COMPONENTS OF HRM COMPONENTS OF HRM

RecruitmentRecruitment SelectionSelection Training & DevelopmentTraining & Development Performance AppraisalPerformance Appraisal CompensationCompensation Labor RelationsLabor Relations

INTERNATIONAL HRMINTERNATIONAL HRM

Basic HRM issues remainBasic HRM issues remain Must choose a mixture of Must choose a mixture of

international employeesinternational employees How much to adapt to local How much to adapt to local

conditions?conditions?

EMPLOYEES IN MULTINATIONAL EMPLOYEES IN MULTINATIONAL ORGANIZATIONSORGANIZATIONS

Local country nationals (LCNs) Local country nationals (LCNs) Expatriate workers or home Expatriate workers or home

country nationals (HCNs)country nationals (HCNs) Third country nationals (TCNs)Third country nationals (TCNs)

IHRM ORIENTATIONSIHRM ORIENTATIONS Ethnocentric Ethnocentric PolycentricPolycentric RegiocentricRegiocentric GlobalGlobal

IHRM ORIENTATION AND IHRM ORIENTATION AND MULTINATIONAL STRATEGYMULTINATIONAL STRATEGY

Early stages of internationalization Early stages of internationalization = ethnocentric IHRM= ethnocentric IHRM

Multilocal strategies = ethnocentric Multilocal strategies = ethnocentric or regiocentric or regiocentric

Regional strategy = closer to the Regional strategy = closer to the globalglobal

International strategy = International strategy = ethnocentric or polycentric ethnocentric or polycentric IHRM IHRM

Transnational strategies = a Transnational strategies = a global IHRMglobal IHRM

MULTINATIONAL MANAGERSMULTINATIONAL MANAGERS

Host country or expatriate?Host country or expatriate?

USING HOST COUNTRY USING HOST COUNTRY MANAGERSMANAGERS

Do they have the expertise for Do they have the expertise for the position?the position?

Can we recruit them from Can we recruit them from outside the company?outside the company?

USING EXPATRIATE MANAGERSUSING EXPATRIATE MANAGERS

Do parent country managers have Do parent country managers have the appropriate skills?the appropriate skills?

Are they willing to take expatriate Are they willing to take expatriate assignments?assignments?

Do any laws affect the assignment Do any laws affect the assignment of expatriate managers? of expatriate managers?

IS THE EXPATRIATE WORTH IS THE EXPATRIATE WORTH IT?IT?

High costHigh cost High failure rateHigh failure rate

EXHIBIT 11-3 PAYING FOR EXHIBIT 11-3 PAYING FOR THE EXPATRIATE MANAGERTHE EXPATRIATE MANAGER

050000

100000150000200000250000300000350000

$

REASONS FOR U.S. REASONS FOR U.S. EXPATRIATE FAILUREEXPATRIATE FAILURE

Spouse fails to adapt Spouse fails to adapt Manager fails to adapt Manager fails to adapt Other problems within the Other problems within the

familyfamily Personality of the managerPersonality of the manager Level of responsibilitiesLevel of responsibilities

Lack of technical proficiencyLack of technical proficiency No motivation for assignmentNo motivation for assignment

MOTIVATIONS TO USE EXPATSMOTIVATIONS TO USE EXPATS

Managers acquire international skillsManagers acquire international skills Coordinate and control operations Coordinate and control operations

dispersed activities dispersed activities Communication of local Communication of local

needs/strategic information to needs/strategic information to headquarters headquarters

KEY EXPATRIATE SUCCESS KEY EXPATRIATE SUCCESS FACTORSFACTORS

Professional/technical competenceProfessional/technical competence Relational abilities Relational abilities Motivation Motivation Family situation Family situation Language skills Language skills Willingness to accept position Willingness to accept position

PRIORITY OF SUCCESS PRIORITY OF SUCCESS FACTORSFACTORS

Depends on : Depends on : Assignment lengthAssignment lengthCultural distanceCultural distanceAmount of required interaction Amount of required interaction

with local peoplewith local peopleJob complexity/responsibilityJob complexity/responsibility

EXHIBIT 11.5 SHOWS A EXHIBIT 11.5 SHOWS A DECISION MATRIX USED TO DECISION MATRIX USED TO SET PRIORITIES OR SET PRIORITIES OR DIFFERENT SUCCESS DIFFERENT SUCCESS FACTORS DURING FACTORS DURING SELECTIONSELECTION

Assignment Characteristics

ExpatriateSuccessFactors

LongerDuration

MoreCulturalDis-similarity

GreaterInteractionandCommunica-tionRequirementswith Locals

MoreComplex orRespon-sible Job

Professional/TechnicalSkills

High Neutral Moderate High

Relational Abilities

Moderate High High Moderate

InternationalMotivation

High High High High

FamilySituation

High High Neutral Moderate

LanguageSkills

Moderate High High Neutral

EXPATRIATE TRAININGEXPATRIATE TRAINING

TRAINING RIGORTRAINING RIGOR

The extent of effort by trainees The extent of effort by trainees and trainers required to prepare and trainers required to prepare the trainees for expatriate the trainees for expatriate positions positions

LOW RIGOR TRAININGLOW RIGOR TRAINING

Short time periodShort time period LecturesLectures Videos on local cultureVideos on local culture Briefings on company operations Briefings on company operations

company operations company operations

HIGH RIGOR TRAININGHIGH RIGOR TRAINING

Lasts over a month Lasts over a month Experiential learningExperiential learning Extensive language trainingExtensive language training Often includes interactions with Often includes interactions with

host country nationals host country nationals

EXHIBIT 11.6 SHOWS EXHIBIT 11.6 SHOWS VARIOUS TRAINING VARIOUS TRAINING TECHNIQUES AND THEIR TECHNIQUES AND THEIR OBJECTIVES AS THE RIGOR OBJECTIVES AS THE RIGOR OF THE CROSS- CULTURAL OF THE CROSS- CULTURAL TRAINING GROWS TRAINING GROWS

Techniques: Field trips tohost country, meetingswith managers experiencedin host country, meetingswith host countrynationals, intensivelanguage training.

Objectives: Developcomfort with host countrynational culture, businessculture, and socialinstitutions.

HighTraining

Rigor

Techniques:Experiential learningexercises, role playing,simulations, casestudies, survivallanguage training.

Objectives: General andspecific knowledge ofhost country culture,reduce ethnocentrism.

Mid-level

TrainingRigor

Techniques: Lectures,videotapes, readingbackground material.

Objectives: Providebackground information onhost country business andnational cultures, basicinformation on companyoperations.

LowTraining

Rigor

EXHIBIT 11.8 SHOWS SOME EXHIBIT 11.8 SHOWS SOME OF THE TRAINING CONTENT OF THE TRAINING CONTENT THAT HELPS SUPPORT A THAT HELPS SUPPORT A COMPANY'S MULTINATIONAL COMPANY'S MULTINATIONAL STRATEGYSTRATEGY

Multinational Strategy

Example Additional Training Needs

Multilocal Parent country nationals: Local business culture,political environment, laws, technology transfer.

Host country nationals: Production or servicepractices.

Regional Parent country nationals: How to facilitate two-waytechnology transfer and corporate culture transfer.

Host country nationals: Corporate culture,manufacturing or service systems.

International Parent country nationals: How to facilitatetechnology transfer; knowledge of local businessculture, political environment.

Host country nationals: Sales and service systems.

Transnational All nationals: Corporate culture, strategies.

CHALLENGES OF EXPATRIATE CHALLENGES OF EXPATRIATE PERFORMANCE APPRAISALPERFORMANCE APPRAISAL

Unreliable dataUnreliable data Complex and volatile Complex and volatile

environmentsenvironments Time differences and distance Time differences and distance

separationseparation Local cultural situationsLocal cultural situations

STEPS TO IMPROVE THE STEPS TO IMPROVE THE PROCESSPROCESS

1. Fit the evaluation criteria to 1. Fit the evaluation criteria to strategy.strategy.

2. Fine tune the evaluation criteria 2. Fine tune the evaluation criteria

3. Use multiple evaluators with 3. Use multiple evaluators with varying periods of evaluation varying periods of evaluation

EXHIBIT 11.9EXHIBIT 11.9

Shows several sources of Shows several sources of information a superior or the information a superior or the HRM professionals may use to HRM professionals may use to evaluate an expatriate managers evaluate an expatriate managers

EvaluationSources

Criteria Periods

Self evaluation Meeting objectivesManagement skillsProject successes

Six months and atthe completion ofa major project

Subordinates Leadership skillsCommunication skillsSubordinatedevelopment

After completionof major project

Peer expatriate andhost countrymanages

Team buildingInterpersonal skillsCross-culturalinteraction skills

Six months

On-site supervisor Management skillsLeadership skillsMeeting objectives

At the completionof significantprojects

Customers andclients

Service quality andtimelinessNegotiation skillsCross-culturalinteraction skills

Yearly

EXPATRIATE COMPENSATIONEXPATRIATE COMPENSATION

THE BALANCE SHEET THE BALANCE SHEET APPROACHAPPROACH

Provides a compensation Provides a compensation package that equates purchasing package that equates purchasing power power

BALANCE SHEET COSTSBALANCE SHEET COSTS

Allowances for cost of living, Allowances for cost of living, housing, utilities, furnishing, housing, utilities, furnishing, educational expenses, medical educational expenses, medical expenses, club memberships, and expenses, club memberships, and car and/or driver expenses car and/or driver expenses

DomesticAssignmentExpenses andSpendableIncome

Expatriate Assignment Expenses and BalancedSpendable Income + Allowances

Base Salary = Base Salary

+Allowances as an incentive to take position,foreign service premium, hardship pay, R&R

Taxes = Taxes+ Allowances to balance extra tax payments

Goods andServices

= Goods and Services

+Allowances to cover cost of living differences,housing, children’s education, medical costs,automobile, recreation, home leave travel

Housing = Housing

+Allowances for moving expenses, settling inexpenses, initial housing costs, and furnishingallowances

SpendableIncome

= Spendable Income

OTHER APPROACHESOTHER APPROACHES

Parent country wages everywhere Parent country wages everywhere Wean expatriates from allowancesWean expatriates from allowances Pay based on local or regional Pay based on local or regional

marketsmarkets Cafeteria selection of allowancesCafeteria selection of allowances Global pay systems Global pay systems

THE REPATRIATION THE REPATRIATION PROBLEMPROBLEM

Difficult for many organizations Difficult for many organizations "Reverse culture shock" "Reverse culture shock" Expatriates must relearn own Expatriates must relearn own

national and organizational national and organizational cultureculture

Includes whole family Includes whole family

STRATEGIES FOR SUCCESSFUL STRATEGIES FOR SUCCESSFUL REPATRIATION PROVIDE:REPATRIATION PROVIDE:

A strategic purpose for repatriationA strategic purpose for repatriation A team to aid the expatriateA team to aid the expatriate Home country information sourcesHome country information sources Training and preparation for the Training and preparation for the

returnreturn Support for expatriate and familySupport for expatriate and family

INTERNATIONAL INTERNATIONAL ASSIGNMENTS FOR WOMEN ASSIGNMENTS FOR WOMEN TWO IMPORTANT "MYTHS"TWO IMPORTANT "MYTHS"

Myth 1: women do not wish to Myth 1: women do not wish to take international assignments take international assignments

Myth 2: women will fail in Myth 2: women will fail in international assignments international assignments because of the foreign culture's because of the foreign culture's prejudices against local women prejudices against local women

SUCCESSFUL WOMEN SUCCESSFUL WOMEN EXPATRIATESEXPATRIATES

Foreign not female Foreign not female Emphasize nationality not genderEmphasize nationality not gender The woman's advantageThe woman's advantage Strong in relational skillsStrong in relational skills A wider range of interaction A wider range of interaction

options options

CONCLUSIONSCONCLUSIONS

HRM functionsHRM functions IHRM challengesIHRM challenges IHRM orientationsIHRM orientations Expatriate managersExpatriate managers The role of women in The role of women in

multinational organizationsmultinational organizations