Other Economies

Foreign executives – country contexts and implications for practice in other economies

Findings from research on FELOs can be applied to organisations in other emerging economies. However, country contexts need to be taken into account. In addition, it is important in all cases to take LOCAL perspectives seriously (through gaining the participation and perspectives of representatives from local organisations). Research must carefully distinguish between global- and country-level influences on the FELO phenomenon, and organisational, group, and individual levels of investigation. FELO typologies assist in identifying which combinations produce successful outcomes (and those which are likely to fail).

Russia

As a result of Russia having joined the WTO, migration legislation concerning foreign executives will be liberalised. A draft bill has been published by the Economic Development and Labor Ministries, proposing changes for senior managers and highly qualified specialists (“key personnel of commercial organisations”).

Proposals include that foreign executives with at least one year of work experience in another WTO member country be allowed to work in senior management positions in local Russian companies and their subsidiaries. The minimum salary for qualified foreign executives is given as 2 million Russian rubles (about US$62,500 as of 15 Oct 2012). One of the key objectives of the proposed legislation is to attract qualified specialists to the Skolkovo Innovation Center, a high technology business area initiated by Dmitry Mevedev in 2009, under construction near Moscow. High-profile proponents include Russian oligarch Viktor Vekselberg and former Intel-CEO Craig Barrett. Skolkovo is planned to be an incubator for science and technology companies, concentrating innovation and development of various technologies. The draft legislation also proposes to limit the number of foreign executives to five positions per legal entity (two FELO positions for banks). More . . .

Brazil

With a population of more than 194 million citizens, Brazilian companies have a significant semi- and unskilled labor force at their disposal but a shortage of internationally experienced executive level managerial talent. Finding qualified executives for high-technology industries and business innovation in established industries is among the biggest challenges. Local companies are now able to appoint foreign executives, including legal representatives such as members of the board of directors, under the ‘permanent visa’ class (Normative Resolution N.62), and it is expected that increasing numbers of FELOs will assist Brazilian organisations in their internationalisation and globalisation in the coming years.

Due to the significant influence of labour unions, current regulations are complex. There must be two Brazilian citizens for every foreign executive and their combined remuneration must be at least twice that of the FELO. This has caused the undesirable effect that appointments of well-compensated foreign executives significantly increase the overall payroll cost at the executive level. By extension, there is evidence that this regulation has further increased the resentment about FELO appointments felt in the lower ranks. The regulation is based on the labour union inspired principle that at least two-thirds of employees must be Brazilian citizens, and that at least two-thirds of total payroll must be paid to Brazilians at every organisational level. Foreign executives are required to be registered as company officers in the articles of association of local companies. Local limited liability companies may at times choose to avoid the associated costs by appointing foreigners as non-employee officers (diretor estatutário), which raises the risk of employment misclassification and visa issues. More . . .

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