Chapter 111: What Are The Advantages And Disadvantages Of Us

Chapter 111 What Are The Advantages And Disadvantages Of Using Expatr

What are the advantages and disadvantages of using expatriate managers in foreign countries? What MNC's prefer in international operation? How expatriate managers are appraised and compensated and why? How many IHRM orientations do we have and which benefit the global companies the most and why?

Paper For Above instruction

International Human Resource Management (IHRM) plays a critical role in how multinational corporations (MNCs) operate across different countries. One of the key strategies employed is the use of expatriate managers—employees sent from the home country to manage operations abroad. Understanding the advantages and disadvantages of expatriate managers, along with the appraisal and compensation methods, is essential for effective global management. Furthermore, comprehending the different IHRM orientations helps in aligning HR practices with organizational goals, especially in a global context.

Advantages of Using Expatriate Managers

Expatriate managers bring valuable expertise and organizational knowledge, ensuring the alignment of local operations with corporate standards and strategies. Their presence facilitates better communication and coordination between headquarters and subsidiaries, fostering a unified corporate culture. Additionally, expatriates serve as mentors and trainers for local staff, transferring critical skills and knowledge. They also help in establishing trust with local authorities and business partners, which is crucial for successful market entry and expansion.

Disadvantages of Using Expatriate Managers

Despite these benefits, employing expatriate managers presents several challenges. The cost of expatriation, including relocation, salary differentials, and cultural training, can be substantial and impact the company's financials. Expatriates often face difficulties adjusting to local cultures, which can lead to performance issues or expatriate failure. There is also a risk of creating dependency on expatriates, potentially hindering the development of local managers. Furthermore, cultural misunderstandings and communication barriers can cause operational inefficiencies and exacerbate cross-cultural tensions.

Preferences of MNCs in International Operations

Multi-national corporations (MNCs) often choose a balance between expatriate managers and local personnel depending on strategic needs. Many prefer a polycentric approach, employing local managers to adapt to local markets, supplemented by expatriates who bring advanced management practices. Some firms favor a geocentric approach, selecting the best talent regardless of nationality. The decision hinges on factors such as organizational culture, industry type, and the complexity of operations.

Appraisal and Compensation of Expatriate Managers

Expatriates are typically appraised based on their performance outcomes, adaptation to the host country's environment, and contribution to organizational goals. They are often compensated through a differential pay package that includes base salary, cost-of-living allowances, housing allowances, and fiscal equalization. Companies justify such compensation structures to account for the financial, cultural, and professional challenges faced abroad. Proper appraisal and compensation are essential for motivation, retention, and expatriate success, directly impacting the effectiveness of cross-border operations.

IHRM Orientations and Their Benefits to Global Companies

International HRM orientations include ethnocentric, polycentric, regiocentric, and geocentric approaches. The geocentric orientation, which emphasizes recruiting the best talent regardless of nationality, benefits global companies most. It promotes a diverse, inclusive, and flexible workforce, facilitating innovation and global integration. This approach aligns with the needs of companies operating in highly competitive, rapidly changing markets where local responsiveness and global efficiency are equally critical.

Conclusion

In conclusion, expatriate managers are vital in facilitating global operations, but their use involves discernible advantages and disadvantages. Effective appraisal and compensation strategies are crucial for maximizing expatriate performance and organizational success. Adopting a suitable IHRM orientation, especially the geocentric approach, can significantly benefit multinational corporations by fostering a truly global workforce capable of navigating diverse cultural landscapes.

References

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• International Journal of Cross Cultural Management, 20(1), 89-105.