Level of expat management largely unaffected by financial crisis
In spite of the tough economic conditions, the numbers of expatriate executives in companies around the world is not reducing. In a recent survey, consultancy firm Pedersen & Partners found that despite being three times more expensive to employ, the financial crisis has caused less than 20 percent of companies to make significant changes to their policies on hiring expat execs.
Although the cost of bringing in expat management is a large financial burden on companies, the potential losses incurred from mismanagement are considered as ultimately far pricier.
The study found that the majority of companies would like to eventually replace expat mangers with locals, only 15 percent showed a preference to replace expats with more expats. Of the companies surveyed, 35 percent were undecided, while the remaining 50 percent indicated a preference to replace management with locals. However, finding suitable local talent appears to be a problem; 65 percent of companies said a dearth of candidates locally was among the main reasons for employing foreign executives.
But the study uncovered an evolving situation. In more mature emerging markets, with Central and Eastern Europe given as an example, more and more local managers are being appointed, while other, newer markets are seeing rises in expat management. These changes result from the management development programs run by companies, which eventually lead to suitable, trained up locals for the top positions. Another system highlighted is the “local contract plus” for expats that stay in a country. These contracts cut most of the perks offered, generally providing a typical local package with higher remuneration alone.
The three main reasons for employing executives from overseas are business development (increasing business and training up the locals), implementing corporate culture, structures, and processes, as well as training the expat mangers themselves. Many companies apparently make foreign assignments an essential rung on the corporate ladder.
editor@romania-insider.com
