Introduction
There are multinational companies who build representative offices outside the headquarters 120-150 years ago. There are family-owned companies in Europe who decided in a very early stage to be present in other European countries, besides the home country, but also overseas (EUA, South America, Australia and/or Asia). These companies had a very clear strategy established in early times and followed the same on regular basis[1].
Initially in the 50’s and 60’s South America was on the focus. Much later the Asian market was on the pipeline of many companies. Looking for the future growth possibilities in the world, based on the population development[2], where certain markets will stagnate, other will shrink and few will growth, the African continent was on the agenda. Depending on the product portfolio companies always started to look much earlier on the major American market, too. Recently, with the population development in India, the subcontinent became again a focus for many global companies. Considering the current global political development and the relations between countries, the selection of expatriates for the Asian Region became an important issue for multinational companies.
In the remote time the available communication tools (and the digital transformation[3]) with the subsidiary were the phone, telex, letters and later the fax. Many corporations were proud to have globally a sum of several successful “kingdoms” (independent subsidiaries). These managers working at the subsidiaries had as a major target to build the local business by introducing the global available company products.
The organizational structure and the defined role of the manager chosen for the international assignment in a subsidiary will have many implications for the corporations[4]. Equally important seems to be the necessary and defined profile of the managers of a subsidiary, mostly for the selection process[5].
Initially, in the past, most of the multinational companies decided to have strong and totally independent managers in the countries to build up the businesses, markets, and company image. Later, considering that not all companies were satisfied with the “independence” of the subsidiary and of the managers, and that several times the global products were not always available anywhere, and considering the new communication tools available (internet), multinational companies decided to centralize all decision making into the headquarters to assure uniformity of the implementations of these centralized decisions across the globus.
The changes were accompanied with new job descriptions[6] for the expatriate managers. Fact is that for each managerial position a proper job description and job profile[7] is required.
The different modalities to deal with the subsidiary and with the role of the managers can have an impact on a subsidiary[8]. This is the aim of the paper, to find out which important topic’s companies should consider by the selection of a manager for the subsidiary (international assignment[9]), independently of the structure, position in the international subsidiary or defined role.
Not neglected should be the different cultures and legal setups in different regions[10] which should be considered when a selection is in place. These factors can affect drastically the communication and will influence the businesses and the performance of the company or engagement of the employees[11].
Considering the different possible organizational structures and different roles of the expatriate managers in the subsidiary, it is even more important to select the proper position holder for each setup[12].
The question is, if global companies do have a proper selection process for an expatriate for an international assignment[13]
Where should the candidate come from? Internal or external? From the country or from somewhere else?
Who should interview the candidate? How many opinions are required? How the interview should be done? How to observe the candidate and relatives? How many opinions are required (direct superior, human resources, heads of major business units)?
On the end, human resources should consolidate all the information and the direct superior should take the final decision[14]. The superior will be measured in the performance appraisal if the right candidates have been chosen and the targets achieved. For this reason, the direct superior should take the final decision about the candidate to be posted as manager in the international subsidiary. This is extremely important, because the superior will be evaluated on the end about the performance of the subsidiary.
When and who should approach the candidate? What about the first visit to the country (see and look)? What should be seen during the visit (housing, schools, recreation, culture, etc.).
A training program for the new expatriate for an international assignment prior to the takeover is fundamental and should include from cultural aspects till business’ issues and good governance. Normally companies should have an internal induction program for new managers for international assignments to assure that topics like compliance, environment, health are not neglected. This is what everyone believes. In the research, something different was found out.
Who and how the family should be prepared? What is important for the family? Who will assist the family? Is an induction necessary and required for the family? How should it be done?
A follow up of the progress (candidate and family) is fundamental. Who will be involved? Normally the direct new superior should accompany closely during the first months the new manager in the host country by calls or sporadic visits.
To finalize it is important to mention that company’s Vision, Mission, and Values will be a strong help to a manager to perform accordingly. The topics of Compliance, Risk Management, Safety, Health & Environment are equally important than financial figures.
Fact is, as mentioned in the researched bibliography, that several important steps by the selection of an expatriate should be considered by international conglomerates when selecting an expatriate for a subsidiary.
Methodology and Research Methods
Initially a bibliography survey about published articles was elaborated, based on over 100 articles published in the last 10 years. These articles were cataloged in Zotero by specific topics, like assessment, selection, performance appraisal, job profile, job description, etc.
Besides the consideration of the mentioned articles in the bibliography published, a survey by interviews with global human research managers of multinational companies were carried out. The survey was done during the years 2022 and 2023 through emails and got the participation of 20 heads of global human resources managers from different kind of businesses and regions. Additionally, in a second step, interviews were performed with all these managers for clarifications or complementation of information. Over 80% of the participants of the survey belong to European based headquarters. Most of the companies do have over 10 thousand employees worldwide. Nearly 55% of the participant companies have a divisional and 35% a matrix organizational structure. Over 90% of the managers sent to international assignments are males.
Results / Findings
Strategy
When the topic of how the selection of a manager for an international assignment is raised, one of the basics is that a strategy for the specific country for which an expatriate manager should be selected must be in place. This strategy must be defined on short, medium, and longtime. This means that on base of the strategy an organizational structure, clear reporting line of the expatriate manager, job description and later a profile of the expatriate manager should be implemented and in place.
A very important point is the global organization of the company. There are companies where certain functions are fullfilled globally for all subsidiaries in one place as a „service unit“[15].
When a global, regional, or local organization start with the strategic management, the leaders should have as a base for the formulation the Vision and Mission[16] of the organization. For this, the leaders should ask themselves what the organization want to become (Vision) and what the business is (Mission). Equally important is to have the Values which the company want to follow, and which will dictate the way to work.
The values will dictate how the operations of the company should be run. This is extremely important not only for the formulation, implementation, and control of a strategy, but also for the daily way to operate the business internally and externally.
There is a new trend in the recent years whenever organization prepare a strategy. Ethics, social responsibility, and sustainability are concepts followed by the major of the organizations.
Another important point to be mentioned is the crisis[17]. There are statistically not five years without any kind of crisis for a international company and consequently for a subsidiary. Even knowing this fact, the strategic process is important because can identified and prepare the organization to act, react, prevent or to overcome the difficult period. Normally companies do have crisis management systems where specific and relevant processes, products, partners etc. are described with immediate alternatives in case of a crisis. The same process can be included in the strategic process, this means that for relevant changes in the market etc. Plan Bs are preprepared.
The researcher observed during his carrier that normally companies have clear strategies for the global businesses and for the regions and countries. Normally companies have included in this strategy how to deal with the strategy in each international subsidiary. Consequently, companies use to pre-define which position should be fulfilled by local or expatriate managers. Besides having in mind which kind of necessary skills are required for expatriate managers in a certain subsidiary, a clearly defined list with all requirements are not in place.
Organizational Structure
There are, as previously mentioned, several possible organizational structures for a subsidiary[18]. Starting from a classical organizational structure, where a managing director will be responsible for all activities in the country, like all kind of businesses, all functions etc. In this classical approach the head of the local organization will be responsible for all facts and figures of the subsidiary and will be the legal responsible for the total entity. Another possibility is where the managing director will be responsible only for the good governance of the subsidiary and all the businesses and functions will have a functional superior in the headquarters or in the region. This model is called also as dedicated managing director. The last case is where the managing director will also be responsible for one business unit. In this case he will have a functional superior in the headquarters or region who will measure his achievements as managing director and as head of one business unit. All other heads of the other business units and all the heads of functions (finance, logistics, production, human resources etc.) will equally have a functional superior in the headquarters or region. This setup will require a distinct expatriate manager for an international assignment at one subsidiary reporting to this kind of managing director.
In the survey was found out that there are 3 major reasons for a decision about the organizational structure, namely the size of the market, if the country is a strategic country and finally grade of the complexity of the business.
The researcher observed that organizational structures are globally implemented based on a global strategy. Nevertheless, companies have exceptions for “strategic countries” where a faster implementation is expected.
Job Description
The basic is that the organizations should have implemented clear and transparent job descriptions[19], targets for the subsidiary and for each position and finally all linked to the country company strategy. The job description is extremely important for all positions and not only for the position of the managing director or for the holders of international assignments (expatriate manager)[20].
In the job description, the job purpose, key accountability, service delivery, business development, people management, SHE (safety, health, environment), risk management, quality (company rules & norms), compliance, finance authority, self-development required, dimension of the job (direct reports, internal and external contacts), planning, problem solving expected, technical effectiveness, acquired experience and qualifications and eventually other requirements should be mentioned.
For each of the setups mentioned under the organizational structure, a proper job description will need to be elaborated.
Depending on the post in the subsidiary, the three more relevant skills of a manager are leadership, strategic thinking, and communication. Sometime these topics are extremely relevant in the selection process of a candidate for the international assignment at the subsidiary.
Fact is that depending on the organizational structure and the position and reporting line of the expatriate manager located in the subsidiary a different job description will be required.
Job Profile
There are two groups of necessary skills for a manager. The first is related to the technical skills, leadership, emotional intelligence, and capability to resolve complex problems. The second is related to adaptability & flexibility, family issues, hobbies, experience, development plan and languages[21].
Normally, as answered by the heads of global human resources in the survey, leadership, strategic thinking, and communication are the most relevant and necessary skills of an expatriate manager, followed by entrepreneurship, teamwork, conflict management and adaptability.
Depending on the country, the language, local traditions, dress code, body language, seniority, local politics, and religion can require a specific profile of an expatriate manager. Depending on the adaptability of the expatriate manager and of the family, certain regions can bring problems to the candidate, family and consequently to the subsidiary[22]. The clime zones are relevant because not always the candidate and relatives will adapt in a totally different clime.
All the countries worldwide are in different steps of development and not everything will be as in the home country. Even not the security. For this reason, this topic should be also considered.
When a job description should mention the specific duties to be perform and the related responsibilities for the role of managing in a subsidiary, the job profile should mention the personal necessary qualification and skills which are important and relevant for an expatriate manager to successfully perform the related job.
Most of the companies do have a clear job description, but rarely a clear profile for the job holder. Often, unfortunately, companies mix both topics.
Whenever human resources start to look for a selection of a candidate of the position of an expatriate manager for an international assignment, the job profile should be the base of the process[23]. The profile will have fundamental information about the role of psycho-aptitude features, technical and professional requirements, and personal elements. Besides the activities and the responsibilities of the job holder, the profile should include the necessary experience and skills and finally the level in the global organizational structure (scope of responsibility). In the profile can be mentioned also which skills are fundamental and which one will be appreciated from the candidate.
The researcher had the evidence, from his experiences, that very often companies mix the
concept of job description and job profile. Not always all the necessary skills and not
always all the duties of the specific job to be performed by an expatriate manager are
listed with transparency.
Targets / Grading / Development / Package
It is fundamental that the targets should be clear, measurable and with a time frame regarding when the targets should be achieved. Only on this way the performance can be defined and measured with transparency[24]. There are companies with quarterly, half-year or yearly reviews.
Besides the topics above mentioned, one additional very important issue is the grading implemented in the companies. Grading is the level which each job in the organization is defined in relation to other jobs. The major issues are the scope of responsibility and the complexity of the job. There can be managers with totally different grades, because of totally different scopes of responsibility (sometimes in one case are more businesses units than in other countries or number of products, or even number of employees) and the complexity of the job (size of businesses, business model, complexity of the operation, local culture or regarding the stability of the economy in the country).
In the last years, international companies changed the fixation of salary from gross to net salary to avoid that eventual tax advantages will be given to certain expatriate managers in certain countries, if compared with other expatriate managers located in subsidiaries in other countries[25].
Selection
The major discussion will be who should select the candidate: human resources or the superior? Or both? An additional question will be whether the company has an assessment centre implemented. This assessment could be an internal or an external.
Fact is that with the profile and with the job description, human resources can provide a list from the central candidates’ data[26]. This list should be complemented with eventual candidates which the superior would like to see considered. Important is that both parties should agree on a list based on profile and job description.
The next step will be who, how, and when to approach the candidate. Leading with human beings means that always expectation can raise, and eventual demotivation can be appeared. This should be avoided. For this reason, a strategic plan regarding the selection process needs to be elaborated in advance. Not forgotten should be the topic of information to the current superior of the candidate.
With the final selection, a training plan needs to be communicated to the selected candidate. A communication plan for the organization and for the subsidiary needs to be prepared to avoid rumours and instabilities.
The researcher observed that during the selection process of a specific candidate for an expatriate position in the subsidiary the managing director of the subsidiary is not always involved. This represents a loss of the local know-how and of the local needs. The inputs of a local manager will enrich the selection process of an expatriate position.
Training
What kind of training will be necessary for the expatriate manager before the international assignment? Depending on the organizational structure, the role or job description and the profile, a specific training should be provided. There are cases where businesses and product-related trainings will be necessary, or, in other cases, good governance training is fundamental. Depending on the targets, even specific communication training (how to deal with the press) can be part of the necessary package.
Another important point is the handover. Will the newly appointed expatriate manager work together with the previous manager for a certain time frame? All these need to be pre-defined and a proper plan elaborated[27].
Only nearly 50% of the expatriate managers, as detected from the interviews, with the
global heads of human resources, are sent to an assessment centre prior to the indication.
Over 55% of the expatriate managers are not getting specific training before the takeover of the job.
Nearly 90% of the companies have a performance appraisal system implemented for the expatriate managers with international assignments.
Even with a relatively high number of expatriate managers working in a matrix organization, only a few have a performance evaluation with two superiors. This is not in line with a matrix organization and system.
Another important topic, deeply analysed in the survey, was the succession plan. In the interviews, it came out that most of the companies have a weak succession plan in place.
The handover process to the expatriate manager is important. It was verified by the survey that not always a proper handover is done. Sometimes the previous job owner left the country before the new expatriate manager arrived. Sometimes the managing director of the international subsidiary will support the new expatriate at the beginning and will help him in the job and will assure that the family will get equally all support to a proper settle down.
Important will be also a proper performance appraisal of the expatriate manager to assure that in an early stage, he will get all necessary feedback about the possibility of improvements. This evaluation should be done by the superior, namely the managing director or/and by the functional superior. Both feedback are extremely important. Not always this is done when a matrix organization in in place.
Other Issues
What should happen with the expatriate managers after finishing the period of assignment? Unfortunately, most of the companies will not have a clear strategy implemented for this topic. The argument normally used is that at the time of the finishing of the period of the international posting, this will be decided and cannot be fixed in advance. Partially this is true, but at least options should be pre-defined when an expatriate manager is sent to an international subsidiary. Companies should keep in mind, that by sending a manager for an international assignment this manager will have a add value through this new experience and this should be used in the future.
There are few companies, that include in the selection process of a candidate for an international assignment the 3 possibilities after the period of the assignment.
Another issue is the fact that most of the expatriate managers are males. Companies, unfortunately, believe that sending a female for an international assignment is more difficult and complex if females are considered because normally the husbands do have jobs in the home country or children attend schools there[28].
Additionally, mostly in recent years, when females perceive carriers in the home country, husbands are reluctant to be sent for an international assignment because the carrier of the wife will be disturbed and no compensation for this is offered by the corporations.
The researcher observed, in the praxis, that unfortunately, the age of a candidate can still be a barrier for the expatriate[29]. Companies and superiors are still reluctant to take certain risks by sending younger candidates – even with all the necessary skills – for an international assignment. Sometimes the inverse is equally the case, when a very senior and experienced manager is required but companies “categorize” the same as to old. The same is happening with gender. Females are less approached for international assignments than males.
Conclusions & Recommendations
There are different organization models for subsidiaries of multinational companies. Most
companies do have divisional organizational structures or matrixes.
There are companies where the reporting lines of the expatriate manager with an international assignment will be linked to a regional or global head of a unit and there are structures where the local expatriate manager will report to the local managing director.
As a result of the research, the performance of a subsidiary is linked to the scope of responsibility of an expatriate manager with international assignment. This is statement is based on the results of the survey. Nevertheless, to finalize, the scope of responsibility doesn’t need to be always prefixed by the global organization. The expatriate manager can take the responsibility upon himself. This means that an expatriate manager will need to be diplomatic, flexible, creative and a pure informal leader. These topics are normally not listed in the profile of the job. Fact is that in this way he will see the success of his unit, the organization and of the good results in the employee surveys.
The basic is that the organizations should have implemented clear and transparent job descriptions, targets for the subsidiary and for the expatriate managers and linked to the country company strategy.
It is fundamental that the targets should be clear, measurable and with a time frame regarding when the targets should be achieved.
Another finding is that companies should implement a way to get the feedback for the performance appraisal from both superiors of an expatriate manager.
In the survey, leadership, strategic thinking, and communication have been appointed as the most relevant skills of an expatriate manager for an international assignment. Fact is that in most of the cases only the business figures are the most important topics seen by the superiors.
Another important point overseen by the selection process is the capability of the partner of the expatriate manager to deliver the necessary support.
A training program is fundamental from a cultural aspect till business issues, good governance and take over plan. Normally, companies should have an internal induction program for new expatriate managers for an international assignment to assure that topics like compliance, environment, and health are not neglected. This is what everyone believes. In the research, something different was found out: only a little over than 35% of the expatriate managers got a specific training.
In summary, there are few important issues unnoticed by global organizations:
- Companies should have a clear and pre-defined selection process, where all the steps of the process should be pre-defined.
- The targets agreement and the performance appraisal need to be done with both superiors in the case of a matrix organization.
- A standard training program should be the rule prior to the takeover of the job (business issues, cultural aspects and good governance).
- Companies should include the local managing director in the selection process of an expatriate manager for an international assignment about the necessary skills for this position (depending on the country, the skills can be totally different).
- It should be included in the job responsibilities all duties to be performed by the expatriate manager under the law of the host country.
- In the selection process should be verified if the role of the partner in the country will be important and if an evaluation of the partner will be necessary.
Prior to the preparation of a profile, discussions with the managing directors of the specific subsidiary, with the proposal to get inputs, is recommended. This is rarely done by organizations, as the survey demonstrated.
Independently of the organizational structure and job description prepared by the organization, the local law & order regarding the responsibility of the legal head of the entity and of each job holder in the subsidiary should be included in the job description.
To finalize, it is important to mention that a company’s vision, mission, and values will be a strong help to an expatriate manager to perform accordantly in the subsidiary.
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[1] (Andrews et al., 2023)
[2] (Cleland, 2013)
[3] (Miklášová & Bajzíková, 2021)
[4] (Gates & Egelhoff, 1986)
[5] (Shetty, 1971)
[6] (Yumpu.com, 2023)
[7] (Job Profile vs. Job Description, 2023)
[8] (Stajanoska & Tulung, 2012)
[9] (Shetty, 1971)
[10] (Nunn, 2012)
[11] (Meyer et al., 2020)
[12] (Stajanoska & Tulung, 2012)
[13] (Dowling et al., 2017)
[14] (Elms et al., 2015)
[15] (Marciniak, 2012)
[16] (Mirvis et al., 2010)
[17] (Alpaslan et al., 2009)
[18] (Judge & Li, 2012)
[19] (Cushway, 2008)
[20] (Hemphill, HBR, 2009)
[21] (Akyazi et al., 2022)
[22] (Schoepp & Forstenlechner, 2010)
[23] (Shetty, 1971)
[24] (Lee, 2022)
[25] (Bussin, 2015)
[26] (Wilson & Dalton, 1998)
[27] (Kealey & Protheroe, 1996)
[28] (Izraeli et al., 1980)
[29] (Duarte et al., 2020)
