Expatriate Challenges in Developing Countries

heaps_warren1Author:
Warren Heaps – Birches Group LLC

Today I had the pleasure to deliver a presentation to the Thames Valley Chapter of the Forum for Expatriate Management.  If you are not familiar with this organization, I urge you to visit their website – there is a wealth of great resources to be found regarding all aspects of international assignment management.

My presentation focused on the unique challenges of expatriate assignments in developing countries.  There is information about:

  • the challenges of designing expatriate compensation packages;
  • the emerging trends in the sources of talent for these assignments;
  • some comparative information on hardship pay (a key element of packages to some developing countries); and
  • a couple of ideas about alternative approaches to consider.

If you would like to look at the presentation in its entirety, please send me an email using the Contact Us page.

If you have some thoughts or questions about this topic, use the comments feature to share them!

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14 responses to “Expatriate Challenges in Developing Countries

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  3. Warren,

    I liked your presentation very much. Your summary point about needing to understand all the conditions on the ground is key. The developing world is tremendously complex, and VERY different from developed economies–and these differences cross the full range, from business practices to cultural perceptions to expectations about time and money.

    One point worth piggy-backing on: you mentioned in your talk that, because of these differences, adjustment is more challenging for expats going into developing societies. The corollary to this, which our clients need to hear from us, is that not everyone can succeed in these environments. Some people can’t make these adjustments, or can only make them with an expenditure of time and resources that the sending company usually doesn’t want to pony up. Getting the right people is far more important than finding folks with the right technical skills–and if you send the wrong person, even the best of compensation packages won’t prevent failure of the assignment.

    • Thanks for your comments, Bill. I agree with your point, that selection is an absolutely critical step in the expatriation process. I would even go a bit further, and suggest that spouses and family members need to also be considered in the process of evaluating suitability for a particular assignment. Research clearly shows that unhappy families result in failed assignments.

  4. Sushant Aggarwal

    Dear Warren,

    Thanks for sharing presentation on expat compensation. There are a couple of things I would like to mention:

    – How does offsetting expat’s compensation of a developed country (say US) to comparatively low cost country (say Bangladesh) impacts the morale, productivity, and efficiency of an expat, considering that he/she is not only moving to a totally different place, but also are having a comparatively lower salary to work with.

    – Don’t you think expats moving from high cost regions should be paid their original compensation as paid in their home/native country rather than switching to a different pay package as it can create some real imbalance the way they allocate their spending on their family say child education, home rent and so on. After all, some expats may travel alone and leave their family at native country.

    – Don’t you think since designing and updating expat compensation is so complex, particularly taken in to consideration every economy behaves differently and so GDP and particularly inflation rates could shoot up in some countries while not in other, it is better to really simplify the whole model and pay people shifting from developed countries to developing their original salaries and offset changes for expats who move from developing countries to developed countries on the higher side.

    Please send across what you think about my view above.

    Regards,
    Sushant Aggarwal

    • Exactly! There is no reason why companies need to make expatriate compensation schemes so complex. Sure, there are issues to manage related to compliance, tax, immigration, etc. But on an overall basis, your idea – just pay the home salary – could work. Maybe a small extra incentive, and some consideration for housing and schooling, too.

      The most important thing, though, is the impact on families (when the accompany, and even when they don’t).

      Also, don’t overlook the importance of integrating your expatriate program into a broader succession planning and development approach. If you cannot manage expectations for assignees coming off assignment and looking for the next challenge, you will lose that talent, which is an expensive proposition.

  5. Warren,

    Your point about families is VERY well taken. We have seen cases where very good people–technically strong, well-adjusted to the environment–were derailed by a spouse who couldn’t fit in and find a place. We try to stress that point in our book, CARRY A CHICKEN IN YOUR LAP, OR WHATEVER IT TAKES TO GLOBALIZE YOUR BUSINESS–families matter very much, and smart companies take that into account.

  6. globalcoachcenter

    Families matter a lot in the expatriate adjustment and success. And relationships are the ones that take the first hit should the assignment present difficulties/frustrations/etc. Which is why, if a company considers the employee an asset, they should do everything in their power to help the family adjust. This is especially true in developing countries.

    While expatriation in general tests a person — expatriation to a developing country tests a person even more. Most human beings don’t like change and they like drastic change even less (drastic change being between the Western country and a developing one). However, everyone — and I truly believe it — has the ability to make it work for them. They may simply need some help in the form of coaching and support in order to adjust.

    That means that instead of dismissing well-qualified candidates because the company thinks he/she may not survive expatriation, the company really needs to provide that person with all the support required to get him/her through the process.

    I have worked with many, many clients — both expats and spouses — who came to expatriation without any support from their companies and as a result, had some real issues. They hired me on their own because they needed the support to get through it.

    I also think Culture Shock has a lot to do with it. And it has to be addressed. In case anyone is interested, I am offering a How to Manage Culture Shock Webinar on Nov 10 and 12th — and I offer three innovative tools to deal with it. More information here:

    http://globalcoachcenter.wordpress.com/three-steps-to-managing-culture-shock-webinar/

    Margarita Gokun Silver
    Expatriate and Cross-Cultural Coach
    http://www.globalcoachcenter.com

  7. Sushant Aggarwal

    Dear Warren,

    Thanks for your response on my previous comment.

    Just to add on integrating expatriate program in succession planning and development point – do you think most companies struggle to successfully manage expatriates expectations because companies typically tend to select employees based on core skills and not on other softer areas such as adaptability (specific to location, culture, geography, people), total time spent on the project abroad, variance in compensation (higher to lower and vice versa), family (spouse related, children related like education, health and other which could be more sensitive to a parent)

    In addition, do you think that companies are unable to interlink international projects to the bigger picture and skills acquired

    Further, do you think having a survey before selecting potential employees on above parameters can help companies select employees who are not only proficient in work, but are also prepared and motivated to live in challenging lifestyles.

    After all, worst thing for an organization could be to have such a expat project go completely offtrack and forcing good employees to leave organizations.

    Regards,
    Sushant Aggarwal

    • Sushant,

      I think that oftentimes company absolutely select employees for assignments without considering the “softer skills.” Most often, in fact, it is technical qualifications that are cited as the reason why a particular candidate is suitable for an assignment.

      There are tools available to assess candidates and their families prior to an assignment to determine their suitability and highlight areas which could present problems during the assignment. Many companies are reluctant to use these tools to screen out assignees, but should use them to address issues that they identify to ensure successful assignments.

      It requires a big investment of resources to integrate an international assignment program effectively with succession and recruitment. Companies that are willing to make the investment will certainly benefit from the results.

      Warren

  8. Warren,

    I wonder about the effectiveness of some of the tools you mention, and their interaction with incentive structures. I’d be curious to hear your experiences with them.

    In my observations & research, surveys for “expat-ability” are often a bit too transparent–that it, it is relatively easy to spot the answers that will get you labeled either as “good” or “bad” to send overseas. Employees, being rational much of the time, will pick the answers that produce the outcome they want.

    Thus, if the company has made “international experience” a prerequisite for advancement to the senior level, people will put down the answers that make it look like they are good internationalists. If the company treats overseas assignments as punishments or dumping grounds, or if the person simply doesn’t want to go (for family or other reasons), they will skew their results the other way.

    I know it’s hard in large organizations for people to really know each other. But this is a point we make repeatedly in our book–you’ve got to know your people, know their strengths and weaknesses, and what motivates them. Drucker said repeatedly, manage to your people’s strengths. But if you don’t know what their real strengths are, you’re in the dark.

    • Bill –

      I have no personal experience with assessment tools, but know many who do, and have had decent results.

      One tool I am familiar with is the SAGE (Strategic Assessment for Global Endeavors). While it has assessment in the name, it’s more of a culture-based assessment of an individual’s readiness to deal with cultural differences in an assignment location. There is a version for spouses as well.

      SAGE was developed and validated by Dr. Paula Caligiuri (http://www.paulacaligiuri.com/blog) at Rutgers University in New Jersey. It’s marketed these days by RW3
      (http://www.rw-3.com) .

  9. Paula’s work is quite good, we cite some of it in our book. So I would guess that her stuff might be better than some I’ve seen.