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Each has specific desires and motivations regarding the expatriate selection process.

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- One of the reasons there has been a decline in the number of expats in recent years is that MNCs have found that the expense can be prohibitive.
- However, localization has picked up in the Asia Pacific region, particularly as companies want to tap into the regional talent pool and contain costs

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MNCs use a number of selection procedures. The two most common are:
- tests
- interviews
Theoretical models containing the variables that are important for adjusting to an overseas assignment have been developed -> contribute to more effective selection of expatriates.

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Tailoring the Package

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Why do individuals accept foreign assignments?

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Why do individuals accept foreign assignments?

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Greater demand for their talents abroad than at home.

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Balance-sheet approach: Ensure that the expat is “made whole” and does not lose money by taking the assignment.

Negotiation: Work out a special, ad hoc arrangement that is acceptable to both the company and the expat.

Localization: Pay the expat a salary that is comparable to the salaries of local nationals.

Lump-sum method: Give the expat a predetermined amount of money and let the individual make his or her own decisions regarding how to spend it.

Cafeteria approach: Give expats a series of options and let them decide how to spend the available funds.

Regional system: Set a compensation system for all expats who are assigned to a particular region.

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Common Elements of Compensation Packages

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Common Elements of Compensation Packages

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There are five common elements: base salary, benefits, allowances, incentives, and taxes.

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Whom would it like to see put in managerial posi- tions?

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Whom would it like to see put in managerial posi- tions?

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Although many MNCs try to choose people who fit in well, little attention has been paid to the host country’s point of view

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One early study grouped the participating countries into clusters

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One early study grouped the participating countries into clusters

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include such things as family life, economic life, unemployment rates, political stability, and so forth to determine how safe or attractive the country.

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Comparative Positive Managerial Behavior by Country

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Comparative Positive Managerial Behavior by Country

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Comparative Negative Managerial Behavior by Country

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Comparative Negative Managerial Behavior by Country

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(Australia, Austria, Canada, India, New Zealand, South Africa, Switzerland, United Kingdom, and United States)

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The Anglo cluster was more interested in individual achievement and less interested in the desire for security than any other cluster.

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(Denmark, Finland, Norway)

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(Belgium and France)

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Honesty and follow-through with employees, distinguish Indonesian and U.S. managers from Mexican managers

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(Colombia, Mexico, and Peru)

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- Base salary is the amount of money that an expatriate normally receives in the home country.
-  Expatriate salaries typically are set according to the base pay of the home countries.
- The base pay also serves as the benchmark against which bonuses and benefits are calculated.

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Public criticism and discipline toward employees, also distinguish Indonesian and U.S. managers from Mexican managers

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(Argentina and Chile)

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Anticipa-tory adjustment is carried out before the expat leaves for the assignment and is influ-enced by a number of important factors

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(Brazil, Germany, Israel, Japan, Sweden, and Venezuela)

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The French cluster was similar to the Anglo cluster, except that less importance was given to individual achievement and more to security.

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Countries in the Northern European cluster were more oriented to job accomplishment and less to getting ahead; considerable importance was assigned to jobs not interfering with personal lives.

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- Approximately one-third of compensation for regular employees is benefits
- Most U.S.-based MNCs include expatriate managers in their home-office benefits program at no additional cost to the expats.
- Additionally, MNCs often provide expatriates with extra vacation and with special leaves.

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In South American clusters, individual achievement goals were less important than in most other clusters. Fringe benefits were particularly important to South American groups.

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Germans they placed a greater emphasis on advancement and earnings.
The Japanese were unique in their mix of desires. They placed high value on earnings opportunities but low value on advancement.

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In-country adjustment takes place once the expatriate is on
site, and a number of factors will influence his or her ability to adjust effectively.

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Some firms use testing, it is not extremely popular.

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- Allowances are an expensive feature of expatriate compensation packages.
- Relocation expenses typically involve moving, shipping, and storage charges.
- Housing allowances cover a wide range.
- Education allowances for the expat’s children are another integral part of the compensation package.
- Hardship allowances are designed to induce expats to work in hazardous areas or in an area with a poor quality of life.

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Almost 80 percent of the 127 foreign operations managers: no tests in the selection process.

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The more widespread testing that these firms use when selecting domestic managers.

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- some MNCs have also been designing special incentive programs for keeping expats motivated.
- The lump-sum payment has a number of benefits.
- The specific incentive program that is used will vary, and expats like this.

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Testing has limited value because:

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The costs.

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Questionable accuracy.

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Poor predictive record.

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- the pre-departure training that is provided
- the previous experience the expat may have had with the assigned country or with countries with similar cultures

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Interviews of candidates (and their spouses) by senior executives still ultimately provide the best method of selection

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- Another major component of expatriate compensation is tax equalization.
- Usually, MNCs pay the extra tax burden.
- Any taxes that exceed what would have been imposed in the home country are paid by the MNC, and any windfall is kept by the expat as a reward for taking the assignment.

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- the expat's ability to maintain  a positive outlook in the face of a high-pressure situation, to interactwell with host nationals, and to perceive and evaluate the host country's cultural values and norms correctly

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Tung’s research:

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Tung concluded:

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- the job itself, as reflected by the clarity of the role the expat plays in the host management team, the authority the expat has to make decisions, the newness of the work-related challenges, and the amount of role conflict that exists.

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52 percent of the U.S. MNCs: conducted interviews with both the manager and his or her spouse.

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47 percent conducted interviews with the candidate alone.

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MNCs are becoming increasingly cognizant of the importance of this factor to effective performance abroad.

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the organizational culture and how easily the expat can adjust
to it

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nonwork matters

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In management-type positions which involve more extensive contact with the local community, the adapt ability of the spouse to living in a foreign environment was perceived as important for successful performance abroad.

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the expat's ability to develop effective socialization tactics and to understand "what's what" and "who's who" in the host organization.

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Even for technically oriented positions, a sizable proportion of the firms did conduct interviews with both candidate and spouse.