Post on 05-Apr-2018
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2006 Prentice Hall 9-1
Chapter 9Staffing, Training, and
Compensation for Global
Operations
PowerPoint by
Kristopher Blanchard
North Central University
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Introduction
[In the new millennium], the caliber of thepeople will be the only source of
competitive advantage.
Allan Halcrow, Personnel Journal
Of the top 100 UK firms surveyed by CendantInternational Assignment Services, 63
reported failed foreign assignments.- www.expat.FT.com
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Staffing Philosophies for Global
Operations
Firms using an ethnocentric staffing approach fill
key managerial positions with people from
headquartersthat is, parent-country nationals
(PCNs).
In a polycentric staffing approach, local managers
host-country managers (HCNs)are hired to fill
key positions in their own country.
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Ethnocentric/PCN
Advantages: PCNs familiar with company goals,products, technology, policies and procedures.
Disadvantages: lack of development of local
managers (impacts moral and commitment) andpoor adaptation and lack of effectiveness ofexpatriates
Used when: inadequate local management, early
stages of internationalization, centralized approachto globalization, close communication andcoordination with HQ is needed.
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Polycentric/HCN
Advantages: less expensive to hire a local
than to create an expatriate, local managers
can help with sensitive political issues andsome countries may require it.
Disadvantages: difficulty of coordinating
with HQ, conflicting loyalty of local, HQ
managers do not get valuable experience
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Staffing Philosophies for Global
Operations
In the global staffing approach, the best managers
are recruited from within or outside of the
company, regardless of nationality.
Greater pool of candidates to chose from
Usually more culturally savvy and adaptable
Often more cost effective
In a regiocentric staffing approach, recruiting isdone on a regional basissay within Latin
America for a position in Chile.
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Problems with Expatriation
Selection based on headquarters criteriarather than assignment needs
Inadequate preparation, training, andorientation prior to assignment
Alienation or lack of support fromheadquarters
Inability to adapt to local culture andworking environment
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Problems with Expatriation
Problems with spouse and childrenpooradaptation, family unhappiness: mostfrequently cited reason for expatriate
failure.
Insufficient compensation and financial
support
Poor programs for career support and
repatriation
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Training and Development
Areas critical to preparation: cultural training, languageinstruction, familiarity with everyday matter.
Challenges faced by expatriates China: a continuing problem for expatriates; one complained that
at his welcome banquet he was served duck tongue and pigeonhead
Brazil: expatriates stress that cell phones are essential becausehome phones dont work
India: returning executives complain that the pervasiveness ofpoverty and street children is overwhelming
Indonesia: here you need to plan ahead financially becauselandlords typically demand rent two to three years in advance
Japan: expatriates and their families remain concerned thatalthough there is excellent medical care, the Japanese doctorsreveal little to their patients.
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Cross-Cultural Training: Culture
Shock
Culture shock is a state of disorientation and
anxiety about not knowing how to behave in an
unfamiliar culture. The cause of culture shock is
the trauma people experience in new and differentcultures, where they lose the familiar signs and
cues that they had used to interact in daily life and
where they must learn to cope with a vast array of
new cultural cues and expectations.
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Cross-Cultural Training: Culture
Shock
Honeymoonwhen positive attitudes and expectations, excitement,
and a tourist feeling prevail
Irritation and hostilitythe crisis stage when cultural differences
result in problems at work, at home, and in daily living
Gradual adjustmenta period of recovery in which the patientgradually becomes able to understand and predict patterns of behavior,
use the language, and deal with daily activities, and the family starts to
accept their new life
Biculturalismthe stage at which the manager and family members
grow to accept and appreciate local people and practices and are ableto function effectively in two cultures
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Cross-Cultural Training: Sub-
Culture Shock
Subculture shock occurs when a manager is
transferred to another part of the country
where there are cultural differencesessentially from what she or he perceives to
be a majority culture to a minority one.
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Training Techniques
Area studies, that is, documentary programs about the
countrys geography, economics, sociopolitical history,
and so forth
Culture assimilators, which expose trainees to the kinds ofsituations they are likely to encounter that are critical to
successful interactions
Language training
Sensitivity trainingField experiencesexposure to people from other cultures
within the trainees own country
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Integrating Training with Global
Orientation
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Integrating Training with Global
Orientation
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Training Host-Country Nationals
Continuous training and development of HCNs
and TCNs for management positions is an
important factor for long-term success of the
multinational corporation
Ongoing development will facilitate the transition
to an indigenization policy
The company will have a well-trainedmanagement staff with broad international
experience
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Training Host-Country Nationals
Training to facilitate e-business adoption is
taking on increasing importance
Training in information and communicationtechnologies is particularly critical for firms
in new economy and emerging markets
List of training needs for managers inEastern Europe
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Compensating Expatriates
Compensation is a crucial link betweenstrategy and its successful implementation
Must be a fit between compensation and the
goals of the firm
Maintaining an appropriate compensationpackage is more complex than it would
seemLittle variation in typical salary but there is a
wide variation in net spendable income
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Balance Sheet Approach
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Compensating Expatriates
SalaryLocal salary buying power and currencytranslation, as compared with home salary;bonuses or incentives for dislocation
TaxesEqualize any differential effects on taxesas a result of the assignment
AllowancesRelocation expenses; cost-of-livingadjustments; housing allowance for assignment
and allowance to maintaining house at home; tripshome for family; private education for children
BenefitsHealth insurance; stock options
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Compensating Host-Country
Nationals
A number of variable apply including local market
factors and pay scales, government involvement in
benefits, unions, and the cost of living must all be
considered
Eastern Europeans spend 35% to 40% of their
disposable income on food and utilities
East European managers must have cash for about 65%to 80% of their base pay
US managers must have cash of about 40%
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Compensating Host-Country
Nationals
To be competitive, MNCs can focus on
providing goods and services that are either
not available at all or are extremelyexpensive.
It is important to make clear what benefits,
as well as salary, come with a position
because of the way compensation is
perceived and regulated around the world
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Comparative Management in Focus:
Compensating Russians
Select Russian employees who are achievement-oriented and willing to take risks
Tie individual bonuses to initiative and personalaccountability (to encourage individual goal setting).
Organize social events and other group activities.
Provide small-group incentives
Provide a mix of short- and long-term incentives
Tailor the compensation package to individualpreferences
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Repatriation: Out of sight, out of mind
Organizational problems: Perceived lack of recognition
Loss of networking and mentor relationships
Unsuitable job assignment
Loss of career and promotional opportunities
Loss of authority and professional freedom Resentment from colleagues and others
System and policy changes as well as technicalobsolescence
Personal problems: Social adaptation problems Loss of status and standard of living
Financial problems
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Looking Ahead
Chapter 10Developing a Global
Management Cadre
Preparation, Adaptation, and RepatriationGlobal Management Teams
The Role of Women
Working within Local Labor Relations Systems
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Training Priorities for E-
Business Development
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