Before discussing International HR in International Business I would like to tell brief

introduction about domestic HR

Human Resource Management is concerned with the people dimension in management. Since
every organization is made up of people, acquiring their services, developing their skills,
motivating them to higher levels of performance and ensuring that they continue to maintain
their commitment to the organization are essential to achieving organizational objectives. This is
true regardless of the type of organization government, business, education, health, recreation
or social action.
- David A. Decenzo and Stephen P. Robbins
Human Resource Management (HRM, or simply HR) is a function in organizations designed
to maximize employee performance in service of their employers strategic objectives. [1] HR is
primarily concerned with how people are managed within organizations, focusing on policies
and systems. HR departments and units in organizations are typically responsible for a number of
activities, including employee recruitment, training and development, performance appraisal, and
rewarding (e.g., managing pay and benefit systems). HR is also concerned with industrial
relations, that is, the balancing of organizational practices with regulations arising from
collective bargaining and governmental laws.
International Human Resource Management (IHRM)
Definition General: Procurement, allocation, utilization and motivation of Human Resources in
International business.
P Morgan: Two groups of variables that affects basic HR process
1st
Types of employees
2nd
Political, economic, legal environment, labor laws and practices prevailing indifferent
countries accordingly.
IHRM can be defined as an interplay between these two groups of factors. But in other model,
one more group is added i.e. multinationals operational philosophy.
Difference between IHRM and Domestic HRM
Responsible for a greater number of functions and activities
Broader knowledge of foreign county employment law
Closely involved with employees lives
Cope with more external influences
Exposure to problems and liabilities
Management of differential compensation
Diversity management

More liasoning activities

More coordination and travel
More risk management

NEED FOR IHRM

As a result of Globalization or Internalization of firms, it has become critically important for
organizations to find and nurture the Human resources required to implement a global strategy
successfully thats why effective IHRM is essential for this purpose. Second managing expatriate
(an employee who is working and temporarily residing in a foreign country. or Employees who
are transferred out of their home base into some other area of firms international operations for
the sake of completing a particular assignment. Also called as International assignees). Third to
effectively utilize services of people at both the corporate office and at foreign plants.

To reduce the risk of international human resource

To avoid cultural risks
To avoid regional disparities
To manage diversifies human capital
Create a local appeal without compromising upon the global identity.
Generating awareness of cross cultural sensitivities among managers globally and hiring
of staff across geographic boundaries.
Training upon cultures and sensitivities of the host country.

IHRM Models:
Broad HR activities include: a) Procurement b) Allocation c) Utilization
IHRM countries of operation: a) Parent/ Home country where the firm is head quartered. b) Host
country where the firms subsidiaries are located. c) Third country where the firm is neither
headquartered nor subsidiaries are located. May be used as a source of labor.
IHRM type of employees: a) Host Country Nationals (HCNs) b) Parent Country Nationals
(PCNs) c) Third Country Nationals (TCNs).

Reasons for growing interest in IHRM

Globalization of business leading to mobilization of resources
Effective management of human resources.
To minimize the risk of underperformance or failure in overseas assignments.
Implementation of international strategies by competent managerial personnel to man overseas
assignments.
Movement from traditional hierarchical organizational structures towards the network
organization.
Plays significant role in implementing and control of strategies in an international business.

BASIC STEPS IN IHRM

1. HRP (Human Resource Planning is the strategy for the acquisition, utilization,
improvement and preservation of organizations human resources. It aimed at
coordinating the requirements for and the availability of different types of employees.)
2.
3.
4.
5.
6.
7.
8.

RECRUITMENT & SELECTION

TRAINING AND DEVELOPMENT
PERFORMANCE MANAGEMENT
REMUNERATION
REPATRIATION
EMPLOYEE RELATIONSHIP
MULTICULTURAL MANAGMENT

STAFFING POLICIES IN IHRM

Staffing :- the process of acquiring, deploying, and retaining a workforce of sufficient quantity
and quality to create positive impacts on the organizations effectiveness
Companys response to global market opportunities depend greatly on managements
assumptions or beliefs both conscious and unconscious.
The world view of a companys personnel can be described as
Ethnocentric Polycentric Regiocentric Geocentric

Ethnocentric Orientation
Firms at the early stages of internationalization
Assumptions
Home country is superior
Similarities in markets
Assume the products and practices that succeed in the home country will be successful
everywhere
Domestic companies - the ethnocentric orientation means that opportunities outside the home
country are ignored
International company - they adhere to the notion that the products that succeed in the home
country are superior and therefore, can be sold everywhere without adaptation
Managing international operations - people from the home country i.e. Parent Country
Nationals (PCNs) fill top management and other key positions

 Perceived lack of qualified Host Country Nationals (HCNs)

need to maintain good communication, coordination, and control links with corporate
headquarters
The firm uses a large group of expatriate mangers
Foreign operations are viewed as being secondary or subordinate to domestic ones
Operates under the assumption that tried and true headquarters knowledge and
organisational capabilities can be applied in other parts of the world.

Polycentric Orientation
Opposite of ethnocentric orientation
Assumption that each country in which a company does business is unique
Each subsidiary to develop its own unique business and strategies in order to succeed
The term multinational company is often used to describe such a structure
This eliminates the language barriers, avoids adjustment problems for expatriates and allows an
MNC to take a lower profile in sensitive political situations
Subsidiaries are managed and staffed by personnel from the host country
The HCNs are recruited to manage subsidiaries
PCNs occupy the corporate headquarters
Employment of HCNs is less expensive
It has its limitations in terms of
Bridging the gap between the HCN subsidiary managers and PCN managers at
corporate head quarter
language barriers
conflicting national loyalties
a range of cultural differences may isolate the corporate HQ staff
Regiocentric Orientations
Management views regions as unique and seeks to develop an integrated regional strategy
It is a regional approach in which the MNC divides its operations into geographical regions and
transfers staff within these regions

 This approach reflects some sensitivity to local conditions, since local subsidiaries are staffed
by HCNs
This approach to staffing policy will reflect organizational needs, but there are difficulties in
maintaining a uniform approach to international staffing
Strategies in different countries may require different staffing approaches
Have a worldview on a regional scale
Selection for staffing is on the basis of a set of characteristics SMILE
Specialty (required skill, knowledge)
Management ability (particularly motivational ability)
International flexibility (adaptability)
Language facility
Endeavor (perseverance in the face of difficulty).

Geocentric Orientations
Views the entire world as a potential market
Strives to develop integrated world business strategies
Represents a synthesis of ethnocentrism and polycentrism
a world view that sees similarities and differences in markets and countries and seeks to
create a global strategy that is fully responsive to local needs and wants.
Nationality is deliberately downplayed
Firm actively searches on a worldwide or regional basis for the best people to fill key positions
Transactional firms tend to follow this approach.
Regiocentric or Geocentric orientations are practiced in global or transnational company
However, some research suggests that many companies are seeking to strengthen their regional
competitiveness rather than moving directly to develop global responses to changes in the
competitive environment.
This approach is feasible when highly competent and mobile managers have an open
disposition and high adaptability to different conditions in their various assignments and such
employees are available at HQ as also in subsidiaries.

HR policies need to be framed in a country keeping in mind the following factors

1. Cultural difference:-Incentive plan in Japan tend to focus on workgroup while in west it
focuses on individual work.
2. Economic factor:-In market based economy HR policies are such that value productivity
and efficient worker whereas in a socialist economy HR policies are towards reducing
unemployment.
3. Industrial Relation factor:-In Germany Co-determination is a rule.
4. Labor cost:-Differences in labor cost are substantial example compensation cost, for
production workers in Germany are $23.56 and in Mexico are $2.56.

Who is an Expatriate:An employee who is working and temporarily residing in a foreign country. Some firms prefer
to use the term international assignees. Expatriates are PCNs from the parent country
operations, TCN or HCN.
Why We Require Expatriate?
The unavailability of the required skills and talents takes the organization to source talent from
other countries. To get the job done more efficiently and effectively.
Parent Country Nationals
Advantages
Well versed in companys needs and norms
Familiar with the firms products and services as well as with the corporate culture
Disadvantages
Potential unfamiliarity with the culture norms.
Potential blocking of HCNs career progression within the firm
Considerable cost of relocating abroad
Host Country Nationals
Advantages
Familiar with the host country culture and language
Cost less than expratriates
Competitive capabilities in international market
Disadvantages

 Limited familiarity with firms own operation

PCNs at headquarters may lack sufficient understanding of the subsidiarys needs and
corporate strategy for the subsidiary may suffer as a result.
Large Expense involved
Spouse or children may not want to stay
Foreign Trained Professionals (Third Country National)
Advantages
Greater familiarity with host country culture than Parent Country Nationals, but loyalty will be
the firm (rather than to the host country per se)
Have intensive international experience and know the corporate culture from previous working
experience with the corporate branches in the third country
Relocation costs lower that the PCNs
Enhanced career development opportunities by allowing employees from the various
subsidiaries to move to other subsidiaries.
Soften tensions between host country and home country compromise
Disadvantages
Some cross-cultural preparation may still be required
Potentially suffering from a lack of knowledge of the corporate culture
Use of TCNs is often part of a strategy that entails the use of employees fro many nationalities
increasing the overhead for expatriate relocation across the entire firm considerably.
Using TCNs to the exclusion of HCNs may create the same problem or blocked carer
advancement that occurs when PCNs are used in this manner.

Selection of expatriates:Selecting expatriates is an important element in international human resource management.

Recruitment of expatriates involves greater time, monetary resources and other indirect costs.
Improper recruitment and selection can cause the expatriates to return hastily or a decline in their
performance. Companies apply Ethnocentric, Polycentric, Regiocentric and Geocentric as per
requirement.

CRITERIA FOR EXPAT SELECTION

1. Technical ability ensure that the person chosen for a given jobs abroad has the
competencies, abilities, knowledge and experiences that are required in order to perform
well
2. Past international work experience The candidate should be well experienced and
should have expertise skill.
3. Cross-cultural suitability ensure that the person is knowledgeable of the culture of the
foreign countries for his or her mission. It is important to consider that the lack of
knowledge about the culture of other country is one of the primary reasons for failure of
expatriate jobs. That is, the employee should have Adaptability to the new culture
4. Family requirements this is important because, in general, it is not just the decision of
one person but with the couple. Different studies that there are great connections and
correlations between the adjustment aspect of the spouse and the expatriate.
5. Country/cultural requirements it is important to focus on the macro- environmental
factors which can be found in the foreign country, which include the political and
environmental risk, which can affect safety of the employees.
6. Language language is the primary aspect connected to communication; communication
on the other hand is a vital factor which causes success of relationship in the team, which
will result to productivity and efficiency. Therefore, it is important to send person who is
experienced and knowledgeable, at the same time, can verbally and non-verbally
communicate using the language of the foreign country.
7. Company requirements it is important to consider the different requirements needed by
the company where to send the expatriate. It is important to consider, that there are some
regions in the world that do not accept women for managers and leaders. Therefore, it is
important to consider these aspects.
8. Empathy towards local culture The candidate should have soft corner towards the
cultural trend of Bangladesh.
9. Flexibility It considers how much an employee may be flexible while acting as an
expatriate in Bangladesh.
10. Tolerance and open-mindedness the expatriate should be in the habit of zero tolerance
and open-mindedness. Recruitment of expatriates should be followed by cultural and
sensitivity training, and language training.
11. In conclusion we can say that most of the processes are not as visible and clear as it says
in literatures. There is no specific policy for recruiting expatriates in Bangladesh,
companies customize policies as and when needed; that is, it changes time to time,
considering situation, government rules, organizational policies, and other factors.

Expatriate Failure
Premature return of an expatriate, under-performance during an international assignment.
Reason for Expatriate Failure

Inability of spouse to adjust Managers inability to adjust other family problems

Managers personal or emotional immaturity
Inability to cope with larger overseas responsibilities
Inability to cope with larger overseas responsibilities
Difficulties with the new environment
Personal or emotional problems
Lack of technical competence
Inability of spouse to adjust
Other non-work conditions like living and housing conditions, and health care

COMMON HARDSHIP FACTORS ARE:

HOUSING
CLIMATE & PHYSICAL CONDITIONS
POLLUTION
DISEASES & SANITATION
MEDICAL FACILTIES
EDUCATIONAL FACILITIES
INFRASTRUCTURE
PHYSICAL REMOTENESS
POLTICAL VIOLENCE & REPRESSION
POLITICAL & SOCIAL ENVIRONMENT
CRIME
COMMUNICATION
CULTURAL & RECREATIONAL FACILTIES
AVAILIBILTY OF GOODS & SERVICES

MANAGING EXPATRIATE FAILURE

Design a job that maximize role clarity,

Minimizes role conflict with proper selection of candidate.
Provide opportunity for languages lessons.
Provide all information & equipment pertinent to the role/work of the employee.
Provide proper organizational support systems from supervisors & co-workers in the host
country.
Include spouse in any training & support programmes
Provide realistic previews
Have a careful screening process
Improve orientation
Provide good benefits
Test employees fairly
Shorten assignment length

CULTURAL ADJUSTMENT
Culture Shock
We are surrounded by elements in our own culture that influence who we are and how we
relate to the world. Because we have grown up with this culture, we are comfortable with
it. Our values and attitudes have been shaped by our
experiences in our native culture. What happens when we suddenly lose cues and
symbols that orient us to situations of daily life? What happens when facial expressions,
gestures, and words are no longer familiar? The psychological discomfort one feels in a
foreign situation is commonly known as culture shock.
Cross-Cultural Adjustment Cycle
Each stage in this process is characterized by symptoms or outward and inward signs
representing certain kinds of
behavior.
Honeymoon Period: Initially, you will probably be fascinated and excited by
everything new. Visitors are at first elated to be in a new culture.
Culture Shock: The visitor is immersed in new problems: housing, transportation,
food, language, and new friends.Fatigue may result from continuously trying to
comprehend and use the second language. You may wonder, Why did Icome here?
Initial Adjustment: Everyday activities such as housing and going to school are no
longer major problems. Although the visitor may not yet be perfectly fluent in the
language spoken, basic ideas and feelings in the second language can be expressed.
Mental Isolation: Individuals have been away from their families and good friends for
a long period of time and may feel lonely. Many still feel they cannot express themselves
as well as they can in their native language. Frustrations and sometimes a loss of selfconfidence result. Some individuals remain at this stage.
Acceptance and Integration: A routine (e.g., work, school, social life) has been
established. The visitor has accepted the habits, customs, food, and characteristics of the
friends, associates and the language of the country.
Return Anxiety, Re-entry Shock, Reintegration
While these stages play an important role in a visitors adaptation to a new culture, many
students are surprised to experience the very same feelings upon reentry to the U.S. Reentry shock can be even more difficult than the initial culture shock because it is so
unexpected.
Suggestions for Dealing with Culture Shock
Try to look for logical reasons why things happen. This may help you view your host
culture in a more positive light.
Be slow to judge; observe first, show respect, and invite conversation. Try not to dwell
on the negative things about your host culture, and dont hang around with people who
do.
Explore! Get a sense for the physical environment, looks for parks, sports facilities, bus
stops, etc. Get a sense for the behavioral norms; how do they greet each other, wait in
line, etc. Find out where people meet and socialize. Make an effort to go to those places

. Try to fit into a rhythm of life in your host culture. Adjust to their time schedule for
meals and work. Read local newspapers and books.
Keep your sense of humor!
Set small goals for yourself, as high expectations may be difficult to meet.
Speak the language of the country you are in, and dont worry if you only know a few
phrases.
Take care of yourself by exercising, getting enough sleep, eating properly, and doing
things you enjoy.
Keep in touch with friends and family at home.
Draw on your personal resources for handling stress. Youve done it many times before,
and you can do it again.
Cross-cultural Training
Cross-cultural training stresses on training employees about other cultures and sensitizing
them to the discrimination and biases diverse employees feel (Farren and Nelson, 1999).
Cross-cultural training aims at helping employees live and work comfortably in another
culture. Organizations can use two approaches of training that can play a big role in
managing diversity.
(i) First approach offers training to diverse groups of employees. People from diverse
groups can be trained for an entry-level skill.
(ii) Second approach is to provide training to managers and other employees who work
with diverse employees (Luthans, 1995).
Many organizations impart practical, real-life training to teach employees how to handle
situations those arise due to cultural differences. The organizations can use the following
cross-cultural training techniques:
Environmental briefings: to provide information about history, geography, climate,
schools,government, economy, etc.
Orientation in culture: to familiarize the employees with value systems and culture of
the host country.
Cultural assimilator: is a programmed learning technique that is designed to expose
employees of one culture to some of the attitudes, customs, etc. of another culture.
Language training: to teach conversational language skills.
Sensitivity training: to develop attitudinal flexibility.
Field experience: to give first hand exposure to another culture (Hodgetts and Luthans,
1994)

The Benefits of Cross Cultural Training

Cross cultural differences can and do impede upon communication and interpersonal
relationships. In the business world this occurs daily, where people from different
cultures interact and are expected to perform and make decisions. Cross cultural training

aims to develop awareness between people where a common cultural framework does not
exist in order to promote clear lines of communication .
Cross cultural training has many benefits to be gained by both participants and
businesses. For participants in cross cultural training, the 10 main benefits are that it
helps:
People Learn About Themselves: Through cross cultural training, people are exposed to
facts and information about their own cultures, preconceptions, mentalities and
worldviews that they may otherwise not have contemplated. Cross cultural training helps
people learn more about themselves through learning about others.
Encourage Confidence: Cross cultural training promotes self-confidence in individuals
and teams through empowering them with a sense of control over previously difficult
challenges in the workplace.
Break Down Barriers: All of us have certain barriers such as preconceptions, prejudices
and stereotypes that obstruct our understanding of other people. Cross cultural training
demystifies other cultures through presenting them under an objective light. Through
learning about other cultures, barriers are slowly chipped away thus allowing for more
open relationships and dialogue.
Build Trust: When peoples barriers are lowered, mutual understanding ensues, which
results in greater trust. Once trust is established altruistic tendencies naturally manifest
allowing for greater co-operation and a more productive workplace.
Motivate: One of the outcomes of cross cultural training is that people begin to see their
roles within the workplace more clearly. Through self-analysis people begin to recognise
areas in which they need to improve and become motivated to develop and progress.
Open Horizons: Cross cultural training addresses problems in the workplace at a very
different angle to traditional methods. Its innovative, alternative and motivating way of
analysing and resolving problems helps people to adopt a similarly creative strategy when
approaching challenges in their work or personal lives.
Develop Interpersonal Skills: Through cross cultural training participants develop great
people skills that can be applied in all walks of life. By learning about the influence of
culture, i.e. the hidden factors upon peoples behaviours, those who undertake cross
cultural training begin to deal with people with a sensitivity and understanding that may
have previously been lacking.
Develop Listening Skills: Listening is an integral element of effective and productive
communication. Cross cultural training helps people to understand how to listen, what to
listen for and how to interpret what they hear within a much broader framework of

understanding. By becoming good listeners, people naturally become good

communicators.
People Use Common Ground: In the workplace people have a tendency to focus on
differences. When cross cultural communication problems arise the natural inclination is
to withdraw to opposing sides and to highlight the negative aspects of the other. Cross
cultural training assists in developing a sense of mutual understanding between people by
highlighting common ground. Once spaces of mutual understanding are established,
people begin to use them to overcome culturally challenging situations.
Career Development: Cross cultural training enhances peoples skills and therefore
future employment opportunities. Having cross cultural awareness gives people a
competitive edge over others especially when applying for positions in international
companies with a large multi-cultural staff base.
The above benefits are but a few of the many ways in which cross cultural training
positively affects businesses through staff training and development.

Methods of Cross-Cultural Training

1. What is culture-specific training?
Culture-specific training refers to information about a given culture and guidelines for
interaction with members of that culture (Brislin & Pederson, 1976).This training is
specific to a particular culture (Triandis, 1977).
Experiential culture-specific training methods:
bicultural communication workshop
Participants learn intercultural communication through their interaction with members of
other cultures in a small group setting.
culture-specific simulation games
Simulation games provide interactive opportunities to practice new behaviors and
experiment with new attitudes and points of view. The simulation does not involve
interaction between members of the two cultures but trainees can learn about cultural
differences.
culture-specific role plays
The major and most appropiate purpose of a role play is skill building. It is a training
activity where two participants take on characteristics of people other than themselves
in order to learn how to interact in specifc situations with members of a specific culture.
critical incidents exercise
The purpose of the CIE is to confront participants with conflict situations they can
expect to encounter in interacting with persons from another culture. Brief descriptions

of situations in which there is a misunderstanding, problem or conflict arising from

cultural differences are discussed in groups with members of both cultures in order to
find an explanation.
case study
A case study is a description of a realistic situation including sufficient detail of the
perspectives of the different characters to make it possible for the participants in a
training program to analyze the problems involved and to determine possible solutions.
Didactic culture-specific training methods:
area orientation briefings
Factual information about the specific country and the attitudes of the countrys people
in form of a lecture (geography, climate, politics, educational systems, customs, law).
language training
Learning the host language is necessary to indicate an interest in the people and the
culture and to facilitate the successful adjustment to the host culture.
culture-specific assimilators
Trainees are sensitized to behaviors, norms, attitudes and values of another cultural
group by reading a series of episodes that are labeled as problem situations. The
trainee tries to find the right interpretation of the behavior among several different
possibilities.
culture-specific reading
To gain knowledge of a specific culture trainees could read culture-specific books.

Paying Expatriate
Employees assigned to overseas positions usually receive pay packages different from
those of domestic employees. While base salaries for the foreign-assigned employee and
the domestic employee are usually comparable, the foreign-assigned employee will
receive extra allowances and incentives not available to the domestic employee. These
allowances and incentives cover the excess costs of living abroad and provide an
incentive for overseas-assigned employees to accept and remain at a foreign assignment.
Incentives such as housing allowances, relocation benefits, and completion bonuses are
amongst the many tools employers use to encourage employees to accept overseas
assignments.
Common approaches to developing expatriate compensation packages
The balance-sheet approach
One of the most pervasive approaches to compensating expatriates is the balance sheet
approach. Research suggests that more than 85 percent of US organizations employing
expatriates use the balance sheet approach (Overman, 2000; Wentland, 2003). In a 1996
study commissioned by Price Waterhouse, the figure for usage of the balance sheet
approach exceeded 90 percent (Frazee, 1998b). While there is some variation in the use

of this approach, experts agree that the balance sheet method remains the method of
choice for US-based organizations employing expatriates (Frazee, 1998b).
In addition to being the most common approach to expatriate compensation, the
balance sheet method is among the oldest approaches to compensating expatriates.
The balance sheet approach was designed soon after World War II as a no gain-no loss
method of compensating employees for working overseas. The idea was that the
employer would sustain the expatriate employees standard of living throughout the
assignment so that the expatriate family did not come out ahead or behind (financially)
from the assignment. In general, the goal of the balance sheet approach is to provide
equivalent purchasing power abroad to help maintain home lifestyle (Overman, 2000,
p. 88).When parent organizations utilize the balance sheet approach, it is essential to keep
expatriate salaries in line with their home country peers, not with host country
colleagues. In other words, the focus is on maintaining internal equity with peers in the
home country (Reynolds, 2000). Under the balance sheet approach, an expatriate would
typically be responsible for the same costs and expenses as a domestic counterpart
with the parent company paying additional income in an effort to keep the employee
whole. As a final note, it is important to recognize that there are numerous versions of
the balance sheet approach.
The destination-based approach
As organizations seek to bring the spiraling costs of compensating expatriates under
control, an increasingly popular approach to compensating expatriates has emerged.
The buzzwords for this approach to compensating expatriates include localization,
destination, and the host country-based approach. This approach to expatriate
compensation takes into account what competitors are paying and, more importantly,
how expatriate compensation compares with the compensation levels of local
employees in comparable jobs (Chen et al., 2002; Mervosh, 1997; Wentland, 2003).
Specifically, with the destination-based approach, traditional allowances (housing,
childrens education, and incentive premiums in particular) are sharply curtailed. The
curtailing of incentive pay could be problematic given the perceived importance of
performance-based pay to expatriates (Lowe et al., 2002).
The destination-based approach is a marked shift away from the well-established
balance sheet approach that has been so prevalent for the last five decades. The newer
destination-based model endeavors to treat the expatriate employee as a citizen of the
host country, encouraging a when in Rome do as the Romans do mentality whereby
employees are expected to embrace their foreign lifestyle instead of living above it in
an expatriate community (Myers, 1995).Clearly, this approach to expatriate compensation
has its disadvantages. The successful use of the destination-based approach is contingent
on several factors,which may or may not be present in some organizations. First,
organizations must understand that the most expensive expatriates are going to be those
who least want to be in an overseas assignment. Therefore, for the destination-based
approach to have any chance of being successful, it is generally accepted that an
organization must have be willing to forgo lavish allowances and benefits. By finding

employees who want to work overseas and adhering to the destination model, it is
estimated that organizations could save up to 20 percent of the cost of using the balance
sheet approach (Myers,1995).
Another requirement for success using the destination-based approach is to send a
clear corporate message that an overseas stint is a virtual requirement for upward
advancement in an organization. It is more and more common now that expatriates are
being chosen from high-potential lists and told that accepting the transfer is a wise
career move. Expatriates are recognizing that the experience abroad will translate into
opportunities when they return to the USA. Some globally minded organizations are
taking this a step further by making it a matter of formal policy that senior executives
are chosen exclusively from among those with international experience (Oemig, 1999).
Another factor that may make the destination-based approach more effective is to
ensure that expatriate employees clearly understand what will happen regarding their
career upon repatriation into the home organization (Cryne, 2004; Eisenberger et al.,
1990; Misa and Fabricatore, 1979). Uncertainty about the nature of the position that
will be available for the expatriate upon repatriation will decrease the effectiveness of
the destination-based approach. Conversely, however, if the expatriate has the security
of knowing how and to what position they will be repatriated (particularly if a
Expatriate comp successful overseas stint will be rewarded with a promotion), the
destination-based approach may be quite effective (Arthur and Bennet, 1995).
Some organizations that have begun to implement the destination-based approach
have been pleased with initial results and cost savings. Global companies like AT&T,
Xerox Corporation, Mobil Corporation (pre-merger), and AlliedSignal have started to
experiment with this approach. The key is to implement a destination-based expatriate
compensation program slowly, selectively, and with a considerable amount of
communication. Also, parent organizations must remember that regardless of which
approach is used, certain basic needs of expatriates must be met. Even with a
destination-based approach, organizations must be particularly sensitive to basic
needs like security, medical care, education of children, housing, and home trips.
Flexibility is key, since deciding exactly where to cut costs will depend on the nature of
the assignment, the expatriate, and the expatriates family (Myers, 1995).
The international headquarters approach
Under the international headquarters approach, also referred to as the regional
approach, expatriates are compensated as if all expatriate employees originated from
the same geographic headquarters and are being paid on the same balance sheet
program. For example, if an organization has expatriates from three or four different
nationalities working together in Beijing, an international headquarters approach
would ensure that these expatriates are not working under different compensation
packages, thus promoting perceptions of equity. It also ensures, for example, that if
two of the expatriates in Beijing accept a new assignment in Tokyo, they will not be
paid any more or any less than the expatriates already working in Tokyo (Chen et al.,
2002; Frazee, 1998b). Gillette, a truly international company, has used this approach

with considerable success when the company entered China (Zingheim and Schuster,
2001).
This type of approach can be somewhat complicated to administer, however. Since
the goal is equity in a geographic location, the organization must find viable ways to
manage social security, pension, and taxation laws across country borders (Allard,
1996). Another potential disadvantage of this approach is that, initially, this type of
compensation package attracts younger expatriates. As these younger expatriates
move up the corporate ladder and gain more experience, they begin to negotiate more
traditional expatriate compensation packages namely the home-based balance sheet
approach. If they are unable to negotiate a compensation package they feel is
consistent with their experience and position, they may simply move to a competitor
(Allard, 1996).
REPATRIATION:
What is Repatriation?
Repatriation generally refers to the termination of the overseas assignment and
coming back to the home country or to the country where the HQ is located or to
the home subsidiary from where he/she was expatriatedSo, Expatriation process also
includes repatriation:The activity of bringing the expatriate back to the home country.
Therefore, Repatriation may be defined as the activity of bringing an expatriate back to
the home country and Repatriation is the final step in the expatriation process(recruitment
& selection , pre departure training ,foreign assignment , repatriation or reassignment)
Reasons of Repatriation
1. Most Reason: the period of posting got over
2. Second Reason: The expats want their children study in a home country school.
3. Third Reason: the need for the expats to move on to another global assignment of a
similar kind where he/she would have the opportunity to use the skills and expertise
acquired.
4. Forth Reason: the assignees are not happy in their overseas assignment. Un-happiness
can be result of:
- inability to adjust to host country environment
- spouses or childrens unwillingness to stay
- lack of moral support from HQ at the time of crisis.
5. Fifth Reason: Expats return because of failure to do the assigned job
Phases of Repatriation Process
1. Preparation Approx. 5-3 month before the expat. returns to the home country, he
or she should be taken through a re-entry phase, followed by actual repatriation .
This involves developing plans for the future and collecting information about the
new position the expat is likely to occupy after returning home.

During the pre re-entry phase, the mentor can play an advisory role in finding the
expat a suitable position within the organization. The company may provide a
checklist of items to be considered while leaving the host country.
2. Physical Relocation This stage involves removal of personal belongings,
breaking ties with colleagues and friends and traveling to the next posting, usually the
home country.
Professional re-entry training should also be given to expat and his or her family that
covers social cultural contrast orientation, an updated political and social issues
and changes in the home country, job opportunities for the partner, an
evaluation of the experiences in the host culture and the psychological aspects of
repatriation.
3. Transition Phase in which the expatriate and his or her family readjust to
their return to the home country. Some companies hire relocation consults to
assist in this phase also. Typical activities include acquiring temporary
accommodation, making arrangements for housing and schooling, performing
necessary administrative tasks (e.g. renewing drivers license, applying for
medical insurance, opening bank accounts)
4. Readjustment This phase involves coping with reverse culture shock and
the expatriates career demands on the organization.
Generally, the more the host country culture differs from the home country
culture, the more difficult the re integration process will be. Likewise, the
more successful the expat was in the host culture, the more difficult it is to
adjust to the work environment at the home base.
Challenges of effective Repatriation Based on three factors:
Organizational Factors:
Individual Factors:
Social- cultural Factors:
1. Organizational Factors
Recent research indicates that the majority of organizations have no formal
repatriation programme to help expatriates readjust on return to the home
country . Only a small proportion of the repatriation programmes have consideration for
the spouse .Typical reasons given by organizations for not having a repatriation
programme include:
Lack of the requisite expertise
Programme cost
Lack of a perceived need by top management
Some organizations provide a form of repatriation assistance in the form of a
mentor
The mentor is usually a superior to the expatriate and provides assistance in

the form of information, by maintaining regular contact with the expatriate,and by taking
the expatriates interests regarding promotion and job placement on return etc. into
account. Research indicates that the likelihood of an organization using mentors
depends on the size of the expatriate workforce, the organizational unit responsible for
handling expatriates and the nationality of the organization.
Individual relations Job Related factors
Career anxiety
No post-assignment guarantee of employment
Loss of visibility and isolation
Changes in the home workplace
Work adjustment
The employment relationship and career expectation
Re-entry position
Devaluing of the international experience
Coping with new role demands
Role behavior
Role clarity
Role discretion
Role conflict
Loss of status and pay
Autonomy
Responsibility
Lower pay in absolute terms
Drop in housing conditions
Social cultural factors
If an expatriate served in a foreign assignment in a high-profile position where
he or she enjoyed considerable and sustained interaction with the social,
economic and political elites of the host country, a feeling of disappointment
may emerge after return to the home country.
In addition to the expatriates social readjustment problems, the social
readjustment problems of his or her accompanying family members must also
be taken into consideration as well.
Reestablishment of social networks in the home country may be difficult if,
for e.g., the expatriate and family are repatriated to another locality in the
home country. It may be that friends have moved away while the expatriate
was on assignment and that other friends may have joined the workforce and
have no time for social activities
Children may encounter social readjustment problems in school because they
are not update on latest trends, and may have problems adjusting to their home
country educational system .