Monday, March 25, 2013

Book Notes: International Business by Charles W. Hill (8th edition)

I rented this textbook for Kindle via Amazon for an International Business MBA course I taught this semester. I found the text easily accessible by students and most of the case studies well-written.

Given my various forays into finding a career overseas, I found the chapter on human resources perhaps most intriguing. The book presents various strategies for staffing overseas, which I'll not get into. But Hill presents results of various surveys on results and job satisfaction of people who took overseas assignments on behalf of a company in their home country. Overall, it's not a pretty picture. While American companies increasingly seek and profit from overseas opportunities, the expatriates who help achieve that success seemingly get the short end of the stick.

Some stats which stand out:
"(B)etween 16 and 40 percent of all American employees sent abroad to developed nations return from their assignments early, and almost 70 percent of employees sent to developing nations return home early."

Sending an employee overseas is a big risk for a company because most don't seem equipped to determine whether the employee can handle it-- and has almost no legal way of evaluating whether spouse and children can. 
"Tung’s research, for example, showed that only 5 percent of the firms in her sample used formal procedures and psychological tests to assess the personality traits and relational abilities of potential expatriates...90 percent of the time employees were selected on the basis of their technical expertise, not their cross-cultural fluency."

"'inability of spouse to adjust' was the top reason for expatriate failure among U.S. and European multinationals but only the number five reason among Japanese multinationals."

"Managers of European firms gave only one reason consistently to explain expatriate failure: the inability of the manager’s spouse to adjust to a new environment."

Spouse's lack of personal career fulfillment appears to be a factor:
"(Of) spouses, 49 percent were employed before an assignment and only 11 percent were employed during an assignment." 

What type of people are successful overseas? (bold mine) 
"Mendenhall and Oddou identified four dimensions that seem to predict success in a foreign posting:
self-orientation, others-orientation, perceptual ability, and cultural toughness...Self-orientation: The attributes of this dimension strengthen the expatriate’s self-esteem, self-confidence, and mental well-being. Others-orientation: The attributes of this dimension enhance the expatriate’s ability to interact effectively with host-country nationals.
Perceptual ability. This is the ability to understand why people of other countries behave the way they do; that is, the ability to empathize. Cultural toughness. This dimension refers to the relationship between the country of assignment and how well an expatriate adjusts to a particular posting. "

Perhaps worse than not evaluating and training an employee in areas of cross-cultural competency before sending him overseas is not validating that employee after he returns. This is the sad part. 

"Often when they return home after a stint abroad—where they have typically been autonomous, well-compensated, and celebrated as a big fish in a little pond—they face an organization that doesn’t know what they have done for the last few years, doesn’t know how to use their new knowledge, and doesn’t particularly care."

"77 percent of those surveyed took jobs at a lower level in their home organization than in their international assignments." 

"15 percent of returning expatriates leave their firms within a year of arriving home, and 40 percent leave within three years." 
"56 percent of the managers surveyed stated that a foreign assignment is either detrimental or immaterial to one’s career."
"many expatriate managers believe that headquarters management evaluates them unfairly and does not fully appreciate the value of their skills and experience."

It seems employees take overseas assignments primarily for the increase in pay, and perhaps other personal reasons-- like wanting to see the world. But in most cases, it hurts their long-term career aspects with the parent company. Even if they get deep personal fulfillment from their experience overseas, the return hoe robs them of the benefit. I would have expected the opposite. 

There are a few happy stories. Large multinationals with a diverse workforce criss-crossing the globe have figured out it's worth investing in their employees' lives overseas and celebrating their success upon return. Shell built and staffed elementary schools on-site for company employees. Monstanto has a complete re-repatriation program where returning expats share with their colleagues their experiences, and the company makes an effort to learn from the employee's debriefing. Ericsson is another listed as managing an overseas workforce well, particularly learning cross-culturally. 

I've experienced life overseas as a single, married without children, and married with child. I can definitely relate to the issues of the importance of spouse fulfillment. I tried to point out to my students that HR issues involving overseas staff was just one more item companies tend to underthink and overlook before moving into an overseas market.

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