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This is the Author’s version of the paper published as:

Title: Expatriates that stay at home? Understanding Individual and

Organizational perspectives on Mobility in MNCs Author: D. da Silva Author Address: [email protected]

Conference Title: Conference Name: Changes in Society, Changes in Organizations, and the Changing Role of HRM: Managing International Human Resources in a Complex World

Year of Conference: 2007 Conference Location: Tallinn, Estonia Editor: E. Estonian Business School

URL: http://www2.ebs.ee/index.php?id=2872 Keywords: expatriation, IHRM, organisational commitment, mobility Abstract: The dominant theme in international human resource management

literature has been the investigation of expatriate failure, and the human resources policies applied to these international assignees. However, this focus has largely excluded the possibility of other types of employees who fulfil a

similar cross-boundary role within the organisation, yet may undertake this work in different formats. Steeping away from the ethnocentric and HQ-centric notions of parent country, host country and third country nationals, this paper

presents a theoretical model of a multinational corporation's workforce and the human resources architectures that are applied to that workforce. This approach seeks to account for an array of emerging issues that have remained

largely outside the scope of traditional expatriate research. By redefining the key outcome in terms of strategic goals for the organization, the model allows for the consideration of new influences such as different forms of mobility, new

employment relationships at the domestic level and the interaction between expatriates and local employees. In particular, this paper will suggest a typology for establishing both stocks and flows of resources in the model, and suggest

outcomes for the development of MNCs human resources architectures. CSU ID: CSU284348

http://researchoutput.csu.edu.au/

EXPATRIATES THAT STAY AT HOME?

NEW TYPOLOGIES FOR UNDERSTANDING THE ROLE OF

CROSS-BOUNDARY EMPLOYEES IN IHRM

Debra da Silva

Lecturer in Management, School of Business

Charles Sturt University

PO Box 789 Albury NSW 2640 Australia

[email protected]

Abstract

The dominant theme in international human resource management literature has been the investigation of expatriate failure, and the human resources policies applied to these international assignees. However, this focus has largely excluded the possibility of other types of employees who fulfil a similar cross-boundary role within the organisation, yet may undertake this work in different formats. Steeping away from the ethnocentric and HQ-centric notions of parent country, host country

and third country nationals, this paper presents a theoretical model of a multinational corporation’s workforce and the human resources architectures that are applied to that workforce. This approach seeks to account for an array of emerging issues that have remained largely outside the scope of traditional expatriate research. By redefining the key outcome in terms of strategic goals for the organization, the model allows for the consideration of new influences such as different forms of mobility, new employment relationships at the domestic level

and the interaction between expatriates and local employees. In particular, this paper will suggest a typology for establishing both stocks and flows of resources in the model, and suggest outcomes for the development of MNCs human resources architectures.

mailto:[email protected]

INTRODUCTION

While the growth in internationalisation of economic systems is being mirrored by the amount of attention being paid to issues of international human resource management (IHRM) research, there has been an almost-exclusive focus on international transfers, considered in terms of a traditional expatriate assignment of a parent country national to a host country. As organisations face competitive pressures, the continued use of international assignments has been questioned (Forster, 1997). At the same time, the increasing application of communications technologies is enabling the rise of virtual work, such as the emerging use of global virtual teams (Jarvenpaa & Leidner, 1999; Maznevski & Chudoba, 2000).

The narrow focus on physical location vis-à-vis the MNC headquarters as the defining variable for conceptualising an MNCs workforce in terms of host country nationals, parent country nationals and third country nationals has masked the complex array of issues facing organizations in global labour markets. In reality, organizations use a variety of approaches to allocate human capital, and often use these forms simultaneously (Davis-Blake & Uzzi, 1993).

Reconceptualizing a MNC workforce as a whole is used as a starting point to develop a new theoretical framework will lead to a more comprehensive understanding of an MNCs HR architecture. In turn, this will lead to a more meaningful understanding of the use of the many types of employees within a MNC and how these employees co-exist in various combinations. This framework suggests a complexity for the MNC staffing choices that is overly simplified by the exclusive focus on HR practices as they apply to international transfers.

LITERATURE REVIEW

When one examines the research literature on expatriate adjustment, one will quickly find that a rather grim picture is being painted. Many authors indeed mention high failure rates (e.g. Black & Gregersen, 1999). It has become, as Harzing (1995) points out, almost traditional over the last three decades to open an article on expatriate management by stating that expatriate failure rates are high. Remarkably, she states that there is almost no empirical foundation for the existence of high expatriate failure rates when measured as premature re-entry. With respect to that criterion they are probably not much different from domestic failure rates.

Nevertheless, there are quite a few compelling reasons why we should pay attention to expatriate adjustment. From the standpoint of the expatriate enormous changes are brought on by accepting the overseas assignment. The expatriate has to leave friends, relatives, and colleagues behind in search of a new life in a country that he or she often knows little about. When spouses and or children are involved, they too will have to cope with drastic changes in their lives. On top of that, the overseas assignment is binding in the sense that one cannot easily quit the job and return home. In addition from the standpoint of the employer, huge costs are involved in overseas assignments. Obviously, the ability to predict expatriate adjustment is of great interest not only for selection purposes, but also for assessing possible training needs.

What do we mean by expatriate adjustment? In the literature, a distinction is made

between personal and sociocultural adjustment (Searle & Ward, 1990). Personal

adjustment refers to internal psychological outcomes such as mental health and personal

satisfaction. Sociocultural adjustment refers to external psychological outcomes that

link individuals to their new context such as the ability to deal with daily problems,

particularly in the areas of family life and work (See Segall, Dasen, Berry, & Poortinga,

1999). In the present study in addition to personal adjustment we focused on two areas

of sociocultural adjustment: professional adjustment referring to the amount of

satisfaction with the new work environment in the host country, and social adjustment

referring to satisfying social relationships in the host country. Together, these three domains provide a useful framework for studies on expatriate adjustment.

The whole question of performance measurement and management in

multinational companies involves a complex range of issues (Schuler, Fulkerson, &

Dowling, 1991) and research to date suggests that rigorous performance appraisal

systems for expatriates are far from universal (Brewster, 1991, Schuler, Fulkerson, &

Dowling, 1991). This is perhaps surprising given the high costs of expatriate under-

performance and the growing tendency to see expatriates as key human assets (Adler &

Bartholomew, 1992, Forster & Johnson, 1996). The assessment of expatriate

performance requires an understanding of the variables that influence an expatriate’s

success or failure in a foreign assignment. It has been argued that the three major

variables include the environment (culture), job requirements and personality

characteristics of the individual (Schuler, Fulkerson, & Dowling, 1991). Problems in

cultural adjustment which may have an impact on work performance should be

considered when assessing and expatriate’s performance in a new job (Mendenhall & Oddou, 1988).

The Role of ‘Other’ Employees

Typically, expatriation research focuses solely on the experiences and issues

related to the expatriate. As noted by Kochan et al’s (1992) critique, the current

literature in IHRM defines the field too narrowly. Kochan et al (1992) argues that a new

field of IHRM studies should be built around a broader set of questions, which

considers the lessons and outcomes for all stakeholders and not just multinational firms

and their managers.

Limited research has been conducted to understand better the issues of

expatriation from the perspective of host country employees. Hailey (1996) interviewed

host country managers employed in European, Japanese, and US MNC’s in Singapore.

He found that Singaporean managers tended to interpret the continued employment of

expatriate managers as a sign that the parent company did not trust local managers and,

perhaps even worse, as an expression of the ‘colonial mentality’ of the parent

companies. Singaporean managers also questioned expatriate effectiveness. Expatriates

were viewed as inflexible and unable to adjust to local cultural norms. In addition,

expatriates tended to isolate themselves in an ‘expatriate lifestyle’ and frequently failed

to make contacts with the local business community. Half of the managers in Hailey

(1996 p. 266) sample also ‘reacted angrily to what they saw as the insensitivity and even

insulting behaviour of their expatriate managers.’ While the general tone of Hailey’s

(1996) article is clearly anti-expatriate, his interviewees perhaps unintentionally

provided support for those that would argue for the continued use of expatriates. Nearly

three-quarters of the Singaporean managers stated that expatriates relied too heavily on

head office procedures and were ‘blindly obedient to headquarters.’ To maintain

effective control in their subsidiaries, it would seem highly likely that the average MNC would want a certain amount of blind obedience to their directives.

Other studies tend to support Hailey’s (1996) findings. For example, Simon and

Davies (1996) interviewed 28 Hungarian managers employed in 14 international joint

ventures in Hungary. They reported that; ‘Nearly every Hungarian manager commented

upon the attitudes of expatriate managers and how they looked down on Hungarians,

considering themselves superior’ (Simon & Davies, 1996 p. 276). The Hungarian

managers were especially resentful of the reward differentials between local and foreign

managers. Expatriates were often provided with (Simon & Davies, 1996 p. 281)

‘luxurious homes or permanent accommodation in the most expense hotels, company

cars, even for young and inexperienced managers, and wage differentials on average

four to five times higher in the case of expatriates.’ These researchers concluded that the

conflict between Hungarian and expatriate managers was limiting the learning taking

place in joint venture firms. A study by Walsh, Wang and Xin (1999) found that US and

Chinese managers in 10 joint venture firms in China frequently had negative opinions of

each other’s managerial abilities. For example, the Chinese interviewees made such

statements as (Walsh, Wang, & Xin, 1999 p. 75) ‘Some Americans, not all Americans, are full of hot air’ and ‘Expats become dumb or lost after coming to China.’

This approach has tended to focus on questioning host country managers directly

as to their opinion of expatriate employees. It has not questioned what role host country

employees have has in the likely outcome of the adjustment process of the expatriate, or

their contribution to the success or failure of an assignment. Expatriation research tends

to ignore the interaction between the domestic labour market (host country employees)

and the global labour market (expatriates) in organisations. It is often assumed that these

two markets operate in isolation, with little transfer between the two. The only outflow

of labour is selection from the domestic labour supply for expatriate assignment, and the

inflow is on repatriation. Beyond this, there is no crossover of the two markets.

The Expatriate ‘Fails’

Throughout the literature, there has been little testing of the assumption that

failure rests with the expatriate manager. There is a lack of research that satisfies the

unspecified assumption that a non-expatiate manager would have indeed succeeded

where an expatriate manager failed. In particular, would a local manager have had more

success in completing the assignment? In addition, there is a need to question if the

assignment would have been successful at the head office?

The ability to adapt to cross-cultural lifestyles and environments appears to be at

the centre of successful foreign assignments (Adler, 1991, Gudykunst, Ting-Toomey, &

Nishida, 1996, Samovar, Porter, & Jain, 1981). The communication skills of the

expatriate play a major role in successful adaptation (Gudykunst, Wiseman, & Hammer,

1977, Gudykunst, Wiseman, & Hammer, 1977, Ruben & Kealey, 1979), with effective

communication skills such as listening, controlling verbal and nonverbal cues, and

feedback contributing to culturally appropriate behaviour and adjustment to the foreign

culture. The adaptation ability, therefore, would appear to be predicated on skills,

abilities, predispositions, and traits that an individual possesses prior to becoming an

expatriate.

These assumptions reinforce the narrow focus on the expatriate, and help to

perpetuate the research of HR processes at the expense of broader strategic

considerations. This body of literature focuses on the how the individual is able to adapt

to new cultures, and provides in-depth analysis of adjustment issues, communication

problems and inter-personal relationships. The theoretical framework for many of these

studies tends to be based on Hofstede’s theory of cultural dimensions (Hofstede, 1983,

Hofstede, 1980, Hofstede, 1983), as well as much research from the field of organisational psychology, such as impression management theory.

Assumption of Homogeneity

The assumption of homogeneity is two fold. First, often the research assumes

expatriates are a homogenous group of employees, employed in the home country and

sent to the host country for duration of several years. Second, the assumption of

homogeneity neglects to consider the broader perspective of an MNC’s workforce. That

is, that the pool of possible candidates for expatriation is homogenous, and that the

workforce being managed by those expatriates selected is also homogenous. The

concept of different types of employees going on different types of assignments for

different durations is still in the early stages of empirical investigation.

Recently, research has shifted towards considering staffing questions in a more

strategic context, and attempts have been made to develop models of international

assignments, identifying those appropriate for expatriates (Edwards & Brewster, 1996,

Scullion, 1995). However, according to Forster (1997) there is a serious question about

the whole rationale underpinning the development of ‘international managers’. In the

sample of UK companies, few, if any, had any coherent idea of what this actually means

or what their international work forces will look like in the future. For most, an

‘international manager’ is little more than a loose description of someone who is

potentially or currently abroad on an international assignment, regardless of the nature

or duration of this, or with any real sense of using this experience as part of an overall policy of developing international managers.

Policy initiatives in this area seem to be driven entirely by short term strategic

demands from either senior management or line managers. There seems to be little

integration of HRM and long term strategic planning or consideration of what potential

implications of this are for career planning in the future. Their failures lead to question

the rhetoric of ‘internationalisation’, when expatriates still only represent a tiny

proportion of the overall size of the total workforce of a company. Their operations may

be becoming more international, however, their staff, overwhelmingly, are not (Forster, 1997, Forster & Johnson, 1996).

Similarly for employees, the concept of an ‘international manager’ is equally

meaningless within the context of their own career goals and objectives. Very few

would recognise themselves as either being actually, or potentially, globe-trotting

nomads moving from region to region for the rest of their lives (Forster, 1997). The idea

that these job moves are somehow part of a long term plan to convert them into truly

international managers would be unrealistic. Again, this reflects a failure to turn the rhetoric of internationalisation into the reality of HRM.

New Directions of International Mobility

The practice of developing host country managers and third country nationals

through developmental transfers to corporate HQ is becoming significant. It has been

argued that this type of international transfer exposes host country nationals and third

country nationals to the HQ corporate culture and facilitates their developing a

corporate perspective (Edstrom & Galbraith, 1977). However, since the work by Banai and Zeira (1984), little has been done in this area.

New Forms of International Mobility

Not all cross border activities are staffed by expatriates. Much activity,

particularly in the purchasing and sales areas, has traditionally been conducted by

people on short visits. The increasing improvement of travel and technology is making

such expatriate arrangements much more common. The increasing use of video

conferencing and real-time computer information from around the world has provided

alternatives to control by physical presence of an expatriate (Martinez & Jarillo, 1989).

Again, the implications of the developments for the people involved, and for their

management, remain largely unresearched.

As noted by Kalleberg (2001 p. 488) ‘to view the core and peripheral workers as

occupying positions in separate parts of the organisation is to neglect to consider ways

in which these groups may work together within the same departments and may even

perform the same jobs within an organisation’. Therefore, it is essential to understand

better how these segments interact and how these interactions produce outcomes that affect the expatriate.

DEVELOPING A NEW MODEL

In the domestic HR literature Lepak and Snell (1999) highlight the problem that most HRM researchers have tended to take a holistic view of employment and human capital, focussing on the extent to which a set of practices is used across all employees of an organization. By ignoring the possible existence of different employment practices for different employee groups within an organization, this approach appears monolithic. It may be inappropriate to simplify the nature of human capital investments and suggest that there exists a single optimal HR architecture for managing all employees. The proposed model uses Lepak and Snell’s (1999) theory of HR architectures to better understand the HR architecture of a MNC.

Construction of the Model

The proposed model is a two-by-two matrix that identifies four groups of employees in an MNC: international careerists, core employees, transient employees and free agents.

FIGURE 1: CONCEPTUAL MODEL OF RESOURCES

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Group 1: International

CareeristsGroup 2: Core Employees

Group 3: Transient

Employees

Group 4: Free Agents

Organizational Factors From the perspective of the MNC, there are two primary criteria for the allocation and deployment of its human capital: resource development (internal or external) and resource focus (single-geography and multi-geography). The intersection of these criteria determines the specific HR mode that is applied to each group.

The resource development spectrum is drawn from the extensive literature on the resource-based view of the firm that argues that resources are valuable when they enable a firm to enact strategies that improve efficiency and effectiveness, exploit market opportunity and/or neutralise potential threats (Barney, 1991; Porter, 1986; Wright, Dunford, & Snell, 2001). Based on this assessment, a firm has both core and peripheral assets (Barney, 1991). Core assets are vital to the competitive advantage of an organization (Porter, 1985), and often, core assets require continual internal development. The outsourcing of these skills might jeopardise the competitive advantage of the firm by eroding its stock of core skills (Bettis, Bradley, & Hamel, 1992).

Another major differentiation between the domestic and international HR literature is the geographical dispersion of a headquarters and subsidiaries. Therefore, this model proposes the use of single-geography focussed and multi-geography focussed as a distinction between the roles of employees. Importantly, this conceptualisation removes the previously used categories of HCN, PCN and TCN and defines the MNC employees in terms of their relativity to their own geography and the scope of their role rather than the previously used HQ/subsidiary classification. For example, theoretically the role of an employee working in the US headquarters for a US MNC is the same as that of an Australian working in Australia for that same US MNC. Strategically, they deliver the same outcomes in terms of a local performing a role that focuses entirely within their home location.

Individual Factors Correspondingly, the employees of the MNC are characterised by two primary criteria: their commitment to the organization (internal or external) and their strategic focus (single-geography and multi-geography). Each group of employees will in turn have a unique perspective of their relationship with the MNC based on the intersection of their commitment versus their mobility.

The literature on organizational commitment provides the basis for the distinction between internal and external commitment to the organization (Meyer & Allen, 1997; Mowday, Porter, & Steers, 1982; Mowday, Steers, & Porter, 1979; Rousseau, 1995; Rousseau & Wade-Benzoni, 1995).

This differentiation between single-geography focus and multi-geography focus has been manifested in the expatriate literature as the problem of dual identification between the organization as a whole and the local subsidiary. It has been shown that managerial employees of MNCs draw a distinction between the local subsidiary and the global organization in a way similar to that drawn between the sub-unit and the wider organization in a domestic context (Gregersen & Black, 1992; Reade, 2001).

Research Questions Therefore, this model provides for a unique opportunity to examine the following research questions:

1. What are the strategic requirements for allocating and deploying human resources in MNCs?

2. What are the individual characteristics, employment relationship and HR practices of those human resources?

3. What are the consequences of using this HR architecture for the individual and the organization?

HYPOTHESIS DEVELOPMENT

Stocks in the Model

Group One: International Careerists International Careerists are defined as those employees whose primary job function relates to more than one geography within the MNC. As a departure form the current literature, this would include employees that are on international assignment with the MNC (host country nationals, parent country nationals and third country nationals) as well as employees who work in regional or global roles, including virtual teams, covering many geographies. It is important to note that these employees may be physically located in their home country. Rather than differentiating between the various types of expatriates or physical location of the employee, for the purposes of this model they all share similar characteristics as far as the strategic objectives of the MNC are concerned in terms of the resource development and focus.

Typically, these employees are drawn from the core workforce on the merit of technical skills demonstrated, or may transfer from the free agent segment through a change in the employment contract to a more permanent basis. There has been much research into the selection process of expatriates. In general, much research has been focussed on the more visible aspects of the process, such as the criteria used in selection decisions. Studies by Black (1988), Black and Mendenhall (1990), Ronen (1989), Mendenhall and Oddou (1986) and Tung (1981) bring together the dimensions of expatriate success, identifying five attributes to success: job factors, relational dimensions, motivational state, family situation and language skills.

Hypothesis 1: International careerists are highly committed to the organization and their strategic focus is multi-geography.

Group Two: Core Employees The ‘core’ employees are those employees with a single-geography focus in their primary role and have a regular and permanent employment relationship with the organization. These workers are highly trained, skilled and committed to the organization and represent the largest proportion of an MNCs workforce.

Firms have both strategic and financial incentives to internally develop this form of human capital. Firm specific skills are non-transferable, therefore, the value of any employee’s human capital will be less with any other firm, and internal development will be less likely to result in capital loss. This segment typically represents the largest proportion of an MNCs workforce.

Hypothesis 2: Core employees are highly committed to the organization and their strategic focus is a single-geography.

Group Three: Transient Employees Transient employees are defined as those workers with only a single-geography orientation who have a short-term or temporary employment relationship with the organization. Employers may hire some workers directly on a temporary basis; either for a short time on fixed-term contracts (which have a fixed ending point, determined by completion of task or date) or an on-call basis.

Given the transactional nature of contract work, HR activities need only focus on securing compliance with the terms and conditions of the contract versus executing broader

responsibilities and assuming organizational roles. To ensure compliance, firms likely will concentrate on enforcing rules and regulations, upholding specific provisions regarding work protocol and ensuring conformance to preset standards. Organizations that rely on the external labour market to contract work rarely invest in training and development activities for those people.

Hypothesis 3: Transient employees have a low organizational commitment and their strategic focus is a single-geography.

Group Four: Free Agents Free agent employees are self-employed; they have neither an employer nor a wage contract and are responsible for their own tax arrangements. Unlike employees, whose work is usually defined in terms of labour expended, Free agent employees are generally given specifications for the final product or result and they decide how best to accomplish it.

Such employees move from employer to employer, doing essentially the same work in each job. Jobs where the tasks are self-contained, short term and are common across organizations fit this model. Many free agent employees can be classified as knowledge workers, and are only interested in undertaking assignments of limited duration so that they can enhance their portfolio of skills and experience and move more easily between different employers rather than building a career in one organization. This reflects not only an orientation towards their expertise but also a realistic assessment that the longevity of organizations is uncertain. Yet most employers still wish to retain a certain core of knowledge workers for a longer duration so that the organization is not depleted of skills and experience.

In a study of occupational commitment of knowledge workers in large organizations, Tam, Korczynski and Frenkel (2002) surveyed a total of 134 employees, consisting of system developers in a telecommunications company and dealers in a financial services company who provided advice and undertook transactions in money markets for corporate and institutional fund managers. This study found that there was a lack of formal human resource management policies for these employees and an absence of internal career ladders (Tam et al., 2002: 788). The responsibility for employee development was on the dealers and the developers themselves. They had to seek their own learning opportunities, instead of relying on management initiatives. Performance-related pay was a main feature of the market-based HR approach. Employees in one of the companies studied encouraged work effort by the use of performance-based pay. Bonuses made up a substantial proportion of the total pay of employees (Tam et al., 2002).

Hypothesis 4: Free agent employees have a low organizational commitment (and a high occupational commitment) and their strategic focus is multi-geography.

Flows in the Model

Changes in the composition of employees in each segment can occur in several ways. This section explores the flows in the model and proposes several hypotheses.

How do resources enter the model? The diagram below illustrates the possible entry points into the MNC from the external market. These are shown by the arrows.

FIGURE 2: RESOURCES ENTERING THE MODEL

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Group 3: Transient

Employees

Group 4: Free Agents

It is important to note that there is no external entry point for Group 1. This is supported by the extensive literature on the recruitment and selection of expatriates that largely concurs that this represents a closed-system (Brewster, 1991; Brewster & Scullion, 1997).

Core employees enter into the MNC via established standard recruitment practices within the MNC. Transient employees enter the MNC through agency-based recruitment. The need for transient employees is identified by the line manager and then sent to the agency contact to procure the resource. The recruitment of free agent employees is the most problematic due to the more sporadic nature of this form of employment. It is proposed that this type of entry into the MNC is based on personal contact and word of mouth, normally predicated upon prior experience with the MNC either as an employee, client or supplier. This practice represents a highly informal and opportunistic system often based on rapidly emerging business needs.

Hypothesis 5: Employees will enter the MNC in Groups 2, 3 and 4 but not in Group 1.

What is the movement of resources between each segment? Theoretically speaking, it is possible that resources can move from any group to any other group in any number of combinations. However, by examining the characteristics of each segment it is logical to assume that not all paths will be possible, and that several dominant flows will exist between each group.

FIGURE 3: WHAT IS THE MOVEMENT OF RESOURCES BETWEEN

EACH SEGMENT?

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Group 3: Transient

EmployeesGroup 4: Free Agents

From Group 1

1 2 Repatriation

Promotion to an ANZ position after having been in an AP role or on assignment.

Lifestyle change eg. Need to reduce travel for personal reasons.

1 3 This transition is very unlikely due to the nature of the work conducted by Group 1 employees, relative to the types of openings available and work done in Group 3.

1 4 Group 1 is the most likely source of Free Agents.

There is little evidence to suggest that there is a direct transition.

Most that transit between these two groups have actually left IBM in Group 1 (i.e., exited the model) and then at some later stage returned to IBM as a Free Agent in Group 4.

The return to IBM in group 4 generally occurs in a very informal manner and is described as opportunistic. That is, it is word of mouth and/or one-off chances that lead to the Free Agent role.

From Group 2

2 1 Expatriation

Move into an Asia-pacific role or cross-geography role

Joining an global or regional project team

Becoming the regional lead contact on an issue

2 3 Transition to retirement through the use of casual work/contract based work

Lifestyle changes such as maternity leave or career breaks

2 4 This flow is very unlikely due to the lack of international experience of those in Group 2

May occur where there are specific skills, and the person had previously moved from 1 2. i.e., this is the next step in a longer career path in the model.

From Group 3

3 1 This is a major source of recruitment within IBM and is identified as a strategic priority to transition these resources across where needed.

It is the most common flow identified in the model.

The transition requires a fundamental changes in the structure of the employment relationship from contract to permanent, strongly reinforced by current IR laws and regulations

3 2 This is not a likely flow in the model and has yet to be evidenced.

This is due to the relative skills levels and the difference in employment relationship.

3 4 This is not a likely flow in the model and has yet to be evidenced.

This is due to the relative skills levels and the difference in employment relationship.

From Group 4

4 1 Not likely due to the nature of the work

Identification of talent and skills is needed

Only possible if the person is a new employee to IBM rather than a re-entry from Group 1

4 2 Less likely based on the need for skills and talent and the employee wanted a major change in the employment relationship

Only possible if the person is a new employee to IBM rather than a re-entry from Group 1

4 3 Not likely due to the lack of skills required in Group 3 and therefore the lower market value to be paid.

FIGURE 4: WHAT ARE THE DOMINANT FLOWS?

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Group 3: Transient


Existing flow

Emerging flow

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Existing flow

Emerging flow

Existing flow

Emerging flow

The dominant flows that have been hypothesised between Groups 1 and 2, and Group 2 and 3. The gate between Groups 1 and 2 is open, established and most importantly, supported by extensive HR policies and practices. This si evidenced in the extensive literature looking at expatriation (a move from Group 2 to Group 1) and repatriation (a move from Group 1 to group 2). Much research has demonstrated that the most likely source of recruitment for expatriation is existing employees, and this concurs with the notion that international assignments are used a career development tools (Brewster, 1991; Mendenhall, Dunbar, & Oddou, 1989; Scullion, 1993; Tung, 1988).

However, as this model separates the notion of a physical relocation from the strategic function of the role being performed, it is also vital to consider the move between roles that focus solely on a single-geography to those that focus on multi-geographies. For example, the shift from a domestic role to a regionally based role, or the move from a domestic project team to a regional or global project team. Such examples do not require the physical relocation that is necessitated by expatriation and repatriation, but they do represent a shift from Group 2 to Group 1. However, these transitions have not been researched extensively in the HR literature to date. An important issue for investigation therefore is to compare the relative changes for employees and ascertain the HR practices and policies that are applied to each.

The other major gate that exists within this model of an MNCs workforce is between Groups 2 and 3. The flow of resources from Group 3 into Group 2 is well evidenced, and the temporary hire literature demonstrates that the use of this type of employment is an entry point for employees into organisations (Cappelli, 1999, 2001; Kalleberg, 2001; Kalleberg et al., 1997). At the same time this group of employees provides organisations with a fertile pool of talent for recruiting.

Two emerging flows have been identified for testing. The first is the shift of resources from Group 2 into group 3. This flow from being a core employee to a transient employee is providing MNCs with an opportunity to retain experienced resources in non-traditional forms of employment. Examples where this retention strategy may be used by the MNC is in retaining the mature workforce through transitioning to retirement and the provision for work-family balance arrangements based on contract employment for specific periods of time. Legislative changes in employment relations in Australia have enabled organizations to make better use of these provisions and therefore retain valuable resources.

Lastly, the ability to capture Free Agents as a permanent resource in the MNC is a critical flow that needs to be examined further. Many theorists have commented on the availability of employees to go on international assignment, specifically due to the issue of dual-career couples (Brewster et al., 1997; Harvey, 1985; Harvey, Buckley, Novicevic, & Wiese, 1999). As with both expatriates and employees who work across multiple geographies, retaining employees with international experience and the ability to work in different cultures is necessarily a strategic HR priority.

Hypothesis 6: There exist two primary gates for movements within an MNC. The gates are between groups 1 and 2, and between Groups 2 and 2. These gates are represented by established and supported HR practices and policies that enable the movements.

Hypothesis 7: Two emerging flows of employees will be essential to an MNCs strategy: recruiting from Group 4 into group 1, and enabling group 2 employees to change their employment status to enter Group 3.

METHODOLOGY

The methodology is based on a case study of a multinational IT company, being conducted over 12 months from mid-2005 to mid-2006. The model will be tested using a stocks and flow approach The fieldwork will incorporate a series of questionnaires (employees perspective), corporate data collection and policy documentation (HR mode) and supplemented with interviews for each of the four groups of employees.. Online surveys of employees across 4 professional categories will be used to establish the stocks in the model. In-depth interviews will be conducted to establish the flows in the model.

Stocks Methodology - Surveys

Target Sample In order to test the hypotheses, it is necessary to collect sufficient

data on employees from each of the four identified employee types: expatriates, core

employees, transient employees and spot market employees. Given the longitudinal

nature of the study, each sample group will need to be sufficiently large so as to enable

some stability over time for means of comparison. As such, it is estimated that each sample group will consist of approximately 100 employees.

Defining the qualifying attributes of each sample group is fundamental to this

research design and methodology. In part, this will be investigated further with the input

of IBM, based on the specifics of their personnel data management and other

organisational issues. This will be the case to the extent that it does not affect the

integrity of the research.

What is the sample size? Approximately 240 survey (questionnaire) participants.

This sample size is adequate to establish the characteristics of the four hypothesized groups being studied.

TABLE 1 SUMMARY OF TARGET SAMPLE – SURVEYS

Target Sample Method

Expatriates Interviews – 5

Questionnaires – 120

Core employees Interviews – 5

Questionnaires -120

Transient employees Interviews -3


Spot market employees Interviews – 3


Flows methodology - Interviews

Sample Size Approximately 15 interview participants. This allows coverage of all

the major HR functions within IBM that have some input on this area of study, plus

participants to discuss the effects/impacts of HR policies that are being examined.

Research Design To be conducted as individual semi-structured interviews lasting

approximately 30 minutes. This is to provide the IBM corporate perspective on the HR

policies being analysed. For example, the HR manager for Compensation and rewards

will be interviewed to provide the IBM policy perspective on how different pay

structure affects employees in each category. It is anticipated that there will be

approximately 15 of this sort of interview to cover all topic areas across the relevant HR

functions.

TABLE 2: INTERVIEW QUESTIONS

Note: all questions are to be asked with reference to the specific HR function being interviewed. Part 1 – General Information

1. What is your job title and primary area of responsibility? 2. These areas of responsibility primarily apply to which level of IBM (eg.

Global, regional, ANZ)?

Part 2 – International Assignments Policy General Issues and Trends

1. What is the trend [in this HR function] regarding types of assignments worldwide?

2. What is the trend [in this HR function] regarding origin and destination of international assignments?

3. What is your main purpose behind having international assignments? 4. What is the typical profile of your expatriate population [in this HR

function]? 5. Is IBM planning to, review/modify its international assignment policy

[in this HR function]? 6. What element(s) of your policy did you recently, or are you planning

to review [in this HR function]? a. We did review? b. We intend to review? 7. If your company did review/modify its international assignment

policy, what was/is the reason triggering the change [in this HR function]?

8. Your company’s international assignment policy [in this HR function] is best described as?

9. Do you have one policy [in this HR function] for all your international assignees or different policies?

10. How is the administration of international assignments [in this HR function] handled at IBM (i.e., centralised vs. decentralised)?

Part 3 - Post Assignment 1. What is the percentage of assignees leaving the company within 12 months after returning from an international assignment?

2. To what elements do you attribute the success or the failure of retaining employees upon repatriation [that involves this HR function]?

a. Elements of success: b. Elements of failure:

Part 4 – Permanent Relocation

Permanent Relocation: employee will remain in the assignment location indefinitely with no expectation of return to home location.

[Skip if you do not have any permanent relocation case} 1. Do you have a policy concerning permanent relocation [in this HR

function]? 2. What are the reasons behind permanent relocation [in this HR

function]? Part 5 – Localisation When an employee sent on an international assignment for a defined

duration remains in the host location for an indefinite duration (by his/her or company's decision)

1. Does [this HR function] have a formal policy in place to address the transition from an expatriate to a local status?

2. Please describe this policy?

Part 6 –Short-Term Assignment Practices

What is the policy of this HR function in relation to short-term assignments?

TABLE 3: SUMMARY OF VARIABLE MEASUREMENT, HYPOTHESISED RELATIONSHIPS AND SUPPORTING LITERATURE

VARIABLE SURVEY ITEM MEASUREMENT

RELATIONSHIP

WITH MOBILITY RELATIONSHIP

WITH COMMITMENT

REFERENCE

Demographic Information

What is your marital status? Objective measure of marital status: married, single, widow/widower, de-facto

-ve +ve Tung 1982 Harvey 1985 Black & Stephens, 1989

What is your age in years? Objective measure in years -ve +ve Brief & Aldag, 1980 Dornstein & Matalon, 1989, Kushman, 1992 Mathieu & Zajac, 1990 Morris & Sherman, 1981 Morrow & Wirth, 1989

What is your level of education? Objective measure +ve -ve Naumann, 1992 Gordon and Arvey 1975

What is your employment status with IBM? Objective measure NA NA

Organisational Tenure

How long have you been employed with IBM? Objective measure in years -ve +ve curvilinear relationship: Meyer and Allen 1993 Positive correlation: Arnold & Feldman, 1982 Cotton, 1993 Cotton & Tuttle, 1986 Kushman, 1992 Mathieu & Zajac, 1990 Sheldon, 1971

How long have you worked in your current role? Objective measure in years -ve +ve

Where is your home location? Objective measure NA NA

How long have you worked in this location? Objective measure in years NA NA

Geographic and Occupational Mobility

How many times have you relocated (either with IBM or for other reasons) in the past 5 years?

Objective measure determining the number of geographical moves, job changes and occupational changes within the past five years, both within and external to the organisation

+ve NA Black & Stephens, 1989 Positive correlation Louis (1980) Nicholson (1984) Jones (1986) Negative Correlation Pinder and Schroeder (1987)

Please indicate how many times you have changed jobs in the past 5 years?

+ve NA

Please indicate how many times you have changed occupations in the past 5 years?

+ve NA

Social Interaction How frequently do you have social contact with your work colleagues?

Objective self report measure +ve (international context only)

+ve Based on (Sheldon, 1971) measurement of social interactions David, 1976 Salancik, 1977 Luthans, McCaul, & Dodd,

1985 Buchanan, 1974 Near, 1989 Rotundi, 1975 Sheldon, 1971

International Assignees

Are you currently on an international assignment, including STFS, for IBM?

Objective self report measure NA NA

What is the duration of your international assignment?

What was your original home country office with IBM?

Social identification with Group

At what level in IBM is your role located? Objective self-report measure: IBM ANZ, IBM AP or IBM Global

NA NA Mael and Tetrick’s (1992) Identification with a Psychological Group (IDPG) scale.

When someone criticizes IBM ANZ, it feels like a personal insult.

4-point Likert-type format (1 = strongly disagree, 4 = strongly agree).

+ve +ve

I don’t act like the typical person of IBM ANZ

I’m very interested in what others think about IBM ANZ.

The limitations associated with IBM ANZapply to me also.

When I talk about IBM ANZ, I usually say ‘‘we’’ rather than ‘‘they.’’

I have a number of qualities typical of members of IBM ANZ.

IBM ANZ'S successes are my successes.

If a story in the media criticized IBM ANZ, I would feel embarrassed.

When someone praises IBM ANZ, it feels like a personal compliment.

I act like a person of IBM ANZ to a great extent.

Working across Boundaries

The primary manager to whom you report, where are they located?

Objective self report measures

+ve for IBM AP NA for IBM ANZ

+ve

GVT Literature

Employees who report to you, where are they located?

Do you travel in order to undertake your role with IBM? How frequently do you travel for your role?

Organisational Commitment

I am willing to put a great deal of effort beyond that normally expected in order to help this organisation be successful.


NA

+ve Based on the Organisational Commitment Questionnaire Mowday, Steers, & Porter, 1979

I speak of this organisation to my friends as a great one to work for.

I would accept almost any type of job assignment in order to keep working for this organisation.

I find that my values and the organisation’s values are very similar.

I am proud to tell others that I am part of this organisation.

This organisation really inspires the very best in me in the way of job performance.

I am extremely glad that I chose this organisation to work for over others I was considering at the time I joined.

I really care about the fate of this organisation. For me this is the best of all possible organisations for which to work.

HR Policies & Practices

Several professional development activities (eg. Coaching, training) are offered to employees to improve their skills and knowledge


NA +ve Angle & Perry, 1983, Buchanan, 1974, Steers, 1977 Milkovich & Newman, 1998, Sheppard, Lewicki, & Minton, 1992 Agarwal & Ferratt, 1999, Gomolski, 2000

Employees have the possibility to rotate jobs to develop their skills

Employees have the possibility to develop their skills in order to increase their chances of being promoted

I am able to apply my new skills in my work

Organisational Sponsor

IBM really cares about my well-being. 4-point Likert-type format (1 = strongly disagree, 4 = strongly agree).

NA +ve The Survey of Perceived Organisational Support (POS) Eisenberger, Huntington, Hutchison, & Sowa, 1986

IBM values my contributions to its well-being.

IBM would grant a reasonable request for a change in my working conditions.

IBM strongly considers my goals and values.

IBM takes pride in my accomplishments at work.

IBM is willing to help me if I need a special favor.

Organisational Leadership

My manager lets group members know what is expected of them


NA +ve The Ohio State leadership studies. LBDQ – Form XII Schriesheim & Stogdill, 1975 Bass & Stogdill, 1990

My manager decides what shall be done and how it shall be done

My manager puts suggestions made by the group into operation

My manager is willing to make changes

My manager makes their attitudes clear to the group

My manager schedules work to be done My manager tries out their ideas with the group

My manager treats all group members as his equals

My manager is friendly and approachable

My manager looks out for the personal welfare of group members

Perceived fairness I believe that rules and procedures are administered fairly organisational leaders.

4-point Likert-type format (1 = strongly disagree, 4 =

NA

+ve

Moorman, Niehoff, and Organ 1993

I trust my organisation to make decisions on my behalf strongly agree). Martin & Bennett, 1996, McFarlin & Sweeney, 1992 Resources are allocated without favouritism.

Role Discretion

The degree of autonomy that I currently have is more than in my previous roles.


NA +ve Job-related Tension Index Kahn et al (1964)

Role Ambiguity Lack of information needed to carry out your job 4-point Likert-type format (1 = strongly disagree, 4 = strongly agree).

NA -ve Job-related Tension Index Kahn et al (1964) There is a lack of guidelines and policies to help me

Not knowing just what the people you work with expect of you

There is a lack of guidelines and policies to help me

Lack of clarity of job description and responsibilities

Feeling that you have too little authority to carry out the responsibilities assigned to you

I feel unable to influence my immediate superiors' decisions and actions that affect me

Role conflict I do things that are apt to be accepted by one person and not by others


NA -ve Job-related Tension Index Kahn et al (1964) Rizzo, House, & Lirtzman, 1970

I have to buck a rule or policy in order to carry out an assignment

I work under incompatible policies and guidelines

I work with two or more groups who operate quite differently

I receive incompatible requests from two or more people

Role overload I receive an assignment without the manpower to complete it


NA -ve Job-related Tension Index Kahn et al (1964)

I feel that I don't have enough time to do everything that others ask me Thinking that the amount of work you have to do may interfere with how well it gets done

Occupational Commitment

I spend a significant amount of time reading journals, books or magazines realted to my profession


+ve

+ve Occupational Commitment Questionnaire Blau, 1985 I am disappointed that I ever entered this profession. -ve

I definitely want a career for myself in this profession. +ve

If I could get a job different from my current occupation and paying the same amount, I would take it.

-ve

Tolerance for ambiguity

I would like to live in a foreign country for a while 4-point Likert-type format (1 = strongly disagree, 4 = strongly agree).

+ve NA Based on a 16 item scale developed by Budner (1962) Three subscales also can be computed to reveal the major source of intolerance

There is really no such thing as a problem that can’t be solved.

A manager is one who makes you wonder about your way of looking at things

It is more fun to tackle a complicated problem than to

solve a simple one of ambiguity: Novelty Score, Complexity Score, and Insolubility Score.

People who insist upon a yes or no answer just don’t know how complicated things really are.

Many of our most important decisions are based upon insufficient information.

Managers who hand out vague assignments give one a chance to show initiative and originality

Ego resilience I often feel as if the world was just passing me by. 4-point Likert-type format (1 = strongly disagree, 4 = strongly agree).

-ve NA Representative Items from the Self-Report Ego-Resiliency Scale Based on the California Psychological Inventory (Klohnen, 1996)

Most of the time I feel happy. +ve

My daily life is full of things that keep me interested. +ve

I feel like giving up quickly when things go wrong. -ve

CONCLUSIONS

Advancing our knowledge of an MNCs labour utilisation strategy depends on our ability to develop models of the relationship between international and domestic employees, and to specify the conditions under which an MNC will establish various combinations of both. This project will advance our theoretical and empirical understanding of globalisation and mobile workforces, in four main ways.

Most importantly this project will help us to understand the issue of physical, psychological and employment mobility in the workforce as a series of more complex inter-relationships. Rather than the simplistic understanding of expatriate assignments, MNCs will understand their total workforce as being fluid and dynamic. Secondly, the project will extend our knowledge and understanding of the operational aspects of MNCs in facilitating these fluid workforces. It will provide an empirically grounded study of how employees move between segments, through ‘gates’ and how these gates can be facilitated by HR processes. It will also demonstrate how employees can enter into the MNC through various segments as an important recruitment and retention strategy.

Another important policy implication of this project is to demonstrate how this model can be used by MNCs to managed their entire workforce at different stages in the business cycle. The dynamic nature of the model allows for employees to be moved between segments to cater for peak demand times, skills shortages and times when there is a need to reduce the contingent workforce. Finally, the project will develop our understanding of the everyday experiences of the MNC workforce in the Asia Pacific region.

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