Profile of the 21st-century expatriate manager

The 21st-century American expatriate manager (EM) will have completely different professional skills and experience, management orientation and professional challenges from those of today's managers.

The recruitment, selection and development of these managers must begin immediately if U.S. multinational corporations (MNCs) want to stay competitive in the global marketplace in the years to come. Dow Chemical Co., for example, has already commissioned a worldwide panel of senior executives to determine what skills are needed so the necessary training and developmental process can begin immediately Until recently, Dow Chemical identified its CEOs about five years in advance, but now it believes that the selection and developmental process may have to begin 25 years prior to hiring EMs.

Critical issues

The critical issues to be addressed immediately by global human resource managers include the following: * Determining the new success criteria for 21st-century EMs. * Determining the skills and knowledge managers should possess in order to succeed. * Determining the recruitment source(s) for these managers. * Determining developmental needs and techniques for management development. * Determining the fate of the 20th-century EMs who are unable and/or unwilling to adjust to a new role in the 21st century.

Many significant changes, in both the global and the domestic marketplace, demand that MNCs worldwide reassess their current overseas staffing policies and modify them to accommodate the impending changes in the role of the 21st-century Ems.

The global phenomena. The global phenomena currently affecting human resource management and the fate of Ems include the following: * The growing need for generalists rather than functional specialists in overseas subsidiaries. Due to the shortage or unavailability of competent functional staff specialists locally and the exorbitant costs associated with maintaining functional specialists in many overseas locations, the EM in a strategic management position is required to perform all functions. * The growing need for flexibility in overseas subsidiaries' and affiliates' organizational structures. This situation is appropriately reflected in Unilever PLC's philosophy Flexibility in its organizational structure is the most important ingredient of the management philosophy. * The growing need for global managers with flexible management philosophy, management style and cultural orientation. According to Peter Dessau, Colgate-Palmolive Co.'s pan-European human resource director, flexibility in managing" is one of the key attributes of a successful expatriate manager. Dow Chemical Co. is another MNC that believes in the absolute flexibility concept. * The hesitancy of many MNCs to put Ems in strategic line positions in their overseas subsidiaries. In Honeywell's European division, for example, 12 of the top jobs are held by non-Americans. Unilever has six nationalities on its board of directors. * The need for a matrix organization, which makes decisions on a geographical basis, as well as a functional basis, to maintain managerial and operational efficiency in the overseas subsidiary. According to Richard Dulude, a member of Corning Glass Works' board of directors, the old-fashioned matrix is "too bureaucratic, too slow, and too expensive in today's market." According to a Business Week report, today's global product managers are asserting power over country and regional managers. At Unilever, the profit responsibility in the developed countries rests with the product coordinators. In the less developed countries, the regional managers hold the responsibility. * The diminishing competitive position of the United States in the world economy. The global economic arena is no longer exclusively driven by, or designed to favor, the United States. * The rising tide of nationalism in some regions of the globe and the resulting demand for greater employment of the locals in strategic management positions in foreign-owned firms in the country. * The gradual increase in the availability of better qualified and better trained local management talent to fill strategic management positions in both domestic and foreign-owned businesses. Unilever management believes in hiring only local management talent. * The increasing restrictions on the gainful employment of foreign nationals in the host country, including the United States, to protect jobs for the qualified locals. * The increasing global competition for businesses worldwide, compelling MNCs to use the best management talent in the overseas operations, regardless of the manager's national origin, geographic location, citizenship, religious and political persuasions, and racial and ethnic background. * The continuing growth of advanced and more sophisticated computer and information technologies, making intercontinental communications more efficient and faster. * The emergence of better, faster and more reliable modes of transportation, making international travel less time consuming and less expensive. * The forthcoming unification of Europe, offering MNCs enormous business opportunities and EMs all sorts of professional challenges. * The emergence of market-oriented economies in the Commonwealth of Independent States, compelling their managers to become market and profit oriented. * The reconstruction of the Middle East, requiring installation or renewal of all kinds of infrastructure, including experienced management talent.

The domestic phenomena. Many of the domestic phenomena identified here are underway. A number of farsighted U.S. MNCs have already started responding to these global forces and are currently reformulating their overseas staffing strategies and policies. Major domestic forces currently interacting to shape the future of expatriate management include the following: * The decline in the number of Ems working abroad for U.S. MNCs, for financial and political reasons. Approximately 150,000 Americans currently work abroad for U.S. MNCs, down 2 5 percent from five years ago, according to Organization Resources Counselors Inc. * The goals of many U.S. multinational firms to be perceived as true international citizens. Therefore, the organizations change staffing policies to replace U.S. expatriates with local managers. * The escalating costs of recruiting, transferring and maintaining EMs and their families abroad. According to Peter Tillmanns, general manager at the Bank of America's Frankfurt branch in Germany, an American employee costs double what a German doing the same job is paid. Everybody is trying to keep their expatriate numbers down because they are so expensive," he says. * The weakening of the U.S. dollar has changed the staffing policies of many U.S. MNCs. They are replacing expatriate personnel earning dollar-based salaries with local hires. According to Stanley Holt, senior vice president, Boyden International, an international executive-search firm based in Tokyo, "Firms that have been thinking about future movement into Japan--or whose expatriate salary packages are denominated in dollars--are taking a very close look at the dollar's drop." * Fewer career opportunities stateside for the returning overseas managers. The common myth that a foreign management assignment is a stepping stone to a better management career in the domestic organization upon return is no longer true. * The refusal or reluctance of some domestic managers to relocate abroad for personal and professional reasons. For example, lack of professional career opportunities upon return, the weakening of the dollar abroad, dual-career families and the political instability in some areas are among the reasons for refusing an overseas transfer. Roger W Lundeen, former chairman of Dow Chemical and currently chairman of Tektronix Inc., is helping the company grapple with the problem of getting good people to go overseas. "They say, 'What will there be for me when I get back?' " * The loss of glamour in some overseas assignments. The financial perks of many overseas assignments are gradually eroding, making assignments less appealing and attractive. Some overseas assignments are being shortened, and negative overseas premiums are included in the overseas compensation package, inducing the expatriates to return home soon. For example, expatriate benefits are being trimmed or scrutinized at such multinational giants as Chase Manhattan Bank, Colgate-Palmolive Co., Digital Equipment Corp., FMC Corp., General Electric, and General Motors. In a survey of personnel managers at 56 multinational companies based in the United States, 56 percent of the respondents believed a foreign assignment to be immaterial or detrimental to their careers.

Profile of 21st-century EM

The 21st-century U.S. global managers will have to possess multidimensional skills and knowledge.

"The top 21st-century manager should have multi-environment, multicountry, multifunctional, multicompany, multi-industry experience," says Ed Dunn, corporate vice president of Whirlpool Corp.

According to Michael Angus, chairman of Unilever PLC, "Most people who rise toward the top of our business will have worked in at least two countries, probably three. They will probably speak another language and they almost certainly will have worked in different product areas."

The skills and knowledge of the 21st-century expatriate managers can be grouped into two categories--core skills and augmented skills. The core skills are a must for one to succeed abroad, but augmented skills help facilitate managing in a foreign environment. These skills and their managerial implications are identified in Exhibit 1.

The recruitment process

Human resource managers and administrators face two critical issues in developing and implementing their staffing strategies for their overseas subsidiaries in the year 2000 and beyond: Where will these super expatriate managers for the 21st century be recruited from? How will they be transformed to fit their new managerial role in the global markets?

There are three recruitment sources for 21st-century expatriate managers: internal, external or both. Each MNC will have to make its own determination as to the selection of a given recruitment source(s) and the developmental process. A general recruitment and developmental process should operate as follows.

Internal recruitment sources

Steps to use when developing junior talent from domestic operations.

1. Identify potential overseas managers within the parent company and its strategic business units at early stages in their careers. The personnel chief for the European division of the 3M company, for example, asks the company's local operating units to identify young managers who might do well internationally

2. Prepare an individual development plan (IDP), for each candidate selected, by conducting a training and developmental needs analysis. This analysis should include discussions with the candidate's immediate supervisor and peers, based on success criteria and the related knowledge and skills.

3. Give the selectees training and skills development related to potential overseas assignments. In addition to providing theoretical knowledge and information about future assignments overseas, practical on-the-job training can be used to expedite the development process. Both internal and external expertise can be used to provide this training.

This internal source for potential overseas managers offers three major benefits: The multinational organization has a captive management pool to tap; the selectees are expected to be in tune with the corporate culture and its management philosophy; and the process of placing selectees in overseas management projects helps to weed out the unqualified ones.

However, there are two major drawbacks of the above source: The process is quite time-consuming in addition to being costly, and it could seriously disrupt the entire career-pathing and management succession processes should the selectee targeted for further development decide to leave the organization or be separated involuntarily.

Steps to use when developing junior- and senior-level managers currently abroad. Using this source for the 21st-century Ems should involve these pertinent steps:

1. Survey eligible overseas expatriate managers worldwide to determine their willingness to continue working even after a change in their management role and status.

2. Identify the needs for further training and development for those wishing to adjust to fit their new and more demanding managerial role in the years to come.

3. Prepare independent development plans for those willing to adjust.

4. Provide the skills and knowledge identified on their IDPs. Again, both internal and external expertise can be used to provide the necessary training.

5. Place expatriate managers in worldwide subsidiaries, according to the MNC's staffing needs and expatriates' qualifications.

This source of management talent for potential overseas assignments in the 21st century is both less expensive and less time-consuming than developing domestic talent.

The source has two inherent drawbacks: Administering the survey among current Ems overseas to determine their willingness to continue employment under the new system can present a major logistical problem for MNCs with geographically dispersed overseas subsidiaries; and designing, administering and coordinating the development process for those selected for development can be problematic for MNCs whose EMS are dispersed widely overseas.

External recruitment sources

Another route an MNC can follow to recruit qualified expatriate talent is to hire from external sources, including its competitors, worldwide.

This process of recruiting expatriate management talent externally should consist of these steps:

1. Recruit seasoned expatriate managers, directly or through executive-search firms, from competing and noncompeting firms, both at home and abroad.

2. Identify their training and development needs after their selection to help them fit into the new corporate culture.

3. Prepare an individual development plan (IDP) for each hire.

4. Provide the necessary skills and knowledge. Again, both internal and external expertise can be used to achieve this objective.

5. Place them in strategic overseas management positions.

This source of potential senior-level expatriate management personnel has two major benefits: The new hires bring in seasoned overseas management experience and personal maturity, and they are accustomed to working and living in different cultures.

There are three major drawbacks of external recruitment: * The search process is expensive, because reputable national and international executive-search firms are expensive. * The process is difficult to manage and implement because of the distance and logistics involved. * The new, seasoned expatriate managers may find it difficult to adjust.

Role of educational institutions

The colleges and universities in the United States cannot escape their responsibility in the preparation of future Ems. Their academic curricula should be broad enough to adequately equip their students with the professional skills, including appropriate cross-cultural and linguistic skills, critical to their success in overseas assignments. They should stay away from curricula that promote a narrow functional specialization and a parochial perspective to managing abroad.

Dealing with potential misfits

What to do with the 20th-century Ems who will be unable or will be unwilling to adjust to fit their new role in the 21st century? This is the question all MNCS worldwide will have to answer sooner or later. The best strategy to deal with this question is to develop a formal "Salvage Plan" for the potential misfits and to appoint a standing Task Force to manage the plan. The major personnel options and their implementation strategies are indicated in Exhibit 2.

Planning for the potential misfits should start now, so that these individuals can prepare themselves for a well-planned and smooth transition. The development of the Salvage Plan and its execution will also be both time-consuming and costly MNCs have a moral obligation to assist the potential misfits in their adjustment to a new lifestyle.

Conclusions

The need for a new breed of Ems with multidimensional exposure and a broad-based undergraduate education is emerging now and is expected to intensify by the year 2000. In view of this compelling need, MNCs should seriously scrutinize their current overseas-staffing policies and determine the professional skills and training their Ems will need in order to excel in their overseas assignments. Identifying and developing prospective expatriate management personnel will be time-consuming and costly. The identification and development process should begin now to avoid a future shortage of appropriately qualified personnel for overseas assignments.

COPYRIGHT 1992 Society for Human Resource Management
COPYRIGHT 2004 Gale Group