chap016 international hr

7/21/2019 Chap016 International HR

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Copyright © 2011 by The McGraw-Hill Companies, Inc. ll rights reser!e". McGraw-Hill#Irwin

Global Business

Today 7e

by Charles W.L. Hill



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Chapter 16

Global Human

ResourceManagement



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Introduction

Question: What is human resource management?

Human resource management (HRM) - the activities anorganiation carries out to utilie its human resources

e!!ectivel"HRM activities includedetermining human resource strateg"sta!!ing

#er!ormance evaluationmanagement develo#mentcom#ensationlabor relations



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Introduction

HRM is more com#le$ in an international businessbecause o! di!!erences bet%een countries in labormar&ets' culture' legal s"stems' economic s"stems' andso on

International HRM also deals %ith issues related toe$#atriate managers (citiens o! one countr" %or&ingabroad) including

%hen to use e$#atriates

%ho to send on e$#atriate #osting

ho% e$#atriates should be com#ensated

ho% to handle the re#atriation o! e$#atriates



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trategic Role o! International HRM

Question: Wh" is international HRM im#ortant to thesuccess o! the !irm?

ns%er:trateg" is im#lemented through organiation#eo#le are the linch#in to the !irm*s organiation

architectureo' success in international business re+uires that HRM

#olicies be congruent %ith the !irm*s strateg"



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trategic Role o! International HRM

,igure ./: 0he Role o! Human Resources in ha#ing1rganiation rchitecture


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ta!!ing 2olic"

ta!!ing #olic" is concerned %ith the selection o!em#lo"ees !or a #articular 3ob

It involves selecting #eo#le %ho have the right s&ills!or a #articular 3ob

It also involves develo#ing and #romoting thecor#orate culture o! the !irm - the organiation*snorms and value s"stems



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0"#es o! ta!!ing 2olic"

0here are three t"#es o! sta!!ing #olicies

/ the ethnocentric a##roach

4/ the #ol"centric a##roach

5/ the geocentric a##roach 0he most attractive #olic" is the geocentric a##roach'

ho%ever it is not al%a"s eas" to im#lement



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/ 0he 6thnocentric ##roach - &e" management #ositionsare !illed b" #arent-countr" nationals ma&es sense !or !irms %ith an international strateg"

n ethnocentric sta!!ing #olic" is attractive %hen

there is a lac& o! +uali!ied individuals in the hostcountr" to !ill senior management #ositions

a uni!ied cor#orate culture is desired the !irm %ants to trans!er &no%ledge o! core

com#etencies to the !oreign o#eration 0his #olic" is !alling out o! !avor because

it limits the advancement o! host countr" nationals it can lead to cultural m"o#ia



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4/ 0he 2ol"centric ##roach - host countr" nationals manage localsubsidiaries and #arent countr" nationals occu#" #ositions at HQminimies the dangers o! cultural m"o#ia' but it also hel#s create

a ga# bet%een home and host countr" o#erations best suited to !irms #ursuing a localiation strateg"

0he advantages o! the #ol"centric #olic" are that the !irm is less li&el" to su!!er !rom cultural m"o#ia it ma" be less e$#ensive to im#lement

0he disadvantages o! the #ol"centric #olic" are that host countr" nationals do not gain !oreign e$#erience and cannot

#rogress be"ond senior #ositions in their o%n subsidiaries a ga# can !orm bet%een host countr" managers and #arentcountr" managers



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5/ 0he Geocentric ##roach - the best #eo#le are sought !or &e" 3obsthroughout the organiation' regardless o! their nationalit" consistent %ith building a strong uni!"ing culture and in!ormal

management net%or&ma&es sense !or !irms %ith global or transnational strategies

0he advantages o! a geocentric a##roach are that itma&es the best use o! human resources builds a cadre o! international e$ecutives %ho !eel at home

%or&ing in a number o! di!!erent cultures 0he disadvantages o! geocentric a##roach include di!!iculties %ith immigration la%s costs associated %ith im#lementing the strateg"



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0able ./: om#arison o! ta!!ing ##roaches



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6$#atriate Managers

,irms that use e$#atriates must consider the #roblem o!e$#atriate !ailure - the #remature return o! an e$#atriatemanager to his home countr"

8// !irms have higher e$#atriate !ailure rates than either

6uro#ean or 9a#anese !irmstudies sho% that 7. #ercent o! 8// M6s had

e$#atriate !ailure rates o! ; #ercent o! more < 7#ercent had !ailure rates as high as 4; #ercent

6stimates o! the cost o! e$#atriate !ailure range !rom=4>;';;; million to = million



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6$#atriate Managers

0he main reasons !or e$#atriate !ailure !or 8// M6sarethe inabilit" o! an e$#atriates s#ouse to ada#t to a

!oreign culture

the inabilit" o! the em#lo"ee to ad3ustother !amil"-related reasonsthe manager*s #ersonal or emotional maturit"the inabilit" to co#e %ith larger overseas

res#onsibilities



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6$#atriate Managers

,or 6uro#ean !irms' onl" one reason %as !ound toconsistentl" e$#lain e$#atriate !ailurethe inabilit" o! the manager*s s#ouse to ad3ust to a

ne% environment

,or 9a#anese !irms' the reasons !or !ailure %erethe inabilit" to co#e %ith larger overseas res#onsibilit"di!!iculties %ith the ne% environment#ersonal or emotional #roblems

a lac& o! technical com#etencethe inabilit" o! s#ouse to ad3ust



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6$#atriate Managers

Question: Ho% can !irms reduce the rate o! e$#atriate!ailure?

ns%er:

6$#atriate !ailure rates can be reduced through betterselection #rocedures

Mendenhall and 1ddou identi!ied !our dimensions that#redict e$#atriate success

/ sel!-orientation4/ others-orientation

5/ #erce#tual abilit"

@/ cultural toughness



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6$#atriate Managers

/ el!-orientation attributes strengthen the e$#atriatessel!-esteem' sel!-con!idence' and mental %ell-being

4/ 1thers orientation re!ers to ho% the attributes o! thisdimension enhance the e$#atriate*s abilit" to interact

e!!ectivel" %ith host-countr" nationals5/ 2erce#tual abilit" re!ers to the abilit" to understand %h"#eo#le o! other countries behave the %a" the" do

@/ ultural toughness re!ers to the !act that ho% %ell ane$#atriate ad3usts to a #articular #osting tends to be

related to the countr" o! assignment



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0he Global Mindset

ome e$#erts believe that a global mindset (one that ischaracteried b" cognitive com#le$it" and acosmo#olitan outloo&) is essential to the success o!global managers

Aet' studies sho% that !e% !irms consider this %henselecting e$#atriate managers' and instead !ocus ontechnical e$#ertise



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0raining and Management Bevelo#ment

Question: Ho% should !irms #re#are e$#atriate !or their!oreign #ostings?

ns%er:0raining !ocuses u#on #re#aring the manager !or a

s#eci!ic 3obManagement develo#ment !ocuses on develo#ing the

s&ills o! the manager over her career %ith the !irm

0raditionall"' training has been considered moreim#ortant than management develo#ment' ho%ever thismindset is beginning to shi!t



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0raining !or 6$#atriate Managers

Question: Ho% can !irms reduce e$#atriate !ailure?

ns%er:0o reduce e$#atriate !ailure' !irms should #rovide/ ultural training - see&s to !oster an a##reciation !or the

host countr"s culture4/ Canguage training - im#roves the e!!ectiveness o!

managers and hel#s them better relate to the !oreigncountr"

5/ 2ractical training - hel#s the e$#atriate manager and!amil" ease into da"-to-da" li!e o! the host countr"



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Re#atriation o! 6$#atriates

Question: Ho% should !irms #re#are e$#atriates !or theirreturn?

ns%er:

Managers need to be #re#ared !or reentr" into theirhome countr" organiation

0his involves HRM #lanning to determinethe role o! the em#lo"ee in the home countr" at the

end o! the assignmentho% to utilie the &no%ledge the em#lo"ee ac+uired

%hile abroad



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Management Bevelo#ment and trateg"

Question: Ho% can !irms use management develo#mentas a strategic tool?

ns%er:Management develo#ment #rograms increase the s&ill

levels o! managers throughmanagement educationthe rotation o! managers through 3obs

Management develo#ment is o!ten used as a strategic

tool to build a strong uni!"ing culture and in!ormalmanagement net%or&both su##ort transnational and global strategies



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2er!ormance ##raisal

Question: Ho% should em#lo"ees be evaluated?

ns%er:

2er!ormance a##raisal s"stems are used to evaluateem#lo"ees

0hese s"stems are im#ortant com#onents in the !irm*scontrol s"stem



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2er!ormance ##raisal 2roblems

Question: Wh" is it di!!icult to evaluate the #er!ormanceo! e$#atriates?

ns%er:

When evaluating em#lo"ees'home countr" managers tend to rel" on hard datahost countr" managers can be biased to%ards their

o%n !rame o! re!erence

o' man" !irms rel" on both grou#s to evaluate the#er!ormance o! e$#atriate managers



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Guidelines !or 2er!ormance ##raisal

Question: Ho% can !irms reduce the bias in #er!ormanceevaluations?

ns%er:

0o reduce biasmore %eight should be given to an on-site managers

a##raisal than to an o!!-site managers a##raisala !ormer e$#atriate %ho has served in the same

location should be involved in the a##raisal #rocesshome o!!ice managers should be consulted be!ore an

on-site manager com#letes a !ormal terminationevaluation



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om#ensation

Question: What are the &e" com#ensation issues !orinternational !irms?

ns%er: 0here are t%o &e" issues

/ ho% com#ensation should be ad3usted to re!lectnational di!!erences in economic circumstances and

com#ensation #ractices4/ ho% e$#atriate managers should be #aid



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ational Bi!!erences in om#ensation

Question: hould !irms #a" e$ecutives in di!!erentcountries according to the #revailing standards in eachcountr"' or should it e+ualie #a" on a global basis?

ns%er:

,irms using a geocentric #olic" that %ant to develo# aninternational cadre o! managers must #a" e$ecutives thesame salar" regardless o! their countr" o! origin

i! a !irm does not e+ualie #a"' it could createresentment among !oreign nationals



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6$#atriate 2a"

0he most common a##roach to e$#atriate #a" is thebalance sheet a##roach

e+ualies #urchasing #o%er across countries soem#lo"ees can have the same standard o! living in the

!oreign countr" as the" do at home 0"#ical com#ensation #ac&ages include

/ base salar"

4/ a !oreign service #remium

5/ allo%ances o! various t"#es

@/ bene!its

>/ ta$ di!!erentials



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6$#atriate 2a"

/ Dase alar" - normall" in the same range as the basesalar" !or a similar #osition in the home countr"

4/ ,oreign ervice 2remium - e$tra #a" the e$#atriatereceives !or %or&ing outside his countr" o! origin

o!!ered as an inducement to acce#t !oreign #ostings5/ llo%ances - o!ten include hardshi# allo%ances housing allo%ances

cost-o!-living allo%ances education allo%ances



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6$#atriate 2a"

@/ Dene!its - man" e$#atriates receive the same level o!medical and #ension bene!its abroad that the" receivedat home

>/ 0a$ation - the e$#atriate ma" have to #a" income ta$ to

both the home countr" and the host-countr"governments unless a host countr" has a reci#rocal ta$treat" %ith the e$#atriate*s home countr" %hen a reci#rocal ta$ treat" is not in !orce' the !irm

t"#icall" #a"s the e$#atriate*s income ta$ in the hostcountr"



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International Cabor Relations

Question: Ho% can organied labor is able to limit thechoices available to an international business?

ns%er:

!irms abilit" to #ursue a transnational or globalstrateg" can be signi!icantl" constrained b" the actionso! labor unions

o' the HRM !unction must !oster harmon" and minimiecon!lict bet%een management and labor



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0he oncerns o! 1rganied Cabor

Question: What are the concerns o! organied labor?

ns%er: 1rganied labor is concerned that

/ the multinational can counter union bargaining #o%erb" threatening to move #roduction to another countr"

4/ multinationals %ill &ee# highl" s&illed tas&s in thehome countr" and !arm out onl" lo% s&illed tas&s

5/ im#orted em#lo"ment #ractices and contractualagreements %ill reduce its in!luence and #o%er



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0he trateg" o! 1rganied Cabor

Question: Ho% can organied labor res#ond to the #o%ero! multinationals?

ns%er:

1rganied labor has res#onded to the increasedbargaining #o%er o! multinationals b"tr"ing to set-u# their o%n international organiationslobb"ing !or national legislation to restrict

multinationals

tr"ing to achieve regulations o! multinationals throughinternational organiation such as the 8nited ations

o !ar' these e!!orts have had onl" limited success



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##roaches to Cabor Relations

Question: Ho% do !irms a##roach labor relations?

ns%er:0raditionall"' most labor relations have been

decentralied to individual subsidiariesHo%ever' because man" !irms are realiing that the %a"

in %hich %or& is organied %ithin a #lant can be a ma3orsource o! com#etitive advantage' there is a shi!t to%ardsgreater centraliation to enhance the bargaining #o%er

o! the multinational vis-E-vis organied labor In addition' man" !irms are realiing ho% %or& is

organied %ithin a #lant can be a source o! com#etitiveadvantage



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lassroom 2er!ormance "stem

FFFFFFF a##roach to sta!!ing ma&es sense %hen a !irm%ants to #ursue a transnational strateg"/

a) 6thnocentric

b) Geocentric

c) 2ol"centric

d) 0ranscentric



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sta!!ing a##roach in %hich all &e" management #ositionsare !illed b" #arent-countr" nationals is called

a) n ethnocentric sta!!ing #olic"

b) geocentric sta!!ing #olic"

c) #ol"centric sta!!ing #olic"

d) transcentric sta!!ing #olic"



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tudies sho% the most common reason !or e$#atriate!ailure is

a) 0he manager*s inabilit" to ad3ust

b) 0he manager*s emotional or #ersonal maturit"

c) 0he inabilit" o! the s#ouse to ad3ust

d) 0he manager*s lac& o! technical com#etence



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Bimensions that hel# #redict success in a !oreign #ositinginclude all o! the !ollo%ing e$ce#t

a) 1thers-orientation

b) ultural toughness

c) 2erce#tual abilit"

d) 0echnical e$#ertise




Cabor has res#onded to the increased bargaining #o%er o!multinationals b" doing all o! the !ollo%ing e$ce#t

a) 6stablishing global unions

b) 0r"ing to set-u# their o%n international organiations

c) Cobb"ing !or national legislation to restrict multinationals

d) 0r"ing to achieve regulations o! multinationals throughinternational organiation such as the 8nited ations

chap016 international hr

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