2. Expatriate issues

There are several advantages and disadvantages of using expatriate employees to staff international company subsidiaries. Advantages include, permitting closer control and coordination of international subsidiaries and providing a broader global perspective. Disadvantages include high transfer costs, the possibility of encountering local government restrictions, and possibly creating a problem of adaptability to foreign environments. Despite the advantages above, this practice becomes really popular. And Nestle is not an exception.

All careers are unique; however, one factor that cuts across most of them at Nestlé is international exposure and travel as well as assignments in different countries. The company’s policy is to develop local managers into senior executives, as and when they have the required managerial and technical skills.

Expatriates are used to transfer technical and management knowledge from the Nestlé group to local entities, enhancing Nestle local presence, utilising company’s know-how, enabling it to respond quickly to consumer insights and allowing to build a local flavour into global brands²³. Based at Nestlé headquarters, an employee will often have the opportunity to travel widely as part of his/her job. This might be in the form of a short business trip in the marketing and sales area, or a longer assignment in the context of the global projects, which can last some months. Not only does working at Nestlé headquarters mean a unique exposure to a multicultural environment; it also means frequent travel to all parts of the world²⁴.

Nestlé's business is based on respect for different cultures. For example, the company knows that tastes and eating and drinking habits differ throughout the world. It also expects that the staff is comfortable in different settings, and that they should not be adversely affected by the strains of frequent foreign travel and the pressure to meet tight deadlines. Indeed, coping well with such conditions will have a positive impact on an employee’s career. But to have an international career is tough challenge, which demands a lot of self-control, ambitions and stress-resistance from a candidate. They are extremely flexible and mobile, and thrive in different working conditions.

Expatriation is a two-way process, as many employees from emerging markets also transfer to work in developed markets, sharing and acquiring different sets of skills in the process. In 2009, 41% of all expatriates in Nestlé’s Swiss headquarters and central functions were from emerging markets and 49% of expatriates from Switzerland headquarters were in developing countries²⁵. Moreover, expatriation is possible for different level positions all over the world.

The maximum percentage of expatriate employees varies according to the stage of development of each market for Nestlé. While the Nestle company does not set a specific target, it aims for at least 50% locals, as soon as local management and technical skills of the right level can be sourced or developed. However, it should be noted that it is not always that it turns easy to find a competent local employee who will share the company’s values. Sometimes, the cultural aspects are stronger.

The same is true for those who are chosen for Nestlé's graduate programmes. For instance, as a member of the audit function, a person will be part of teams that travel the world on assignment, typically three months at a time, at Nestlé locations. This phase generally lasts for four years. In other areas (for example, in technical & production or marketing & sales) a candidate can also commit to a career of long-term expatriation, which means that he/she will be relocating about every three years.

Young specialists are more flexible than older ones. They are not tailored to their hometown and ready to take a challenge. Nestle suggests special programs, which aim is to prepare motivated graduates to take up leadership positions throughout the company. The initial phase aims to give a clear understanding of the role of the Headquarters, and the way it works with Nestlé local markets. During these first few months a person has the opportunity to network with many people who will be important contacts in a future work. After that a specialist is ready to embark on a expatriate training period abroad. But regardless of where the first assignment takes place, all participants are being trained for a global expatriate career. The participant’s aim is to familiarize himself with all aspects of the specific local Nestlé operation²⁶. The great problem here is to retain a candidate, finishing the program and not concede a talented staff turnover. Otherwise, these programmes will not be cost-effective.

Expatriate failure is usually defined as a posting that either ends prematurely or is considered ineffective by senior management. Most research into the matter has come to the conclusion that failure rates are high and can vary between 10% and 50% depending on the country. Emerging countries such as those of Southeast Asia are considered higher risk than so-called advanced nations. Among chief factors resulting in an unsuccessful expatriate assignment are family stress, cultural inflexibility, emotional immaturity, responsibility overload, physical breakdown²⁷. The company should pay a lot of attention to an individual and predict his/her personal problems, otherwise a failed assignment in an overseas location will cost a lot for a company.