication 

 
Communication in Western cultures is typically direct and explicit. The
meaning is on the surface, and a listener doesn’t have to know much
about the context or the speaker to interpret it. This is not true in many
other cultures, where meaning is embedded in the way the message is
presented. In cross-cultural negotiations, the non-Westerner can
understand the direct communications of the Westerner, but the
Westerner has difficulty understanding the indirect communications of
the non-Westerner. The differences between direct and indirect
communication can cause serious damage to relationships when team
projects run into problems.  
 
For example: An American manager who was leading a project to build
an interface for a U.S. and Japanese customer-data system explained
the problems her team was having this way: “In Japan, they want to
talk and discuss. Then we take a break and they talk within the
organization. They want to make sure that there’s harmony in the rest
of the organization. One of the hardest lessons for me was when I
thought they were saying yes but they just meant ‘I’m listening to you.’”
When this manager discovered that several flaws in the system would
significantly disrupt company operations, she pointed this out in an e-
mail to her American boss and the Japanese team members. Her boss
appreciated the direct warnings; her Japanese colleagues were
embarrassed, because she had violated their norms for uncovering and
discussing problems. Their reaction was to provide her with less access
to the people and information she needed to monitor progress. They
would probably have responded better if she had pointed out the
problems indirectly—for example, by asking them what would happen if
a certain part of the system was not functioning properly, even though
she knew full well that it was malfunctioning and also what the
implications were. In Japan, a typical response to direct confrontation is
to isolate the norm violator. This American manager was isolated not
just socially but also physically. She told us, “They literally put my office
in a storage room, where I had desks stacked from floor to ceiling and I
! !267
MANAGING DIVERSITY
was the only person there. So they totally isolated me, which was a
pretty loud signal to me that I was not a part of the inside circle and
that they would communicate with me only as needed.” Her direct
approach had been intended to solve a problem, and in one sense, it
did, because her project was launched problem-free. But her norm
violations exacerbated the challenges of working with her Japanese
colleagues and limited her ability to uncover any other problems that
might have derailed the project later on.
2. Trouble with accent and fluency 

 
Although the language of international business is English,
misunderstandings or deep frustration may occur because of nonnative
speakers’ accents, lack of fluency, or problems with translation or
usage. These may also influence perceptions of status or competence.
Nonfluent team members may well be the most expert on the team, but
their difficulty communicating knowledge makes it hard for the team to
recognize and utilize their expertise. If teammates become frustrated or
impatient with a lack of fluency, interpersonal conflicts can arise.
Nonnative speakers may become less motivated to contribute, or
anxious about their performance evaluations and future career
prospects. The organization as a whole pays a greater price: Its
investment in a multicultural team fails to pay off. 
 
For example, a Latin American member of a multicultural consulting
team lamented, “Many times I felt that because of the language
difference, I didn’t have the words to say some things that I was
thinking. I noticed that when I went to these interviews with the U.S.
guy, he would tend to lead the interviews, which was understandable
but also disappointing, because we are at the same level. I had very
good questions, but he would take the lead.”
3. Differing attitude towards hierarchy and authority 

 
A challenge inherent in multicultural teamwork is that by design, teams
have a rather flat structure. But team members from some cultures, in
which people are treated differently according to their status in an
organization, are uncomfortable on flat teams.  
 
 
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When, as a result of differing cultural norms, team members believe

they’ve been treated disrespectfully, the whole project can blow up. In a
Korean-U.S. negotiation, the American members of a due diligence team
were having difficulty getting information from their Korean
counterparts, so they complained directly to higher-level Korean
management, nearly wrecking the deal. The higher-level managers were
offended because hierarchy is strictly adhered to in Korean
organizations and culture. It should have been their own lower-level
people, not the U.S. team members, who came to them with a problem.
And the Korean team members were mortified that their bosses had
been involved before they themselves could brief them. The crisis was
resolved only when high-level U.S. managers made a trip to Korea,
conveying appropriate respect for their Korean counterparts.
4. Conflicting norms for decision making 

 
Cultures differ enormously when it comes to decision making
particularly, how quickly decisions should be made and how much
analysis is required beforehand. Not surprisingly, U.S. managers like to
make decisions very quickly and with relatively little analysis by
comparison with managers from other countries.  
 
A Brazilian manager at an American company who was negotiating to
buy Korean products destined for Latin America told us, “On the first
day, we agreed on three points, and on the second day, the U.S.-
Spanish side wanted to start with point four. But the Korean side wanted
to go back and rediscuss points one through three. My boss almost had
an attack.” What US team members learnt from an experience like this
is that the American way cannot be imposed on other cultures.
American managers have learned to keep their impatient bosses away
from team meetings and give them frequent if brief updates. A
comparable lesson for managers from other cultures is to be explicit
about what they need—saying, for example, “We have to see the big
picture before we talk details.”
Strategies to manage cross cultural teams
The Harvard Business Review featured study also interviewed the most
successful cross cultural teams and managers to find out what are the
strategies one can use to build successful cross cultural teams. There is,
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MANAGING DIVERSITY
however, no one right way to deal with a particular kind of multicultural

problem; identifying the type of challenge is only the first step. The more
crucial step is assessing the circumstances—or “enabling situational
conditions”—under which the team is working. For example, does the
project allow any flexibility for change, or do deadlines make that
impossible? Are there additional resources available that might be tapped?
Is the team permanent or temporary? Does the team’s manager have the
autonomy to make a decision about changing the team in some way? Once
the situational conditions have been analyzed, the team’s leader can
identify an appropriate response.
1. Adaptation 
 
Some teams find ways to work with or around the challenges they face,
adapting practices or attitudes without making changes to the group’s
membership or assignments. Adaptation works when team members are
willing to acknowledge and name their cultural differences and to
assume responsibility for figuring out how to live with them. It’s often
the best possible approach to a problem, because it typically involves
less managerial time than other strategies; and because team members
participate in solving the problem themselves, they learn from the
process. When team members have this mindset, they can be creative
about protecting their own substantive differences while acceding to the
processes of others. 
 
For example: A U.S. and UK multicultural team tried to use their
differing approaches to decision making to reach a higher-quality
decision. This approach, called fusion, is getting serious attention from
political scientists and from government officials dealing with
multicultural populations that want to protect their cultures rather than
integrate or assimilate. If the team had relied exclusively on the
Americans’ “forge ahead” approach, it might not have recognized the
pitfalls that lay ahead and might later have had to back up and start
over. Meanwhile, the UK members would have been gritting their teeth
and saying “We told you things were moving too fast.” If the team had
used the “Let’s think about this” UK approach, it might have wasted a
lot of time trying to identify every pitfall, including the most unlikely,
while the U.S. members chomped at the bit and muttered about
analysis paralysis. The strength of this team was that some of its
members were willing to forge ahead and some were willing to work
! !270
MANAGING DIVERSITY
through pitfalls. To accommodate them all, the team did both — moving
not quite as fast as the U.S. members would have on their own and not
quite as thoroughly as the UK members would have.
2. Structural Intervention 
 
A structural intervention is a deliberate reorganization or reassignment
designed to reduce interpersonal friction or to remove a source of
conflict for one or more groups. This approach can be extremely
effective when obvious subgroups demarcate the team (for example,
headquarters versus national subsidiaries) or if team members are
proud, defensive, threatened, or clinging to negative stereotypes of one
another.  
 
Another structural intervention might be to create smaller working
groups of mixed cultures or mixed corporate identities in order to get at
information that is not forthcoming from the team as a whole. The
manager of the team that was evaluating retail opportunities in Japan
used this approach. When she realized that the female Japanese
consultants would not participate if the group got large, or if their male
superior was present, she broke the team up into smaller groups to try
to solve problems. She used this technique repeatedly and made a point
of changing the subgroups’ membership each time so that team
members got to know and respect everyone else on the team.
3. Managerial Intervention  
 
When a manager behaves like an arbitrator or a judge, making a final
decision without team involvement, neither the manager nor the team
gains much insight into why the team has stalemated. But it is possible
for team members to use managerial intervention effectively to sort out
problems. Managerial intervention to set norms early in a team’s life can
really help the team start out with effective processes.  
 
For example: a multicultural software development team’s primary
language was English, but some members, though they spoke
grammatically correct English, had a very pronounced accent. Setting
the ground rules for the team, the manager addressed the challenge
directly, telling the members that they had been chosen for their task
expertise, not their fluency in English, and that the team was going to
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MANAGING DIVERSITY
have to work around language problems. As the project moved to the

customer-services training stage, the manager advised the team
members to acknowledge their accents up front. She said they should
tell customers, “I realize I have an accent. If you don’t understand what
I’m saying, just stop me and ask questions.”
4. Exit 
 
During the study, they found that leaving the team was an infrequent
strategy for managing challenges. In short-term situations, unhappy
team members often just waited out the project. When teams were
permanent, producing products or services, the exit of one or more
members was a strategy of last resort, but it was used—either
voluntarily or after a formal request from management. Exit was likely
when emotions were running high and too much face had been lost on
both sides to salvage the situation.
Hence, over several interviews and studies, the Harvard Business Review
featured study found that the strategies stated above are illustrations of
what may work in a cross cultural team. There are, of course, no absolute
answers. Managers who intervene early and set norms; teams and
managers who structure social interaction and work to engage everyone on
the team; and teams that can see problems as stemming from culture, not
personality, approach challenges with good humor and creativity. Managers
who have to intervene when the team has reached a stalemate may be
able to get the team moving again, but they seldom empower it to help
itself the next time a stalemate occurs. When frustrated team members
take some time to think through challenges and possible solutions
themselves, it can make a huge difference.
In another example encountered during these interviews, the Indian

manager of a multicultural team coordinating a company wide IT project
found himself frustrated when he and a teammate from Singapore met
with two Japanese members of the coordinating team to try to get the
Japan section to deliver its part of the project. The Japanese members
seemed to be saying yes, but in the Indian manager’s view, their follow-
through was insufficient. He considered and rejected the idea of going up
the hierarchy to the Japanese team members’ boss, and decided instead to
try to build consensus with the whole Japanese IT team, not just the two
members on the coordinating team. He and his Singapore teammate put
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MANAGING DIVERSITY
together an e-Business road show, took it to Japan, invited the whole IT

team to view it at a lunch meeting, and walked through success stories
about other parts of the organization that had aligned with the company’s
larger business priorities. It was rather subtle, he told us, but it worked.
The Japanese IT team wanted to be spotlighted in future e-Business road
shows. In the end, the whole team worked well together—and no higher-
level manager had to get involved.
8.5 Summary
1. Women can be very successful in global assignments. However, MNCs

cannot ignore the fact that it is a challenge for women to be global
assignees in some countries.International HR is a challenging job for
any Human Resource Manager and an important and complex part of
this tough job is managing the compensation of employees who are part
of these international employees.
2. In an article in the Journal of World Business, a framework to better

understand what makes women successful in global assignments was
developed. The four critical factors in the model include: Personality
traits, Organizational support, Family support and Host nationals'
attitudes toward women expatriates.
3. Following from this framework, several strategies to make women

expats successful in their roles.
4. International expansion is seen by many organisations as the answer for

future business growth and development. However, there is a challenge
to find the right talent.
5. The challenge is intensified in the case of Dual Career Couples by the

fact that between fifty and sixty per cent of all international assignees
have partners (Brookfield survey 2012) who are often unwilling to give
up or compromise their own careers in exchange for the “experience” of
international living.
6. There are times (opportunities) when the dual career couple would find
it more amiable to undertake an international assignment. What is
needed is a means to anticipate when there could be strategic windows
in the family life cycles of dual career couple.
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MANAGING DIVERSITY
7. The family life cycle provides a means to measure the stages of a family
that can provide valuable insights into the predisposition to, and
probable success of, an international relocation of dual career couples.
8. Since the dual career couple and the organisation will both view the
process and the advantages/disadvantages of relocation through their
own screen of perception, a realistic international relocation preview is
suggested before the couple or the organisation self selects into a
training or international career path programme (Caligiuri & Phillips
2003). A site visit that includes the family, and is part of a cross-cultural
pre- training programme, could be used as an ‘inoculation’.
9. International HR managers need to start paying serious attention to the

work-life balance challenges of their global managers as they are
impacting on effectiveness and employee retention among other long-
term business goals of companies.
10.ORC Worldwide Expatriate Work Life Balance Survey found that

expatriates work longer hours abroad than at home, International
assignments disrupt family life, causing dissatisfaction among spouses
and children, Overall, companies have weak work-life balance policies,
Cultural and language differences create specific stress issues for
expatriates, Female expatriates have higher levels of work-related
stress than their male counterparts and Expatriates and HR staff have
contradicting views regarding work-life balance policies and practices.
11.Culture can impact our organizational behaviour in a variety of ways.

Some significant ways can be – differences in motivation,
communication, conflict resolution and response to change.
12.Multicultural teams often generate frustrating management dilemmas.

Cultural differences can create substantial obstacles to effective
teamwork. There are, of course, no absolute answers. However, studies
have revealed that strategies such as Adaptation, Structural
Intervention, Managerial Intervention and Exit can help manage cross-
cultural teams.
! !274
MANAGING DIVERSITY
1. According to an article in Journal of World Business, four critical factors

to make women successful in international assignments are:
(a)Personality traits, Cross-cultural team management, Organizational

support & Family support
(b)Personality traits, Host nation’s attitude towards women expats,
Organizational support & Family support
(c)Personality traits, Achievement orientation, Organizational support &
Family support
(d)Personality traits, Host nation’s work life balance, Organizational
support & Family support
2. One of the major issues in Dual Career Couples for international

assignments is:
(a)Expats don’t want their spouse to sacrifice their careers

(b)Elderly relatives don’t allow expat dual career couples to relocate
(c)Trailing spouse take the risk of returning home to a less desirable job
(d)The spouse may not know the host language
3. According to Hofstede’s Masculinity-Femininity cultural values,
(a)Masculine cultures prefer receiving money and titles

(b)Masculine cultures prefer receiving non monetary rewards
(c)Both a and b
(d)Only a
4. Communication in Western culture is typically:
(a)Direct and explicit

(b)Indirect and embedded
(c)Rude and mean
5. Strategies to manage cross-cultural teams include:
(a)Adoption, Structural Intervention, Managerial Intervention and Exit

(b)Adaptation, Structural Intervention, Managerial Intervention and Exit
(c)Adaptation, Structural Interview, Managerial Intervention and Exit
(d)All of the above
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MANAGING DIVERSITY
6. Studies show that:
(a)Female expats have higher levels of work-related stress than male

expats
(b)Male expats have higher levels of work-related stress than female
expats
(c)Both male and female expats have high amounts of work-related
stress
7. Strategic window of opportunity for Dual Career couples is:
(a)Time when the organization can build a strategy for international

assignments
(b)Times when they would find it more amiable to go on an international
assignment
(c)Time when the HR can build a strategy for expats on international
assignments
(d)Time when the expat builds a strategy on how to handle an
international assignment 
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MANAGING DIVERSITY
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !277

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International Human Resource

Sr. No. Chapter Name Page

At the end of the chapter, you should be able to understand:

• International compensation management

5.1 Managing International Compensation

Pollution Compensation for Expat Workers

Japanese electronics giant Panasonic has announced plans to pay expat

The air quality in many Chinese cities is routinely found to be at

Managing compensation internationally is a tricky area. International HR

5.1 Managing International Compensation

The economic trends in the world keep swinging between ‘economic

In such a scenario, how does one put together a sustainable reward

Compensation is a tool used by management for a variety of purposes to

Compensation may be used to:

• Recruit and retain qualified employees.

Compensation is based on:

• Market research about the worth of similar jobs in the marketplace,

International HR is a challenging job for any Human Resource Manager and

1. International Compensation System is understood as provision of

perquisites, long and short-term incentives in accordance with their

2. Attract Individuals who are competent and interested in foreign

3. Facilitate movements of expatriates from one subsidiary to another,

4. Consistent pay levels at headquarters, domestic affiliates, and foreign

5. Be cost effective by minimizing unnecessary expenses.

6. Be consistent with the overall strategy, structure and business needs.

Components of an International Compensation Package

Components of international compensation comprises the base salary,

(b)The salaries usually are paid in Home currency, local currency, or a

(a)Alternatively known as indirect compensation.

(b)Benefits constitute a substantial portion of international compensation

(c)Benefits include a suit of programmes such as: – Entertainment, festival

(d)Basically an employee tends to join and stay with an organization which

(a)An additional payment (or other remuneration) to employees as a

designing special incentive programmes for keeping expatriates

(b)The lump sum payment has at least three advantages:

• Third, less chances for premature repatriation.

5. Foreign Service/Hardship Premium:

(a)Employee Stock Option Plan (ESOP): A certain number of shares

(b)Restricted Stock Unit (RSU): This is a plan established by a

(c)Employee Stock Purchase Plan (ESPP): This is a plan wherein the

Hence, the primary objective for providing stock options is to

(a)Tax equalization: Firms withhold an amount equal to the home

(b)Tax protection: The employee pays up to the amount of taxes he or

situation, the employee is entitled to any windfall received if total

The basis of deciding compensation for any expatriate is the Compensation

Therefore, the compensation philosophy of an organization plays a big role

competent people who contribute to its competitive advantage. Human

• The Agency Theory

goods and services. They hypothesized that extra role, or citizenship

Ask compensation directors to describe how international compensation

Other compensation directors think in terms of different national cultures.

1. Nation and region-based strategy:

There is considerable difference in compensation and rewards not only

Studies of some Japanese companies report differences in compensation

2. National culture-based strategy:

This national culture approach prescribes that compensation and reward

A recent study of values placed on individualism-collectivism and risk

Closer analysis reveals that political, economic, institutional, and other

3. Organization culture-based strategy:

5. Foreign Service/Hardship Premium: 

• The Agency Theory 