Question

Discuss and give examples of the challenges faced by international businesses with the management of psychological contracts for expatriate managers.

Answer 1

International business by their very virtue are employers of manpower from differrent parts of the world. And as it is obvious, different parts of the world have different cultural values. When we talk of multi-national companies, their vision, mission and goals may be uniform, however how they are percieved in different geographies may differ. And this gives rise to complications in psychological contracts.

Cultural differences add ambuguity to psychological contracts and hence can cause mis-understandings between expectations and deliverables.

Different countries have different expectations when it comes to award systems, behavioral aspects, reward systems and ethics.

Different cultures have different expectations when it comes to leadership styles. There are countries where almost anarchy style of leadership is preferred whereas in certain parts collective leadership with empathy is a preferable attribute.

The biggest challenge is that a psychological contract is an unsaid understanding and hence there is no formal approach to identify and resolve problems.