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Trade Routes: The Hidden Cost of Expatriate Executives

By: Michael Wynne
Posted: October 26, 2006, from the October 2006 issue of GCI Magazine.

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It’s not at all surprising that American companies have a reputation for prematurely abandoning potentially good markets. As soon as the local economy softens, inexperienced, short-term focused executives tend to view normal local downward economic cycles as long-range trends. On the other hand, Japanese and European companies usually will stay the course and benefit from the eventual economic upswing.

What is the Alternative?

If a company has no other choice but to send an expatriate, then it should at least choose someone who shows some of the qualities that lead to successful adaptation.

Multicultural and international business training and mentoring prepare employees for the challenges they will face. Unfortunately, most acculturation trainers tend to focus more on academic aspects of local cultures rather than on the skills needed to manage an overseas business successfully. This can be offset by providing executives with an experienced international business mentor, and it will make their learning curve much shorter and far less expensive.

The Best Alternative

The prime mission of expatriate executives should be developing local management leadership. Identifying talented management potential is a demanding task in any environment, much more so in a foreign one. Another challenge is that once local leaders are hired, trained and in place, they immediately become the target of competing firms. Either that or the talented leaders start successful businesses of their own. Nevertheless, developing local managerial talent is still the best alternative; it is essential to long-term success.

What are the perils of hiring local management talent? Although their experience in the local market may be good, their lack of corporate savvy can be a handicap. As previously mentioned, just finding qualified candidates can be a daunting task. Fortunately, today most major U.S. executive search firms have established operations in countries around the world.