Important Selection Criteria for International Assignments

Table of contents

1) Introduction

2 International assignments
2.1 Definitions and process of an international assignment
2.2 Targets and motivations

3 Selection of international assignees
3.1 Selection policies and criteria
3.2 Cultural adjustment
3.3 Family adjustment

4 Conclusion

5 Bibliography - secondary literature

1) Introduction

“ The performance of global firms depends on their ability to cope with heterogeneous cultural, institutional and competitive environments. ” ¹

In today’s world of globalization more and more people are sent abroad by their company. Most of these companies are multinational companies (MNEs) that have subsidiaries, cross-border alliances, international joint ventures or f ranchise partners. There are so many reasons why companies are sending employees abroad, for example for preparing and managing a merger and acquisition or just to make experiences abroad for a better intercultural understanding between the home company and the host company. The ultimate objectives are knowledge transfer and a common corporate management. As soon as a company leave the national borders it is predicted that it needs employees who are able to manage in an international environment. The IHRM (International Human Resource Management) of a company has therefore a d ifficult selection process to handle. In this term paper the targets and motivations for an international assignment will be outlined from the entrepreneurial as well as from the employee’s point of view and demonstrate how these motivations play a role for a successful international assignment. In the main part it will be shown which selection criteria are important concerning the selection of global managers. Here a global manager is synonymous with an international assignee or an expatriate because most of the assignees hold a leading position. This term paper is not concentrated on selecting for a special international assignment like for a merger and acquisition or a joint venture, but for selecting assignees for international assignments in general, trying to identify the concerning problems for a l ong-term assignment. It is to point out which are the criteria and requirements for global managers an international environment. Furthermore two important factors for selection will be pointed out more precisely, the cu ltural and the family adjustment. For the IHRM the p olitical and juridical subject like international compensation or international contracts is an important issue but it would take us too far afield and thus unregarded here. In this text the female form is renounced for a better reading flow, but the male form always implies the female form, too. In the next and first chapter of the definition of an international assignment and its process will be outlined for getting a better overview of the topic and special terms.

2 International assignments

2.1 Definition and process of an international assignment

An international assignment is a time limited staffing across national borders mostly with the target of knowledge-transfer and for establishing a u niform corporate management. Employees who work abroad are called assignees or expatriates, but there exist many definitions of an expatriate.

The Bosch Group for example, defines an expatriate as an employee who is working for more than 18 months outside his home country.²

In literature there exists the d ifferentiation between short-term, extended and long-term assignments. A short term assignment is up to three months, an extended one is up to one year and a long-term assignment, also described as a traditional assignment, is typically 12-36 months and can be longer as well. The biggest difference between a traditional assignment and a short- term assignment is the family’s position. If an assignee leaves his country for two or more years his family will in the most cases join him abroad. A family companion could have advantages and disadvantages. Later on the family companion advantages and disadvantages and how to support this will be more elaborated. There is a big difference between business trips or if the employee has to build a brand new production site in another country. For the second one you need much more know-how and cultural adjustment. The factor cultural adjustment will be more elaborated in Chapter 3. Important is also that the IHRM activites can take place in three countries described in the following quotation.

“ The host-country where a subsidiary may be located, the home-country where the firm is headquartered and ‘ other ’ countries that may be the source of labor, finance and other inputs. ” ³

The employees of the home-country are called parent-country nationals (PCH), the host-country belonging employees are the host-country nationals (HCN) and the staff of a third country is named third-country nationals (TCN). The difficulties of an international assignment can depend on the time frame. These are factors which influence the selection for the assignment in the firm’s point of view as well as in the employee’s point of view. Companies have to put themselves in the position of their employee’s situation for a better understanding of their motivations to gain thus a successful international operation. For a better understanding of their point of view the next paragraph concentrates on company’s as well as on expatriate’s targets and motivations.

The process of an international assignment can be divided in five categories: strategic planning, selection, preparation, performance measurement and repatriation.⁴ When a co mpany selects staff for an international assignment it has to think of the i nherent challenges for the assignee first for getting a b etter overview of the requirements for a p articular vacancy. The challenges depend on the destination and the company’s policies but in general one can find the following challenges. The expatriate is confronted with so many challenges concerning the international assignment in different periods. There are three challenges periods: Pre-departure, on assignment and re-entry. The pre-departure period concerns the preparation, the on assignment includes all the challenges living through abroad and the re-entry phase describes the challenges when the status of an expatriate change into a repatriate that means that the assignee comes back to the home country. In the second period the on assignment the expatriate go through cultural adjustment which is determined by a cultural shock. He has to be able to communicate in the foreign culture and communication does not mean just to know the language, it means also to be open for the foreign culture, to accept unfamiliar behavior and to adapt the personal behavior. After the assignment in the third phase the re-entry the assignee get a reverse shock.⁵ But what have these three periods to do with the selection of international staff? Every period’s requirement is important for establishing criteria for the r ecruiting and selection process. Furthermore the work of an IHRM is not restricted on recruiting and selecting staff but also in accompanying and supporting the employees. The next chapter will point out why an all-the- time support is important concerning the motivations of the assignees.

2.2 Targets and motivations

Why is it so important to select international staff well-conceived and motivate and support employees before, during and after the international assignment? Because statistics say that 50% of expatriates resign within the first year of return.⁶ This is a hard result when one thinks about the costs of a deployment abroad.

“ A recent study by Price Waterhouse Coopers reports that the average expatriate assignment cost per annum is US$ 311 000 with a range of between US$ 103 000 and US$ 396 000. ” ⁷

If an international assignment is not successful the company will lose a lot of money. So this is the main reason why companies should select their international staff well. But first of all we want to know what the company’s targets are by sending an employee abroad. A global manager plays a big role for the company. He is working at the interface between the parent company and the host company.⁸ Very important is a global manager for companies who own subsidiaries in emerging countries like China or India, where it is difficult to find qualified personnel.⁹ A global manager should achieve the parent company’s goals and transfer the parent company’s values to the host company as well as be attentive to the differences and he has to be empathetic and appreciative with the host company’s policies.

Firms also have to think of the employee’s motivation because studies revealed that there exists a negative approach among employees concerning international assignments.¹⁰ To firms the main objective of an employee’s deployment abroad is the increase of business success in the relevant market. Special reasons are the transfer of technology and management know-how as well as talent management, they need staff that is developed for international assignments. Concerning transferring technology and management skills a h uman being is absolutely essential. The employee transfers his job experience, too. For companies it is important to inherent employees with experiences abroad thus most of the companies want to grow and they can grow among others with international qualified people, who assume responsibility and management tasks.

Especially in non-developed countries there exists a lack of qualified specialists. Contrary to this more and more companies’ objective is to fill the vacancies with local employees most of all for financial reasons and because in most of the international assignments occur integration problems.¹¹ A survey of ORC Worldwide 2002 found out that 72 % of responding firms selected their assignees on the basis of skills and competencies what shows how common is the ‘position filling’ for companies.¹²

For a s uccessful international assignment companies must have a c lear understanding of the objectives and motivation of their future global managers.

An international assignment awakes special motivations for employees. An international assignee expects a b etter lifestyle, improving his career prospects and earning more money. Within the period of the international assignment it is important that the employee does not forget his aims and motivations for avoiding an expatriate failure which means an advanced return without having the m ission accomplished. The employee is the intermediate between the parent company and the host company, a representative of the firm’s values and the international assignment involves high financial costs. If an employee fails it is much more expensive for a company. The biggest motivation for a company is that this employee is important for its future because of the international market concurrence. Since there are not just MNEs engaged in international trade, also the small and middle enterprises move up. The motivation drops within dual-career couples because both do not want to sacrifice their careers. Furthermore the motivation drops when expatriates have no prospect of a lucrative job offer after the international assignment. But to these discouraging factors we take up on later.

The solution could be asking the employees what are their motivations and desires concerning the international assignment for example by a questionnaire or interview. As a consequence companies can better prepare and motivate their global managers.

Personnel planning must be designed in the context of corporate goals and issues and the specific situation in the host country.¹³

[...]

¹ Ricks, Toyne, Martinez, 1996

² Dowling/Festing/Engle (2009), p. 340.

³ Dowling/Festing/Engle (2009), p. 3

⁴ Harris/Brewster/Erten, Auslandseinsatz, aber wie? In: Stahl, Mayrhofer, Kühlmann (Hrsg.), Internationales Personalmanagement (2005), p. 273.

⁵ Dowling/Festing/Engle (2009), p.

⁶ M. Walther, Repatriation to France and Germany, mir-Edition, Springer Fachmedien Wiesbaden

⁷ Dowling/Festing/Engle (2008), p. 81.

⁸ Stahl, Die Rolle des Auslandsmanagers im internationalen Unternehmen. In: Kühlmann/Mayrhofer/Stahl (2005): Internationales Personalmanagement, pp 293-295.

⁹ Dowling/Festing/Engle (2013), Hampshire, p. 124.

¹⁰ Harris/Brewster/Erten, Auslandseinsatz, aber wie?, in: Stahl, Mayrhofer, Kühlmann (Hrsg.), Internationales Personalmanagement (2005), p. 272.

¹¹ Kiepe/Habermann, Entsendung von Mitarbeitern ins Ausland (1984), p. 8.

¹² Dowling/Festing/Engle (2009), p. 120.

¹³ Dowling/Festing/Engle, International Human Resource Management, South-Western, Ohio 2009, S. 337