Global HRM

Basic Assumptions

Major growth opportunities for large organizations are

at the international level

Going across national borders creates the need to

coordinate and manage actions of employees from

different cultures, educational levels, etc.

Cultural, legal, and other differences affect all levels

of HRM functions (e.g., selection, training, etc.)

And now for a short quiz: Number

Why Move Beyond National Level?

New markets

Reduce labor costs

Needed knowledge, skills, or resources may not be readily available

locally

Technology makes operating at a distance feasible

Operate on a 24/7 basis

Easier to do than in the past

Levels of Global Participation

See Noe, Hollenbeck, Gerhart, & Wright (2009), Fig. 15.1, p. 437

Factors Affecting HRM in International Markets

Global HRM

Culture

EducationEconomic Systems

Political-Legal

Systems

(Wiletzky, 2009)

Example: Culture

• Culture – a community’s set of shared assumptions

about how the world works and what ideals are worth

striving for.

• Culture can greatly affect a country’s laws.

• Culture influences what people value, so it affects

people’s economic systems and efforts to invest in

education.

• Culture often determines the effectiveness of various

HRM practices.

(Wiletzky, 2009)

• Cultural characteristics influence the ways members of

an organization behave toward one another as well as

their attitudes toward various HRM practices.

• Cultures strongly influence appropriateness of HRM

practices.

• Cultural differences can affect how people communicate

and how they coordinate their activities.

(Wiletzky, 2009)

Culture

Basic idea is that culture impacts how managers relate to employees

or “how leaders are expected to lead.” Another example: How training

takes place and role of the trainer.

Hofstede’s Dimensions of Culture

1. Individualism/Collectivism Describes the strength of the relation between an individual and other individuals in the society.

2. Power Distance Concerns the way the culture deals with unequal distribution of power and defines the amount of inequality that is normal.

3. Uncertainty Avoidance Describes how cultures handle the fact that the future is unpredictable.

4. Masculinity/Femininity The emphasis a culture places on practices or qualities that have traditionally been considered masculine or feminine.

5. Long-term/Short-term Orientation

Suggests whether the focus of cultural values is on the future (long term) or the past and present (short term).

(Wiletzky, 2009)

(cf. Weiten, 2011, p. 526)

Terms for Employees in an International Workforce

• Parent-country national – employee who was born and

works in the country in which an organization’s

headquarters is located.

• Host-country national – employee who is a citizen of the

country (other than parent country) in which an organization

operates a facility.

• Third-country national – employee who is a citizen of a

country that is neither the parent country nor the host

country of the employer.

(Wiletzky, 2009)

Terms for Employees (continued)

• When organizations operate overseas, they hire a

combination of parent-country nationals, host-country

nationals, or third-country nationals.

• Expatriates – employees assigned to work in another

country.

– “A citizen of one country living and working in another country.”

(Gomez-Mejia, Balkin, & Cardy, 1998, p. 518)

(Wiletzky, 2009)

Local vs. Expatriates: Advantages and Disadvantages (1 of 2)

(cf. Gomez-Mejia, Balkin, & Cardy, 1998, p. 520)

Locals

• Decreases labor costs

• Shows trust

• Increases local acceptance of

organization

• Helps reflect local knowledge and

issues in decisions

• Potential problems balancing global

and local priorities

• May lead to delays in making difficult

local decisions

• Local labor pool may not contain

necessary KSAOs and competencies

• Possible decline in corporate oversight

and control

Advantages Disadvantages

Local vs. Expatriates: Advantages and Disadvantages (2 of 2)

Expatriates

• Increased transfer of business

practices

• May increase corporate control and

coordination

• Employee development (e.g.,

multinational experience)

• May be used to develop local talent

• Problems adapting to and returning

from international assignments

• To locals, expatriates (and company)

viewed as foreigners

• Costs for travel, moving, etc.

• Possible personal and family issues

• Use of expatriates may be prohibited

or time-limited by host nation laws,

etc.

Advantages Disadvantages

(cf. Gomez-Mejia, Balkin, & Cardy, 1998, p. 520)

Criteria for Selection of Employees for Foreign Assignments

1. Competency in the employee’s area of expertise

2. Ability to communicate verbally and nonverbally in the foreign country

3. Flexibility, tolerance of ambiguity, and sensitivity to cultural differences

4. Motivation to succeed and enjoyment of challenges

5. Willingness to learn about the foreign country’s culture, language, and customs

6. Support from family members

(Wiletzky, 2009)

Selection of Expatriates: Examples

(Bennett, 2002, p. 4)

Examples of standardized measures:

• Overseas Assignment Inventory

• Culture Shock Inventory

• Cross-Cultural Adaptability Inventory

Also use:

• Structured behavioral interviews

• Assessment centers

• Self-assessment programs

Expatriates: Examples of Problems

Career blocked or sidetracked

Culture shock

Lack of proper recruitment, selection, training, and

orientation

Overemphasis on technical skills

“Dumping ground” for problem employees

Family problems

Problems upon return (loss of status, lack of respect for

new skills, problems with return position, reverse culture

shock)

(Gomez-Mejia, Balkin, & Cardy, 1998, pp. 522-525)

Profile of Effective Expatriate Spouse: Examples

(Bennett, 2002, p. 2-3)

Good listener; “concerned about others”

Flexible in response to ideas, beliefs, or points of view

Effective at building and maintaining relationships with

diverse persons

Respect for others; “nonethnocentric”

Good relations with immediate family

Other issues to consider include impact on:

• Spouse’s career

• Children’s educational and other needs

Effects of Culture on Training Design

See Noe et al. (2009), Table 15.1. p. 447

International HR: Training Topic Examples

(Kreicker, 2005)

• Intercultural competency

• Language training

• Cultural training & coaching

• Security briefing

• Employee’s expectations for assignment

• Company’s expectations for assignment

• Business culture training

• Management training

• Informational meetings

Performance Management Across National Boundaries

Differences may include:

– Which behaviors are rated

– How and the extent to which performance is measured

– Who performs the rating

– How feedback is required

(Wiletzky, 2009)

Compensating Expatriates

• Balance sheet approach –adjusts expatriate’s

compensation so that it gives her/him the same standard

of living as in the home country plus extra pay for the

inconvenience of locating overseas.

• This approach involves an effort by the global

organization to ensure that its expatriates are “made

whole.”

(Wiletzky, 2009)

The Balance

Sheet for

Determining

Expatriate

Compensation

See Noe et

al. (2009),

Fig. 15.6, p.

457

Compensating Expatriates (continued)

After setting the total pay, the organization divides

this amount into the four components of the total pay

package:

1. Base salary

2. Tax equalization allowance

3. Benefits

4. Allowances

(Wiletzky, 2009)

International

Assignment

Allowance

Form

See Noe et al. (2009),

Fig. 15.7, p. 460

Helping Expatriates Return Home

Repatriation – the process of preparing expatriates

to return home from foreign assignment.

1. Communication: the expatriate receives information

and recognizes changes at home while abroad.

2. Validation: giving the expatriate recognition for the

overseas service when this person returns home.

(Wiletzky, 2009)