»host country national«

Strategic Global Human Resources Management in the Twenty-First Century
by Michael Harvey and Nancy K. Napier

[p.42] The authors start off that in a globalized economy the only advantage businesses have is "the uniqueness of their human resources and their system of managing human resources". They understand an effective global organization to be a "repository (Behälter, Fundgrube) of skills, competencies, routines, and dynamic capabilities that are managed by multicultural management teams in a manner difficult for global rivals to replicate". [p.43] Therefore global managers are needed who "possess a complex amalgamation (Vermischung) of technical, functional, cultural, social, and political skills to successfully navigate the intricacies (Feinheiten) of the new global manager responsibilities".

[p.44] Outlining how companies start doing business abroad, they define a little evolution.
[p.45] At first businesses simply check out their potential in the host country. In this phase they completely rely on their home-grown staff. Expatriates hold the key positions and all of the parent organization's structures and processes are transferred unmodified. The advantages of this "exportive or ethnocentric orientation" are obvious. The parent organization remains in full control and promising managers gain international experience.
When the host organization appears to bear enough potential, companies shift to a more "adaptive or polycentric orientation". Host country nationals are employed to manage the business abroad. Human resource management is based on local policies, philosophies, and personnel. All in all the branch office receives more responsibility. Harvey and Napier note that in many countries organizations will directly have to rely on host country nationals. Especially in developing countries this is a popular approach since there are simply not enough expatriates who would give up the comfort of their home.
While the reliance on local staff makes it difficult to implement the corporate culture, it allows the company to more deeply set roots in the foreign country. While at the same time it offers the host country to establish competencies of training and work.
[p.46] In the third step a "integrative or regiocentric orientation" is established. Ideally staff is exchanged mutually between the headquarter and the subsidiaries and staff is employed on both sides regardless of nationality (even third country nationals are being employed). In this system the best of both sides is used to the company's success.

[p.47] Thus there are different kinds of global managers: the expatriate, the local national, and the inpatriate managers.

The Expatriate
So far sending expatriates is the common business option for companies working abroad. They posses advanced technical as well as business skills, are experienced and hold a broad, informal knowledge in working within the parent organization. While it is their task to establish their company in the foreign country, they often fail to manage and to adjust to the given cultural setting. Even though this fact is well known it still remains difficult to select promising expatriates. [p.48] Research (as I already introduced) nowadays focuses on predictive character traits, mostly focusing on the Big Five (though introduced already, here a short-form):

1. extroversion: ability to assert oneself and to gain acceptance through social relationships.
2. agreeableness: ability to form reciprocal social alliances and thus to build social capital within the organization; acting as a team player
3. conscientiousness (Pflichtbewußtsein): being trustworthy, supportive, and diligent
4. emotional stability: ability to cope with stress on a professional as well as on a private level
5. openness and intellect: ability to complete an assignment as supposed and apply changes where needed

Though the authors do not support research on predicting expatriate success based on singling out certain character traits they introduce multiple screening devices. [p.49] The Ashridge Management Research Center, for example characterize expatriates by their
"(1) strategic awareness and support,
(2) adaptability in [p.50] new/novel environmental situations,
(3) sensitivity and openness to other cultures and social mores,
(4) language capabilities, and
(5) interpersonal communication skills."
Other sources call expatriates to posses the so-called soft skills such as "global awareness, international strategy, cultural empathy, international or cross-cultural team building, international negotiation skills, ethical understanding of conducting business in foreign countries, and self-efficacy."

Altogether they pin down expatriate's failure to be caused by problems to adjust to the organization and/or the culture and due to family-related issues. They warn of a lack of cross-cultural training and a lack of support by the organization itself to transfer and to adjust. The authors caution against damaging relationships and therefore business opportunities in the long run, and against damaging the expatriate's career.

Local Nationals
The advantages of hiring local nationals in emerging markets are obvious: They possess a "tacit knowledge of cultural, social, and economic characteristics". [p.51] Thus they have a lead on handling local institutions. They can rely on a professional and personal network - which expatriates would still have to establish. Different to expatriates who are only on short-term assignments they are also more likely to guarantee stability and do not need any adjustment time. In that regard they are also less expensive since the company does not need to pay extra for housing and incentives.
Additionally, the authors suggest that local nationals might be especially highly motivated because of extra benefits, compensation, and the prestige working for an international company. Presumingly receiving more acceptance throughout staff then foreigners, they could also function as a role model. Especially in developing countries the authors expect to find a larger pool of applicants in the host country than expatriates. They even suggest to find staff that is perfectly qualified but simply does not meet the local market needs - e.g. women. (But actually I think that that contradicts their assumptions of a higher acceptance of local nationals - it sure offers new chances to the affected potential employees but putting them in lead positions might need some extra effort to establish their role.)
As disadvantages Harvey and Napier name questionable loyalty. They also mention difficulties to first find and then retain qualified staff with experience. They assume potential qualified staff to be mostly integrated in family owned businesses or in the government. They also warn that different cultures might stick to different hierarchies: the most qualified might not necessarily be accepted in the designated role when normally, for example, the oldest person holds the lead position. It might also be difficult to impose Western business practices and policies on the subsidiary.
Altogether it seems as if multinational companies are afraid to take the challenges and even more important they are reluctant to give away control.

Inpatriate Managers
Inpatriate managers are host country nationals who are referred "back" to the headquarter. Harvey and Napier understand them to be "linking-pins". [p.52] As expatriated host nationals they possess a deep social knowledge about their home country, they have their existing networks, they know the culturally "right" way of handling staff and partners. Going abroad they are getting attached to the businesses corporate culture and thus gain credibility and trust. They broaden their skills by taking an external view on the local business, getting "a keen sense of the dynamics". Having grown up with a different education, different training and different work experiences they can enrich the company to a "pluralistic strategic orientation". Thus inpatriate managers can function as "boundary spanners between the domestic and foreign operations of a company".

Harvey and Napier see inpatriate managers to be the future of global business.


in: Gerald R. Ferris, M.Ronald Buckley, Donald B. Fedo.: Human Resources Management - Perspectives, Context, Functions, and Outcomes. Upper Saddle River, NJ: Prentice-Hall, 2002. 4th edition

My interview partner's company does not especially prepare their expatriates for their mission. Since they preferably hire people coming from a multi-ethnic background or having lived in another culture, they accept them to cope well in any cross-cultural setting. Prior to their employee's departure they conduct a so-called exit-interview. In this they simulate the employee's financial situation before and after his expatriate-mission, they talk about social insurance, the company car, .... and hard facts like that. My interview partner was actually disappointed that I did not show any interest in these facts, while they make up 90% of the future expatriate's concerns. Only by the time that they are on their second or third mission, they will start asking about the soft facts concerning the foreign culture and foreign attitudes.
In the host country a start up team which is assigned by the division manager is renting housing and helps organizing the required documents. If no facilities are available and the projects are planned to take longer, the company puts up its own camp.
The expatriates themselves are expected to learn the apparent cultural gestures of their host country and as said before they are expected to cultivate networks. The company understands itself as guest in the foreign country and it wants to keep that status/reputation. ("Wir sind Gäste in dem Land. Wir wollen auch in fünf Jahren noch willkommen geheißen werden.")

Additionally, it has to be mentioned that working for a big constructing company expatriates are not going to a "Polish" construction site - big construction sites are international by matter of investors and experts joining in. On 80% of their sites English is spoken as common language.
It also has to be remembered that expatriates are not coming to an unknown setting - they have worked on that project already for at least four years and know the relevant people on the other side, plus the colleagues they met in common workshops or trainings before. In addition construction sites offer a huge pool of diverse people thus it should be possible for everyone to find somebody he gets along with well. And, too, my interview partner says that it is still business and not about finding buddies.

They have hardly any problems with the acceptance of expatriates in the host country: On the one hand the expatriates are committed to excellence in their job, they want to show their best talents and thus are dedicated to absolute professionalism. ("Ich hab hier eine Aufgabe und ich zeige euch, dass ich das auch kann.") On the other hand their higher payments are usually accepted by host country nationals if they prove to be experts. ("Nach dem Motto 'ah-ha, der kann was', dann wird das auch akzeptiert.")

Nevertheless, expatriates especially in Eastern Europe hardly ever have problems with socializing. This is due to what my interview partner called "double binding". While it is simply their mentality to be more cordial than Germans, they are also aware that these are high-ranked people who are sent to them and they meet them as welcomed guests. Apparently, the biggest problem for expatriates is how to return this affection. Most of them can easily go along but then experience frustration and disappointment as part of a reversed culture-shock coming back to Germany. Others though perceive the call for socializing as an obligation and have a hard time to escape from it without appearing solitary.

In all cases it is up to the expatriate's personality if he succeeds in diminishing power structures or not. My interview partner argues that they never had any problems. "We are not putting anyone in a role, he couldn't play."
Every now and then they might have to send somebody who does not necessarily suit the expatriate profile but is an expert in a certain technique. In these cases it might happen that expatriate and host country nationals do not find a way to work together at all. But since the company cannot abandon the expert, they send a second expatriate to pour oil on troubled water by involving people in personal conversations, outlining the problem and showing empathy for the difficult situation. ("Ein Mensch kann nicht alle Fähigkeiten haben - in bestimmten Fällen muss man Abstriche machen. Da schickt man dann notfalls einen Gutelaune-Clown hinterher.")

I had two nice interviews this week.
I'll throw you right into the second one. The text is quite long but I think it's worth reading ;-) And it was a long interview: 1.5 hours. (I add some German quotes I scribbled along since I was not allowed to record the interview. Hope they don't bother the English readers too much but I might want to use them.)

For my second interview I met a guy from the human resource management of a German constructing company. Thus he is one of the big important guys - scary. Lucky me that I did not know that before. Among other things he is responsible for the 380 expatriates his company is sending on mission abroad. He did not tell me so much about Poland in specific but drew a very interesting picture on the expatriate business.

His company first went to Poland in 1990, thus veryvery early. Mostly when they move onto new markets they follow their clients. Let's say they have done constructing for e.g. Volkswagen in Germany. Then Volkswagen decides to put up a factory in Poland - my interview partner's constructing company will for sure accompany them. In Poland they were first cooperating with a Polish company to master a huge construction project. But their expansion plans based on former clients. He said the Eastern European market to be especially interesting because the population is keen on consuming, on investing their money.

While the Polish part of his company is an independently running association, expatriates are send for several reasons:

• they are experts in their field of the construction process.
• for means of human resource development. The mission abroad is often taken as a step up in the business's hierarchy. ("Wenn der demnächst ne ganze Truppe leiten soll, soll der vorher auch mal sehen, wie der Laden im Ausland läuft.")
• they act as guarding dogs in all areas (which my interview partner described as organs, the vital parts of an organization: "Organe der Gesellschaft") but especially when it comes to financing; in this function the expat is responsible to do or see through the processes of planning, calculating, thus watch that everything is running smoothly and that the right numbers are reported, since everything will flow into the overall big balance.
• Every now and then expatriates are also installed in the Board of Executives, sometimes as guarding dogs and sometimes to profit from their experience when it comes to installing a whole new division for example.

They try to run a regular cycle with their expatriates ranging from two till four years. Every now and then they might send somebody on a half-year mission but that only happens in special cases where experts are needed. They normally do not stay longer to prevent fraternization.

Their biggest problem is actually to find enough people who are willing to go on an expatriate mission. ("Es ist nicht viel Auswahl. Wir freuen uns, wenn wir für eine Position drei Kandidaten haben, meistens sind es nur zwei.") They try to meet this problem already in their hiring practice where they especially look for people with international experience or for people with a multi-ethnic background. ("Wir suchen nach Menschen mit zwei Seelen in der Brust; Menschen mit zwei, drei Mentalitäten.") Thus they normal advertise their jobs already in English since on 80% of the construction sites English is the main language. They look for people who are mobile, adroit, open-minded and who already studied or worked in foreign countries. They have to show a certain ambitiousness and joy at other people and other cultures; they have to show a gipsy-mentality.

At the same time they try to work on the Polish side by means of ongoing training. This has several advantages. In the long-term they hope to reduce the need for expatriates. For the moment further training is simply necessary to work with qualified staff and then to draw employees close to the company. My interview partner described Poland as one of the hot markets where it is relatively easy to make a career if you are keen on that. ("Osteuropa - das sind heiße Märkte, da bewegt sich unheimlich viel.") Nobody has the patience to run through a solid three-year apprenticeship while you can make the big bucks so much faster.
In general companies are faced with a much higher fluctuation than in Germany. Qualified staff is rare and competitors are willing to pay higher salaries if they do not have to invest into education. But there is a natural limit to paying employees for staying. My interview partner's company tries to bind people by offering them a future, by cultivating personal relations, and by giving them the outlook to work for a successful, well-positioned company, thus employ their reputation. A profound job marketing and close connections to the universities leads to 30.000-40.000 job applications annually. ("Jung finden und selbst backen." - Find young and bake yourself.) Nevertheless, this procedure implies that only in 10-15 years you will have the staff that you are looking for.

Thus: back to expatriates.
(I split the summary so you'll have to check out the next article linked aboved.)

Not relying on expatriates the station in Poznań became a regular company with warehousemen, executives in the warehouse, people for administration, controlling, human resource management, planning, computing, accounting, purchasing, technical administration, ... Thus it is an independently functioning company - set up as a Polish company with its own board of executives.

When establishing the station, Panopa was looking for a closer contact to the technical university and logistic institute. Installing all the cross-divisional supply chain functions it would have been a unique chance to bind junior staff members to the company. Being in the early stage of development it would have been quite easy to integrate students writing their examination paper who in return could have profited from the experiences of the experts responsible to build up the company. Unfortunately, Panopa did not succeed. The only student who was interested was a guy who had Polish roots but had grown up and studied in Germany.

A lose exchange with the German headquarter is established when Polish employees attend programs on how to meet the quality standard of calculating propositions. Therefore they visit the German headquarters and are introduced how propositions are made, which devices are used, how the program works, ... Based on the same idea the Polish man in charge for controlling spends several weeks at a time in Germany to watch and learn when new software was purchased.
Besides the technical aspects this sort of exchange is to get acquainted to the practices of doing things, to the way decisions are made... ("So das nach Möglichkeit die Standards und Entscheidungswege so wie wir sie hier haben nach dorthin übertragen werden." Dr. Hucht, 16.02 min.) This ensures a smooth working flow: a decision on investment in or for Poznań is a decision that has to be backed up by the German parent company as well. This means that the decision making process is initiated and prepared in Poznań, that the plan then is accredited by the board of executives and is afterwards - like all other projects of Panopa - passed to the German board of executives. Therefore it is helpful to work by the same structures and the same forms and preprints.
In the field of qualification management all employees are trained in Germany. Workshops are certified on a pan-European level and employees in all divisions and countries of Panopa can take part in a training run in Duisburg by the German headquarter. The participants then are observed by the responsible German employees of Panopa in an auditing at their respective work setting. Participating successfully employees can acquire a pan-European certificate guaranteeing quality management.

Besides this advanced training, Panopa conducts driving classes for forklift drivers. This is simply due to the fact that the company did not find enough employees in this field. Panopa also faced problems with fake documents ("Sie können in Polen nicht unbedingt glauben, dass wenn Ihnen einer einen Schein vorlegt, dass das nicht der vom Bruder ist." Vieth, 18.07 min.) Consequently every applicant gets to take driving classes to make sure he can actually drive a forklift. This training is completely financed by Panopa even though they are confronted with a high fluctuation rate: potential employees take the benefits of the extra qualification and apply at other companies. Nevertheless, Panopa sees this to be the only way to get qualified forklift drivers. ("Anders hat man keine Chance - sie kriegen keine Staplerfahrer." Vieth, 18.32 min.)

In general the workforce is characterized by a high fluctuation rate. Panopa tries to meet that by appropriate payments and by fair working conditions, thus keeping their staff happy. However, the extreme high fluctuation rate does not come about by employees switching to other companies in the area of Poznań but by the general shift of workforce towards other European countries, especially Ireland and England. Last year 8000 young people from the area of Poznań alone moved to work abroad. Having graduated from university and knowing English well enough they plan on two, three, four years abroad to earn the big bucks and to then return to Poland when the market has grown even more. By then they know perfect English, German already anyway and have a solid education. ("Die sprechen dann Deutsch, sprechen Englisch und haben eine entsprechende Ausbildung." Vieth, 19.29 min.)

Education in general plays an important role. Mr. Vieth says that he experienced the Polish staff to be extremely eager for knowledge. Being offered a training at the weekend Germany employees would ask for extra payment and a substituting day off, while Polish employees would only ask for the training's fee to be paid. ("Die polnischen Mitarbeiter, so wie ich sie da kennengelernt habe, sind unheimlich wissbegierig. Ich bring's mal knapp auf einen Nenner: wenn Sie in Deutschland ein Mitarbeiter fragen, ob er Samstag, Sonntag Zeit hat, dann ist meistens die erste Frage: 'Wie wird das vergütet?', 'Wann krieg ich dafür frei?' [...] In Polen ist die einzige Frage: 'Wer bezahlt den Lehrgang?' [...] Der Mitarbeiter will nichts haben." Vieth, 19.45 min. "Da ist der Wille zu lernen deutlich stärker ausgeprägt als bei uns." Vieth, 20.30 min. "Das ganze Ausbildungsgeschäft läuft Samstag/Sonntag, nicht unter der Woche." Vieth, 20.38 min.)
Meeting this eagerness to learn with additional training offers, Panopa manages to bind employees to the company and profits from the advantages of home-grown staff.

Nevertheless, Panopa has problems to find enough employees. Additional to the high emigration rate there is also a tight competition among companies because they are all looking for the same kind of employee. Even though they are partners Volkswagen and Panopa ran into problems building up their subsidiaries at the same time. While Volkswagen was stocking up their staff from 2000 employees to 5000, Panopa was complementing their staff from 130 to 700 employees nowadays. Consequently it was difficult to alone fill the positions but also to find good people for the managerial levels. To keep the people in the management level proves to be just as difficult for the very same reasons: the competition for good employees is high. But competing in raising the salary is difficult. The budgets are quite reduced since everybody tries to produce as cheap as possible. ("Das heißt, da war der Bedarf für Leute da, gleichzeitig der wachsende Trend ins Ausland zu gehen, gepaart mit anderen Unternehmen, die sich in Polen ansiedeln, das heißt der Wettberwerb um gute Leute ist schon sehr groß. Damit natürlich auch die Schwierigkeit, die dann über finanzielle Möglichkeiten - denn was anderes ist es im Endeffekt erstmal nicht - so zu motivieren, dass sie bei der Stange bleiben. Weil gleichzeitig unser Kunde natürlich nach Polen geht, um günstiger zu werden. Das heißt, es ist auch nicht so ohne weiteres möglich über einen festgelegten Preis pro Fahrzeug, den wir da bekommen für unsere Dienstleistung, jetzt zu sagen, ich halt die Führungskräfte indem ich finanzielle Zugeständnisse mache. Weil der Topf aus dem das bezahlt wird, der ist einfach mal fix. Unser Kunde wird da nicht sagen: 'Na gut, dann zahl ich dir auch wieder mehr, weil du jetzt mehr Geld ausgeben musst, um deine Leute entsprechend zu motivieren." Dr. Hucht, 21.36 min).

Talking so much about education, I wondered if many people take vocational retraining like it happened in Germany after the reunification.
Mr. Vieth says that actually a lot of people understand their German studies and their accordant language skills as a basis to work in a German company. Even though they are not qualified for any specific job. ("Viele, die Germanistik dort unten studieren, nutzen ihre Deutschkenntnisse, um in deutschen Unternehmen zu arbeiten. Das hat nichts damit zu tun, dass die vom Fach sind. Sie werden dort unten niemanden finden, einen Polen, der deutsch spricht und nebenbei perfekt im Buchhaltungswesen ist. Den werden Sie überhaupt nicht treffen. Den müssen Sie ausbilden. Die Bereitschaft muss man mitbringen, wenn man sich dort langfristig etablieren will und auch einen vernünftigen Stamm ausbauen will." Vieth, 22.40 min.)
In general there is no system of apprenticeship like we know it in Germany. While we run through a dual structure of training-on-the-job and additional school, people in Poland get into their jobs by additional training. If somebody might apply for a job in accounting that person would attend a three-week program in accounting. The workshops would of course take place during the weekend while the applicant learns the actual work on the job. ("Das läuft wirklich gezielt: So, sie soll jetzt in die Buchhaltung. Jetzt macht sie drei Wochen an den Wochenenden jeweils den Lehrgang, den Lehrgang, den Lehrgang." Vieth, 23.32 min. "Das läuft also nicht wie bei uns im dualen Ausbildungssystem mit Berufsschule und nebenbei arbeiten." Vieth, 23.53 min.)

At the same time Panopa employs quite some students. Financially limited most students have to work to afford their studies. Thus they work as forklift driver during the week and study at the weekend: up to 18 hours. ("Die müssen einerseits das Geld verdienen, damit sie ihre Wohnung, ihre Familie bezahlen können und das Studium läuft am Wochenende, Samstag, Sonntag: Samstag 10 Stunden und Sonntags acht Stunden. Da machen die jedes Wochenende 18 Stunden." Vieth, 2nd: 02.01 min.)
Thus working at Panopa is not seen as a basis for entering a career in the company - it simply pays money. On the other hand studying - as was mentioned before - serves first of all the purpose to obtain a certificate of higher education. Everything else can be arranged afterwards.
Most of the staff will not stay at Panopa once they finished their studies. The company simply cannot take so many employees considering that there are only around 60 positions in administration while the rest of the 650 jobs are merely operational.

Alone for economical reasons work is taken very serious in Poland. The gap between the rich and the impecunious is bigger than in Germany without a broad middle class. There are only the very rich, then a rather small middle class and then nothing for a long time. And there is no legal coverage by law like we know it from Germany. ("Die, die keine Arbeit haben, die, die nichts haben, die sind wirklich arm - unterhalb des Existensminimums." Vieth, 25.14 min.) For most families it is taken as a matter of course that both parents work.
For their workplace people are willing to shuffle 80 km every day from home to work and back again. ("Fahrgemeinschaften - 4 Mann in ein Auto und dann 80 km." Vieth, 2nd 04.06 min.) This reflects also how difficult it was for Panopa to find enough workers and it explains the necessity to train them into decent forklift drivers: coming from the countryside most of them will have only driven a tractor before. ("Das war eins der Probleme natürlich auch, dass Sie Leute kriegen; deshalb auch die Staplerschulung. Wenn die vom Land gekommen sind, 40 km weg, die haben - auf Deutsch gesagt: am Tag vorher haben die noch Traktor gefahren. So, und dann Staplerausbildung, sind da teilweise hervorragende Leute dabei. Kann man nicht anders sagen. Und die sind Ihnen auch ewig dankbar, dass sie nen Job haben. Sobald sie da in ländliche Gegenden reinkommen, dann ist auch in Polen noch: Licht aus." Vieth, 2nd 04.20 min.)

Continuing training is seen at the least as absolute necessity. Many understand it as means to learn something for oneself in order to be able to get ahead. And getting ahead offers the possibility to afford a nice appartment or little house. ("Sie werden kaum Familien sehen, wo die Frau zu Hause bleibt. Da pflegt wirklich die Mutter das Kind und die beiden arbeiten - weil sie's müssen, vom Finanziellen her. Sonst könnten sie sich kein Haus leisten, keine vernünftige Wohnung leisten, und so weiter. Da hat Arbeit einen anderen Stellenwert." Vieth, 24.31 min. "Arbeit hat wirklich unter anderem den Stellenwert irgendwo Karriere zu machen. Die sehen die Notwendigkeit, dass sie lernen müssen, um später irgendwann mal gesichert dazustehen." Vieth, 24.13 min.)

At the same time work also has a different social significance. When faced with problems concerning retirement payment for example, Polish employees would definitely turn to their company instead of turning to the official institutions. Mr. Vieth accounts this partly to the complicate bureaucratic system in Poland. ("Das Unternehmen in Polen hat eigentlich einen anderen Stellenwert für den polnischen Mitarbeiter als ein Unternehmen hier. Wenn die ein Problem mit der Rente haben, lösen sie das über die Firma. Hier würde man selbst die LVA oder wen auch immer anschreiben; machen die nicht. Dazu muss man aber auch wissen, dass das System das die da haben wesentlich komplizierter ist." Vieth, 26.15 min.)