Post on 28-Jan-2016
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INTERNATIONALHRM
International HRM Differences
• Greater Number of Services
• Special Services to Unique Group
• Compensation Complexity
• Foreign Exchange Rate Attention
• Language and Cultural Differences
International Mergers and Acquisitions
Global Competition
Importance of Global Human
Resources Management
Foreign Human
Resources
Market Access
Opportunities
Increasing Importance of Global Human Resources Understanding
Composition of the Cultural Environment of International Business
Religionsacred objectsphilosophicalsystemsbeliefs & normsprayertaboosholidaysrituals
Technology and Material Culturetransportationenergy systemstools & objectscommunicationsurbanizationscienceinvention
Values and AttitudesToward:timeachievementworkwealthchangescientific methodrisk-taking
Educationformal educationvocational trainingprimary educationsecondary educationhigher educationliteracy levelhuman resources planning
Social Organizationkinship social institutionsauthority structuresinterest groups social mobilitysocial stratificationstatus systems
Languagespokenwritten languageofficial languagelinguistic pluralismlanguage hierarchyinternational languagesmass media
Lawcommon lawcode lawforeign lawhome country lawantitrust policyinternational lawregulation
Politicsnationalismsovereigntyimperialismpowernational interestsideologiespolitical risk
Key Issues in International HRM1. Worldwide Human Resources
Planning– Recruiting and Selection– Expatriate orientation and
training– Repatriation– Performance appraisal
2. Compensation– Dealing with inflation and
unexpected changes in exchange rates
– Providing sufficient pay to keep individuals
– Should company pay hardship allowance?
– Dissatisfaction with cost of living allowances
3. Housing (Complex problems at home and overseas)
Key Issues in International HRM4. Benefits Planning
– Developing equity among employees– Several plans necessary for different
categories of personnel
5. Taxation (Proliferation of new laws)
6. Communication of HR Policies and Programs Worldwide– Treat communication as a
continuous process– Face-to-Face contact frequently– Make policy manuals brief and
simple– Be sensitive to needs of receiver– Send regular written explanations of
policy changes– Periodic rotation of overseas HR
managers desirable– Security
Global Manufacturing
International Corporation
Domestic firm that uses its existing capabilities to move into overseas markets.
Multinational Corporation (MNC)
Firm which independent business units operating in multiple countries.
Global Corporation
Firm that had integrated worldwide operations through a centralized home office.
Transnational Corporation
Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units.
Types of Organizations
Global Efficiency
High
Global
Views the world as a single market; operations are controlled centrally from the corporate office.
Transnational
Specialized facilities permit local responsiveness; complex coordination mechanisms provide global integration.
Low
International
Uses existing capabilities to expand into foreign markets.
Multinational
Several subsidiaries operating as stand-alone business units in multiple countries.
Low High
Local Responsiveness
The Multi-National Corporation (MNC)
• Home Country Employment
• External Country Employment
Managing in a Foreign Environment
• Attitudes Vary• Motivational Tools
are Distinctly Different
Cultural Environmentof International Business
Clustering Nations Approach
• Geography• Languages• Religion• Job Attitudes
• Work Goals
• Values• Needs
Managerial Values
• Role of Competition• Role of Blame• Role of Shame• Role of Participation:
Japan (hi)• Role of Autocratic:
Europe (hi) and South America (hi)
Sources of Managerial Talent
• Home Country Nationals (Expatriates)
• Host Country Nationals (Natives)
• Third Country Nationals (Non-Home/Host)
Advantages of Different Sourcesfor Overseas Managers
Host Country
Home Country
Third Country
•Less cost
•Preference of host country government
•Knowledge of environment
•Language facility
•Talent available within company
•Greater control
•Company experience
•Mobility
•Experience provided to corporate executives
•Broad experience
•International outlook
•Multi-lingualism
SOME OF THE LARGEST U.S. MULTINATIONALS
AT&T General Electric Microsoft
Cisco General MotorsProcter and
Gamble
Citicorp. Hewlett-Packard RJR Nabisco
Coca-Cola IBM Texaco
DuPont IntelUnited
Technologies
Exxon/Mobil Oil J.P. Morgan Wal-mart
Ford Motor Johnson & Johnson Xerox
Motorola
6 Major Reasons for American Expatriate Failures in Foreign
Environment
• Inability of the manager’s spouse to adjust to a different cultural environment.
• The manager’s inability to adapt to a different physical or cultural environment. Other family-related problems.
• The manager’s personality or emotional immaturity.
• The manager’s inability to cope with the responsibilities posed by the overseas work.
• The manager’s lack of technical competence.
• The manager’s lack of motivation to work overseas.
Selection Methods
• Interviews (executives and psychologists)
• Assessment Centers (exercises)
• Tests (language and special tests)
• Role of Family
Flowchart of the Selection-Decision Process
Start the Selection Process
Can the position be filled by a local national?
Identify degree of interaction required with local community – using a 7- or 9- point scale, ranging from low to high, indicate the degree
of interaction with local community required for successful performance on the job.
Select local national and subject him/her to training basically aimed at improving technical
and managerial skills.
Emphasis* on tasks variables.
Second but by no means unimportant question is to ask whether the individual is willing to
serve abroad.
Is candidate willing?
Probably not suitable for position
Emphasis* on task variables
Identify degree of similarity / dissimilarity between cultures –
using a 7- or 9-point scale, ranging from similar to highly
diverse, indicate the magnitude of differences between the two
cultures,
Emphasis* on “relational abilities” factor.
“Family situation” factor must also be taken into consideration.
Start orientation (most rigorous)
Start orientation(moderate to high rigor)
Start orientation(moderate to high rigor)
Probably not suitable for position
YES
NO
YES
YES NO
NO
HIGH
LOW
HIGHLY DIVERSE
VERY SIMILAR
Preparing for an International Assignment
Study the following subjects:• Social and business etiquette.• History and folklore.• Current affairs, including relations between
the country and the United States.• The culture’s values and priorities.• Geography, especially the cities.• Sources of pride: artists, musicians,
novelists, sports, great achievements of the culture, including things to see and do.
• Religion and the role of religion in daily life.• Political structure and current players.• Practical matters such as currency,
transportation, time zones, hours of business.
• The language.
Cultural Shock
• "A Disorientation that Causes Perpetual Stress"
– Disorienting Incidents– Impossible
Communication– Telephone Difficulties– Family Frustrations
Special Considerations
• Career Development Risks
• Reentry Problems• Managing Family Life• Terrorism
Recruitment
• Government Regulations
• Work Permits Universally Required
• Recruitment of Locals Varies
• Guest Workers• Role of Church, Family,
Politics
Selection
• Merit Versus Best Family
• Family Ties• Social Standing• Origin• Industrialized versus
Less Developed
Training Issues
• Local Resources• Less Technical
Capabilities• Apprenticeship
Strengths in Europe• Management
Development (US Leader)
• Language (English Need)
Compensation
• Host Country Employees– Production Standard or
Time or Combination– Benefits (often higher
than U.S.)– Profit Sharing (may be
Required)
• Managers– Narrowing of Salary
Gap with USA
Expatriate Compensation
• Base Pay• Differentials• Incentives• Company Assistance• Cost: 3-4 times USA
Rate
Compensation of Expatriate Managers
1. Provide an incentive to leave the united states.
2. Maintain an American standard of living.
3. Facilitate reentry into the united states.
4. Provide for the education of children.
5. Maintain relationships with family, friends, and business associates.
To be effective, a compensationprogram must:
Compensation Elements of an Expatriate
• Programs used by most U.S. Based MNCs have four elements:
• Base pay – equal to pay of domestic counterparts in comparably evaluated jobs.
• Differentials – to offset the higher costs of overseas goods, services, and housing.
• Incentives – to compensate the person for separation from family, friends, and domestic support systems.
• Company assistance programs – to cover added costs such as moving and storage costs, automobile, and education expenses.
The Price of an Expatriate
An employer’s typical first-year expensesof sending a U.S. executive abroad.
Direct Compensation Costs
Base Salary 100%
Foreign-service premium 15%
Goods and services differential 20%
Housing costs 20-40%
Transfer Costs
Relocation allowance 5%
Air fare 2%
Moving household goods 25%
Other Costs
Company Car 15%
Schooling (two children) 20%
Annual home leave (four people) 5%
Personal income tax abroad 50%
Total = Salary plus 187-207%
Note: Additional costs often incurred aren’t listed above, including language and cross-cultural training for employee and family, and costs of selling home and cars in the U.S. before moving.
*Figures take into account payments by employee to company based on hypothetical U.S. income tax and housing costs.
*It is not unusual to triple costs compared to USA earnings.