Cross Cultural Training: A Good Return on Investment?

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The increasing competition in the global economy necessitates that companies, especially Multinational Enterprises, engage in cross-cultural training in order to achieve corporate mission objectives, among other benefits (Aguinis & Kraiger 2009, p.452). Workers engage in a firm's learning process with the aim of promoting cultural integration among foreign employees in order to ensure their progress in the new world. However, the performance of expatriates in the foreign arena varies, with some failing to meet their expected goals. Notably, cross-cultural training to the expatriates has its benefits and costs that is the organization incurs certain expenses and also receive returns due to its investment in the training (Nowak & Linder 2016, p.89). It is on these grounds that this write-up will critically analyze restitution on investment and costs resulting from cross-cultural training by an organization.

There are various cross-cultural training strategies adopted by an organization such as pre-departure instructions, on-site training as well as follow-up learning activities. All the training plans take different forms that are seminars, information packages, workshops, e-learning systems, and mentoring among others (Zhang & Fan 2014, p.69). Since the main reason for cross-cultural training for the expatriates is to give them international assignments, there are variations in the cultural skills needed depending on the host country and the country of origin. Aguinis and Kraiger (2014, p.452), noted that the cost of training and development of employees amounted to $126 billion annually. The basic cross-cultural training involves learning a new language that will be useful in the execution of international assignments. Moreover, the instruction also aims at providing relevant information on the managerial skills that promotes compatibility between the expatriate and the new working environment. The costs are also viewed from failures or difficulties in achieving the intended learning purposes (Nowak & Linder 2016, p.90). Nevertheless, an organization has to spend money so as to achieve the desired training outcomes at each level.

Various cross-cultural training methods are involved in the pre-adventure training for the expatriates (Chen & Chan 2016, p.3). Organizations can adopt factual training methods whereby facilitators are paid to undertake a formal cultural training to the selected employees. In such cases, the organization incurs expenses such as facilitation fees, meals, as well as space booking if the training is conducted in a hotel. Similarly, the use of lectures and books also form part of the factual method of training as a way of introducing the culture of a particular country. In such a case, purchase of the books and hiring of personnel form part of the costs incurred. On the other hand, expatriates are subjected to analytical training methods to enhance their understanding of the culture of the host country (Chen & Chang 2016, p.3). In applying the analytical methods, funds are needed to purchase films, case study materials as well as covering travel costs to expose the trainees to interactive language lessons.

In some cases, organizations resort to look-and-see trips to the expatriates before they are deployed to serve in another country (Nowak & Linder 2016, p.95). It implies that the organization will carter for transport charges, meals, flights, and other accommodation expenses depending on the number of the trips needed for an individual to familiarize with the cultural context of the desired destination (Nowak & Linder 2016, p.94). Notably, such trips are accompanied by workshops whereby expatriates get the opportunity to understand better the cultural context in which they are expected to serve. Workshop arrangements also involve significant charges which form part of the learning for the expatriate. Before the organization_x0092_s commitment to the instruction of a particular employee, there must be a selection process whereby the employees are properly scrutinized to avoid premature expatriate return (Zhang & Fan 2014, p.61). The process of selection also involves certain costs that the organization must incur to increase the chances of success in the training and deployment.

According to Chen and Chan (2016, p.4), follow-up, as well as supportive teaching, is necessary for the success of expatriates in their new working environment. Most multinational enterprises (MNEs) invest huge finances in the on-site learning as an effective strategy of expatriate management. In some cases, the organizations primarily Chinese multinational companies use their subsidiaries as a training tool to develop the cultural competence among the expatriates. It implies that besides the establishment of the branch, the MNE will also institute a separate department to facilitate a systematic training for the expatriates. Running a training department require resources such as human capital, financial and structural resources which the organization must put in place to enhance the efficiency of such functions. Therefore, adequate on-site training for expatriates will form part of the variable and fixed costs in the subsidiary company (Chen & Chang 2016, p.3). Some of the onsite training methods include field trips and role play among others which involve the use of financial resources.

Internationalization is a cross-cultural strategy that is employed by most global companies to leverage competition (Zhang & Fan 2014, p.68). Internalization involves the learning by following the approaches in which expatriates are offered attractive salaries to accept international assignments. Through interactions, these expatriates develop the desired cultural competence that is needful to their company. It implies that the corporation or the organization will utilize resources to manage and maintain expatriates while avoiding early returns which are more expensive to the organization. The expatriate maintenance and management strategies in the process of their learning while serving in the host country involve such expenses as allowances. Notably, internationalization as a process of cross-cultural teaching is more stressful to the expatriates. Therefore, the organization provides high salary incentives, bonuses, hardship allowances, and the car to prevent early returns before they acquire the desired knowledge and skills (Nowak & Linder 2016, p.96). It implies that expatriation process involves cross-cultural learning which requires financial resources.

Apparently, holistic view of the studies for expatriates in an organization reveals multiple charges that are attributable to training. For instance, to identify the best employees to engage in an international assignment which requires training, a group will undertake a selection process involving the use of finances. After the process of selection, the identified persons are subjected to a different cross-cultural instruction to suit in the new cultural environment. Meanwhile, the organization will still need to fill the gap left by the expatriate. Besides, there is need to hire trainers and facilitators, organize workshops, field trips, as well as other look and, see trips which require resources. It implies that it is not possible to exactly estimate the cost that an organization incurs to undertake a cross-cultural training for the expatriates adequately. The process of expatriate training is costly to an organization in both pre-departure and the expatriation process.

The concept of return on investment due to training for the expatriates involves financial and non-financial benefits that an organization receives. Expatriate cross-cultural instruction has a remarkable return on investment for the organization in both short run and long run periods (McNulty & Cieri 2013, p. 25). The benefits can be understood in light of the leadership skills, competitive advantages, organizational, and individual job performance. Notably, the expatriates serve in managerial positions whereby they are entitled to offer guidance to people with different cultural background. Therefore, leadership is part of the teaching provided to the expatriate. The emphasis is placed on transformational leadership training which is more desirable to most organizations. When the learning is meant to achieve the objective of building charismatic traits in an expatriate, it results in motivation and stimulation of teams toward the achievement of organizational goals. The variations on how to employ transformational leadership is apparent across cultures (Aguinis & Kraiger 2009, p.455). For instance, in the United States, freedom for employees to perform their duties under limited control is a motivating factor while in the Chinese context it is seen as a weakness on the part of leadership.

Through transformational leadership that results from cross-cultural training for expatriates has both financial and non-financial gains to an organization. Firstly, it leads to the empowerment of individuals and teams through the effective environment adjustment skills. The resulting outcome is the effective coordination of tasks within the organization. As a result, the productivity level of employees increases since they put extra efforts in the performance of duties to meet the corporate strategic goals. On the other hand, the resulting self-efficacy that is generated through transformational leadership increases financial benefits to the organization. Arguinis and Kraiger (2009, p.456) pointed out that appropriate instruction promotes the internalization of an organizations _x0092_morals. At the same, it increases innovation which yields greater financial returns to the firm. Therefore, training for expats in an organization equips them with the relevant leadership skills which are beneficial to the new environment of operation.

Overall profitability, revenue increments, as well as other financial benefits are the metrics that are used to gauge the instruction outcomes in an organization. As pointed out by Arguinis and Kraiger (2009, p.457), training accounts for 4.6% of the organizational financial performance. Expatriates who are culturally competent due to the learning are capable of driving employee satisfaction to higher levels. It implied that the trained expatriates would curb other costs such as expenses due to employee turnover while increasing the productivity of each employee through personal consideration by culture. Similarly, the overall performance of an organization especially in the subsidiaries of global companies is believed to be explained by investment in training. Nowak and Linder (2016, p.102) noted that the long-run outcomes of expatriation are more beneficial to an organization than the costs. Notably, the overall nonfinancial benefits of instruction of expatriates to an organization have not been adequately captured in the quantification methods. However, there is an agreement that there are both short-term and long-term benefits that result from investing in such training which supersedes the cost of undertaking the training process.

Cross-cultural training benefits are also evident in the individual job performance among the expatriates (Chen & Chang 2016, p.2). The increasing foreign investments in multinational enterprises create employment opportunities which can only be filled with culturally competent expatriates. The cultural competence is gained through teaching either at the organization level or the international subsidiary levels. Notably, the world economic trends present opportunities that if well utilized by the enterprise become the success determining factors. For instance, there are ready markets for manufactured products, increased the need for information technology services as well as several unexplored investment opportunities especially in the emerging markets. Cultural differences act as a barrier for the organization to access these opportunities and increase their levels of profitability (Zhang & Fan 2014, p.61). The education bridges this gap by producing expatriates who are capable of adjusting to the prevailing cultural trends and driving results in the new environment.

The job performance outcomes of cross-cultural training also encompass the relevant technical, procedural, and innovative skills which cumulatively explain the overall success of an organization (Arguinis & Kraiger 2009, p.455). The skills gained through the education are essential in developing work procedures and processes that are acceptable among the employees in the new working environment. On the other hand, the innovative skills are beneficial in developing new products concerning cultural preferences and expanding the customer base for an organization. Finally, the procedural knowledge is instrumental in strategic planning and role allocation in the new environment. For instance, gender issue in workplace varies across cultures. In some cultures, women are highly acceptable in a leadership position while in others they are not allowed to serve as team leaders. It implies that specific cultural knowledge gained through training of the expatriate will enable them to develop positive work relations through effective delegation of duties (Arguinis & Kraiger 2009, p.455). On-site education for the expatriates is viewed as one of the most efficient methods of enhancing job performance and the overall financial outcomes in the international investment.

Cross-cultural training of expatriates is a prerequisite for an organization to gain a competitive edge in the global economy (Chen & Chang 2016, p.2). When organizations expand and acquire subsidiaries in the international market, it is necessary to send exparts who serve to promote the organizational values and vision in the new culture. Inadequate instruction results into failure which may be due to early return or poor performance. Therefore, the firm does not benefit from the cheap labor, raw materials, and operating cost associated with the foreign direct investment. Therefore, it is possible that a corporation_x0092_s peers will gain a competitive advantage and generate substantive profits.

The instruction of expatriates will set an organization_x0092_s workforce above the cultural pressures and enhance their ability to adjust to the new environment and provide the desired results. An international organization_x0092_s effectiveness is explained by cultural competence exhibited by its employee_x0092_s adaptability and compatibility to the foreign environment. The communication efficiency and relevant managerial as well as organizational skills that expatriates receive through learning enable the organization to enlarge its market share in the foreign country (Zhang & Fan 2013, p.72). Therefore, cross-cultural training to the expatriates is viewed a critical approach to leveraging organization competition in the global economy.

Besides, the target customers from the new cultures often feel comfortable when they deal with those who understand their needs. In fact, they will likely visit the business premises that offer what they want and whose employees know how to interact in a manner that preserves the cultural values. The process of understanding such regional changes in behavior calls for a proper instruction of those sent to work in such places. However, most multinational enterprises do fail to perform well since they neglect the critical essence of such training (Aguinis & Kraiger 2009, p.447). Some of those firms would only rely on few weeks_x0092_ induction of the expatriates that might not be appropriate. Moreover, the failing companies usually think that the employment of the locals would help solve the situation. Nevertheless, the dynamic is that the entire staff has to know the culture so as to make effective decisions.

Conclusion

Evidently, cross-cultural training of expatriates involves costs as well as return on investment to for an organization. Costs include both the pre-departure and the on-site training expenses. The pre-departure expenses include the cost of transport, field trips as well look-and-see travels. Other charges involve payment for facilitators when using both factual and analytical methods of cross-cultural training. The on-site training also requires financial resources to institute training department in the international subsidiary to progressively provide contextual learning opportunities to the expatriates. Additional internalization is also considered as a method of instruction requirement. In the case of internationalization, salaries and other allowances are used to attract and maintain expats in a new environment.

On the contrary, there are multiple benefits that organization gains due to the cross-cultural teaching of the expatriate. In a wider perspective, the return on investment is considered from financial and nonfinancial benefits that result from the cross cultural training of expatriates. The primary outcomes include leadership skills, competitive advantages, and job performance which are vital in organization growth and development. Cross-cultural instruction for expatriates is the only way through which organizations explore new markets in the global economy without which they cannot access the cheap labor and vast opportunities internationally. Moreover, it leverages comparative and competitive advantages of an organization. Therefore, from an intellectual standpoint, cross-cultural training for expats is an excellent return on investment that international organizations should embrace.

References

Aguinis, H. and Kraiger, K., 2009. Benefits of training and development for individuals and teams, organizations, and society. Annual Review of Psychology, 60, pp.451-474.

Chen, H.M. and Chang, C.C., 2016. Contingent expatriate training strategies with examples of Taiwan MNEs. Journal of Human Resource and Sustainability Studies, 4(01), pp.1-14.

McNulty, Y. and Cieri, H.D., 2013. Measuring expatriate return on investment with an evaluation framework. Global Business and Organizational Excellence, 32(6), pp.18-26.

Nowak, C. and Linder, C., 2016. Do you know how much your expatriate costs? An activity-based cost analysis of expatriation. Journal of Global Mobility, 4(1), pp.88-107.

Zhang, M.M. and Fan, D., 2014. Expatriate skills training strategies of Chinese multinationals operating in Australia. Asia Pacific Journal of Human Resources, 52(1), pp.60-76.

November 09, 2022
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