Global HRM 25 Matakuliah: J0124 – Manajemen Sumber Daya Manusia Tahun : 2010.

Global HRM25

Matakuliah : J0124 – Manajemen Sumber Daya ManusiaTahun : 2010

Learning Outcomes

After studying this chapter, the students should be able to :

• Identify the types of organizational forms used for competing internationally

• Explain how domestic and international HRM differ

Bina Nusantara University 3

Managing Across BordersManaging Across Borders

• International International corporationcorporation Domestic firm that uses Domestic firm that uses

its existing capabilities its existing capabilities to move into overseas to move into overseas markets.markets.

• Multinational Multinational corporation (MNC)corporation (MNC) Firm with independent Firm with independent

business units operating business units operating in multiple countries.in multiple countries.

• Global corporationGlobal corporation Firm that has integrated Firm that has integrated

worldwide operations worldwide operations through a centralized through a centralized home office.home office.

• Transnational Transnational corporationcorporation Firm that attempts to Firm that attempts to

balance local balance local responsiveness and responsiveness and global scale via a network global scale via a network of specialized operating of specialized operating units.units.

© 2010 South-Western, a part of Cengage Learning. All rights reserved

Increasing Importance of Understanding Increasing Importance of Understanding Global Human Resources ManagementGlobal Human Resources Management

International International Mergers and Mergers and AcquisitionsAcquisitions

International International Mergers and Mergers and AcquisitionsAcquisitions

Global Human Resources Management

Global Human Resources Management

Foreign Human Foreign Human ResourcesResources

Foreign Human Foreign Human ResourcesResources

Global Global CompetitionCompetition

Global Global CompetitionCompetition

Market Access Market Access OpportunitiesOpportunities

Market Access Market Access OpportunitiesOpportunities


Cultural Environment of International Business


Domestic versus International HRMDomestic versus International HRM

•Issues in international HRM in helping Issues in international HRM in helping employees adapt to a new and different employees adapt to a new and different environment outside their own country:environment outside their own country: RelocationRelocation OrientationOrientation Translation servicesTranslation services


International StaffingInternational Staffing

•Expatriates, or Home-country NationalsExpatriates, or Home-country Nationals Employees from the home country who are on Employees from the home country who are on

international assignment.international assignment.

•Host-country NationalsHost-country Nationals Employees who are natives of the host country.Employees who are natives of the host country.

•Third-country NationalsThird-country Nationals Employees who are natives of a country other Employees who are natives of a country other

than the home country or the host country.than the home country or the host country.


Hiring Host-Country NationalsHiring Host-Country Nationals

• Advantages:Advantages:1.1. Hiring local citizens is generally less costly Hiring local citizens is generally less costly

than relocating expatriates.than relocating expatriates.

2.2. Since local governments usually want good Since local governments usually want good jobs for their citizens, foreign employers may jobs for their citizens, foreign employers may be required to hire locally.be required to hire locally.

3.3. Most customers want to do business with Most customers want to do business with companies they perceive to be local versus companies they perceive to be local versus foreign.foreign.


Selecting Global ManagersSelecting Global Managers

•Global ManagerGlobal Manager A manager equipped to run an international A manager equipped to run an international

businessbusiness

•Skills Categories for Global ManagersSkills Categories for Global Managers Ability to seize strategic opportunitiesAbility to seize strategic opportunities Ability to manage highly decentralized Ability to manage highly decentralized

organizationsorganizations Awareness of global issuesAwareness of global issues Sensitivity to issues of diversitySensitivity to issues of diversity Competence in interpersonal relationsCompetence in interpersonal relations Community-building skillsCommunity-building skills


Comparison of Advantages in Sources of Overseas Managers


Expatriate Selection Criteria


Causes of Expatriate Assignment Failure

• Family adjustment

• Lifestyle issues

• Work adjustment

• Bad selection

• Poor performance

• Other opportunities arise

• Business reasons

• Repatriation issues


Training and DevelopmentTraining and Development

•Essential training program content to Essential training program content to prepare employees for working prepare employees for working internationally: internationally: Language trainingLanguage training Cultural trainingCultural training Assessing and tracking career developmentAssessing and tracking career development Managing personal and family lifeManaging personal and family life RepatriationRepatriation

•Culture shockCulture shock Perpetual stress experienced by people who Perpetual stress experienced by people who

settle overseas.settle overseas.© 2010 South-Western, a part of Cengage Learning. All rights reserved

3Nonverbal Communications in Different Cultures


Assessing and Tracking Career DevelopmentAssessing and Tracking Career Development

•Developmental and Career Advantages of Developmental and Career Advantages of an International Assignment:an International Assignment: Increases the expatriate’s responsibilities and Increases the expatriate’s responsibilities and

influence within the corporationinfluence within the corporation

Provides a set of unique experiences beneficial Provides a set of unique experiences beneficial to both the individual and the firmto both the individual and the firm

Enhances understanding of the global Enhances understanding of the global marketplacemarketplace

Offers the opportunity to work on a project Offers the opportunity to work on a project important to the organizationimportant to the organization


Global Compensation ChallengesGlobal Compensation Challenges

•Different countries have different norms Different countries have different norms for employee compensation:for employee compensation: Financial (money) incentives versus Financial (money) incentives versus

nonfinancial incentives (prestige, nonfinancial incentives (prestige, independence, and influence)independence, and influence)

Individual rewards versus collectivist concerns Individual rewards versus collectivist concerns for internal equity and personal needsfor internal equity and personal needs

General rule:General rule: Match the rewards to the values of the local cultureMatch the rewards to the values of the local culture——create create

a pay plan that supports the overall strategic intent of the a pay plan that supports the overall strategic intent of the organization but provides enough flexibility to customize organization but provides enough flexibility to customize particular policies and programs to meet the needs of particular policies and programs to meet the needs of employees in specific locations.employees in specific locations.


Compensation of Host-Country ManagersCompensation of Host-Country Managers

• Global Compensation Global Compensation SystemSystem A centralized pay system A centralized pay system

whereby host-country whereby host-country employees are offered a full employees are offered a full range of training programs, range of training programs, benefits, and pay comparable benefits, and pay comparable with a firm’s domestic with a firm’s domestic employees but adjusted for employees but adjusted for local differenceslocal differences


Expatriate Compensation SystemsExpatriate Compensation Systems

• Home-Based PayHome-Based Pay Pay based on an expatriate’s home country’s Pay based on an expatriate’s home country’s

compensation practicescompensation practices

• Balance-Sheet ApproachBalance-Sheet Approach A compensation system designed to match A compensation system designed to match

the purchasing power in a person’s home the purchasing power in a person’s home countrycountry

1.1. Calculate base payCalculate base pay

2.2. Figure cost-of-living allowance (COLA)Figure cost-of-living allowance (COLA)

3.3. Add incentive premiumsAdd incentive premiums

4.4. Add assistance programsAdd assistance programs


Expatriate Compensation Systems (cont’d)Expatriate Compensation Systems (cont’d)

•Split PaySplit Pay A system whereby expatriates are given a A system whereby expatriates are given a

portion of their pay in the local currency to portion of their pay in the local currency to cover their day-to-day expenses and a portion cover their day-to-day expenses and a portion of their pay in their home currency to of their pay in their home currency to safeguard their earnings from changes in safeguard their earnings from changes in inflation or foreign exchange ratesinflation or foreign exchange rates

•Host-Based PayHost-Based Pay Expatriate pay is comparable to that earned by Expatriate pay is comparable to that earned by

employees in a host country to which the employees in a host country to which the expatriate is assigned.expatriate is assigned.


Expatriate Compensation Systems (cont’d)Expatriate Compensation Systems (cont’d)

•LocalizationLocalization Adapting pay and other compensation benefits Adapting pay and other compensation benefits

to match that of a particular countryto match that of a particular country Reduces resentment among local staff Reduces resentment among local staff

members if they are earning significantly less.members if they are earning significantly less.

•Other IssuesOther Issues Adequacy of medical careAdequacy of medical care Personal securityPersonal security Compensation policies of competitorsCompensation policies of competitors


Performance Appraisal Performance Appraisal of International Managersof International Managers

•Who Should Appraise Performance?Who Should Appraise Performance? Home-country evaluationsHome-country evaluations Host-country evaluationsHost-country evaluations

•Adjusting Performance CriteriaAdjusting Performance Criteria Augmenting job dutiesAugmenting job duties Individual learningIndividual learning Organizational learningOrganizational learning

•Providing FeedbackProviding Feedback Debriefing interviewDebriefing interview


Global HRM 25 Matakuliah: J0124 – Manajemen Sumber Daya Manusia Tahun : 2010.

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