Global Human Global Human Resource Resource

ManagementManagementByBy

Dr. Deborah FerberDr. Deborah Ferber

Integration of the world’s economies and the globalization of business continue unabated at the beginning of the 21st century.

Indicators of Globalization

International trade is growing at a more rapid rate than world outputForeign direct investment (FDI) flows have set record levels in recent yearsCross-border inter-firm agreements have risen dramatically during the last 20 yearsSocial, economic, and political developments throughout the world have changed the way global business is conducted.

The People Factor

Firms need to strengthen their presence, involvement, and relative positions in the domestic and global marketplaceThis can be done by utilizing their global human resources in a manner that helps them establish and sustain competitive advantage

Global Human Resource Management (GHRM)

Refers to the policies and practices related to managing people in an internationally oriented organization

Includes the same functions as domestic HRMThere are many unique aspects to human resource management in the international organization

Major HRM Problems for the International Corporation (1 of 2)

1. Selecting and training local managers2. Companywide loyalty and motivation3. Speaking local language and understanding

local culture4. Appraising managers’ overseas performance5. Planning systematic management succession6. Hiring local sales personnel

Major HRM Problems for the International Corporation (2 of 2)

7. Compensating local foreign managers8. Hiring and training foreign technical

employees9. Selecting and training managers for overseas10. Dealing with foreign unions and labor laws11. Promoting or transferring foreign managers12. Compensating managers for an overseas

assignment

The Cultural Nature of Global HRM

The cultural differences between nations influence the effectiveness of HRM policies and practicesOf critical importance:

understanding these differencesensuring that HRM and the cultural orientation of workers are congruent with one another

The Concept of “Fit” in Global HRM

Internal FitConcerned with making sure that HRM policies facilitate the work values and motivations of employeesPolicies must be structured in ways that allow headquarters and foreign subsidiaries to interact efficiently

External FitThe degree to which HRM matches the context in which the organization is operatingThe organization must understand the cultural and socioeconomic environment of the foreign subsidiary

Sources of Employees for International Assignment

Host Country Nationals (HCNs)employees from the local populationreferred to as local nationals

Parent Country Nationals (PCNs)employees sent from the country in which the organization is headquarteredreferred to as expatriates

Third Country Nationals (TCNs)employees from a country other than where the parent organization’s headquarters or operations are located

Characteristics of the Expatriate Manager:

High Probability for SuccessStrong analytical skillsGood language skillsStrong desire to work overseasSpecific knowledge of overseas cultureWell-adjusted family situationComplete support of spouseBehavioral flexibilityAdaptability and open-mindednessGood relational abilityGood stress management skills

Low Probability for SuccessUncertain technical competencyWeak language skillsUnsure about going overseasFamily problemsLow spouse supportBehavioral rigidityUnadaptability – closed to new ideasPoor relational abilityWeak stress management skills

Culture Shock and the Expatriate Manager

Culture Shock – the frustration and confusion that result from being constantly subjected to strange and unfamiliar cues about what to do and how to get it done

Does not typically occur during the earliest days of an overseas assignment

Host Country Nationals and the Global Corporation

Managers who are host country nationals have distinct advantages over expatriates

cultural sensitivityunderstanding of local employees’ motivations and needs

Careful recruitment, selection, and training of HCNs can reduce or eliminate the potential problems with using HCNs

The Legal and Ethical Climate of Global HRM

Business practices that are considered unethical or illegal in the U.S. might be considered part of the national conduct of business in other countriesForeign Corrupt Practices Act of 1977 (FCPA)Employment discrimination

Summary

Global human resource management is an important component of an organization’s success in a global marketplaceOrganizations must be sure that their HRM policies can accommodate a culturally diverse workforce