Should I use expats? How do I select the best expat for our company?

by Lisa DeWaard, Ph.D.

Photo from Shutterstock by Triff

The merger is complete. All the paperwork has been signed. You’re now beginning the integration plans. One of the most difficult issues you face is how to staff new locations. Who stays? Who goes? When there are duplicate positions that need to be reduced to a single role, these decisions are difficult. They’re made even more difficult if you’re expanding across national borders. Quite often, the use of expats seems like the most obvious choice for getting your new location in step with your current company. After all, managers who have been successful at your company in the past already understand the company’s culture and goals, right? This is, in fact, true, and is one of the strongest arguments in favor of using expats as you expand.

That being said, there are drawbacks as well. Let’s explore what the research says about expats. A quick review of articles (source) (source) on the subject reveals that the advantages are many:

• Expats have deep knowledge about your company.
• Expats use the practices you have developed over the years.
• You know you can trust them because there’s a history of working together to show it.
• Typically, only the best performers are selected, so you are likely to have highly motivated individuals.
• Many of the areas that you are expanding into may have smaller talent pools and may not have many applicants familiar with your industry.

Despite these very positive points, failure rates associated with the use of expats show that one in four expats fails in developed countries and that the failure rate in underdeveloped countries is 40%, with costs of failed assignments estimated between $250,000 and $1,000,000 each. The potential is high, but so are the risks. 

Reasons for failure include language barriers, differing legal systems, and high burnout due to a lack of familiarity with the culture and/or isolation from friends and loved ones at home. 

Another article clearly lays out the benefits and drawbacks for three approaches to hiring: the traditional expat (here defined as “Home-Country National”), hiring a local on the ground (“Host-Country National”), and hiring from a third country (“Third-Country National”). Each has its benefits and drawbacks and there is no one right answer; the context of your company, the goals for the new location, and the context of the new local market should all be taken into consideration.

For example, the home-country national brings with her greater control of the organization, a greater understanding of the business strategy and how to implement it, and a cultural understanding of the home-country based headquarters. It also provides the home-country national with an inside look at how the new market locale functions. However, the drawbacks include issues with adaptability to the foreign environment, a potential lack of cultural sensitivity, language issues, and costs associated with visas and relocation. 

The host-country national tends to show the inverse picture: there is no language barrier between him and his new team, the chance that he will have a better understanding of local rules and laws is greatly increased, and there aren’t visa issues or relocation costs. However, the host-country national may not have the same understanding of the business’s objectives or processes. And there is the danger of the development of an “us versus them” mentality.

The third approach is less common than the first two and brings with it other challenges: hiring someone from a third country. While they may bring a better international perspective, in this scenario, you have the visa concerns and relocation costs, cultural sensitivity issues, and it can also breed resentment among local workers who believe one of their number could do a better job.

One issue that is present in all three approaches to hiring is that two or more cultures are in contact no matter the scenario. And this means that language and/or cultural differences must be addressed. As with integration issues in general, the best time to start addressing these is as early as possible, ideally when the new location is identified.

If you have decided to use a home-country expat strategy, how do you go about choosing the best person for the job? There are several things to consider. First, there are the job-specific factors to consider. Competence in the role must (of course) be the first consideration. You should never send a technician to do an administrative task or vice versa just because they are a cultural match. But once you narrow down the pool to those who qualify for the job itself, some documented success predictors are the following: Tolerance for ambiguity, behavioral flexibility, non-judgmentalism, cultural empathy, low ethnocentrism, interest in overseas experience and/or interest in the specific culture of the host-country (source). These help significantly with motivation and likelihood that the expat will remain for the duration of the assignment. If your expat candidates are married and/or have children, the motivation and attitude of the spouse is another key factor. Does he or she have an interest in living abroad? Is the marriage a stable one? While it may seem an intrusive question to ask (and you should check with your HR rep to make sure it’s a legal question to ask according to your country’s and/or company’s laws), it’s another key variable in the potential success or failure of an assignment. 

According to our own research at Hofstede Insights, personality factors can also play a significant role. We have developed a tool called the Cultural Adaptability Profile that uses a survey based on four of the Big Five personality traits as well as our own research on cross-cultural values. This scientifically validated tool is able to estimate how a person will cope in an unfamiliar culture. Based on their survey results, a score is given on each of the five areas below and a personalized risk analysis is generated.

After the scores for each trait are calculated, the risk analysis is generated and provides specific feedback for the user. See the selection below from a demo report:

The data are then compared to values differences along the Hofstede Six Dimensions of National Culture model:

These results can be used in a couple of ways. First, they can assist you in understanding which candidate is the best fit for an assignment. Second, they are useful in understanding what kind of cross-cultural pre-deployment coaching is best for your candidate. 

At Hofstede Insights, we emphasize the importance of measurement in all areas of culture. With an average failure rate of 40% and losses between $250,000 to $1,000,000 from each failed assignment, having a tool that can guide you in your selection can prevent significant losses to both your company and your candidate. 

We can assist you in mitigating risks and reaching your full potential.  Contact me ([email protected]) or Dr. Elizabeth Tuleja, Associate Partner at Hofstede Insights and co-creator of this assessment ([email protected]). Let us help you be successful!