Expats need approximately three to nine months to adjust to the new surroundings before being productive and their cost to company is normally three to five times higher than the local staff. By the time they start to deliver, it may be time for them to begin preparing themselves and their family for another international assignment. During the brief interlude of productivity, if the expatriate is not accepted by locals in the organization, it may also result in significant loss to the employer.[break]
In Nepal, organizations are mandated by the government to conduct a search for national experts before opting for international expertise. National policy and rules in Nepal prohibit hiring of expats where similar local talent exists in the market. However, present trends do not suggest or indicate that such search efforts are indeed made prior to hiring expats. Organizations that avail temporary expat support to ramp up local competencies need to understand that there are legal risks in using such short term services for which special waiver may be warranted by the Nepal government.
If organizations cannot get the best expat available (due to cost or other reasons), they can opt for affordable and available local candidates, whose credentials may also not necessarily tick all the boxes. In a flat world, the exposure of the younger workforce towards international trends and multicultural adaptability is exceptionally high; therefore, utilizing the younger workforce may help in creating a multi-cultural environment and could be a better option than hiring experienced and expensive expats.
In Nepal, it has been observed that the best national talents in the market opt for international non-profit jobs. This is hardly the case in developed economies. Therefore, it may be in the selfish interest of the organization to invest in best talent from emerging economies and groom the local talent for strategic responsibilities. However, since managers are hired predominantly from developed economies, they are sometimes oblivious to this unique opportunity and challenge of capitalizing on Nepal’s labor market sentiments.
Expats who are exposed to the international market in their unique discipline bring in their own relationships and knowledge of the global market which may assist in finding additional resources. The business development vantage point may be the key reason for hiring expats.
If Indian firms with international standing are any example, organizations that develop a global vision want people who have internationally acknowledged credibility to lead their businesses. If organizations aspire for such global vision, finding the best expat for the job should be the best solution, irrespective of the costs of such expats.
However, INGOs need to look around outside the comfort zones. Non-profits organizations have been hit hard due to the global financial crisis. The crisis is mostly ‘western’ and is a sign of changing power base from western to eastern countries or from developed towards emerging economies. The International Monitory Fund in its current analysis predicts that emerging economies will surpass developed economies in terms of global output (purchasing power parity) by 2013. This would mean an even greater crisis for non-profit organizations. If history is testimony, this trend would definitely have repercussions on the origins of talent: more directly to the for-profits but surely and eventually trickling down to non-profits.
There are many research articles that suggest how organizations are forgetting ‘western’ expats and are now looking at placing promising Asians in important jobs related to the region. For business organizations, the definition of expat is already changing. These days, expats are less often American or European executives and more of the talented Asian or Latin American sent to US or Europe to join at either the top leadership or middle management levels.
Given the backdrop, INGOs need to gear up to face these strong and visible trends, the direction of which is already set by for-profits. Among many things, they need to critically review and rethink their expat policy. For this, a careful look at the mix of anticipated future workforce for delivering the strategic objective is required. Although many non-profits are actively thinking about this, not many have adopted a clear policy on this in terms of employer branding and attracting talent from emerging economies.
There are some unique reasons why INGOs hire an expat. The reasoning might differ at times, but studies suggest three broad categories of reasons. First, it is to ensure transfer of technology. This rationale preemptively implies that the required skill sets are not available in the host country. Second, to secure direction and control over technology, processes or resources. This rationale implies that there are risks (like fiduciary risk, misrepresentation risks, etc.) in recruiting a local. Third, expats are future global leaders being developed through building international experience.
Technology transfers have witnessed a U-turn with more Asians now seeking and achieving international knowledge and leadership roles. The western world is relying strongly on management capabilities of Asians. Expat placements geared to ensure organizational development are not very popular as international research suggests that expats seldom get repatriated to the head office to avail longer term value addition. In a flat world, there is also growing realization that you do not need expat positions to fuel the global talent management for an institution.
DO INGOS NEED EXPATS?
Since the world is fast changing, organizations that fail to predict future trends and understand the reversed pace of the world economy will increasingly face insurmountable challenges. Hence, careful analysis and quick action is required on the part of the INGOs. For the time being, each expat needs to have a specifically and directly attributable value proposition that is measurable in time and quality to justify his/her presence.
The author is an HR professional. Views are personals.
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