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"ExpatriateÂ employee turnover tendency and job satisfaction in Saudi Arabia". As organizations become globalized, there is an increasing challenge to use expatriates on international assignments to complete strategically critical tasks (Brewster 1998, Downes & Thomas 1999). Multinational corporations use expatriates, not only for corporate control and expertise reasons in global markets, but also to facilitate entry into new markets or to develop international management competencies (Shaffer, Harrison & Gilley 1999, Forster 2000).
Researchers have analyzed the causes of failure in overseas assignments and have introduced Human Resource (HR) practices that would help organizations to select, develop, and retain competent expatriates (Arthur & Bennett 1995, Stroh, Gregersen & Black 1998, Varner 2002). Consequently, multinational corporations are striving to improve their capability in managing human resources internationally.
A prominent concern in the international recruitment and selection literature is that of expatriate failure (Adler 1981, Mendenhall & Oddou 1991). This expatriate failure becomes an international crisis for theÂ MNC. Several studies have identified the reasons behind the failure. For instance, premature return of expatriates and the lack of cross-cultural adjustment by expatriates, their spouse or family are some identified features (Black 1992, Shaffer et al. 1999) as well as poor performance (Fieldman & Thomas 1992, Stening & Hammer 1992, Hodgetts 1993, Naumann 1993, Clark, Grant & Heijltjes 2000) that can arise during an international assignment
The Gulf economies in particular countries like Oman, Qatar, UAE, Bahrain, Kuwait and Saudi Arabia have been heavily relying on expatriates to quench their thirst for rapid and sustainable economic development. In these countries, more than 60% of the employees are expatriates. In recent years, Saudi Arabia has become an important part in the field for international human resource activities, witnessing a thriving interest in the area of expatriate managerial practices and related issues. The shortage of local manpower is the major reason for Saudi Arabia to hire more than 7 million employees from foreign countries. In Saudi Arabia, a prevailing characteristic of the manpower is the cultural plurality. The employees from foreign countries are hired on a contractual basis and they are very much concerned about the salary, benefits and security of their jobs.
Most of the expatriates face problems with adjusting themselves with the culture of Saudi Arabia and this effects their job performance. In Saudi Arabia, a high percentage of expatriates, are returned home or dismissed before the contract period gets over, as they are not able to perform their duties effectively. Therefore, expatriate turnover rate is high in Saudi Arabia, which directly and indirectly incurs additional costs multinational companies (Yavas et al., 1990). The direct cost includes salary, training costs, and travel and relocation expenses. The indirect cost could be a loss of market share, difficulties with host government and demands that parent country nationals be replaced with host country nationals (Dowling, Schuler & Welch 1994, Forster 2000). The effectiveness of the international human resource management can be measured by this expatriate failure rate or the expatriate employee turnover. In Saudi Arabia, high expatriate turnover tendency is becoming a persistent and recurring issue in multinational companies.
The determinants of employee turnover can be categorized into three, which are work-related issues, personal characteristics, and external environmental factors (Cotton and Tuttle, 1986). Work-related factors are job satisfaction and organizational commitment, and these factors can be controlled by the company after hiring the employee. Therefore, the relationship between employee turnover tendency and job satisfaction can be studied and would be useful in effectively managing expatriate employees and also improve its concept in international human resource management. Similarly, personal characteristics such as age, education and experience can be controlled before and after hiring an employee by the organization. These factors can be controlled during recruitment and selection processes and after the employee has been hired, and then it can be controlled through training programs. External environmental factors could be organizational climate, management practices and supervisory behaviors which cannot be controlled by the company unless it could be for long term perspective.
The employee turnover tendency and job satisfaction will be different considering the factors such as type of employee, nature of the job and types of organizational culture. Being one of the largest expatriate communities in international markets among developing countries, Saudi Arabia is chosen to study the nature of employee turnover tendency and job satisfaction among expatriates and the extent to which they are associated in terms of international human resource management.
Expatriate turnover can be either requesting a transfer to home country or quitting the company before the contract period ends. In Saudi Arabia, a high percentage of expatriates who return back home after the assignments are completed, always wanted to leave the job and the country but they delay that intention for several years (Ben-Bakr et al., 1994; Yavas et al., 1990).
Job satisfaction is usually defined as an affective or emotional response toward one's job. Job satisfaction is what the employee feels about their own job, whether it is positive or negative. The most important element of an individual's satisfaction with his/her job is related to the characteristics of the position he/she occupies. Almost everyone agrees with the notion that an interesting and rewarding job will greatly contribute to increasing satisfaction within a given work environment. Researchers have repeatedly shown that these job/task characteristics strongly influence worker's attitudes, including satisfaction and commitment (Miller & Monge, 1986; Cotton & Tutle, 1986).
The concept of job satisfaction can be classified into three: intrinsic, extrinsic or general satisfaction. Intrinsic satisfaction can be accomplished if there is freedom in job and a proper task identity. Extrinsic satisfactions are those which are accomplished when an employee is given a reward by the organization or superiors which include compensation and job security. General satisfactions are those which can be derived from combined satisfaction with various job levels.
Job satisfaction is an important factor or is the most desirable for an organization, as it is highly influential, when the employees are satisfied then it leads to organizational overall success and growth. This can be proven, while considering the most successful firms, all those firms have employees who are highly satisfied with their jobs. Job satisfaction or employee's positive feelings which are resulted from the appraisal received for their performance of their job or job experience reduces the employee's turnover tendency.
The relationship between employees and their organization can consider to be exchanged for gaining insights about the influence of job satisfaction and employee turnover tendency. While considering such an exchange relationship, there will be employees on one hand, who come to organizations with certain extrinsic and intrinsic needs and desires. This employee expects to find an environment which is suitable for them to use their abilities to satisfy these needs within the organization. On the other hand, employees are hired by the organization on the basis that they can accomplish the duties given which are required for the success and overall growth of the organization. When an organization provides the expatriate what they expecting and satisfy their needs, then these employees use their abilities and work hard towards accomplishing their own and organizational objectives. When such exchanges can be taken place, and the organization provides the proper work environment, there will be an increase in the response having lower turnover tendency from the expatriates. Any organization will desire to reduce the turnover tendencies of the expatriates. It can be said that, when the needs of the expatriate employees are satisfied, they are satisfied with their jobs too, and thus the turnover tendency will be lower. Also when an expatriate identifies that there are factors which are important for them in the organization, then they are satisfied with the job. But it also depends based on different types of employees.
In Saudi Arabia, it is generally believed that expatriates are more concerned about their pay, benefits and security which is extrinsic than the task identity, and job variety which are intrinsic (Baker and Abou-Ismail, 1993). In the context of Saudi Arabia, a number of studies (e.g., Ben-Bakr et al., 1994; Yavas et al., 1990) found no relationship between employee characteristics and turnover, implying that individual differences among expatriates were unrelated to their turnover rate. The nature of management and organizational culture in Saudi Arabia may instill perceptions of uncertainty in jobs. Hence, support of the strong members of the organization should be ensured by the expatriates. Feedback on job will help the expatriates to remain informed about the attitudes of authority towards them.
This paper has examined the expatriate employee turnover tendency, job satisfaction and related issues in Saudi Arabia. Managers of multinational corporations have an understandable interest in the expatriate employee turnover tendency and job satisfaction of their multi cultural workforces because these issues relate to the effective management of workforces that are characterized by multiculturalism (Davis and Rasoul, 1988). As the expatriate turnover tendency and job satisfaction are associated steps can be taken in hiring, training, motivation, and incentive programs to reduce employees' turnover tendencies and enhance job satisfaction. Finally, taking steps to enhance employee job satisfaction and subsequently reducing employee turnover tendency could be economically advantageous for employers in terms of reducing costs associated with high turnover. The cultural difficulties encountered by the expatriates, can be resolved by providing cross cultural training and thereby reaching cultural proficiency, thus being able to adjust with the culture of Saudi Arabia and perform their international assignment effectively. The multinational companies has the responsibility to understand their role in encouraging foreign employees to learn knowledge, skills and attitudes congruent with its objectives in global business operations, which are important to achieve job satisfaction and effective business performance.