MNCs are increasingly faced with the problem of how to allocate limited resources among multiple subsidiaries around the world. To be competitive, an MNC cannot afford to sacrifice global competitiveness for local subsidiary performance.
Neither can it sacrifice local performance and expect to survive globally. An MNC and its subsidiaries therefore must carefully balance the demands of strategic global control and local adaptability.
For most MNCs, the person assigned to carry out this balancing act between global and local demands has been the expatriate manager. An expatriate manager is a person assigned to carry out this balancing act between global and local demands.
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Traditionally, expatriates were employees from the home country of the MNC. However, during the 1980s and 1990s, as MNC operations become more diverse, managers from any country in which the MNC operated were selected to manage its foreign subsidiaries around the world.
More recently, the selection and effective utilisation of impetrates (foreign-country managers brought to a MNCs home country) has become an important issue for many multinational firms. As a practical matter, however, the choice often depends on the availability of qualified managers in the host country.
Most MNCs use a greater proportion of PCN’s (also called expatriates) in top management positions, Staffing middle and lower management positions with increasing proportions of HCN’s (impetrates) as one moves down the organisational hierarchy.
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The choice of staffing policy has a considerable influence on organisational variables in the subsidiary, such as the locus of decision-making authority, the methods of communication, and the perpetuation of human resource management practices. These variables are illustrated in Table 19.2 on the next page.
Much of what has been written about IHRM has focused on the problems of selecting and training managers for international assignments and then successfully repatriating them when their foreign stints of duty end.
Without exception, all the phases of human resources management should support tile desired strategy of the firm. In the staffing phase, having the right people in the right places at the right times is a key ingredient to success in international operations.
An effective managerial cadre can be a distinct competitive advantage for a firm. However, the task faced by HR specialists in the MNCs home headquarters in effectively managing expatriate assignments is an extremely complex one.
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These range from identifying employees with international assignment potential, to selecting employees for specific assignments, to managing relocation and immigration issues; to repatriating employees once their foreign assignments end.
Issues such as dealing with dual-career couples and providing counselling and support to expatriates and their families are also part of an overall expatriate management system.