Page 115 - DMGT548_GLOBAL_HRM

Global HRM

Notes If the multinational does not reward expatriate performance, tolerates a high turnover
among repatriates or is seen to terminate a repatriate’s employment upon re-entry, then
the workforce may interpret the acceptance of an international assignment as a high-risk
decision in terms of future career progression within the organisation. The multinational’s
ability to attract high-calibre staff for international assignments is thereby lessened, and
this can have a negative effect on the multinational’s activities in the long-term.
2. Return on Investment (ROI): Expatriates are expensive. Multinationals try to localise
positions through the employment of HCNs but not all positions can be localised. The
alternative is a short-term or non-standard assignment to replace the traditional expatriate
form. Cost containment is the drive here along with staff immobility.

Example: US multinational spends around one million dollars on each expatriate over
the duration of a foreign assignment. And if approximately one in four repatriates exits the firm
within 1 year of repatriation, it is a substantial financial and human capital loss to the firm,
especially if the skills, knowledge, and experience that the individual gains are important to the
firm and scarce in the internal or external labour markets.
Getting a return on this investment would appear to be an important objective, but not
easy to achieve. ROI concentrates on the international assignment period, and can be
substituted by a cost-benefit analysis to justify a decision to replace expatriates with
HCNs, rather than considering gains that accrue to the organisation through repatriated
staff.
3. Knowledge Transfer: Common theme in international business that is stressed by company
managers is the need for cross-fertilisation of ideas and practices that assist in developing
and maintaining competitive advantage. International assignments are a primary method
of achieving this objective. Organisations need to make sure that their business, strategies
are supported by sound mobility strategies regardless of national boundaries will be
increasingly vital to the success of a global organisation.
Given the roles played by expatriates, along with their cost, it is reasonable to expect that
multinationals would endeavour to retain key staff and to extract and build upon their
international experience.
Several conclusions regarding repatriate attrition rates can be drawn:
1. Knowledge transfer is treated as a one-way activity.

2. Expatriates are sent on international assignments and effectiveness is determined on the
performance of their ascribed roles and work responsibilities.
3. Any transfer of knowledge and competence occurs there in the host location, and remains
there. Expatriates return to their home base and are reassigned or resign.
4. While performing their tasks in the host location, expatriates develop skills and gain
experience, knowledge and network relationships that can then be used upon repatriation
in some way or another.

Example: A project manager working in Russia can report, on re-entry to his UK home
base, technical problems encountered and solutions that were developed to overcome these
problems, thus sharing the experience. However, not all of the knowledge about that project is
explicit. Much will remain tacit and person-bound. What is codified and made explicit often is
retained could be applicable to other projects or types of business concerning Russia, such as
important contacts, management styles and some technical solutions.

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