Present and Desired Methods of Selecting Expatriate Managers for International Assignments
| DOI | https://doi.org/10.1108/eb055501 |
| Published date | 01 March 1984 |
| Date | 01 March 1984 |
| Pages | 29-35 |
| Author | Yoram Zeira,Moshe Banai |
| Subject Matter | HR & organizational behaviour |
Present and Desired Methods of
Selecting Expatriate Managers for
International Assignments
by Yoram Zeira, Faculty of Management, Tel Aviv University and
Moshe Banai, London Business School*
Introduction
In the last two decades we have seen a rapid increase in both
the number and size of multinational corporations (MNCs).
These organisations typically have their headquarters (HQs)
in a parent country, and branches, subsidiaries or joint
ventures of different types in host countries. Although their
international personnel policies are very diverse, most
MNCs send parent-country managers and professionals to
work in the host countries for limited periods of time.
Some MNCs regularly appoint parent-country managers
to key positions in their subsidiaries abroad for specified
periods and then replace them with other parent-country
nationals. MNCs which prefer this course of action claim
that their expatriate managers possess certain qualities
which are not possessed by host-country nationals. These
qualities include familiarity with HQ policies and loyalty to
management and/or to the parent country. When the host
country is a developing nation, expatriates have additional
advantages such as exclusive professional knowledge or
training abilities [1].
Other MNCs appoint expatriate managers but do so out
of necessity rather than as a preferred policy. They believe
that under certain circumstances, it is crucial to have parent-
country managers in their subsidiaries for short periods.
This is the case when HQ is in the process of establishing new
branches, subsidiaries or enterprises; when the work force in
the subsidiaries requires training for new professional or
managerial jobs; when HQ wants to carry out special
missions of auditing or control, or when HQ desires to
develop its parent-country managers for international
careers [2].
A major problem faced by MNCs is the high rate of failure
of parent-country managers. This failure suggests that
current selection methods need to be re-examined and
improved in order to increase expatriates' chances of success
in their international assignments.
Analysis of the literature discloses that failure of
expatriate managers is a most important issue. One study
points out that the estimated rate for American expatriate
managers who failed abroad and were recalled by HQ may
be as high as 30 per cent [3]. Another study claims that the
failure of expatriates is even higher: "Thirty-to-fifty per cent
of US expatriates do not complete their assignments in
developed countries, and the proportion rises to 70 per cent
in developing countries" [4]. Torbiorn, who studied 639
Swedish expatriate managers in 26 host countries, found
*The authors would like to thank Dr. Dafna Izraeli for her helpful
comments.
that 25 per cent returned before the end of their contracts,
and that"... difficulties in adjusting were the most common
explanation of premature re-entry" [5].
According to Seward, nine out of ten expatriates were
found to be significantly less successful in Japan than in
previous assignments in their home country [6], while
Adams and Kobayashi report that four out of five expatriate
managers in Japan were considered failures by headquarters
[7].
The cost of premature repatriation of a manager and his
family can be formidable. A study published in International
Management disclosed that posting a manager from Britain
to head a subsidiary in Indonesia, along with his wife and
two children aged nine and 14, with his return after three
months, would cost a company more than $36,000
[8].
The
average cost of the selection of a Swedish manager and his
expatriation is around $50,000 [9]. The failure of an
expatriate manager in the host country and his repatriation
increase that cost considerably. It can reach $80,000 for a
family's premature return and replacement [10].
The real cost of failure of international executives extends
beyond the expenses incurred by repatriation. Obviously, an
inappropriate managerial style has a negative impact on the
bilateral relations between the MNCs and the host
countries. The reactions of host-country organisations and
host governments to subsidiaries of MNCs headed by
unsuitable expatriates have varied. Some expressed their
disapproval by refusing to interact with these executives,
others demanded their replacement by host-country
nationals, and in extreme cases host governments decided to
expropriate or to domesticise the subsidiaries [11]. In every
case there was a loss of good faith, so vital in cross-cultural
encounters.
This situation indicates the pressing need for an effective
selection process of expatriate managers and the importance
of valid and reliable selection criteria. In the following pages
we describe the findings of recent selection studies, discuss
their contributions and limitations, and present an
alternative approach to identifying selection criteria which,
we argue, will lead to more effective selection procedures.
Selection Studies: Classification and Findings
The major studies which attempt to establish valid selection
criteria for expatriate managers can be classified on the basis
of their sources of information as follows:
PR 13,3 1984 • 29
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