hello everyone welcome to business school 101 an expatriate is a migrant worker who is a professional or skilled worker in their profession the expatriate worker takes a position outside of their home country either independently or as a work assignment scheduled by the employer this assignment can come from a company university government or non-governmental organization for example if your employer sends you from your job in its silicon valley headquarters to work for an extended period in its tokyo office you would be considered an expatriate after you arrive in japan finding a qualified candidate to serve as
expatriate is one of the toughest tasks for many managers of multinational companies in this video we will discuss the core characteristics of a capable expatriate in addition we will also introduce guidelines of the training performance appraisal and compensation for expatriates section 1 core characteristics in order to be a capable expatriate there are four core characteristics an individual must possess one self-orientation the attributes of this dimension strengthen the expatriate self-esteem self-confidence and mental well-being expatriates with high self-esteem self-confidence and mental well-being are more likely to succeed in foreign postings two others of orientation the more effectively
the expatriate interacts with host country nationals the more likely they are to succeed two factors seem to be particularly important here relationship development and willingness to communicate relationship development reverses the ability to develop long lasting friendships with host country nationals willingness to communicate refers to the expatriates willingness to use the host country language research has shown that making the effort to use the language tends to be rewarded with greater cooperation by host country nationals three perceptual ability this is the ability to understand why people of other countries behave the way they do that is the
ability to empathize this dimension seems critical for managing host country nationals expatriate managers who lack this ability tend to treat foreign nationals as if they were home country nationals as a result they may experience significant management problems and considerable frustration as one expatriate executive from hewlett packard observed it took me 6 months to accept the fact that my staff meetings would start 30 minutes late and that it would bother no one but me four cultural toughness this dimension refers to the relationship between the country of assignment and how well an expatriate adjusts to a particular
posting some countries are much tougher postings than others because their cultures are more unfamiliar and uncomfortable for example many americans regard great britain as a relatively easy foreign posting and for good reason but many americans find postings in non-western cultures such as india southeast asia and the middle east to be much tougher the reasons are many including poor healthcare and housing standards and hospitable climate lack of western entertainment and language difficulties also many cultures are extremely male dominated and may be particularly difficult postings for female western expatriates section 2 training according to many business studies
two of the most common reasons for expatriate failure were the inability of a manager spouse to adjust to a foreign environment and the manager's own inability to adjust to a foreign environment training can help the manager and spouse cope with both of these problems in general there are three major types of training for expatriates cultural training language training and practical training let's discuss each of these kinds of training individually first cultural training cultural training seeks to foster an appreciation for the host country's culture the belief is that understanding a host country's culture will help the
manager empathize with the culture which will enhance their effectiveness in dealing with host country nationals expatriates should receive training in the host country's culture history politics economy religion and social and business practices if possible it is also advisable to arrange for a familiarization trip to the host country before the formal transfer as this seems to ease culture shock given the problems related to spousal adaptation it is important that the spouse and perhaps the whole family be included in cultural training programs second language training english is the language of world business it is quite possible to
conduct business all over the world using only english however notwithstanding the prevalence of english and exclusive reliance on english diminishes in expatriates manager's ability to interact with host country nationals as noted earlier a willingness to communicate in the language of the host country even if the expatriate is far from fluent can help build rapport with local employees and improve the manager's effectiveness third practical training practical training is aimed at helping the expatriate manager and family ease themselves into day-to-day life in the host country the sooner a routine is established the better the prospects that the
expatriate and their family will adapt successfully one critical need is for a support network of friends for the expatriate when an expatriate community exists firms often devote considerable effort to ensuring the new expatriate family is quickly integrated into that group the expatriate community can be a useful source of support and information and can be invaluable in helping the family adapt to a foreign culture section 3 performance appraisal a particularly thorny issue in many international businesses is how best to evaluate the performance of expatriate managers unintentional bias makes it difficult to evaluate the performance of expatriate
managers objectively in many cases two groups evaluate the performance of expatriate managers host nation managers and home office managers and both are subject to bias the host nation managers may be biased by their own cultural frame of reference and expectations for instance a u.s manager who introduced participative decision making while working in an indian subsidiary the manager subsequently received a negative evaluation from host country managers because in india the strong social stratification means managers are seen as experts who should not have to ask subordinates for help the local employees apparently viewed the u.s manager's attempt
at participatory management as an indication that he was incompetent and did not know his job home country managers appraisals may be biased by distance and by their own lack of experience working abroad home office managers are often not aware of what is going on in a foreign operation accordingly they tend to rely on hard data in evaluating an expatriate's performance such as the subunits productivity profitability or market share such criteria may reflect factors such as adverse changes in exchange rates economic downturns in the foreign country outside the expatriate manager's control in addition hard data does
not take into account many less visible soft variables that are also important such as an expatriate's ability to develop cross-cultural awareness and to work productively with local managers although it is difficult several guidelines can reduce bias in the performance appraisal process first most expatriates appear to believe more weight should be given to an on-site manager's appraisal than an off-site manager's appraisal due to proximity an on-site manager is more likely to evaluate the soft variables that are important aspects of an expatriate's performance second the evaluation may be especially valid when the on-site manager is of the
same nationality as the expatriate since cultural bias should be alleviated in practice home office managers often write performance evaluations after receiving input from on-site managers when this is the case most experts recommend that a former expatriate who served in the same location should be involved in the appraisal to help reduce bias third when the policy is for foreign on-site managers to write performance evaluations home office managers should be consulted before an on-site manager who completes a formal termination evaluation this gives the home office manager the opportunity to balance what could be a very hostile evaluation
based on a cultural misunderstanding section 4 compensation the last question regarding managing expatriates is how expatriate managers should be paid the typical expatriate compensation package includes the following five components a base salary a foreign service premium allowances various types tax differentials and benefits first base salary an expatriate's base salary is normally in the same range as the base salary for a similar position in the home country the base salary is normally paid in either the home country currency or in the local currency second foreign service premium a foreign service premium is extra pay the expatriate
receives for working outside of their country of origin it is offered as an inducement to accept foreign postings it compensates the expatriate for having to live in an unfamiliar country isolated from family and friends having to deal with new culture and language and having to adapt to new work habits and practices many firms pay foreign service premiums as a percentage of base salary ranging from 10 to 30 percent after tax third allowances four types of allowances are often included in an expatriate's compensation package hardship allowances housing allowances cost of living allowances and education allowances a
hardship allowance is paid when the expatriate is being sent to a difficult location usually defined as one where such basic amenities as healthcare schools and retail stores are grossly deficient by the standard of the expatriate's home country a housing allowance is normally given to ensure that the expatriate can afford the same quality of housing in the foreign country as at home in locations where housing is expensive like london or tokyo this allowance can be substantial as much as 10 to 30 percent of the expatriate's total compensation package a cost of living allowance ensures that the
expatriate will enjoy the same standard of living in the foreign posting as at home an education allowance ensures that the expatriate's child receives adequate schooling by home country standards host country public schools are sometimes not suitable for an expatriate's child in which case they must attend a private school fourth taxation unless a host country has a reciprocal tax treaty with the expatriates home country the expatriate may have to pay income tax to both the home and host country governments when a reciprocal tax treaty is not enforced the firm typically pays the expatriates income tax in
the host country in addition firms normally make up the difference when a higher income tax rate in a host country reduces an expatriates take-home pay fifth benefits many firms also ensure that their expatriates receive the same level of medical and pension benefits abroad that they received at home this can be quite costly for the firm since many benefits such as medical and pension benefits that are tax deductible for the firm in the home country may not be deductible out of the country alright let's do a quick review identifying qualified expatriates and managing them effectively are
one of the most critical tasks for managers of multinational companies in this video we covered four major topics about expatriate management first we discussed as a capable expatriate they should have four core characteristics self-orientation others orientation perceptual ability and cultural toughness second we explain that a well-designed training system is crucial to expatriate managers in general there are three major types of training for expatriates cultural training language training and practical training third we provided several guidelines about the performance appraisal form expatriate managers and lastly we discussed a typical compensation package for expatriates and that should include
five components a base salary a foreign service premium allowances tax differentials and benefits so that's it for today's video if you like this video and want to learn more applicable business knowledge then please give this a thumbs up and subscribe to the channel thanks for watching and i will see you next time
