ABSTRACT
Cost is perhaps the major sticking point among host-country personnel. The wide compensation gap between expatriates and locals has been a constant source of indigenous employee resentment. In purely monetary terms, it is often possible to substitute four indigenous managers for the price of one expatriate – hence the difficulties in finding suitable justification for their continued presence, especially in the postcrisis era of thrift and cost control. Notable concern was expressed to us with regard to the cost of personal chauffeurs for senior foreign managers. As one executive bemoaned,
Since the economic upheaval of 1997, MNC branch operations have increasingly turned to the use of “localized” assignments in an effort to contain the costs typically incurred with traditional expatriate packages. Compensation packages offered to locally based Westerners, although competitive, have tended to be more in line with host-country levels, with far less allowance being made for housing, schooling, and so on. This shift toward local expertise has even extended to the recruitment of management consultants, traditionally the almost exclusive territory of the highly paid Western adviser. In practical terms the region has witnessed a thinning out of existing expatriate levels, instanced by the current situation at Jardine, where the proportion of foreign executives is currently running at well below 5 percent of total head count. Several well-known Western multinationals have also decided to pass the leadership torch in a number of their ASEAN units to a native manager, moves that only a decade ago would have been nearly inconceivable.
