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By: Fiona Chawla

Garima Arora

ExpatriationandRepatriation

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Sources of Human Resources

Home country nationals

Host country nationals

Third-country nationals

Inpatriates

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Home-country Nationals

Are citizens of the country where theMNC is headquartered but live & workelsewhere

Often used To start up operations (most common reason)

To provide technical expertise

To help the MNC maintain financial controlover the operation

In top management positions

to give promising home-country managersinternational experience

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Host-country Nationals

Citizens of the country where they live & work They are familiar with the culture and know the

language They can often do a better job than home-country

nationals They are less expensive than home-country

personnel Host-country governments often prefer use of host-

country nationals and some require it

Hiring them is good public relations U. S. companies tend to rely heavily on host-country

nationals

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Third-country Nationals

People who are citizens of neither the

home country or the host country

Example: A Mexican, employed by an

American company, working in Argentina The employee's native country and the country

where he works are often in the samegeographic region

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Inpatriates

Persons who work in the home country

and are citizens of a different country

Advantages of inpatriates

Help to develop global core competencies Provide diversity and an international

perspective in the home office

Improve career opportunities for company

managers who are not from the home country

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EXPATRIATION

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Expatriate

Any person who lives and works outside

the country of which he/she is a citizen.

Includes home-country nationals, third-country nationals, and inpatriates.

In most cases, expatriates must have workvisas from the government of the country

where they live and work

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Factors in Selection of

Expatriates

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Adaptability to Cultural Change

Work experiences with cultures other than

ones own

Previous overseas travel

Knowledge of foreign languages

Recent immigration background or

heritage

Ability to integrate with different people,cultures, and types of businessorganizations

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Adaptability to Cultural Change

Ability to sense and accurately evaluate

events in the host country

Ability to solve problems within different

frameworks and perspectivesSensitivity to differences of culture,

politics, religion, and ethics

Flexibility in managing operations on a

continuous basis despite lack of

assistance and gaps in information

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Willingness to Take an

Overseas Assignment

Unmarried employees are more willingthan other groups to work overseas.

Married employees with teenage childrenare usually the least willing to workoverseas.

Employees with prior international

experience are more likely to accept anoverseas assignment.

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Willingness to Take an

Overseas Assignment

People who are most committed to theircareers are more likely to work overseas

Careers and attitudes of spouses have asignificant impact on employeewillingness to work overseas.

Employee and spouse perceptions of

company support are crucial toemployee willingness to work overseas.

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Compensation Details

Base Salary

Base salary: the amount of money that an

expatriate would receive for doing the

same job in the home country

Used as a basis to establish salary in the hostcountry Salary may be paid in home country currency,

host country currency, or a combination of thetwo

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Allowances

Relocation allowance Cost-of-living allowances are paid when the

employee must incur extra costs that he would not

pay in the home country

Examples: housing allowance, and the costs ofprivate schools for the employee's children

Hardship allowance: Often paid to employeeswho work in a country with difficult livingconditions

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Taxes

An expatriate may be required to pay incometaxes to both the host country and his/her nativecountry

The company compensates the employee for theextra amount of tax

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Compensation Details Summary

The cost of an expatriate employee =

salary costs+ benefit costs+ allowance costs+tax costs

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Compensation Approaches

The compensation package must be cost-

effective and should be seen as fair

Balance-sheet approach: ensure that the

expatriate does not lose money from theforeign assignment

Negotiation approach: Negotiate

compensation with each employee

Localization: Pay the expatriate a salary

comparable to local nationals

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Compensation Approaches

Lump sum method: give expatriate a pre-determinedamount of money. Employee decides how to spend it.

Cafeteria approach: Offer the employee a choice

among various compensation options, with a limit on

total costsRegional system: Set up a compensation system for

all expatriates who are assigned to a particular region

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Success Factors for Expatriates

They must :

Be Willing and motivated to go overseas

Be Technically able to do the job Be Adaptable

Have good interpersonal skills and be able to form

relationships

Have good communication ability Have supportive family

h t i t f il i

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Reasons why expatriates fail inforeign assignments

Spouse cannot adjust to new physical orcultural surroundings

Expatriate cannot adapt to new physical

or cultural surroundingsFamily problems

Manager is emotionally immature

Manager cannot cope with foreign dutiesManager is not technically competent

Manager lacks proper motivation for

foreign assignment

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REPATRIATION

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Repatriation of Expatriates Refers to the termination of the overseas assignment

and coming back to the home countryto thecountry where the HQ is located or to the homecountry subsidiary from where he/she wasexpatriated.

Repatriation is the final step in the expatriationprocess

Repatriation is important because with it areassociated a number of severe challenges for the

expatriate which may significantly determine his orher performance prior to the return to the homecountry, and which hinder the expatriatereintegration due to adjustment problems culture

shock (re-entry shock).

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Repatriation of Expatriates

Reasons for returning home

Readjustment problems

Transition strategies

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Reasons for returning to the home country

Most expatriates return home when theiragreed-on tour of duty is over

Some want their children educated in a home-country school

Some are not happy in the overseas assignment

Some return early because they failed to do a

good job

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Readjustment problems Out of sight, out of mind syndrome: the

expatriate may not have been considered forjobs that he/she could do well

Organizational changes may have:

eliminated the jobs for which the expatriate iswell-qualified

reduced the importance of the expatriate's

position or department The new job may be seen as a demotion.

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Readjustment problems Technological advances may have made the

expatriate's skills obsolete

The former expatriate may not have anopportunity to use skills gained abroad.

The former expatriate's salary and benefits may belower than they were abroad.

The former expatriate has to readjust to home-

country culture and adjust to a new job

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Effectiveness of Returning Expatriates

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Transition strategies: Help smooth the adjustmentfrom an overseas to a home-country assignment Repatriation agreement: addresses the concerns

of the individual and the company before theforeign assignment begins.

Keep the expat involved in home officecommunication and projects during the foreignassignment.

Appoint a higher-level manager as a career

mentor for the expatriate (helps to avoid "out ofsight, out of mind" problem).

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Repatriation Process

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Repatriation Phases

Preparation - developing plans for the future;gathering information about the new position

Physical relocation

Transition

Readjustment - coping with change

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Career anxietyNo post-assignment guarantee of employment

Loss of visibility and isolation

Changes in the home workplaceWork adjustment The employment relationship and career

expectation

Re-entry positionDevaluing of international experience

Coping with new role demands

Loss of status and pay

Individual reactions: job-

related

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Readjustment Challenges

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Treat as re-expatriation : similar to expatriationplan and execute systematically

Repatriation program : provide mentoring for

finding a new role, information on thechallenges as a result of the repatriation,

provide assistance

Repatriation strategies : time-bound

expatriation helps provide better preparednesswhere the expat is aware from the beginning

when his/her assignment ends and can plan

for next steps supported by the organization

Managing Repatriation

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Expat n Repat(84, 88)

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