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Allison Webb: University of New Brunswick, Fredericton, Canada
Increased internationalization has led many executives to believe that if they do not have managers with global skills, their firms will lose their competitive edge. They realize more and more that they must develop managers who understand their global businesses. But it is not enough to send managers overseas for brief stints once or twice a year. Managers need to live within the foreign business arena for several years in order to gain the necessary experience[1]. As these expatriates return, their overseas experiences and new perspectives can lead their firm toward effective multinational strategies[2].
Unfortunately, overseas assignments are often ill-planned and haphazard, leading to poor job performance and or job displacement[3]. The costs of failed expatriate assignments are high, therefore, both financially for the organization and from an individual career perspective. Expatriate failures are a human resource waste, as most of these employees would have had good work records prior to their overseas assignment. Failures can also be a heavy blow to the expatriate's self-esteem and ego[4].
As many as 40 per cent of all expatriate assignments fail owing to poor performance, or the inability of the expatriate to adjust to the foreign environment. In addition, it is estimated that as many as 50 per cent of those who do not return prematurely will function at a low level of effectiveness. Less than one-third of expatriate failures are considered to be job related. Primary reasons for failure include factors relating to family situations that disrupt the adaptation of the employee and the expatriate's lack of interpersonal skills. The number one and two factors blamed for these failures is the inability of the spouse and the inability of the employee to adjust to an unfamiliar foreign culture[5, 6].
The direct costs of bringing expatriate managers back home and finding replacements for them range between $50,000 and $200,000. It is estimated that US firms lose $2 billion annually in direct costs associated with failed overseas assignments. This amount does not include those losses that cannot be measured, such as damage to corporate reputations or lost business opportunities. In most instances however, the risks involved in sending employees abroad are worth the benefit of developing international management skills and a...