19-1 chapter 19 international human resource management and labor relations international business,...

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chapter 19

International Human Resource Management and Labor Relations

International Business, 6th E

dition

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

Griffin & Pustay

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Chapter Objectives

• Describe the nature of human resource management in international business

• Detail how firms recruit and select managers for international assignments

• Explain how international businesses train and develop expatriate managers

• Describe labor relations in international business


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Chapter Objectives (continued)

• Discuss how international firms conduct performance appraisals and determine compensation for their expatriate managers

• Analyze retention and turnover issues in international business

• Explain basic human resource issues involving nonmanagerial employees


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Human Resource Management

Human Resource Management is

the set of activities directed at attracting,

developing, and maintaining the effective

workforce necessary to achieve a

firm’s objectives.


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Figure 19.1 The International Human Resource Management Process

HRM’s Strategic Content

Recruitment and Selection

Training and Development

Performance Appraisal

Compensation and Benefits

Labor Relations

Contribution to Organizational Effectiveness


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International Staffing Needs

Managerial/ExecutiveEmployees

Nonmanagerial Employees


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Scope of Internationalization

Export Department

Global Organization

International Division


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Expertise Needs in Global Organizations

Product line

Functional skills

Individual country markets

Global strategy


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Centralization versus Decentralization of Control

• Centralized firms

– Favor home country managers

– Most common amongst international division form

• Decentralized firms

– Favor host country managers

– Most common amongst multidomestic firms


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Staffing Philosophy

Parent Country Nationals

(PCNs)

Third CountryNationals(TCNs)

Host CountryNationals(HCNs)


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Strategies for Staffing

• Ethnocentric staffing model

• Polycentric staffing model

• Geocentric staffing model


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Figure 19.2 Necessary Skills and Abilities for International Managers

Skills and AbilitiesNecessary to Do

the Job

•Technical•Functional•Managerial

Skills and AbilitiesNecessary to Work

in a Foreign Location

•Adaptability•Location-specific skills

•Personal characteristics

Improved Chances of Succeeding inan International Job Assignment


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Recruitment of Managers

ExperiencedManagers

Younger Managers


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Selecting expatriates is an important element in international HRM.


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Selection of Managers

Managerial competence

Appropriate training

Adaptability to new situations


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Table 19.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees 1

• Would your spouse be interrupting a career to accompany you on an international assignment? If so, how do you think this will affect your spouse and your relationship with each other?

• Do you enjoy the challenge of making your own way in new situations?

• Securing a job upon reentry will be primarily your responsibility. How do you feel about networking and being your own advocate?


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• How important is it for you to spend significant amounts of time with people of your own ethnic, racial, religious, and national background?

• As you look at your personal history, can you isolate any episodes that indicate a real interest in learning about other peoples and cultures?


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• How able are you in initiating new social contacts?

• Can you imagine living without a television?

• Has it been your habit to vacation in foreign countries?

• Do you enjoy sampling foreign cuisine?

• What is your tolerance for waiting for repairs?


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Culture Shock

Culture shock is a psychological phenomenon that may lead to feelings of

fear, helplessness, irritability, and disorientation, which is commonly

experienced by new expatriates who may experience a sense of loss regarding their

old cultural environment as well as confusion, rejection, self-doubt, and

decreased self-esteem from working in a new and unfamiliar cultural setting.


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Figure 19.3 Phases in Acculturation

Honeymoon

Disillusionment

Adaptation

Biculturalism


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Honeymoon Phase

• New culture seems exotic and stimulating

• Excitement of working in new environment makes employee overestimate ease of adjusting

• Lasts for first few days or months


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Disillusionment Phase

• Differences between new and old environments are blown out of proportion

• Challenges of everyday living

• Many stay stuck in this phase


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Adaptation Phase

• Employee begins to understand patterns of new culture

• Gains language competence

• Adjusts to everyday living


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Biculturalism

• Anxiety has ended

• Employee gains confidence in ability to function productively in new culture

• Repatriation may be difficult


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Overseas Success

• Likelihood of managers being successful at overseas assignment increases if the managers:– Can freely choose whether to accept or reject the

assignment

– Have been given a realistic preview of the job and assignment

– Have been given a realistic expectation of what their repatriation assignment will be

– Have a mentor back home who will guard their interests and provide support

– See a clear link between the expatriate assignment and their long-term career path


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Overseas Success

The U.S. military makes sure that its members have “reminders” from home on foreign deployments


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Training and Development

• Assessing training needs

• Basic training methods

– Standardized

– Customized

• Developing younger managers


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Figure 19.4 Barriers to Entering Foreign Markets


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is the process of assessing

how effectively people are performing their

jobs.


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Functions of Performance Appraisals

To provide feedback to individuals about how well they are doing

To provide a basis for rewarding top performers

To identify areas in which additional training and development may be needed

To identify problem areas that may call for a change in assignment


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Compensation Packages

Cost-of-living allowance

Hardship premium

Tax equalization system


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Figure 19.5 Global Cost of Living Survey 2008


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Components of Compensation Packages

OccupationalStatus

ProfessionalLicensing

Requirements

Standards ofLiving

Labor Market Forces

GovernmentRegulations

Tax Codes


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Figure 19.6 An Expatriate Balance Sheet

U.S. Domestic Base Salary

Taxes Consumption Savings

Foreign andExcess U.S. TaxesPaid by Company

Excess Foreign CostsPaid by Company

Foreign ServicePremium/ HardshipAdded by Company

U.S. Levels

U.S. Spendable Income

U.S. Hypothetical Housing and UtilitiesU.S. Auto Purchase

U.S. Hypothetical Tax and

Social Security


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Labor Relations

Comparative Labor Relations

Collective Bargaining

Union Influence and Codetermination


All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in

any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United

States of America.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

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