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MNE Selection Techniques for International Assignments

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Published: Tue, 06 Feb 2018

Chapter1 Introduction

The world has become the global village and globalization has become an important tool for the organizations to be successful in this rapidly changing world. So the coordination between different cultures and people with different backgrounds is increasing in a different multinational organization day by day. So it is very important to study that how the organizations deal with the multicultural set ups within an organization. During the past few decades the rapid changes in economic, social and political environment of the world has led organizations towards the globalization.

According to Harvey & Novicevic the increasing international activities and global competition resulted in increase in globalization. The process of recruitment and selection has always been very important in any organization. According to Dowling (1999) hiring and placing people in positions where they can perform effectively for the benefit of the organization is the goal of most organizations whether they are domestic or international.

Heraty et al (1997) suggested that, in these new changing global condition increasingly, many organizations are transforming jobs into new structures which are more likely based on self directed work teams, made up of empowered individuals with the diverse background are replacing traditional specialized workers. So in this new challenging environment competition is increasing day by day and organizations need such personalities who can adjust themselves with the change.

Burack and Singh (1995) also suggested that firms need adaptable people who can rapidly adjust themselves to the changing environment. So the people who are ready to change with the environmental changes always give advantage to the organization, and these kinds of people are very fruitful for the organization.

According to ones and Viswesvaran (1997) in this rapidly changing world where the change is taking place every minute the organizations have been sending their members to other parts of the world to complete their assignments.

According to Aycan and Kanungo expatriate is an employee of a business or government which is sent abroad to accomplish their organizational goals for temporary period which is more than six months and less than five years. International assignments not only give benefit to the individual expatriate but it also give the competitive advantage to the organization in the global environment. For many organizations sending of expatriate to the other countries to gain competitive advantage in global environment is the part of their overall human resource plan. (Caligiuri & Lazarova, 2001).

So keeping in view the importance of an expatriate the selection process of an expatriate is also very important step for an organization. According to Dowling the failure of expatriate is due to the selection error. This tells that selection plays an important role for a successful expatriate.

So with the changing world it is need to have such staff who can adjust itself with the change. In this paper an effort is being made to give the importance of selection techniques for expatriates within a multinational organization.

1.1 Key purpose of study

The world is globalizing day by day and now it is also called global village and specifically UK has become one of the biggest multicultural countries and there are a lot of multinational organizations working in UK

With the changing world more of MNEs are sending their expatriates in other parts of the world to accomplish their goals and to gain competitive advantage in global world.

As the selection is the most important step for any organization to choose its expatriate and it is always important for MNE’s to choose or select the right person for the given task.

In fact an expatriate failure is often result of a selection error, and often compounded by in effective expatriate management policies. (Dowling Welch & Schuler, 1999).

The key purpose of this study is to show the importance of selection techniques for a MNE when selecting an expatriate for an international assignment.

1.2 Aims

The aim of this study is to explore the proper selection techniques which can improve the performance of an expatriate and help him to retain.

1.3 Objectives:

To outline the factors that influences the selection of expatriates.

To examine different selection methods used for expatriate selection.

To discuss in detail, issues of cross cultural variation in selection process of expatriates.

1.4 Hypothesis

The hypothesis which is developed for this study is stated as below

Without doing proper selection of expatriate much will be poor for the company and result in loss of company.

1.5 Theory an overview

There has been a lot of work done on selection techniques of expatriates in last couple of decades. Selection is the most important part of the success of any expatriate, and if the selection is not according to the needs of organization then the failure chances of expatriate. Dowling says that redirecting future performance potential when hiring or promoting staff is challenging at the best time but if operating in foreign environment certainly adds other level of uncertainty. So if the process of selection is beholds specific importance within a domestic organisation then it must have some extra importance while choosing an international staff.

1.6 Selection

The selection is kind of prediction of the organization’s peoples or decision makers keeping in view the profile of the candidate for the particular job (Hackett, 1991).

The selection is a complete process of analyzing and viewing the profile of the employee and then selecting for the required job.

Moore (2006) discussed this as the selection is the whole process which includes choosing the

right candidate for the position from those persons who have been recruited. This involves

testing and evaluating the skills of an individual is required for the particular job.

According to desler (2000) the selection is the process in which the recruited individual is whittled down by using screening tools like assessment centers, interviews, and different tests.

1.7 Methods of Selection:

There are various selection techniques available, and for the selection procedure all of these depending on the situation and culture of the organization. Some of these selection methods are given below.

Interviews

Tests

Assessment centres (Beardwell and Holden, 2001)

So the above mentioned procedures are used by different organizations depending upon the nature of job and the normal practice they use within the organization.

1.8 Approaches for the Multinational

There are four approaches for the recruitment and selection in any multinational organization. These four approaches are given as follows.

Ethnocentric: It is the type of the recruitment approach in which all the key positions and top management is filled by the nationals of the parent company. According to this approach all the top management decisions and the key strategies of the companies is made by the parent country headquarters.

Polycentric: It is the type of recruitment approach in which the host country fills all the key positions in the subsidiary. Each subsidiary is treated as the separate national entity. But all the key financial decisions are taken by the parent country headquarter.

Regiocentric: It is the type of recruitment approach in which regional talent is preferred. For example if the person is required on for the development of any product then the person who will be recruited will be from the host country.

Geocentric: This is the kind of approach where the persons are recruited without seen any race, religion or region. This approach is international based and is getting in practice in most of the developed countries like UK, USA etc.

1.9 Methods of international selection

The different methods of selection for the expatriate selection which most of the multinational organizations use is as follows

Psychometric Tests

Assessment Centres

Coffee Machine System

1.10 Selection of an Expatriarate

The selection of expatriate is a bit different from the local selection of a local manager. For the selection of an international manager there are a lot of extra factors which needs to be considered by the selectors. The expatriate selection process results in higher cost to the multinationals including relocation process, allowance and accommodation apart from the training costs. (Hailey 2000, pg; 90). During the expatriate selection process, 02 conflicting forces operate within the expatriate’s mind. One that pulls the employee into moving to the new place, the other tends to stop him from going. (Baruch 2005, pg 129).

1.11 Factors involve in selection of an Expatriate.

According to Dowling and Welch the factor involve to determine an appropriate expatriate selection process are as

Country-cultural requirement

Language

MNE requirements

Technical Ability

Cross Cultural Suitability

Family Requirements (Dowling, Welch, Schuler, 1999)

So keeping in view all the above mentioned factors an expatriate should be selected by a multinational organization.

1.12 Culture:

(Kluckholn & Strodtbeck 1952) define culture as, “a set of basic assumptions-shared solutions to universal problems of external adaptation (and internal integration- which have evolved over time and are handed down form one generation to the next.’’

1.13 Corporate culture

Corporate culture includes the behavioral patterns, concept, values, ceremonies and rituals that take place in the organization. It gives the members of the organization meaning as well as the internal rule of behavior when these values and beliefs customs’ rules and ceremony are accepted shared and circulated throughout the organization. (Trompenaars & Turner 1997, pg 157-181)

1.14 Why consider culture?

Adjusting in a new culture is always difficult and it causes problems for both expatriate and family members, therefore it is important for an International HR to look for the similarities of the two cultures in order to deal with the challenges in the business world key activity.

dowling, welch,schuler, 1998 pg 132

Recent research shows that the expatriates who are unable to cope with the challenges find it difficult to adjust and incur costly implications. (Caligiuri, 1997, pg: 45-67). The factor of culture is very important for an expatriate selection process and HR managers will have to select such expatriate who is adjustable with the different cultured people and work with them for the cultural dimension Hofstede and Trompenaars cultural dimensions are given as follows

1.15 Hofstede’s four dimensions (1967-1973):

Gooderham & Nordhang (2003). ‘Culture is always a collective phenomenon, because it is at least partially shared with people who live or lived within the same environment, which is where it was learned. It is the collective programming of the mind which distinguishes the members of one group or category of people from another.’

Hofstede surveyed 116,000 IBM employees in 40 different nations about their preferences in the work environment. The analysis revealed the results creating 4 dimensions:

Power distance: The dimension indicates the extent to which a society expects and accepts a high degree of inequality in institutions and organizations.

Uncertainty avoidance: This refers to the degree to which a society prefers predictability, security and stability.

Individualism-Collectivism: this dimension relates to the extent to which people prefer to take care of themselves and their immediate families rather than being bound to some wider collectively such as extended family.

Masculinity-Femininity: Masculine societies value assertiveness, competitiveness and materialism as opposed to the feminine values of relationships and the quality of life.

1.16 Trompenaars’ cultural dimensions:

Trompenaars concluded four cultural dimensions that relate to the question of inter-personal relationships and work-related values Gooderham & Nordhang (2003).

Universalism vs. Particularism

Communitarism vs. Individualism:

Specific vs. diffuse

Achievement vs. ascription:

So these four dimensions of Trompenar also affect the selection process of an expatriate for international assignments.

1.17 Strategic choices in expatriate selection:

Organizations normally have some strategic choices while selection of an expatriate. These strategic choices are mentioned below.

Internal recruitment versus external recruitment

Individuals versus teams

Technical qualification versus other selection criteria

Extrinsic rewards versus intrinsic rewards.

Chapter 2 Literature Review:

In this chapter researcher tried to discuss all the related studies which are done in past and are available in literature. A lot of work has been done in the literature on the topic of selection. Before proceeding to the actual topic it is necessary to look at the different methods of selection which an organization uses and see that what are the different techniques and criteria which are used for the selection of staff.

2.1 Selection:

Moore (2006) discussed this as the selection is the whole process which includes choosing the right candidate for the position from those persons who have been recruited. This involves testing and evaluating the skills of an individual is required for the particular job.

According to Dessler (2000) the selection is the process in which the recruited individual is whittled down by using screening tools like assessment centers, interviews, and different tests.

2.2 Expatriate selection:

According to (Dowling, Welch, Schuler, 1999, pg: 154) Multinationals take great care in their selection process, however predicting future performance potential of the concerned staff is challenging at the best of times especially operating in foreign environments adds another level of uncertainty. The expatriate selection process results in higher cost to the multinationals including relocation process, allowance and accommodation apart from the training costs. (Hailey 2000, pg; 90). During the expatriate selection process, 02 conflicting forces operate within the expatriate’s mind. One that pulls the employee into moving to the new place, the other tends to stop him from going (Baruch 2005, pg 129).

2.3 Importance of an Expatriates and International Assignments:

The world is globalizing very rapidly and change has become necessary for the organization to survive and to gain competitive advantage internationally. According to Harris and Brewster, 1999. The rapidly globalizing world has increased the need for the international assignments and many of the organizations started considering international management experience for the top management. So the international assignments are becoming an important part for the success of an organization to gain competitive advantage.

As discussed by Chen, Tzeng & Tang, 2005 that organizations internationalize their operation to gain success and to increase its market value internationally and for this purpose an organization needs effective expatriate who can perform its task properly. In this new era the importance of expatriate has increased because expatriates are the ones who can give an organization proper international exposure and make the organization successful.

2.4 Selection Process:

One of the most studied areas for the expatriate selection is the selection process of the expatriate. The selection of expatriate has always been difficult procedure for the multinational organizations. Swaak quotes one HR executive who said. “My job is to find people in a hurry.” So this system is highly crisis-oriented and unsophisticated. Swaak , 1995. Further confirming the problems for the nature of the selection process Still and Smith (1997) report the results of Australian research, which shows that there were a number of different ways through which expatriates were selected. They studied that the most impressive and important form of selection or evaluation of the expatriate was recommendation of the person by the line manager including chief executive officer or specialist persons.

Mostly expatriates in the multinational organizations in a knee-jerk reaction to the need to fill a new or unexpected vacancies overseas. Actually there are well informed intercultural trainers or a good HR professional who selects the expatriates but basically it is HR department within multinational organization who selects the expatriate finally. Managements choose the most technical and competent candidates which makes the expatriates successful internationally. (Shilling, 1993 pg 58).

2.5 Types of selection Process:

Psychometric Tests

Assessment Centers

Coffee machine system

2.5.1 Psychometric Tests:

According to Passmore, 2008 Psychometrics are the widely used testing method for the selection of the employee and personal development. The psychological test is always important for the selection of the employee especially for the selection of an international manager. According to the validity of psychological tests is disputed. According to Sparow and Brewster (2007) the psychologists the variation between the different natured job test is very small (Schmidt and Hunter , 1998). According to a survey done by The Graduate Recruitment in 2007 two third or about 67 percent of 219 respondents surveyed said that the results of psychometric test had some influence on recruiting and selection decisions, and 24 percent said that it has strong influence, and only 2 percent said that these test does not have any influence. So the above figure shows the importance of psychometric tests.

According to Sparow and Brewster (2007) psychological assessment increasingly involves the application of tests in different cultural contexts, either in a single country or different countries. Now a day the demand of cross cultural assessment test is increasing due to the increasing factor of globalization to gain competitive advantage in international market. According to Mendenhall and Oddou, 1985 one of the important option for evaluating the selection process is the use of psychological tests and evaluation dvices. There are number of instruments available to measure the stress level of an individual.

Figure: 2.1 (Source: article by Jonathan Passmore, Bread and butter “How to use psychometrics for coaching”)

In figure 2.1 the real importance of psychometric test is shown. Psychometric tests are reliable that the selected person will be the one on whom one can rely. And obviously these kinds of tests are valid for any kind of job. The most important point in this test is that it does not include any biasness and the selectors cannot show the biasness while selecting on the basis of psychometric tests. These tests are also standard for different jobs. So all the above mentioned qualities and factors involve in the psychometric tests. In other words one can say that almost all the abilities present in an individual’s mind can be noticed, and the end result will always ends up in the right selection of expatriate.

2.5.2 Assessment Centre:

As the assessment centers are considered to be one of the best selection techniques so according to Sparow and Brewster assessment centers will be the best idea as a selection technique to assess the competency of international managers. This is rarely the case, however. According to sparrow (1999) Even where assessment centers are used to select the managers in international settings, the key cross cultural assessment centers seems to be to design the assessment process so that it is very adaptable to local environment in which it will be operated. So there is need of cross culture assessment centers in which international managers can be assessed accordingly with the changing environment.

Krause and Gebert (2003) have done study on international literature on the conception, operation and evaluation of assessment centers. He examined 281 German firms whose language was German and he compares them with the previously studied firms of United States of America. Study showed that both the American and German firms use the assessment centers but the purpose of some of them was different from the basics. For example the competencies assessed for job analysis might be identified through the use of interviews with job incumbents in 79% of US firms and only 39% of German firms. Most of the German firms rely on interviews for the selection of international managers or expatriates.

so the assessment centers are considered to be an important process for expatriate selection.

2.5.3 Coffee Machine System

This system was the idea of Harris and Brewster (1999) the key findings of the study show the reality of the selection process for expatriate selection in the organizations. In many organizations the selection process falls under what we call ‘coffee machine system’ and this system is the most common form of expatriate selection. What happens is that the senior line manager is standing by the coffee machine when he/she is joined by the colleague:

‘How’s it going?’

‘Oh, you know, overworked and underpaid.’

Actually Jimmy in Mumbai has just fallen ill and is being flown home. I don’t know who I can choose to work over there at very short notice of time. It is driving me crazy.

‘Have you met Simon on the fifth floor?’ he is working in the same line of work. He is very good and bright and looks like going a long way. He was telling me that he and his wife had great holiday in Goa a couple of years ago. He seems to like India. Could be worthy to speak to him.

Hey, thanks I will check and speak to him.

‘No problem. They don’t seem to be able to improve this coffee though, do they?’

What happen in the organization next is that the manger will take some decision and will have informal discussion with his seniors about Simon and then that man will be called and interviewed and selected for the required position. Accordingly HR department and financial department will be involved in the process and the formal and systematic process will be started.

This method is rarely used in the organizations in particular cases when there is an urgent need to fill the position of expatriate.

2.6 Niche Assessments

According to Bolt (2008 ) Many assessment venders specialize in certain niches and offer off-the-shelf products to meet clients’ testing needs. However, vendors can find such persons or individuals for the company who can fit in the organizations new environment and can coop with the new organization’s culture. Testing is the most important part of the application process of the candidate because testing gives the good idea of the individual’s abilities and competencies.

2.7 Factors involved in selection Process:

There are number of factors which affect the performance of expatriate. Dowling, Welch, Schuler, (1999) recognised some of the important and most affective factors and these are the factors which involved to determine an appropriate expatriate selection process. All the factors are shown in a model below.

Cross-cultural Suitability

MMNE requirements

SELECTION DECISION

FFamily requirements

LLanguage

TTechnical Ability

CCountry-cultural requirement

Figure: 2.2 Source: (Factors in expatriate selection, pg 77

Dowling, Welch, Schuler, 1999).

Figure 2.2 shows the factors which are required for an expatriate each of the above mentioned factors is discussed in detail below.

2.7.1 Technical Ability:

According to Hays, 1971 All expatriates are assigned abroad to complete some task weather its building a dam, running some business, or teaching it all depends on the personal technical ability to perform that task. Obviously it is important to consider the individuals’ personal ability to perform the required task assigned to the expatriate. So in selection it is another important area which needs to look at. Different research findings show that the multinational organization give a lot of importance to the technical abilities of the individuals going abroad for international assignments at the time of their selection.

According to Harvey and Novicevic,(2001) that technical and functional expertise has been the primary criterion for selecting expatriate managers for assignments. Hixon found that the selection was based on technical ability and willingness to reside abroad. If the individual is selected without keeping in view its technical ability. It can create the big problems for the multinational organizations to complete its related task or assignment. Reinforcing the emphasis on technical skills is the relative ease with which the multinational may assess the potential candidate’s potential, since technical and managerial competence can be determined on the basis of past performance of the individual who is going to be selected as expatriate.

In fact domestic selection cannot be equal to the international selection but person can be selected on the basis of past domestic records which he has performed domestically as the basic criteria is always the same in all the multinational organizations so on the basis of past abilities there should not be any problem for the organizations to select the expatriates. This approach is also found by Foster and Johnsen,(1996) who report the results of the research into the expatriate selection practices for the newly internationalized UK organizations which shows that organizations keep in view the technical skills, and previous domestic records while selecting expatriate for international assignments.

2.7.2 Cross Cultural Suitability:

The environment and the culture where an expatriate is going is an important factor for an expatriate. So the selectors of the expatriates should always consider the factor of culture for the expatriate. Although these factors does not guarantee for an expatriate for his successes but if these factors are not considered it can lead it towards the failure of expatriate. If the culture is considered then it is always important to study the Hofsted’s dimensions for cross culture and Trompenaar’s dimensions so these researches are explained in detail as follows.

2.7.3 Culture:

Culture is always important for any expatriate selection, so it is very necessary for HR managers and selectors to keep the factor of culture in view while selecting expatriate for international assignments.

There have been a lot of studies on culture and there are a lot of different definitions of culture some of them are given below.

(Kluckholn & Strodtbeck 1952) define culture as, “a set of basic assumptions-shared solutions to universal problems of external adaptation (and internal integration- which have evolved over time and are handed down from one generation to the next.’’

The life style of people living in the society is called culture it includes the social, economical, political, religious, life style of the individuals in the country. According to Drennan, 1992 “whatever is going around is called culture.”

Culture is the way of life of a group of people. There are obvious differences between the different cultures such as language, dress, religion, beliefs, and behaviours of the people, and there are also implicit differences between the two cultures such as in values, assumptions about how things should be.

so these different degrees of explicitness are often called the culture.(Scullion&Linehan,2005). So the culture is very important factor for the selection of expatriate because the individuals move from one culture to another culture for the completion of their assignment.

2.7.4 Hofstede’s Cultural Dimensions

Greet Hofstede’s culture’s consequences (1980, 2001) explores the differences in thinking and social action at the country level between members of 50 nations and three regions. Hofstede originally used IBM employees’ answers to company attitude survey conducted twice, around 1968 and 1972. The survey generated more than 116,000 questionnaires with the number of respondents used in the analysis being approximately 30,000 in 1969 and 41000 in 1973. Hofstede identified and validated four cultural dimensions from respondents patterned answers. For each dimension, he presented possible origins as well as predictors and consequences for management behavior.

Hofsted’s four dimensions are as follows

Power Distance

Uncertainty Avoidance

Individualism versus Collectivism

Masculinity versus Femininity

Another dimension which is fifth dimension presented by Michael Bond is Long term versus Short term Orientation was subsequently developed from a research to accommodate non-western orientations and has been adopted from the Chinese Culture Connection study.

Power distance: The dimension indicates the extent to which a society expects and accepts a high degree of inequality in institutions and organizations. It refers to the relationship between supervisors and subordinates. It reflects the extent to which the less powerful members of organisations expect and accept that power is distributed unequally.

In organisations an illustration of a high power distance score is generally represented as a highly vertical hierarchical pyramid. Subordinates are often told or ordered about a particular task but they are not normally entitled to discuss the decision made by the top management so basically the meaning of power distance is that higher the person in hierarchy the more difficult will be this person to approach. So there are some barriers for that person to see their top management. The barriers can be of different ways like the person barriers or the employee is not allowed to see the top manager or they are not allowed to attend the high managerial level meetings in which decisions are made. So basically power distance shows the distance between a supervisor and his employee.

Uncertainty avoidance: This refers to the degree to which a society prefers predictability, security and stability. According to Hofsted the extent to which the members of a culture feel threatened by uncertain or unknown situations. He argued that high uncertainty avoidance is expressed for example by a company’s need for regulations which tends to minimize in the behaviour of its employees. Company rules are such thing which cannot be broken by the employees even if he think that breaking the rule is in company’s best interest in such sort of environment the work stress is more and uncertainty avoidance is high. On the other hands if the employees are less affected by uncertainty is called low uncertainty avoidance.

Individualism-Collectivism: this dimension relates to the extent to which people prefer to take care of themselves and their immediate families rather than being bound to some wider collectively such as extended family. Hofsted ask the IBM individuals that how important is to keep in view his work goals rather than the organisation. If there is preferred work goals stress dependence on organisation. For example good physical working condition, good ventilation enough space individualism in the work place can be seen. Collectivism can be seen in preference of collective organis


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