©2004 Prentice Hall20-1 Chapter 20: International Human Resource Management and Labor Relations...

©2004 Prentice Hall20-1

Chapter 20:InternationalHuman Resource Management and Labor Relations

International Business, 4th Edition

Griffin & Pustay


Chapter Objectives_1

Describe the nature of human resource management in international business

Detail how firms recruit and select managers for international assignments

Explain how international businesses train and develop expatriate managers

Describe labor relations in international business


Chapter Objectives_2

Discuss how international firms conduct performance appraisals and determine compensation for their expatriate managers

Analyze retention and turnover issues in international business

Explain basic human resource issues involving non-managerial employees


Human Resource Management (HRM)

Set of activities directed at attracting, developing, and maintaining the effective workforce necessary to achieve a firm’s objective

Differences in culture, levels of economic development, and legal systems among countries may force changes in HRM systems


Figure 20.1 The International Human Resource Management Process

HRM’s Strategic Content

Recruitment and Selection

Training and Development

Performance Appraisal

Compensation and Benefits

Labor Relations

Contribution to Organizational Effectiveness


International Managerial Staffing Needs

Staffing Issues– Recruiting– Training– Retaining

Staffing Categories– Managerial and Executive Employees– Non-managerial Employees


Scope of Internationalization

Size of staffing tasks depends on scope of firm’s international involvement– Export department

– International division

– Global organization


Centralization versus Decentralization of Control

Centralized firms– Favor home country managers– Most common amongst international

division form Decentralized firms

– Favor host country managers– Most common amongst multidomestic

firms


Staffing Philosophy

Parent Country Nationals (PCNs) Host Country Nationals (HCNs) Third Country Nationals (TCNs)


Strategies for Staffing

Ethnocentric staffing model Polycentric staffing model Geocentric staffing model


Figure 20.2 Necessary Skills and Abilities for International Managers

Skills and AbilitiesNecessary to DoThe Job

•Technical•Functional•Managerial

Skills and AbilitiesNecessary to WorkIn a Foreign Location

•Adaptability•Location-specific skills•Personal characteristics

Improved Chances of Succeeding inAn International Job Assignment


Recruitment

Experienced Managers Younger Managers


Selecting expatriates in an important element in international human resource management


Managerial Selection

Managerial competence Appropriate training Adaptability to new situations


Table 20.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees_1

Would your spouse be interrupting a career to accompany you on an international assignment? If so, how do you think this will affect your spouse and your relationship with each other?

Do you enjoy the challenge of making your own way in new situations?

Securing a job upon reentry will be primarily your responsibility. How do you feel about networking and being your own advocate?

How able are you in initiating new social contacts Can you imagine living without a television?


Table 20.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees_2

How important is it for you to spend significant amounts of time with people of your own ethnic, racial, religious, and national background?

As you look at your personal history, can you isolate any episodes that indicate a real interest in learning about other peoples and cultures?

Has it been your habit to vacation in foreign countries?

Do you enjoy sampling foreign cuisine? What is your tolerance for waiting for repairs?


Culture Shock

Psychological phenomenon that may lead to feelings

of fear, helplessness, irritability, and disorientation


Figure 20.3 Phases in Acculturation

Honeymoon

Disillusionment

Adaptation

Biculturalism


Honeymoon Phase

New culture seems exotic and stimulating

Excitement of working in new environment makes employee overestimate ease of adjusting

Lasts for first few days or months


Disillusionment Phase

Differences between new and old environments are blown out of proportion

Challenges of everyday living Many stay stuck in this phase


Adaptation Phase

Employee begins to understand patterns of new culture

Gains language competence Adjusts to everyday living


Biculturalism

Anxiety has ended Employee gains confidence in ability

to function productively in new culture Repatriation may be difficult


Overseas Success

Likelihood of managers being successful at overseas assignment increases if the managers– Can freely choose whether to accept or reject the

assignment– Have been given a realistic preview of the job and

assignment– Have been given a realistic expectation of what their

repatriation assignment will be– Have a mentor back home who will guard their

interests and provide support– See a clear link between the expatriate assignment and

their long-term career path


Training and Development

Assessing training needs Basic training methods

– Standardized

– Customized

Developing younger managers


Performance Appraisal Process of assessing how effectively people

are performing their jobs Purpose

– To provide feedback to individuals about how well they are doing

– To provide a basis for rewarding top performers– To identify areas in which additional training

and development may be needed– To identify problem areas that may call for a

change in assignment


Compensation Packages

Include salary and nonsalary items Determined by

– Labor market forces– Occupational status– Professional licensing requirements– Standards of living– Government regulations– Tax codes


Table 20.2 Annual Cost of Living in Selected Locations Worldwide, 2003

Rank City Index Rank City Index

1 Tokyo, Japan 126.1 11 Shanghai, China 98.4

2 Moscow, Russia 114.5 12 St. Petersburg, Russia 97.3

3 Osaka, Japan 112.2 13 Oslo, Norway 92.7

4 Hong Kong 111.6 14 Hanoi, Vietnam 89.5

5 Beijing, China 105.1 15 Copenhagen, Denmark 89.4

6 Geneva, Switzerland 101.8 16 Ho Chi Minh City, Vietnam

88.5

7 London, UK 101.3 17 Milan, Italy 87.2

8 Seoul, South Korea 101.0 18 Shenzhen, China 86.7

9 Zurich, Switzerland 100.3 19 Guangzhou, China 86.7

10 New York City, USA 100.0 20 White Plains, NY, USA 86.2


Differential Compensation

Cost-of-living allowance Hardship premium or foreign-service

premium Tax equalization system


Figure 20.5 An Expatriate Balance Sheet

U.S. Domestic Base Salary

Taxes Consumption Savings

Foreign andExcess U.S. TaxesPaid by company

Excess Foreign CostsPaid by company

Foreign ServicePremium/ HardshipAdded by company

U.S. Levels

U.S. Spendable Income

U.S. Hypothetical Housing and UtilitiesU.S. Auto Purchase

U.S. Hypothetical Tax and

Social Security


Labor Relations

Labor relations in a host country often reflects laws, culture, social structure, and economic conditions

Union membership may be high


These striking South Korean workers are picketing government offices in Seoul

©2004 Prentice Hall20-1 Chapter 20: International Human Resource Management and Labor Relations...

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