BUS603: Managing People

In our increasingly global economy, managers need to decide between using expatriates or hiring locals when staffing international locations. On the surface, this seems a simple choice between the firm-specific expertise of the expatriate and the cultural knowledge of the local hire. In reality, companies often fail to consider the high probability and high cost of expatriates failing to adapt and perform in their international assignments.

For example, cultural issues can easily create misunderstandings between expatriate managers and employees, suppliers, customers, and local government officials. At an estimated cost of $200,000 per failed expatriate, international assignment decisions are often made too lightly in many companies. The challenge is to overcome the natural tendency to hire a well-known, corporate insider over an unknown local at the international site. Here are some indications to use to determine whether an expatriate or a local hire would be best.

Managers may want to choose an expatriate when:

• Company-specific technology or knowledge is important.
• Confidentiality in the staff position is an issue.
• There is a need for speed (assigning an expatriate is usually faster than hiring a local).
• Work rules regarding local workers are restrictive.
• The corporate strategy is focused on global integration/
  

Managers may want to staff the position with a local hire when:

• The need to interact with local customers, suppliers, employees, or officials is paramount.
• The corporate strategy is focused on multidomestic/market-oriented operations.
• Cost is an issue (expatriates often bring high relocation/travel costs).
• Immigration rules regarding foreign workers are restrictive.
• There are large cultural distances between the host country and candidate expatriates.