Expatriates

Expatriates are employees who go overseas to accomplish a job-related goal. To remain competitive in the world marketplace or to obtain new marketing opportunities, multinational companies (MNCs) are sending increasing numbers of expatriates on international assignments. In fact, recent research estimates that more than 250,000 Americans currently are serving as expatriates on international assignments. This number is expected to continue to increase with further economic globalization.

There exist several characteristics shared by expatriates. Foremost, expatriates are expected to accomplish assignments in a different country or culture. This change typically introduces expatriates and their families to new living and working environments. A second characteristic of expatriates is that their international assignments are usually complex in nature. For example, many MNCs expect the expatriates to open a new market, transfer skills, and build good public relations with local organizations and medias. Because of the complexity of these assignments, most expatriates tend to be senior mangers whose jobs involve a high degree of responsibility. In fact, expatriates’ performances can directly affect the success of their respective MNCs’ competitive standing in the global marketplace. A third characteristic of expatriates is that they are usually expected to complete their assignments in a predesignated time period (usually ranging from 6 months to 5 years). After this time period, expatriates are sent back to their home country and assigned to a new position, a process termed repatriation.

Benefits for Expatriates

To compensate for the disadvantages expatriates and their families may face while on international assignment, most MNCs’ compensation policies are quite generous. The typical compensation package offered to expatriates includes one or more of the following: overseas premiums, cost-of-living allowances, housing allowances, children’s education allowances, hardship allowances, car allowances, and home leave allowances. Further, performance-based bonuses, as well as seniority bonuses, are common, and exchange risk and taxation differences are usually taken into consideration. The total compensation package offered to expatriates could be equal to several times the salary package in the home country for the same position. This shows the considerable costs associated with expatriate assignments. Although the average onetime cost for relocating an expatriate overseas is $60,000, supporting an expatriate working on an international assignment may cost more than $220,000 annually.

Being well compensated is not the only benefit for expatriates. Gaining international experience can enhance one’s career. Numerous researchers have noted that many successful expatriates are subsequently promoted during repatriation. Further, more and more MNCs are sending their high-potential candidates for senior leadership positions on international assignments as part of their career development. Success in the expatriate assignment often then becomes part of the selection process into higher-level positions. This process seems to be well understood by expatriates, and researchers have documented that expatriates expect to be promoted on successful completion of their assignments.

Criteria of Expatriate Success

An expatriate’s job performance on international assignments and whether the expatriate returns to his or her home country before the assignment contract expires (i.e., premature return) are two criteria often used to evaluate expatriate success. These two criteria clearly reflect the fact that expatriate success means effective and timely completion of the international assignment.

Expatriate Job Performance

The multidimensionality of expatriate job performance is well accepted by researchers. A typical expatriate job performance model usually includes the following intercorrelated components:

Establishing and maintaining business contacts. Identification, development, use and maintenance of business contacts to achieve international assignment goals
Technical performance. Fulfillment of specific task requirements on the international assignment
Productivity. Volume of work produced by the expatriate
Working with others. Proficiency in working with others (i.e., local workers and other expatriates), assisting others in the organization
Communicating and persuading. Oral and written proficiency in gathering and transmitting information; persuading others
Effort and initiative. Dedication to one’s job; amount of work expended in striving to do a good job
Personal discipline. The extent to which counterproductive behaviors at work are avoided
Interpersonal relations. The degree to which the expatriate facilitates team performance and supports others in the organization and unit
Management and supervision. Proficiency in the coordination of different roles in the organization
Overall job performance. Composite of all dimensions of expatriate job performance described in previous points

Expatriate Premature Return

Expatriates are typically expected to complete international assignments in a predesignated time period. Adhering to this time frame is usually critical for two reasons. First, the time frame likely involves critical timing of the introduction of new products or services in the global market. Second, as mentioned, tremendous annual costs accrue to the organization to support such employees. Therefore, expatriate premature return usually indicates failure on the international assignment, which results in high-accrued costs and potential risk concerning global competitiveness for the organization. For expatriates, premature return is more than simply changing or quitting a job—it is a relocation that brings them back to cultures and environments with which they are familiar. Compared with the 5% average domestic turnover rate, expatriate premature return rates can be extremely high (e.g., from 16% to 40%).

Predictors of Expatriate Success

There are two types of predictors that associate with expatriate success. One type, proximal predictors (i.e., international adjustment variables), directly relates to expatriate success. The other type, distal predictors, indirectly affects expatriate success through proximal predictors.

Proximal Predictors

Research on expatriates has identified three variables as proximal predictors of expatriate success: general adjustment, interaction adjustment, and work adjustment. General adjustment refers to expatriates’ comfort associated with various nonwork factors such as general living conditions, local food, transportation, entertainment, facilities, and health care services in the host country. Interaction adjustment refers to expatriates’ comfort associated with interacting with host country nationals, both inside and outside of work. Work adjustment refers to expatriates’ comfort associated with the assignment job or tasks.

A wealth of data has supported direct relationships between these three international adjustment variables and both expatriate job performance and premature return. Expatriates with higher levels of these types of adjustment are more likely to have high levels of job performance and are less likely to return to the home country early.

Distal Predictors

Five categories of distal predictors of expatriate success have been identified by meta-analytical research. They are anticipatory factors, individual factors, job factors, organizational factors, and non-work factors.

Anticipatory factors are related to predeparture expatriate preparations for the upcoming assignment. These factors include the expatriate’s language ability (fluency in the host country language) and previous overseas assignments (prior experience in living and working abroad). Expatriates with better language ability have higher levels of interaction adjustment and work adjustment. Expatriates with more previous experience generally have higher levels of general adjustment and interaction adjustment.

Individual factors are personal requirements for effectiveness in the overseas environment. These factors include the expatriate’s self-efficacy (i.e., beliefs in one’s own ability to execute plans of action) and relational skills (i.e., skills that facilitate the formation of interpersonal ties). Higher self-efficacy is related to higher levels of interaction adjustment and work adjustment. Better relational skills are related to higher levels of all three kinds of international adjustment.

Job factors are features of the work environment over which the expatriate has little or no control. These factors include role clarity (i.e., exact understanding of position requirement), role discretion (i.e., decision-making autonomy), and role conflict (i.e., incompatible cues regarding job expectations). Research has supported relationships between all of these job factors and expatriates’ work adjustment. Expatriates experience higher levels of work adjustment when the role clarity and role discretion are high, and they experience lower levels of work adjustment when the role conflict is high.

Organizational factors are features of the overseas or parent company’s policies and culture. In an expatriate context, the most important organizational factors are coworker support (i.e., social support from coworkers) and logistical support (i.e., assistance from the parent company with respect to day-to-day aspects of living). Expatriates who experience higher coworker support have higher levels of work adjustment. Expatriates who experience higher logistical support have higher levels of general adjustment and interaction adjustment.

Nonwork factors are features of the expatriate context that are not in the job domain. These factors include family adjustment (i.e., how well one’s family adapts to the overseas environment) and cultural novelty (i.e., the discrepancy between host and home cultures). Higher family adjustment has been found to lead to higher levels of all three kinds of international adjustment, whereas higher cultural novelty has been found to lead to lower levels of all three kinds of international adjustment.

Summary

Because of economic globalization, the past two decades have seen a steady growth of expatriate research. Literature in this area supports two conclusions: (a) Expatriate success is best evaluated via expatriate job performance and premature return; and (b) expatriate adjustment is of great functional importance in expatriate assignments.

References:

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