High Turnover Rate Of Expatriate Managers Management Essay

High Turnover Rate Of Expatriate Managers Management Essay The West Indies Yacht Club Resort (WIYCR), headquartered in Chicago, is located on the British Virgin Islands (BVI). BVI is part of the Virgin Islands archipelago with the population of approximately twenty thousand. The majority of the population (83%) is of African descent, with the remainder being of Amerindian, East Indian, and Middle Eastern descent, or white expatriates. Although it has been operating successfully, the West Indies Yacht Club Resort has some alarming problems that have recently become apparent and have seriously affected the operational and organizational aspects of the resort. The main concerns of the organization can be summarized as follows High turnover rate of expatriate managers; Low motivation of the local employees; Rising tension between expatriates and local staff; Rising number of guest complaints; The purpose of this report is to identify the causes of the problems highlighted above as well as provide the most suitable and feasible solutions to improve the current situation in WIYCR. For the purpose of the study critical review of the academic research has been conducted to define the two colliding cultures and to understand the needs of the local staff as well as help US managers to employ the most effective management style. In addition to that, thorough onsite investigation, observations and set of interviews have been conducted, findings of which have been outlined in the below report. Research When it comes to business, it is crucial for a multinational organisation to be able to successfully deal with cross-cultural differences, turning them into strengths, not weaknesses. The existence of expatriate managers is quite common in multinational companies. It is also believed their managerial skills are directly linked to the success of the business and also to the success of cultural adaptation of the organization. According to Schneider and Barsoux cultural adjustment should create opportunities for an organization rather than a threat, and it helps leaders develop intellectually, emotionally and ethically. The qualities that make a good expatriate manager have been often discussed. As per The Chartered Institute of Personnel and Development the key competencies that they feel a good expatriate manager should exhibit include Technical competence, previous achievements in home country, language skills, motivation, stress resistance, independence, and goal orientated personality and good communication skills. They also believe that a manager thriving in one culture is not inevitably going to be successful in another. Moreover, it is vital for a multicultural organization to employ good leaders. However, the leadership styles differ greatly among cultures. Mendenhall et al (1995) claim that in order for an expatriate manager to effectively motivate and lead people from different cultural background they must try to fit in with the social norms of that culture, while also standing out as a leader. In order to identify and understand the main differences between the US and BVI and be able to provide guidance on how to effectively manage people for both cultures, the following two diagnostic models have been reviewed: Hofstede s Model of National Culture; 7d Cultural Dimension Model. In general, people in BVI are more relaxed that in the US and they value quality time with friends and family. They also have very strong power distance which means that people are required to obey and show extreme respect for people based on organizational hierarchy. According to the Hofstede the management style in such societies is mostly authoritarian and vigorous due to the fact that many employees tend to avoid work. The fact that the local staff is paid on the hourly basis and gets a pay raise each year without a proper performance review, gives further incentive to work less. In addition to that, the Caribbean people also experience the lack of proper education, resulting in very high uncertainty avoidance. They also find it difficult to cope with uncertain situations and try to stay away from any conflict that might lead to having to make independent decisions. By contrast, the American culture manifests low uncertainty avoidance. It has been proven that effective leadership systems in countries with high uncertainty avoidance tend to involve providing employees with very clear instructions. Therefore, if they do not have defined objectives for a day, employees choose to avoid work to minimize the stress of uncertainty. According to Hofstede the link between individual and society also plays a significant role in defining a particular culture. There are two main streams individualism and collectivism. As far as the Caribbean culture is concerned, it shows much more tendency towards collectivism as people are viewed mainly in terms of the group they belong to. Unlike in the US, the individualism is very low in BVI, resulting in people not interested in personal achievements and career progression, and they favour work in groups. In those cultures time spent with family and friends is highly cherished and cannot be compensated by financial benefits. The American approach is quite the opposite. According to Hofstedes theory, cultures also differ in terms of expectations as regards to the role of men and women in a society. Therefore high masculinity cultures clearly define the gender roles men are usually more self-confident and dominant and they are more career-oriented. In the case of the Caribbean culture, the gender roles are not clearly divided, in fact there is a high equality among men and women and their performance. Additionally, in order to understand a particular culture, one should also consider whether people have a long term or short orientation. For example, in the US people are more short term oriented which means they expect immediate results and paybacks. By contrast, the Caribbean culture shows greater tendency towards long term orientation, where people are not anxious to see immediate results, compensations or promotions but put emphasis on the role of security and social obligations. In order to analyze those two cultures even deeper and explain how people relate to each other, the 7d Cultural Dimension Model has been employed. First of all, in terms of universalism versus particularism approach, the US is believed to favour universalism, where the most effective management style is based on set of rules and commonly accepted moral principles. On the other hand, the Caribbean people treat each interaction in a different way and pass the subsequent judgments. They are also very affective, which results in expressing their emotions freely whereas in the US people are expected to be conservative in that respect. In addition to that, the Caribbean people believe that they have to establish a personal relationship with the prospect business partner before entering into any business relations. With regards to WIYCR, the local employees say that We have so many managers from US and they dont stay here very long. Many of them think they can just come here and well instan tly be their friends. Since it takes time to build personal relations, there should be a commitment from both sides. Lastly, it is crucial to distinguish between the internal and external control. In the US people believe that they are in charge of their own lives, whereas the Caribbeans put more trust in Gods fate. Those differences have a great impact on the attitudes people show towards different values and norms. For instance, Americans believe they can achieve anything they like if they put enough effort into it. Therefore, the American culture emphasizes and supports personal achievement and continuous improvement. By contrast, Caribbean people believe that their fate has been predetermined. Therefore, they do not try to change something in their lives or put more effort intro achieving something. Findings and analysis To start with, it should be noted that the local government regulations in relation to the labour market in BVI has had a great impact on the overall structure and performance of WIYCR. The government restrictions considerably differ from those the US expatriate managers are familiar with. Generally speaking, in the US the job is given to the best possible candidate, while in BVI it is offered to the most enthusiastic candidate. The local work permit limitations result in trained and qualified managers from the US not being able to find employment in BVI. Another obvious difference between those two labour markets is the process in which employees can be laid off. As tourism is one of the few sustainable industries on the island, employees are granted job security despite their qualifications and willingness to work. By contrast, the number of jobs available in the American hospitality industry is rather limited. The employment opportunities in BVI are almost unlimited in that respec t, which means the local staff can freely leave or change a post if they wish. Unlike in the BVI, the US have extensive hospitality management educational programs and relevant work placement schemes. Therefore, the locals do not have the opportunity to gain the necessary education in the hospitality field resulting in their lack of enthusiasm in relation to taking on management positions. As far as the management team of WIYCR is concerned, the main company departments are located miles away from the actual resort, and all strategic decisional are made offshore. As the top mangers pay visits to the resort only few times a year, and never during peak season, they cannot fully understand the culture diversity and employee needs, let alone the issues which can directly impact the overall operation of the resort. This gap has already resulted in various communication issues. In one particular instance, the Chicago office had over-booked the resort by nearly 20% despite the opposition from the Rooms Division Managers. Therefore, during the peak season the number of guests was much higher than the physical capacity of the resort, affecting the service and staff morale. In the light of the previously identified problems, the study have been concluded with the following findings: Turnover in expatriate management This problem is partly due to the lack of essential international experience, cross cultural communication and sensitivity training on the expatriates side. Additionally, the strict local government regulations create challenges for the management to effectively run the resort. Since the understanding of local culture is limited among the expatriate managers, the management styles they employ are often ineffective. For instance, the behind-the-scene approach so popular in the US is much less effective in managing the Caribbean staff that showing support and participation. As a result of the cultural gap and lack of apparent results, the expatriate managers often feel discouraged since they cannot motivate the local staff to work effectively. Thus, the expatriates often loose their enthusiasm to work in the resort within a short period of time. Lack of motivation in local employees This issue is related to the over-protection from the government labour policy guaranteeing the jobs and salary for the local staff. Moreover, BVI locals are nourishing-oriented they cherish friendships between co-workers and family life. Thus, solely financial reward system is not effective at all. Instead, according to Maslows Needs Hierarchy Theory and The Four Drive Theory belongingness should be developed as well as drive to bond in order to boost their working spirit. It is also crucial for the locals to create personal relationships with their colleagues and direct supervisors, which is combined into their working relationship. Therefore, behind the scene managers do not encourage loyalty or respect from the local employees. Finally, locals know that they are paid on hourly basis and will get a raise each year without a review and regardless of their job performance. Tension between expatriates and local workers This is caused by the cultural difference. In the case of WIYCR, the expatriates are goal-oriented, they emphasize individualism, adopt easily to low power distance, low uncertainty avoidance and competitive environment whereas the local staff put emphasis on collectivism, adapting to high power distance, high uncertainty avoidance and nourishment orientation. The difference leads to misunderstandings on both sides creating unnecessary conflicts and tensions. Additionally, as mentioned previously, the labour laws of BVI increase job protection for locals, posing significant challenges to operations of the resort that suffers from insufficient capacity during peak season and overstaffing during the rest of the year. As it has been already proven the ideal management styles of US and BVI are significantly different. The former prefer laissez-fair or behind the scenes style while the latter prefer a hands-on and more instructive style. Since there are merely a few hands-on managers in WIYCR who strive hard to integrate into the local culture and gain respect, the frequent misunderstandings and lack of cooperation lead to unnecessary tensions in the resort. Moreover, unclear job descriptions and expectations also contribute to the increased tensions. Having lower education levels, the locals require clear and detailed role descriptions while the US expatriates consider brief guidelines sufficient in order to get the job done. Increase in guest complaints This issue is directly related to the above mentioned problems. Internal weaknesses combined with ineffective operating of the resort (e.g. insufficient staff in peak seasons, overbooking) result in the diminished level of service provided to the guests. The low motivation of local employees and the fact that there are currently less reluctant to take on more responsibilities affects the level of the customer service the guests expect. Solutions Based on the above findings it is believed that the optimal solution in the case of WIYCR is to change the organizational mindset to create more globally conscious management that will be able to benefit from the cultural diversity of the organization. The obvious advantage of this alternative is the fact it will promote cultural harmony, leading to increased work efficiency. Be changing the corporate culture to embrace diversity, the company will utilize the strengths of both cultures which in return allows the resort to retain the leading position in the market. As far as the downsides are concerned, the existing team may initially resist change resulting in cultural differences being even more challenging to harmonize. In the short term however, as the Christmas season is about to begin, the company should focus on trust building and improving team working. In the long run, attention should be placed on improving the communication and relationship between the resort and the headquarters in order to increase the overall efficiency of the organization. The first step is to improve the current situation in WIYCR is to have an authority figure present in the resort at all times in order to motivate employees. By having an evident, participating leader people will be motivated to work harder and focus on achieving the companys goals as well as seeking assistance with solving any problems that may occur. Secondly, managers should assign daily tasks and set goals for their employees as collectivists are not willing to set their own targets. This form of leadership is believed to be effective way of managing the local staff due to the high power distance of their culture. It is highly recommended that the implementation of this plan begin immediately since it is a vital part of the overall cultural adaptation process. The second area of development is to improve internal communication, gradually building trust between managers and local staff. In order to do that, the existing managers should undergo cultural training, so they become aware of the cultural differences they deal with be able do handle the situation more effectively. Cross-cultural training will significantly improve the communication between locals and expatriates. It is believed that it could be of a great benefit to the organization if the staff and management team attend both formal meetings to discuss progress and improvements and informal gatherings to improve relationships. The main reason behind it is that the local employees will hopefully increase their involvement and work efficiency as they are highly motivated by social activities. It has also become apparent that the communication between the resort and headquarters needs to be improved to prevent further tensions and deterioration of the customer service. The situation in this case can be improved by having frequent performance reports, as well as resort peak period bookings reviewed by the onsite managers. Additionally, quarterly meetings should be organized as well as visits from the top management to oversee the operation and become actively involved in the resorts day-to-day activities. In the long run, part of the booking duties could be delegated from the headquarters to the resort to improve efficiency and staff involvement. It is also recommended that the above solutions are considered as an on-going process starting with increased interactions among the employees, managers and head office. The third area of improvement related to building team working skills. It is vital for the business to have motivated and enthusiastic employees that work efficiently towards the common goal s of the organization. Since there is a high illiteracy rate among the local staff, precise instructions and demonstration are recommended. Moreover, in order to improve efficiency among the local staff, re-training using a hands-on approach should be considered. Additionally, future recruitment practices with regards to the local employees should be linked to the relevant skill set and attitude of the right candidate. Moreover, the selection of expatriates for managing positions should be based on previous cross-cultural experience and the relevant characteristics. Finally, job rotation should be taken into consideration to further encourage employees to interact with each other and increase job satisfaction and motivation. The fourth area of development relates to the implementation of effective performance measures. Both financial incentives as well as added collective rewards based on group performance should be considered. There should be frequent performance reviews held during group meetings, emphasizing win-win approach among management, employees and customers. The purpose of this approach is to satisfy needs of both cultures that help inspire employees to work efficiently increasing the organizations performance. These changes will involve continuous adjustment and improvements. Short term recommendations Organize an informal gathering prior to the peak season to boost employee morale Liaison with the local bar, popular with both the expatriates and local employees, should be considered and every opportunity such as birthday or festival parties should not be missed. It is also recommended that the resort provide food and drink incentives for employees. This action can help to build up friendship and team spirit between the expatriates and the local people. It will also create an excellent opportunity for both sides to discuss different opinions, express ones beliefs and subsequently reduce the tension between them. Additionally, it will help the expatriate managers to adapt to the local environment better in order to achieve their best management styles and satisfy their drive to acquire in order to have a lower turnover rate. Such informal gatherings are believed to be the first step to overcome cultural barriers and reduce tension between the parties. Informal parties should also provide a perfect opportunity for relationships to be established, and friendships and bonds to be made. It is also highly recommended that the local employees are encouraged to bring their family and friends, which is seen as a crucial part of their culture. In that way both the local employees and expatriate managers will have a brief, but better understanding for each others culture, which may result in mutual respect at least for the forthcoming holiday peak season.. Creating informational leaflets Those leaflets should be distributed among guests upon arrival, in which local culture is explained and embraced. This will help to change customer perceptions and persuade guests to relax and enjoy the slightly slower pace of islands time. This is a short term solution that can be altered into a longer term marketing campaign. Formal meetings (Instruction days) The main aim of these meetings should be to identify difficulties that both sides encounter on a day to day basis in the resort. It is recommended that the meetings are held regularly focusing on giving clear instructions to reduce uncertainties by providing clear indications in terms of work requirements, goals, future plans. In addition to that, demonstrations can be done by managers to increase their awareness of the daily tasks involved in running of the resort. It will also give the managerial team the opportunity to get to know the work of their subordinates and show their willingness to cooperate. Moreover, the local staff should be encouraged to ask questions, which in return help to provide cleared indication for future plans to be implemented and should guarantee higher motivation from the local community. Training programs For locals, the training workshops should focus on three areas: foreign culture, language and hospitality. Those initiatives should help the local people to understand the other culture and break the language barrier, as well as provide guidance on how to treat the customers in appropriate ways, thus helping to reduce the guest complaints. For expatriates, the training workshops should emphasize both BVI culture and management skills. They should be able to explore and appreciate the local culture, and communicate with the local staff in an effective ways by adapting their management styles to the local requirements. Long term recommendations Establish a WIYCR management training program This program should provide an opportunity for enthusiastic locals to receive the necessary training and education in order to be able to understand the industry and operational aspects of the resort. It will help to find a balance between local and expatriate management and staff. Additionally, this should promote motivation and involvement among local people and increase their willingness to take on extra responsibilities. Request frequent visits from the offsite top management team It is recommended that during these visits both the employees and managers should be encouraged to have an open dialogue in efforts to improve communication. Establish a social interaction committee The purpose of this should be to create more informal interactions between the local employees and the expatriate managers. This is especially recommended during off-peak season. This will not only improve internal communication, but also provide conditions for cultural understanding. In addition, non-financial incentives such as providing free food and drinks if customer complaints go down 10% in a particular week. Conclusion To sum up, all problems rooted from the large cultural gap. The remedial measures listed above aim at facilitating mutual communication and thus establishing better understanding and trust to deal with the cultural clash. Managers and local staff are important assets which help to run the resort smoothly. Any disputes and conflicts make unnecessary loss to the resort. Therefore, creating harmonious environment is essential before coming to various solutions.