The Evolution Of The Expat - Part I
September 7, 2008
I found Rome a city of bricks and left it a city of marble
Augustus Caesar
This is the first of a three part series that will discuss the transition from the Expatriate (Expat) to Global Executive. For decades, Expats were characterized in one of two ways. Either they were a loyal lifetime employee who didn’t quite have the talent to run a unit in the U.S., or there simply wasn’t any spot for them in the U.S. These loyal employees were still rewarded with a posting, including the perks of club, car and international school for the kids, in locations such as Hong Kong or Paris as their “Swan Song.” Usually, these offices were already established and the Expat played a caretaker role, performing mostly ceremonial duties. Another major reason for sending these mediocre talents was that the CEO usually wanted their best and brightest right next to them at headquarters. Fast forward to the 21st century and this has completely changed.
“Expats” now prefer the term Global Executive and these positions are being filled by the young and ambitious looking to springboard into the C Suite by managing offices with exponential growth in places such as China, India and Russia. Rather than golf three days a week, these Global Executives are expanding the business, securing talent, formulating strategies and developing their teams into top-notch performers. Furthermore, these roles are not just as VPs or heads of business units, but support functions such as Marketing, Sales, Logistics, IT and R&D.
However, there are still traditional Expats out there and a “Clash of Ideologies” has become evident. Since Expat positions are quite attractive, one common weakness that develops is the fear of losing the position by taking risks. In the end, Expats who develop this weakness become an extreme liability to the company and subvert the entire reason that they’ve been sent overseas. The safe play is to go with the flow and do just enough to get by without taking those risks that can lead to major losses. Unfortunately, many of these risks are what lead to unprecedented success. A mentality of “hold the gain” infiltrates their thinking and stagnates personnel.
Global Executives take a different approach to their position. They treasure the opportunity and see it as their ticket to validating their value in the organization. What are the characteristics of a Global Executive? What does it take to find one, get them on board, and ensure there is a high rate of return on both sides?
First and foremost, one must ask the question, can you manage your business without an Expat, i.e. remote control from home base and/or hire a local person for the specific country or region? What will be the return on the investment and why can’t we “get by” with local talent? This issue causes companies to vacillate when trying to establish a presence in Asia. Here are some key advantages and disadvantages of sending the Expat or managing with a local.
Manage This…Expat or Local
Corporate culture Western management techniques Western customer requirements that need support in Asia Internal relationships to get the job done
Lack of cultural understanding and sensitivity Seen as temporary, lacking credibility Cost relative to return Personal impact, no work/life balance
Culture and language Local and regional networking Ease of getting the job done in country Reduced expenses
Respect with key management Western management techniques Western customer awareness Developing strategy and long-term objectives
If the decision has been made to send a key manager, planting someone from the U.S. “in-country” is expensive, especially if a family is being considered. On average, it costs a company approximately $600,000 to $1,000,000 per year for a family of 4, depending on the package. 20% of all Expats return prematurely and over 30% of the ones that stay to the end are ineffective. This is due to the fact that the manager was chosen for the assignment based on their technical skills rather than doing a proper assessment of their overall capabilities. The key to any successful Expat is 70% attitude and 30% job skills. There are three characteristic quality levels that build on each other that must be considered in vetting the right manager for the Expat assignment.
The Right Stuff
Technical and corporate experience Managing others, three or more Well respected within key departments Clear communicators, oral and written
Multicultural mindset, affinity for working with foreigners Commitment to learning Good work/life balance Go the extra mile in areas not in the job function
Strength and Humanity Ability to network and build relationships Speed and patience Well-balanced spokesperson for the company
Over the years we have seen many companies replace Expats with locals. The primary reason for this move was usually cost cutting and the assumption that local management could handle the complex multi-tasking required to be successful. In many cases the business declined in revenue, margin and fundamental operational issues started to wane. As a result, these companies usually decided to send the Expat back to “fix the problem.” While this scenario seemed to be a trend, it is important to keep in mind there are very intelligent and capable managers in all parts of Asia. The “Holy Grail” is finding a person that has Western company experience combined with the understanding and appreciation of Asian business culture. In part two, we will discuss the details of this transition from Expat to Global Executive, the success and failure.