1. 2008- SECTION C
 DISCUSS THE INCREASING SCOPE OF IHRM. COMPARE DOMESTIC HRM
AND IHRM
 WRITE A NOTE ON HRM AS PRACTISED IN JAPAN
 WHAT IS EXPAT FAILURE? DISCUSS THE WAYS TO MINIMISE THE SAME.
ILLUSTRATE YOUR ANSWER
Expatriate failure not only means the premature return of an expatriate but also
the underachievement in that assignment. Eventually it represents the
organisational failure to manage human resources internationally.
There might be several reasons why many expatriates fail to deliver the objectives
assigned by the headquarters. Cultural adjustments, language differences, Foreign
Service hardship, length of assignment,
Below are the chief factors resulting in an unsuccessful expatriate
assignment.

2. 1. Family Stress
Most expatriate managers are challenged and excited to be in their new
postings. They need to spend a lot of time at work since they are under pressure
to adapt to the new culture and their overall responsibilities are often larger than
they have experienced before.
As a result, the wives of expatriates spend a lot of time by themselves – and yes,
trailing spouses are still usually female – and are cut-off from their own family
and friends. At the same time, the wife is usually dealing with problems for which
she has no previous experience. She may catch a maid stealing or get stopped by
a policeman who wants a payoff for a non-existent offence. She may have been
told that internet connectivity is available but then finds it takes 6 months to
install. All through this, she will probably discover that suitable employment for
herself is next to impossible in an emerging country – seriously damaging her own
long-term career.
It is no surprise that it is generally the trailing spouse who suffers the greatest

3. culture shock in the new country. The result can be an unhappy spouse who does
her best to impair the performance of the expatriate manager.
Total marriage breakdown is not an uncommon result. Unofficial numbers from
the Asian Development Bank (a large development organization modeled after
the World Bank) are that upwards of 50% of their expatriate’s marriages fail due
to the stress of offshore postings.
The consequence is that many expatriate postings are either terminated early or
the performance of the expatriate managers are impaired.
2. Cultural Inflexibility
It is common for inexperienced expatriate managers to be taken completely by
surprise at the deep cultural differences in their posted country.
The expatriate finds that, after a seemingly open conversation about
improvements to be made, the local manager who reports to him doesn’t show
up for work for 2 days. In meetings, his local staff thinks it is acceptable to spend

4. hours talking on and on until every possible issue is agreed to by everyone. If the
expatriate manager is to be successful, he will need to learn how to adapt to
concepts such as “saving face” (the cause of the local manager not showing up for
work) and “building consensus” that are important in Asia.
He also needs to realize that transforming his new staff into Americans or
Japanese workers has been tried a million times and it doesn’t work. All
expatriates maneuver a narrow path between accepting local conventions on one
side and aspiring to international standards on the other.
Southeast Asia has a rich variety of cultures. The differences in religion are one
example. Thailand is graciously Buddhist, Indonesia is gently (but intensely)
Islamic and Philippines is completely Catholic. As for Singaporeans, some say their
only religion is work. Managing such varied peoples obviously requires very
different tactics.
3. Emotional Immaturity
In their home countries, most expatriates are middle-managers with relatively
ordinary lives. Once relocated to Asia, they are suddenly thrust into the national

5. spotlight as the Country Manager of a high profile multinational organization.
They have more people reporting to them than ever and often have more control
over them.
On the personal front, expatriates may have household servants for the first
time, are called upon to meet senior government officials and are generally made
to feel important. Further, some expatriates may be attracting enthusiastic
attention of certain local females seeking their own type of fame and fortune by
landing a high-status foreign boyfriend or husband.
The combination of greatly expanded responsibility and social status can be
difficult to handle for people lacking the emotional maturity to keep themselves
grounded. It is not uncommon for expatriates to either destroy their career
opportunities and/or marriages by ignoring responsibilities and succumbing to
self-destructive temptations.
4. Responsibility Overload
In almost all cases, the responsibilities of expatriates in emerging countries will
be larger than they are used to overseeing. Given the nature of emerging
countries in Southeast Asia, expatriates may supervise 5 to 10 times more people
than ever before.

6. In other words, a German IT Manager who managed 15 people in his home
country could have 100 in Malaysia. An American call center manager with 100
people in the US can find himself soon overseeing 800 in Philippines.
Such large increases in responsibility are difficult for anyone to handle. Added to
that, are the new challenges of managing expectations of head office managers
and clients in other countries and who may not understand the cultural
differences that are impacting results.
5. Physical Breakdown
Expatriates are generally motivated to succeed and excited about gaining
international experience. As a result, they often work long hours in the early part
of their postings to do “whatever it takes” to be successful. They are also adapting
to seemingly overwhelming cultural differences with local staff and greatly
expanded responsibilities.
On the home front, the families of expatriates are almost certainly going through
their own severe cultural adjustments and may be clamouring for the managers’
time and attention to help them through it.

7. The combination of emotional despondency and physical exhaustion from
elevated stress levels and overwork is a common problem for new expatriates --
otherwise known as burn-out. Unless alleviated, the result can be dramatically
reduced effectiveness or work-interrupting illness for the manager.
 FOUR APPROACH TO MULTINATIONAL STAFFING DECISIONS
Corporate culture and management philosophy, to a great extent decide the
formulation and implementation of corporate and operational strategies and
their evolution into various stages of internationalization. Companies involved in
world trade and investment can be divided into four types based on their
management approach and corporate philosophy:
 Ethnocentric
 Polycentric
 Regiocentric
 Geocentric

8. Ethnocentric Organisation:
There motto is ‘this work in my country therefore, it must work in other
countries also'. These are home country oriented organization. Example, when a
Japanese corporation invests in Mexico, Japan is the home country and Mexico is
the host country. If the Japanese Corporation is ethnocentric, it will expect
Mexicans to accept the inherent superiority of Japan. Investments will be made
on the Japanese methods of conducting business.
In this approach, all key management positions are held by parent country
nationals, e.g., Toyota, Matsushita, Samsung etc. this strategy may be appropriate
during the early phases of international business, because firms at that stage are
concerned with transplanting a part well in their home country. Ethnocentric
corporations believe that home country nationals are more intelligent, reliable
and trust worthy than foreign nationals. Firms such as Procter and Gamble,
Philips, and Matsushita originally followed the ethnocentric approach.
In this approach, all important positions in MNCs are filled up by PCNs in
the early stages of internalization. Apart from this, for certain business-related
reasons which are as follows:

9. 1. A perception that qualified HCNs may not be available for the units;
2. To ensure that coordination and communication are maintained
adequately in headquarters.
But, these are several problems in adopting the approach. Some of them have
been pointed below:
1. An ethnocentric staffing policy limits the promotion opportunities of HCNs,
which may lead to reduced productivity and increased turnover among that
group.
2. The adaptation of expatriate managers to host countries often takes a long
time during which PCNs make mistakes and make poor decisions.
3. When PCN and HCN compensation packages are compared, the often
considerable income gap in favor of PCNs is viewed by HCN, as unjustified.
4. For many expatriates, a key international position means new status,
authority and an increase in standard of living. These changes may affect
expatriates sensitivity to the needs and expectations of their host country
subordinates.
Apart from, this the cost of maintenance of expatriates is quite high. This
approach is not only reflected in the staffing policy but in all other areas such as

10. performance appraisal where evaluation format is designed and administered by
parent nationals and new product development is done in the home country.
Many international companies exhibit this ethnocentric philosophy. They have
difficulty in communicating in different languages and accepting cultural
differences. But ethnocentrism limits strategic alternatives to entry modes, such
as exporting, licensing and then key operations.
Polycentric Organisations:
These motto is ‘when in Rome do as the Romans do'. When you are
elsewhere lives as they live elsewhere. The polycentric staffing requires host
country nationals to be hired to manage subsidiaries, while parent-country
nationals occupy key positions at corporate headquarters. Although top
management positions are filled by home-country personnel, this is not always
the case. They see profit potential in a foreign country but find the foreign market
difficult to understand.
The polycentric message is: ‘Local people know what is best for them. Let's
give them some money and leave them alone as long as they make us a profit.'
Governmental pressure and foreign laws often necessitate polycentric approach.
The local government may be a major customer and insist on local ways to be

11. adopted. Many multinationals adopt this approach because they face the
heterogeneous environments in which product preferences may be the deciding
factors and strategies are to be developed on a market by market basis. There are
several advantages with this approach are outlined below:
1. Employing HCNs eliminate language problems for the expatriates and their
family members, reduces cost on costly awareness training programs, and
takes care of the adjustment problems to a large extent.
2. In politically sensitive situations, it helps the MNCs to maintain a low
profile.
3. Even though high salaries may have to be given to attract HCN applicants, it
still works out cheaper for the company in the long run as compared to
employing PCNs.
4. The crucial problem of turnover experienced when employing PCNs can be
avoided effectively by employing HCNs, since they are more stable and can
help in maintaining the continuity in managing subsidiaries more efficiently.
Some are they problems are as follows:
1. Bridging the gap between HCN subsidiary. Managers and the PCN managers
at headquarters is a major problem, especially with regard to language

12. barriers, conflicting national loyalties and differences emanating from
personal values, attitudes to business and so on. This may result in a MNC
becoming a ‘federation' of independent national units with weak linkages
to the corporate head quarters.
2. Lack of exposure to international assignments among PCN managers at
headquarters and lack of career mobility among HCN managers due to their
stagnation in subsidiaries will ultimately affect the strategic decision-
making capabilities, reducing their market share and customer base and
their position in the foreign country vis-à-vis their competitors.
Regiocentric Organization:
These are regionally oriented organizations. A Corporation implements a
regional strategy when synergistic benefits can be obtained by sharing functions
across regions. The international staff is transferred with in the same region they
work, example, for a global firm having a number Asia-Pacific, European and US, a
manager working in Asia-Pacific region will be moving within the same region
only, if the company adopts regiocentric approach. Regional headquarter
organizes collaborative efforts among local subsidiaries, it is responsible for the
regional plan, local research and development, local executive selection and

13. training, product innovation, cash management, brand policy, capital expenditure
and public relations.
The headquarter managers world strategy, country analysis basic research
and development, foreign exchange, transfer pricing, inter company loans, long-
term financing, selection of top management, technology transfer and
establishing corporate culture. The advantages of using a regiocentric approach
are:
1. It allows interaction between executives transferred to regional
headquarters from subsidiaries in the region and PCNs, posted to the
regional headquarters.
2. It reflects some sensitivity to local conditions, since local subsidiaries are
staffed almost totally by HCNs.
3. It can be a way for a multinational to more gradually from a purely
ethnocentric or polycentric approach to a geocentric approach.
Disadvantages of regiocentric policy.
1. It can produce federalism at a regional rather than a country basis and
constrain the organization from taking a global stance.

14. 2. While this approach does improve career prospects at the national level it
only moves the barrier to regional level staff may advance to regional
headquarters but seldom to positions at the parent headquarters.
Geocentric Organisation:
This staffing philosophy seeks the best people for key jobs throughout the
organization, regardless of nationality, selecting the best person for the job,
irrespective of nationality is most consistent with the underlying philosophy of a
global corporation. The MNC is taking a global approach to its operation,
recognizing that each part (subsidiaries and headquarters) makes a unique
contribution with its unique competence. It is accompanied by a worldwide
integrated business and nationality is ignored in favour of ability. There are three
main advantages to its approach:
1. It enables a multinational firm to develop an international executive team
which assists in developing a global perspective and an internal pool of
labour for deployment throughout the global organization.
2. It overcomes the federation drawback of the polycentric approach.
3. It supports cooperation and resource sharing across units.

15. There are disadvantages associated with a geocentric policy.
1. Bridging the gap between HCN subsidiary managers and the PCN managers
at headquarters is a major problem, especially with regard to language
barriers, conflicting national loyalties and differences emanating from
personal values attitudes to business and so on.
2. Host government want a high number of their citizens employed and may
utilise immigration controls in order to force HCN employment if enough
people and adequate skills are unavailable.
3. Many western countries need extensive documentation if they wishes to
hire a foreign national instead of a local national, which is time consuming,
expensive and at times, futile.
4. A geocentric policy can be expensive to implement because of increased
training and relocation costs. A related factors is the need to have a
compensation structure with may be higher than national levels in many
countries.
5. Lack of exposure to international assignments among PCN managers at
headquarters and lack of career mobility among HCN managers due to their
stagnation in subsidiaries will ultimately affect the strategic decision-

16. making capabilities of both the groups of managers, thereby affecting the
firms, and the quality of their business decisions and their resource
allocation capabilities, reducing their market share and customer base and
their position in the foreign country, vis-à-vis their competitors.
6. Large numbers of PCNs, TCNs and HCNs need to be sent abroad in order to
build and maintain the international team required to support a geocentric
staffing policy. To implement a geocentric staffing policy successfully,
therefore, requires a longer lead time and more centralized control of the
staffing process. This necessarily reduces the independence of subsidiary
management in these issues, and this loss of customarily may be resisted
by the subsidiary.