ROLE AMBIGUITY?

ROLEAMBIGUITY?Enhancing Performance by Reducing Uncertaintyin Expatriate AssignmentsBY EVAN WOOD School of Global Leadership & Entrepreneurship1DECEMBER 2010

Growth in globalization and globalmarkets continues. The recent recession highlighted the interconnectednessof global business, as downturns in anyone country have far reaching effects onother countries. Businesses can nolonger choose to compete purely local –all businesses compete globally. Globalization continues to result in a highlycompetitive environment.Most multi-national corporations (MNCs)employ international managers or expatriates to manage global operations, anddespite alternative forms of internationalassignments, evidence continues tosupport the wide use of expatriates(Collings, Scullion, & Morley, 2007), andthere is an expectation for continueduse of expatriates. Brookfield GlobalRelocation Services 2010 Global Relocation Trends Survey, which sampledfirms that manage a global workforce of5.8 million employees, shows that 44%of responding firms project an increasein their expatriate population in 2010,44% of the firms project their expatriatepopulation to remain flat, and only 12%of the responding firms project a declinein their expatriate population. Additionally, globalization and ease of doing business cross borders has resulted in anincreased demand for internationalmanagers by small and medium sizedorganizations, particularly in instancesof international joint ventures. Organizational success largely depends on international managers.FailureHistorically, expatriate failure hasplagued MNCs. The 2010 Global Relocation Trends Survey reported that theRegent Global Business Reviewturnover rate amongst participants was17% while on assignment and 38%within one year of return. Additionally,another 7% returned home from theassignment prematurely, but remainedwith the company (Brookfield GlobalRelocation Services, 2010). That meansnearly 24% of all international assignments resulted in premature conclusions, while over one-third of those withthe international experience leave withtheir new knowledge and experienceshortly after returning. Yet, prematuredepartures are only one form of failure.International managers that are noteffective, yet remain on assignment,may be even more costly. All types offailure are costly for MNCs.Direct costs of failure include itemssuch as salary, training costs, travel,and relocation expenses. Average compensation ranges between 300,000and 1 million per year, with early termination of the assignment costing up to 1 million (Wentland, 2003). The cost ofa failed assignment results in five to 10times the cost of a local hire (Carraher,2005).Indirect costs of failure have greaterconsequences. Indirect costs of failureinclude issues such as damaged relations in the host country, low productivity, and loss of market share. Failure iscostly to organizations, includingmissed opportunities, poor productivity,and diminished relationships that canbe more costly than financial expenditures. Further, industry surveys indicate a low return on investment (ROI)for long-term international assignments, with 70% of organizationsclaiming an average, fair, or poor ROIassociated with such assignments(McNulty & Tharenou, 2004).Numerous factors have been attributedto the cause of failure. These factorsinclude technical knowledge, personaladjustment to the foreign culture, familyadjustment to the foreign culture, andenvironmental factors. Other factorswhich emerge as significant include thepeculiarities of the host environmentand the level of support provided by theheadquarters. However, one significant2factor that is often overlooked is theclarity of the international manager’srole, resulting in role ambiguity.What is role ambiguity?Role ambiguity is the term used whenthere is a lack of clarity on the part of anindividual about the expectations of theorganization and colleagues concerninghis or her role within the organization.Role ambiguity is most common in newpositions or in positions undergoingchange. The four most frequently citedinstances of role ambiguity include: (1)uncertainty about how work is evaluated; (2) uncertainty about advancementopportunities; (3) uncertainty aboutscope of responsibilities; and (4) uncertainty about others’ performance expectations (Handy, 1985). It is expectedthat a major work role transition such asan international assignment would havesome role ambiguity. The basic understanding is that the greater the role ambiguity, the less able individuals are topredict the outcomes of their behaviors(Black, 1988). For example, expatriateswith high role ambiguity are less able topredict how others in their organizationwill respond to decisions they make,causing them to not make necessarydecisions.Impact on AdjustmentAdjustment to the culture and to theassignment represents a significantconcern when employing expatriates.Three major areas of adjustment exist:(1) general adjustment to the cultureand non-work environment; (2) interaction adjustment with host nationals; and(3) work adjustment to the new assignment and work environment. The inability to adjust most often results in failureand the resulting high costs.As might be expected, numerous studies have shown a strong negative relationship between role ambiguity andwork adjustment. This indicates that thegreater the clarity around the international managers role the greater thatmanager will adjust to the assignmentand work environment. In one study ofNorth American expatriates in Ireland,role ambiguity displayed the most signifwww.regent.edu/rgbr

FIGURE 1: Expatriate Assignment Cycleicant relationship (negatively) with workadjustment (Morley & Flynn, 2003).In spring 2010, the author surveyed 88North American expatriates assigned toHong Kong on a variety of factors thatimpact adjustment and performance.That studied found reduced role ambiguity to have a positive effect on workadjustment. Further, reducing role ambiguity had the most significant impacton work adjustment, greater than crosscultural training, mentoring, prior experience, language fluency, and compensation.General and interaction adjustment arealso negatively impacted by role ambiguity as well. Significant spillover effectswere identified between the work andnon-work domains. Numerous studieshave shown that stressors in one domain spill over into other domains.Thus, the inability to adjust to the newwork assignment spills over to non-workdomains, hindering the internationalmanagers ability to adjust to the generalenvironment and to interacting with hostnationals.Impact on PerformanceWith the negative impact role ambiguityhas on the three facets of adjustment, itis not surprising that role ambiguity negatively impacts job performance as well.In the study of North Americans workingin Hong Kong, role ambiguity exhibitedthe greatest relationship (negative) withperformance. As with work adjustment,reduced role ambiguity exhibited agreater relationship with high performance than any other factor in thestudy. Individuals tend to divide up theirmental and emotional resources amongvarious tasks. With reduced role ambiguity, expatriates’ mental and emotionalresources are freer to focus on factorsassociated with actual job performanceas opposed to simply trying to figure outtheir role.Reducing Role AmbiguityWith the clear connection between roleambiguity and reduced adjustment andperformance, the question becomes,“how do we reduce role ambiguity.”Three key areas for organizations toconsider include: (1) clear purpose andgoals of the assignment; (2) clear expectations and responsibilities; and (3)clear levels of authority and decisionmaking capabilities.International managers need to see andunderstand the clear purpose of theassignment. They need to understandhow their role fits in with the organization’s overall strategy globally. Associated with that is the need for clear goals.Clarity around purpose and goals helpinternational managers put their role inperspective. Clear purpose and goalsalso help host nationals working in theorganization gain the proper perspectiveon the international manager’s role. Thisclarity helps to create an alignment between the home office and the international location.Consistent with most positions androles, clear expectations and responsibilities are important for internationalmanagers. Complicating this though isthe reality that most individuals developing the positions or job descriptions arenot familiar with the needs of the international assignment. International managers are often in positions that get developed as they go. This creates greatuncertainty for the individual and thehost nationals they work with. The international manager has to balance the School of Global Leadership & Entrepreneurship3expectations of the locals as well asthose of the home office, which mayhave conflicting expectations. Settingclear performance expectations andclearly outlining responsibilities helpsreduce role ambiguity.Clarifying levels of authority and decision-making capabilities are the finalsignificant area to reduce role ambiguity. International managers are oftenoperating in foreign environments inopposite time zones where they are theface of the organization. Host nationals,both employees and customers, typically expect the international manager tobe able to make decisions on behalf ofthe organization. However, many international managers do not know whattypes of decisions and commitments arepermissible. This tension creates confusion and great stress that can slow themdown significantly, hindering performance. Organizations that clearly spellout levels of authority and frameworksfor types of decisions that can be madeand types of decisions that need inputfrom the home office place their international managers in the best position tosucceed.Questions to Evaluate Role ClarityRizzo, House, and Lirtzman (1970) developed a scale to measure role clarity thatDECEMBER 2010