INTERNATIONAL MOBILITY AND THE CHALLENGE OF EXPATRIATION THE CASE STUDY OF EXPATRATE’S MANAGER IN VIETNAM

INTERNATIONAL MOBILITY AND THE CHALLENGE OF EXPATRIATION: THE CASE STUDY OF EXPATRATE’S MANAGER IN VIETNAM DỊCH CHUYỂN QUỐC TẾ VÀ THÁCH THỨC DI TRÚ ĐỐI VỚI NGƯỜI NƯỚC NGOÀI: NGHIÊN CỨU T

INTERNATIONAL MOBILITY AND THE CHALLENGE OF EXPATRIATION: THE CASE STUDY OF EXPATRATE’S MANAGER IN VIETNAM

DỊCH CHUYỂN QUỐC TẾ VÀ THÁCH THỨC DI TRÚ ĐỐI VỚI NGƯỜI NƯỚC NGOÀI: NGHIÊN CỨU TÌNH HUỐNG CÁC CÁN BỘ QUẢN LÝ NƯỚC NGOÀI LÀM VIỆC TẠI VIỆT NAM: TỪ THÍCH ỨNG GIAO THOA VĂN HÓA ĐẾN ĐỊNH HƯỚNG QUẢN TRỊ NGUỒN NHÂN LỰC QUỐC TẾ

TRAN Van Nhu 1 - Sarah MANGILII

Summary

Although the global economic crisis has caused most companies to review their costs of international assignments, the expatriation remains the best way of creating a global mindset among managers Expatriation is a big challenge both for expatriates and companies itself, especially while the arrived country is Vietnam – the fast growing emerging market From the expatriate point of view,

it is to face a different culture and adapt his personal and professional life, for the sending company, it

is to have a good return on investment, since this investment is significant

Our research aims to analyze how the assignment phase is experienced by the individual expatriate This finding is also served as a tool for the Vietnamese managers to better understand what international managers really think about their country and the way people are working, and what could be changed in order to be compete better in this globalizing world The other aim of our research

is, subsequently, to find out from the expatriates whether or not their companies tend to implement modern International Human Resource approach to maximize the efficiency of its staff

The structured in-depth interviews have been conducted on 25 Hanoi’s expatriate managers in September 2008 The various interviewees composing the sample have been randomly picked up in business directories of foreign Investment companies in Vietnam, and more particularly Hanoi

Our main findings have showed that most of the respondents have experienced the environmental pressures and cultural shocks, but they demonstrated their tenacity in overcoming the various cross- cultural issues and all of them revealed optimism, sincerity and open-mindedness Different tactics

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according to the profiles have been implemented to adjust Few disillusions appeared among some of the respondents who found their experience especially fastidious and who struggled more than the others to cope with their working environment and personal social life These disillusion engendered a feeling of rejection for the country in very few cases The expatriate who adjust in living and working

in Vietnam tend to have established a very special relation with the country and their people, however without trying to become Vietnamese themselves

The International Human Resource Management aspect showed in most cases a minor investment from the sending organization on the expatriate This mainly in terms of preparation and support during the assignment phase and it prevails among the younger expatriates without long professional experience The management of the expatriation as a whole cycle is often true, however only in terms of bureaucracy

Key words: expatriation, cross-cultural adaptation, international human resource management, Vietnam

Tóm tắt

Mặc dù khủng hoảng kinh tế toàn cầu bắt buộc đa số các doanh nghiệp phải xem xét lại những chi phí bổ nhiệm nguồn nhân lực đi làm việc quốc tế, việc di trú làm việc ở nước ngoài vẫn là cách tốt nhất để tạo ra tư duy toàn cầu cho các nhà quản lý Di trú làm việc ở nước ngoài là một thách thức lớn cho cả người nước ngoài và các công ty gửi lao động, đặc biệt khi điểm đến là Việt Nam - thị trường mới nổi đang phát triển nhanh Theo quan điểm của người nước ngoài, đó là phải đối diện với một nền văn hóa khác và thích ứng cuộc sống cá nhân và nghề nghiệp của họ với môi trường mới; còn đối với công ty cử lao động đi làm việc, đó là làm sao đạt được lợi nhuận tốt về đầu tư, nhất là khoản đầu tư này thường đáng kể

Nghiên cứu của chúng tôi nhằm mục đích phân tích giai đoạn được cử đi làm việc tại nước ngoài được những cá nhân nước ngoài trải nghiệm như thế nào Phát hiện này cũng được coi là công cụ hữu ích cho các nhà quản lý người Việt Nam hiểu rõ hơn về những gì các nhà quản lý quốc tế thực sự nghĩ

về đất nước của họ, về cách thức họ làm việc và về những điều có thể cần phải thay đổi để có thể cạnh tranh tốt hơn trong thế giới toàn cầu hoá Ngoài ra, nghiên cứu của chúng tôi có mục đích tìm hiểu, từ các cán bộ nước ngoài xem các công ty của họ có xu hướng áp dụng cách thức quản lý nguồn nhân lực quốc tế để tối ưu hóa hiệu quả của các nhân viên của mình hay không

Các cuộc phỏng vấn sâu đã được tiến hành từ tháng 9 năm 2008, với 25 cán bộ quản lý nước ngoài làm việc tại Hà Nội Các cá nhân trả lời phỏng vấn trong mẫu điều tra được chọn lựa ngẫu nhiên trong các danh bạ kinh doanh về các doanh nghiệp nước ngoài tạ Việt Nam, và đặc biệt tại Hà Nội

Kết quả chính của nghiên cứu đã cho thấy rằng hầu hết những người được phỏng vấn đã trải qua những áp lực môi trường và những cú sốc văn hóa, nhưng họ đã chứng tỏ sự kiên cường của họ trong việc khắc phục các vấn đề phức tạp của giao thoa văn hóa và tất cả đều bộc lộ sự lạc quan, chân thành

và sẵn sàng tiếp thu cái mới Tùy theo đặc thù của từng cá nhân, các chiến thuật khác nhau đã được thực hiện để điều chỉnh Một chút vỡ mộng xuất hiện với một số người trả lời phỏng vấn cảm thấy kinh nghiệm của họ đặc biệt khó khăn và phải đấu tranh nhiều hơn những người khác để đối phó với môi trường làm việc của họ và thích ứng đời sống xã hội cá nhân Tuy nhiên, rất ít trường hợp cảm thấy bị đất nước di trú chối bỏ họ do những vỡ mộng này gây ra Những người nước ngoài đã điều chỉnh trong sinh sống và làm việc tại Việt Nam có xu hướng thiết lập một mối quan hệ rất đặc biệt với đất nước này và với con người của quốc gia đó, tuy nhiên họ không cố gắng biến họ trở thành người Việt Nam

Nghiên cứu về quản trị nguồn nhân lực quốc tế cho thấy đa số các doanh nghiệp gửi cán bộ làm việc ở nước ngoài đầu tư rất ít ỏi cho các cán bộ của họ Hoạt động quản lý nguồn nhân lực chủ yếu tập trung ở khâu chuẩn bị và hỗ trợ các cán bộ quản lý trong quá trình họ thực hiện nhiệm kỳ công tác

và thường dành cho những người nước ngoài trẻ chưa có nhiều kinh nghiệm nghề nghiệp Việc quản lý hoạt động di trú như một chu trình khép kín thường đúng, nhưng chỉ đúng về mặt thủ tục hành chính

Introduction

The multiplication of international joint ventures, alliances, subsidiaries of multinational organizations across national boundaries makes many organisations to view the management of expatriates as a critical part of their international human resource management strategy (Zhu & Purnell, 2006; O’Donnell, 2000; Boyacigiller, 1990) The competitiveness of global corporation depends largely on the effectiveness of their overseas operations Expatriation is a big challenge both for expatriates and companies itself From the expatriate point of view, it is to face a different culture and adapt his personal and professional life; for the sending company, it is to have a good return on investment, since this investment is significant

None of it is easy and both, assignee and sending company have to undertake adequate actions to avoid any failure of international assignment, representing substantial cost, both to the corporation and the individual expatriate involved (Wederspahn, Gary, M.,1992) The case of Vietnam is even more interesting and challenging since it is a developing and fast-growing country Since the launch of market-oriented economic reforms in 1986, the Vietnamese economy has grown at a rate of 7% annually (Thu Thi H & al., 2010) The total registered capital of foreign direct investment (FDI) in Vietnam in 2001-2005 was about 13 times that of the 1988-2000 periods The FDI has strong impact on economic growth in Vietnam (Thu Thi H & al., 2010) Understand and manage the challenges of the globalized workforce is important to sustain the economic development

Our research aims is thus to analyze how the assignment phase is experienced by the individual expatriates How do they succeed in adapting themselves and their style of management to Vietnam? If they do not succeed, what are the reasons? A stress will be put on the international manager in particular on the complex field of intercultural management To a larger extend, this aim is also to serve as a tool for the Vietnamese managers to better understand what international managers really think about their country and the way people are working, what they appreciate, and what could be changed in order to be compete better in this globalizing world

The other aim of our research is, subsequently, to find out from the respondent and experts whether or not companies tend to implement modern International Human Resource approach or not This competitiveness should in theory not only achieved by the expatriate himself but also the organization that is sending Organizations need to view the management of expatriates as a critical part of their international human resource management strategy since employing an expatriate costs an estimated three to four times as much as employing the same individual at home

The first part of the research will review the key notions and the cross-cultural adaptation scheme stages of the cross-cultural adaptation cycle through the literature Secondly, the theoretical expatriation cycle in terms of International Human Resource management strategic approach will be explored Thirdly, the qualitative study will be analyzed using these frameworks

Theoretical Framework

1.1 Culture shock and cross-cultural adaptation process

There is no single definition of “culture” Schein (1985), from the classical managerial perspective, defines culture as how we understand ourselves, others and the environment within which

we operate Hofstede G (1984), an expert on cross cultural differences and management, defined

culture as “the collective programming of the mind which distinguishes the members of one human

group from another…Culture, in this sense, includes systems of values; and values are among the building blocks of culture” The core values that we develop during our lifetime are based on our

community, ethnicity, religion, family, education The increasing of globalization makes individuals from different backgrounds to work together and the culture shock may occur The term of “culture shock” was first introduced by Kalvero Oberg (1960) Culture shock is characterized by the absence of

familiar signs and symbols, often resulting in anxiety and frustration (Oberg K., 1960, cited by

Friedman P.A & al., 2009)

Culture shock is further perceived as part of cross-cultural adaptation process In order to assimilate to the host culture, the individual has to go through the stage of culture shock Many authors have developed differentiated stages of cultural shock (Bhaskar-Shrinivas & al., 2005; Black & al., 1991; Preston, 1985), but the four phases of cultural shock are typically considered as following:

1 The honeymoon stage: in which the individual express his/her excitement, euphoria, positive expectations and idealization about the new culture Although there may be anxiety and stress, this stage tend to be interpreted positively

2 The crisis or cultural shock stage: in which individual begins to show confusion and disorientation in behaviors due to cultural differences Feelings of frustration, isolation or hostility emerge in this phase

3 The adjustment, reorientation stage: in which individual learns how to adjust effectively with the new cultural environment

4 The adaptation, acculturation stage: there are many different adaptation options, especially given individual characteristics and goals The individual tends to build bridges across cultural differences and adopt a bicultural identity

Several researches identified 73 different skills, abilities and competencies related to the

expatriate’s cross-cultural adaptation (cited by Yahmazaki & al., 2004) From this rich review of

literature, Yahmazaki Y and Kayes C (2004) have proposed taxonomy of 9 competencies necessary for the successful expatriate adaptation:

- Building relationships with others;

- Valuing people of different culture

- Listening and observations

- Coping with ambiguity

- Translating complex information into another language

- Taking action and initiative

cross-1.2 International Human Resource Management: An Holistic approach

For organizations to seek and ensure effective expatriate management, a strategic approach should be undertaken to the whole expatriate cycle The main phase of the expatriate includes the strategic planning phase, the predeparture phase (selection and preparation), the “during” assignment phase (performances measurement and support) and finally the repatriation phase (Brewster C & Harris H., 1999) The following part aims to describe these various stages through what has been suggested by the literature for the companies to manage more efficiently their international resources

The strategic planning phase: to assign whether expatriate or local?

Generally expatriates are sent abroad to fulfill missions such as control and co-ordination of operations, transfer of skills and knowledge or managerial development To help organizations in achieving satisfactory strategic planning through making more rational and sensible sourcing decision, Cranfield School of Management has developed a tool entitled the ‘Expatriate Portfolio’ The aim is to help corporate managers identify how an international assignment should be managed and whether a local should fill it or an expatriate The framework outlines four types of assignment based upon the degree of importance of the assignment to the parent organization, and suggests the most suitable type

of appointment for each case (Brewster C & Harris H., 1999)

The predeparture phase

Selection

Most often expatriates are selected from within the corporation The rational thinking is that current managers possess the technical expertise and are more in cohesion with the company’s culture (McDonald G., 1993) Within such companies that seek globally-minded workforce, research into criteria of effective international managers take more and more into account the so-called ‘soft’ skills such as self-awareness, flexibility, intercultural empathy, interpersonal skills and emotional stability This kind of selection of expatriates starts from the recruitment phase By keeping long-term goal in sight as early as in the recruitment stage, a firm can constantly have a pool of employees of which each member can contribute to the future international growth

Tung (1981) selection approach incorporates several of these variables that contribute to the expatriate success Firstly, to identify clearly the nature of the job and an assessment of the qualities and attitudes required by the expatriate that will be on assignment The candidate’s self-evaluation also needs to be considered One major outcome of a good procedure is the self-decision of the expatriate candidate to proceed with the assignment Secondly, to obtain adequate information concerning the differences between the political, legal, social and cultural forces of the home country and the country

of foreign assignment Thirdly, to evaluate the candidate’s willingness to serve in the foreign operation, actual preparation to do so, and the ability to serve effectively in what could be a very huge difference

in culture Finally, to asset the candidate and family’s abilily and willingness to live abroad

A rigorous selection program should therefore consider both of the following considerations:

- The time devoted for the selection processes needs to be sufficient Often, expatriates are selected spontaneously because of an urgent staffing need in an overseas operation (Mc Donald G., 1993) A forecast of IHR needs to be done months in advance Long-term planning and recruitment schemes should be part of the selection efforts

- The utilization of appropriate selection device Various instruments and tests coupled with interview can be used to better predict the likelihood of a successful placement (Mc Donald G., 1993) When evaluation by peer repatriates freshly returned from their assignment is possible, this can also be helpful to assess the candidate’s suitability

Preparation: training, briefing and family orientation

Research findings indicate that pre-departure preparation is positively related to general adjustment and effectual functioning of expatriates in their new environments (Mc Donald, 1993)

Training

Cross-cultural training and foreign language training are two forms of interventions that are suggested to be crucial in the pre-departure phase (Black & Mendenhall, 1990) Such training help the expatriate equipping with knowledge, skills and attitudes necessary to cope with the cultural shock The cultural awareness, one of the major outcomes of this kind of trainings, facilitates working with people who have different social values and behavioral patterns As stated previously in the selection phase, many companies still assume that a manager who proved to be effective in the corporate main office is going to be as effective in the company’s subsidiary Once again, technical skills are important, but the ability to work with individuals and group who are diverse and are functioning according to different business norms is particularly remarkable for expatriates (Mc Donald, 1993)

Even though the potential benefit or cross cultural training is strongly acknowledged, this type of training is not yet well provided by many corporations In addition, most of the corporations who offer such training tend to limit their efforts to a narrow briefing, which provides only little information on the host country’s political, economic and general living conditions (Dunbar &Katchen, 1990)

Briefing

Methods recommended for briefing vary and can include audio-video presentations, meeting with area advisors, session with former expatriates, and even a visit to the country of assignment by the

expatriate and family before the final transfer Knowledge obtained through the briefing program can assist the expatriate in developing reasonable ideas about realities and difficulties of the assignment It could also be essential in setting realistic expectations about working and living in the new environment Moreover, such knowledge can be helping the candidate to accurately assess his/her suitability or vice-versa for the specific assignment (Raffael, 1982)

Family orientation

Pre-departure preparation program directed at the family is very important since family members are usually more susceptible to a cultural shock than the expatriate While the expatriate becomes involved in his/her new assignment, it is the family that faces the difficult process of coping with the social and cultural unfamiliarity (Harvey, 1985) The spouse (since it is men that are often offered international assignment) usually have to deal with disruption of the children’s education, loss of close contacts with relatives and friends, and maybe even a loss of self-worth and identity The situation can

be even more stressful if she had to leave behind her job and interrupt a career

The during assignment phase

Monitoring performance

Monitoring performance during the expatriate assignment requires an understanding of the variables that influence an expatriate’s success or failure in a foreign assignment Three critical variables are the environment (for instance culture), job requirements and the personality characteristics of the individual Organisations need to balance the desire for a global standardised performance appraisal system with the local requirements of subsidiaries (Brewster C & Harris H., 1999) The performance review should allow for a two-way communication and could also serve as a motivational factor in that the expatriate efforts abroad can be recognized (Croft, 1995)

Support

Support during the assignment is believed to be essential for moral and psychological sustenance

as well as for performance effectiveness of international managers Superiors and HR professionals in the home office need to give adequate consideration to the importance of keeping in close touch with their expatriates and providing them and their families with the needed support A major source of

concern for the manager while abroad is loss of visibility to those in home office and fear the sight out-of-mind phenomenon (Adler, 1987) Support during assignment may involve a wide range of formal and informal activities The development of communication channels, for instance, is crucial Nowadays, advanced technology facilitates communication Electronic mail, video conferencing, on-line information, and shared data bases are among the ways expatriates can remain linked to their home country (Croft, 1995)

out-of-Informal support, particularly at the beginning can be very helpful This can include social and professional counseling provided by peers who have already been in the country of assignment for some time It also includes assistance to the newly arrived family with the day-to-day matters such as shopping, schooling, etc

Repatriation

An often neglected area in IHR management is the repatriation process and the subsequent career path of the international manager after the overseas assignment is concluded While the issues associated with expatriation are significant, those related to repatriation are equally important (Tung,

1981) Expatriate expectations of career advancement are not usually realized While overseas, the

expatriate is not likely to be considered for promotion in the domestic operation When repatriated, he/she is also less likely to receive an upward move This is amplified in corporation that do not consider international experience as an important criteria for advancement to high-level management positions (Adler, 1991)

Organizations need to pay careful attention to the way in which they handle repatriation for two key reasons:

9 Firstly, the cost of losing someone who is dissatisfied with his or her position on return is significant, both in purely financial terms and also in terms of the investment in human capital

9 Secondly, expatriate assignments are crucial tools in the effort to create a translational mindset in the organisation Failure to disseminate the individual learning gained from a foreign assignment to others in the organisation is a barrier to the goal of becoming a truly global operation

In order to benefit from their investment on overseas assignments, the firm should establish practices that facilitate effective professional and social repatriation At least 6 months before repatriation, an internal search should be initiated on behalf of the expatriate to find a position that suits his/her qualifications after assignment (Shen Y & al., 2009)

Successful management of expatriation requires a holistic approach to the whole expatriate cycle Organizations that continue to send people on expatriate assignments without carefully considering how this fits into the strategic plan are likely to lose a valuable source of competitive advantage

Methodology

In order to explore in deep the expatriate’s impressions, as well as identify the adaptation strategy and phases of the global manager, the structured in-depth interviews have been conducted on 25 respondents from September to November 2008 An interview guide containing open questions and

using the method of the “critical incidents” has been used to collect information about the respondents,

their adjustment process and also the role played by the sending company in the preparation and if possible, repatriation

The sample has been determined to give a partial overview of Hanoi’s expatriate Managers community Hanoi being a politic capital in comparison to Hochiminh City, a more business centre of Vietnam Managers from both the public (such as NGOs and foreign Government development projects) and the private sector have been interviewed The sample was therefore composed of managers from public and private organization in different sectors and profiles (different nationalities, ages, and seniority in their job and also in the expatriation itself) The size of the sample was 25 people The various interviewees composing the sample have been randomly picked up in business directories

of foreign Investment companies in Vietnam, and more particularly Hanoi These directories are

released by official structures such as the Yellow Pages, Vietnam Economic Times or Hanoi French

Chamber of Commerce, and also unofficial sources such as a database of private and public

organizations that the researchers have obtained thanks to their network

The sample is composed of two 2 types of expatriates: The first category representing 72% is composed of “authentic” expatriates since they have been sent by their company, some were already working for the sending company, and some others have been hired specially for the assignment Another category (28%) is composed by alumni without long term working experience, hired through special programs dedicated specially to them such as VIE or VIA

The following figures aims to give some overview of the degree of acculturation reach by the respondents This map shows the level of identification of the respondents with their culture of origin and their host culture (Model suggested by Oberg K., 1960)

The individuals belonging to “Assimilation” group tends to reject their culture of origin and adapt themselves to the host culture They are completely converting their own norms, values and behaviors The individuals belonging to “Separation” group tend to reject the host culture and the norms of the original culture are strengthened This state leads to segregation

The individuals belonging to ‘Marginalization” group tends to perceive both cultures as being

“equal but naturally incompatible”, the individual in this position doesn’t feel “at home” in neither his original or host culture

Finally, the individuals belonging to “Integration” group tends to perceive both cultures as

“equal” and feel compatible with the host culture The individual becomes multicultural and feels “at home” in cultures, host and original one

As shown, the results obtained from the survey reveals a particularly good acculturation to the count

espondents with the local status tend to be men (only one out of 6 local respo

ry among the respondents The interviews have revealed three cases of relative “separation” The three respondent rejected the host culture for a while after having passed though difficult times at work The adaptation depends on the expectations of the respondents, and on their previous experiences in the expatriation and background The first thing to be noticed is the particularly strong expatriation international background of the respondents More interviews should allow a more accurate and objective view One hypothesis; however could be that most of the expatriate that have trouble adapting themselves to the country don’t stay The other hypothesis is that Vietnam being a developing country, the companies are sending manager with previous working experience abroad or international personal background to reduce the risks

The graph shows that the r

ndent is a women), and also tend to stay longer This can be explained by the fact of being married to a Vietnamese woman and having a family Even if they tend to adapt quite well, the women

of the sample don’t stay for a long period more than 6 years) and don’t plan to stay on a long term basis

in the country All of them are single women and it seems to be more difficult for women to find a partner in Vietnam This factor could explain what triggers an earlier repatriation among women

Furthermore, it seems to be more difficult to handle the fact of being single for a woman than for a man

in Vietnam

The two male respondents married to someone from their own country are taking their situation with p

s- cultural Personal adaptation living in Hanoi

d by the majority of the respondents that were willing to come to Hano

likes the most about the ci

espondent E is married to a Vietnamese and in Hanoi 2 years ago explain his vision of the city, doubl

realize it is a combination.”

hilosophy Respondent N: “My family is quite adaptable with me going away, it make them enjoy

more my presence when I come back”, Respondent A “My wife stayed in Germany It is the same for her Last year she lived in Vietnam but I had to travel around the country all the week so she couldn’t see me But I’ll go back for Christmas this year.”

Findings

1.3 Cros

Euphoria stage and culture shock

The euphoria stage is expresse

i This phase was experienced very physically by some of the respondent, such as Respondent O,

who have been staying for 6 years in Hanoi described “ a wonderful blindness, linked to the intensity of

the expatriation and the travel experience” Hanoi seems to be experienced by the respondents as very

unique and special city, and this is the main point that people enjoy in living here

Respondent P has been working here for almost 2 years and shares what he

ty “I love the weather during spring time, the landscapes, like the lakes, parks, rice fields and

highlands Countless numbers of café and pastry shops, its rich artistic culture makes me feel very pleased being in Vietnam The slow pace of Hanoi life and the feeling being in a country side even I am actually in a city, the absence of skyscrapers is actually very comforting and relaxing at the same time.”

R

e and complex, “I have the feeling that Hanoi is two different places at the same time It can be

extremely laid back and(…) right next to it you have the busiest streets you have ever seen in you life You have the people excess in making money and at the same time you got people that just might not get to work today It is going on side by side all the time It does happen to balance somehow and Vietnamese seems to be pretty comfortable with it But as a foreigner, it is difficult for you to balance (…) The combination of the two is hard First you try to decide which one is Hanoi, and then you