global human resource management

Global Human Resource Management 1

Global Human Resource

ManagementSubmitted by;

Aditi VermaAlya VeronicaAnand KumarAnil Agarwal


Global Human Resource Management is a Global Human Resource Management is a process concerned broadly with recruiting process concerned broadly with recruiting of persons, training them and putting them of persons, training them and putting them to the most productive usage. It is also to the most productive usage. It is also concerned with maintaining of congenial concerned with maintaining of congenial international industrial relations. It is the international industrial relations. It is the essential prerequisite for the success of the essential prerequisite for the success of the international firm owning to its international firm owning to its complexities.complexities.


Global Human Resource ManagementGlobal Human Resource Management

• Global human resource management (GHRM) -- the Global human resource management (GHRM) -- the planning, selection, training, employment, and planning, selection, training, employment, and evaluation of employees for global operations. evaluation of employees for global operations.

• GHR managers serve in an advisory or support role to GHR managers serve in an advisory or support role to line managers by providing guidelines, searching, line managers by providing guidelines, searching, training, and evaluating employees.training, and evaluating employees.

• How a firm recruits, trains, and places skilled How a firm recruits, trains, and places skilled personnel in its worldwide value chains sets it apart personnel in its worldwide value chains sets it apart from competition. The combined knowledge, skills, from competition. The combined knowledge, skills, and experiences of employees are distinctive and and experiences of employees are distinctive and provide myriad advantages to the firm’s operations provide myriad advantages to the firm’s operations worldwide. worldwide.

Global Human Resource ManagementGlobal Human Resource Management

• Four major tasks of HRMFour major tasks of HRM – Staffing policyStaffing policy– Management training and developmentManagement training and development– Performance appraisal Performance appraisal – Compensation policyCompensation policy

• Strategic role: HRM policies should be Strategic role: HRM policies should be congruent with the firm’s strategy and its congruent with the firm’s strategy and its formal and informal structure and controlsformal and informal structure and controls• Task complicated by profound differences Task complicated by profound differences

between countries in labor markets, culture, between countries in labor markets, culture, legal, and economic systemslegal, and economic systems

Staffing PolicyStaffing Policy

• Staffing policyStaffing policy– Selecting individuals with requisite skills to do a Selecting individuals with requisite skills to do a

particular jobparticular job

– Tool for developing and promoting corporate Tool for developing and promoting corporate cultureculture

• Types of Staffing PolicyTypes of Staffing Policy– EthnocentricEthnocentric

– PolycentricPolycentric

– GeocentricGeocentric

Ethnocentric PolicyEthnocentric Policy

• Key management positions filled by parent-country nationalsKey management positions filled by parent-country nationals• Best suited to international businessesBest suited to international businesses• Advantages:Advantages:

– Overcomes lack of qualified managers in host nationOvercomes lack of qualified managers in host nation– Unified cultureUnified culture– Helps transfer core competenciesHelps transfer core competencies

• Disadvantages:Disadvantages:– Produces resentment in host countryProduces resentment in host country– Can lead to cultural myopiaCan lead to cultural myopia

Polycentric PolicyPolycentric Policy

• Host-country nationals manage subsidiariesHost-country nationals manage subsidiaries• Parent company nationals hold key headquarter positionsParent company nationals hold key headquarter positions• Best suited to multi-domestic businessesBest suited to multi-domestic businesses• Advantages:Advantages:

– Alleviates cultural myopiaAlleviates cultural myopia– Inexpensive to implementInexpensive to implement– Helps transfer core competenciesHelps transfer core competencies

• Disadvantages:Disadvantages:– Limits opportunity to gain experience of host country nationals outside Limits opportunity to gain experience of host country nationals outside

their own countrytheir own country– Can create gap between home and host country operationsCan create gap between home and host country operations

Geocentric PolicyGeocentric Policy

• Seek best people, regardless of nationalitySeek best people, regardless of nationality• Best suited to global and trans-national businessesBest suited to global and trans-national businesses• Advantages:Advantages:

– Enables the firm to make best use of its human resourcesEnables the firm to make best use of its human resources– Equips executives to work in a number of culturesEquips executives to work in a number of cultures– Helps build strong unifying culture and informal management Helps build strong unifying culture and informal management

networknetwork

• Disadvantages:Disadvantages:– National immigration policies may limit implementationNational immigration policies may limit implementation– Expensive to implement due to training and relocationExpensive to implement due to training and relocation– Compensation structure can be a problemCompensation structure can be a problem

The Expatriate ProblemThe Expatriate Problem

• Expatriate: citizens of one country working Expatriate: citizens of one country working in anotherin another– Expatriate failure: premature return of the Expatriate failure: premature return of the

expatriate manager to his/her home countryexpatriate manager to his/her home country• Cost of failure is high: estimate = 3X the expatriate’s Cost of failure is high: estimate = 3X the expatriate’s

annual salary plus the cost of relocation (impacted by annual salary plus the cost of relocation (impacted by currency exchange rates and assignment location)currency exchange rates and assignment location)

• Inpatriates: expatriates who are citizens of a Inpatriates: expatriates who are citizens of a foreign country working in the home country foreign country working in the home country of their multinational employerof their multinational employer

Reasons for Expatriate FailureReasons for Expatriate Failure

• US multinationalsUS multinationals– Inability of spouse to adjustInability of spouse to adjust– Manager’s inability to adjustManager’s inability to adjust– Other family problemsOther family problems– Manager’s personal or Manager’s personal or

emotional immaturityemotional immaturity– Inability to cope with larger Inability to cope with larger

overseas responsibilitiesoverseas responsibilities

• European European multinationalsmultinationals• Inability of spouse Inability of spouse

to adjustto adjust

• Japanese FirmsJapanese Firms– Inability to cope with Inability to cope with

larger overseas larger overseas responsibilitiesresponsibilities

– Difficulties with the new Difficulties with the new environmentenvironment

– Personal or emotional Personal or emotional problemsproblems

– Lack of technical Lack of technical competencecompetence

– Inability of spouse to Inability of spouse to adjustadjust

Four Attributes that Predict SuccessFour Attributes that Predict Success

Self-OrientationSelf-OrientationPossessing high self-esteem, self-confidence and mental well-Possessing high self-esteem, self-confidence and mental well-

beingbeing

Others-OrientationOthers-OrientationAbility to develop relationships with host country nationals Ability to develop relationships with host country nationals Willingness to communicateWillingness to communicate

Perceptual AbilityPerceptual Ability- - The ability to understand why people The ability to understand why people of other countries behave the way they doof other countries behave the way they do

Being nonjudgmental and flexible in management styleBeing nonjudgmental and flexible in management style

Cultural ToughnessCultural ToughnessRelationship between country of assignment and the Relationship between country of assignment and the

expatriate’s adjustment to itexpatriate’s adjustment to it

Training and Management DevelopmentTraining and Management Development

• Training: Obtaining skills for a particular foreign Training: Obtaining skills for a particular foreign postingposting– Cultural training: Seeks to foster an appreciation of the host Cultural training: Seeks to foster an appreciation of the host

country’s culturecountry’s culture– Language training: Can improve expatriate’s effectiveness, aids Language training: Can improve expatriate’s effectiveness, aids

in relating more easily to foreign culture, and fosters a better in relating more easily to foreign culture, and fosters a better firm imagefirm image

– Practical training: Ease into day-to-day life of the host countryPractical training: Ease into day-to-day life of the host country

• Development: Broader concept involving Development: Broader concept involving developing manager’s skills over his or her career developing manager’s skills over his or her career with the firmwith the firm– Several foreign postings over a number of yearsSeveral foreign postings over a number of years– Attend management education programs at regular intervalsAttend management education programs at regular intervals

Management Development and StrategyManagement Development and Strategy

• Development programs designed to increase the Development programs designed to increase the overall skill levels of managers through:overall skill levels of managers through:– Ongoing management educationOngoing management education

– Rotation of managers through a number of jobs Rotation of managers through a number of jobs within the firm to give broad range of experienceswithin the firm to give broad range of experiences

• Used as a strategic tool to build a strong Used as a strategic tool to build a strong unifying culture and informal management unifying culture and informal management networknetwork

• Above techniques support transnational and Above techniques support transnational and global strategiesglobal strategies

Performance AppraisalPerformance Appraisal

• Problems:Problems:– Unintentional biasUnintentional bias• Host nation biased by cultural frame of referenceHost nation biased by cultural frame of reference

• Home country biased by distance and lack of experience Home country biased by distance and lack of experience working abroadworking abroad

• Expatriate managers believe that headquarters Expatriate managers believe that headquarters unfairly evaluate and under-appreciate themunfairly evaluate and under-appreciate them

• In a survey of personnel managers in U.S. In a survey of personnel managers in U.S. multinationals, 56% stated foreign assignment either multinationals, 56% stated foreign assignment either detrimental or immaterial to one’s careerdetrimental or immaterial to one’s career

Guidelines for Performance AppraisalGuidelines for Performance Appraisal

• More weight should be given to on-site More weight should be given to on-site manager’s evaluation as they are able to manager’s evaluation as they are able to recognize the soft variablesrecognize the soft variables• Expatriate who worked in same location Expatriate who worked in same location

should assist home-office manager with should assist home-office manager with evaluationevaluation• If foreign on-site managers prepare an If foreign on-site managers prepare an

evaluation, home-office manager should be evaluation, home-office manager should be consulted before completion of formal consulted before completion of formal evaluationevaluation

New HR responsibilities

External influences of Nation and culture

Great Risk exposure

Managing the mix of expatriatesAnd locals

Greater involvement in the Employees’ personal lives

The need for a broaderperspective

Complexity of Global Human

Resource Management


Differences between Domestic and Global HRMDifferences between Domestic and Global HRM1.1. New HR responsibilities. Several activities that are not necessarily New HR responsibilities. Several activities that are not necessarily

encountered in the domestic market include: international encountered in the domestic market include: international taxation, international relocation and orientation, administrative taxation, international relocation and orientation, administrative services for expatriates, host government relationservices for expatriates, host government relation

2.2. The need for a broader, international perspective in compensation The need for a broader, international perspective in compensation policy. At any one time, the HR manager is responsible for a mix of policy. At any one time, the HR manager is responsible for a mix of PCNs, HCNs, and TCNs who are nationals of numerous countries. PCNs, HCNs, and TCNs who are nationals of numerous countries. Establishing a fair and comparable compensation scale, regardless Establishing a fair and comparable compensation scale, regardless of nationality, is one of the challenges in a large MNE.of nationality, is one of the challenges in a large MNE.

3.3. Greater involvement in the employees’ personal lives. The HR Greater involvement in the employees’ personal lives. The HR professionals are concerned about welfare of the expatriates and professionals are concerned about welfare of the expatriates and their families for such matters as: housing arrangements, health their families for such matters as: housing arrangements, health care, schooling of children, safety, and security as well as proper care, schooling of children, safety, and security as well as proper compensation in view of higher cost of living around the world. compensation in view of higher cost of living around the world.


Differences between Domestic and Global HRMDifferences between Domestic and Global HRM

4.4. Managing the mix of expatriates versus locals. Organizations must be Managing the mix of expatriates versus locals. Organizations must be staffed in each national location with personnel from the home country, staffed in each national location with personnel from the home country, the host country, or third countries. The mix of staff depends upon several the host country, or third countries. The mix of staff depends upon several factors, including the international experience of the firm, cost-of-living in factors, including the international experience of the firm, cost-of-living in the foreign location, and availability of qualified local staff.the foreign location, and availability of qualified local staff.

5.5. Greater risk exposure. When employee productivity falls below acceptable Greater risk exposure. When employee productivity falls below acceptable levels or an expatriate returns prematurely from an international assignment, levels or an expatriate returns prematurely from an international assignment, the consequences are even more pronounced in IB. the consequences are even more pronounced in IB.

• Exposure to political risk and terrorism may require an increased Exposure to political risk and terrorism may require an increased compensation package and security arrangements for the employee and compensation package and security arrangements for the employee and his/her family.his/her family.

6.6. External influences of the government and national culture. External to the External influences of the government and national culture. External to the firm is the broader context of the host country environment. Especially firm is the broader context of the host country environment. Especially notable is the influence of the government and national culture. notable is the influence of the government and national culture.

Employee Characteristics Which Employee Characteristics Which Facilitate International EffectivenessFacilitate International Effectiveness

• Technical CompetenceTechnical Competence

• Self-RelianceSelf-Reliance

• AdaptabilityAdaptability

• Interpersonal SkillsInterpersonal Skills

• Leadership AbilityLeadership Ability

• Physical and emotional healthPhysical and emotional health

• Spouse and dependents prepared for livingSpouse and dependents prepared for living

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Culture ShockCulture Shock• A leading cause of expatriate failure is culture shock -- the A leading cause of expatriate failure is culture shock -- the

confusion and anxiety, often akin to mental depression, that confusion and anxiety, often akin to mental depression, that can result from living in a foreign culture for an extended can result from living in a foreign culture for an extended period.period.

• Culture shock may affect family members as well. Culture shock may affect family members as well.

• As many as 1/3 of foreign assignments end prematurely due to As many as 1/3 of foreign assignments end prematurely due to expatriate failure. It is particularly high among employees expatriate failure. It is particularly high among employees assigned to culturally dissimilar countries. assigned to culturally dissimilar countries.

• Regular exercise, relaxation techniques, or keeping a detailed Regular exercise, relaxation techniques, or keeping a detailed journal of experiences, will help employees deal with culture journal of experiences, will help employees deal with culture shock. It can also be reduced through advance preparation, shock. It can also be reduced through advance preparation, training, and by developing a deep interest in the new training, and by developing a deep interest in the new surroundings.surroundings.


Challenges of Global Human Resource ManagementChallenges of Global Human Resource Management

• Recruiting, managing, and retaining human resources at a firm Recruiting, managing, and retaining human resources at a firm with global operations are especially challenging. with global operations are especially challenging.

• Take the global organization of Siemens, the German MNE. In Take the global organization of Siemens, the German MNE. In 2005, Siemens 2005, Siemens had 460,800 employees in some 190 countries. It had 460,800 employees in some 190 countries. It employed 290,500 throughout Europe, 100,600 in the Americas, employed 290,500 throughout Europe, 100,600 in the Americas, 58,000 in the Asia-Pacific region, and 11,900 in Africa, the Middle 58,000 in the Asia-Pacific region, and 11,900 in Africa, the Middle East, and Russia. East, and Russia.

• Like Siemens, firms such as Volkswagen, Hutchison Whampoa, Like Siemens, firms such as Volkswagen, Hutchison Whampoa, Nestle, IBM, Anglo American, Unilever, Wal-Mart, Deutsche Post, Nestle, IBM, Anglo American, Unilever, Wal-Mart, Deutsche Post, McDonald’s, Matsushita, and Mittal Steel have more than 150,000 McDonald’s, Matsushita, and Mittal Steel have more than 150,000 employees working outside of their home country. employees working outside of their home country.

• ManagementManagement grapples with a wide range of challenges in hiring and grapples with a wide range of challenges in hiring and managing workers within the distinctive cultural and legal managing workers within the distinctive cultural and legal frameworks that govern employee practices around the world. frameworks that govern employee practices around the world.

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Charting Global Careers for EmployeesCharting Global Careers for Employees

• Successful firms give high-potential employees adequate Successful firms give high-potential employees adequate opportunity to gain experience not just in their home country but at opportunity to gain experience not just in their home country but at HQ and in other countries as well. HQ and in other countries as well.

• This broadens the pool of global talent for managerial positions and This broadens the pool of global talent for managerial positions and visibly shows top management’s commitment to global strategy. visibly shows top management’s commitment to global strategy.

• At Unilever, employees cannot advance very far in the firm without At Unilever, employees cannot advance very far in the firm without

substantial international experience. Managers are rotated through substantial international experience. Managers are rotated through various jobs and locations around the world, especially early in their various jobs and locations around the world, especially early in their careers. careers.

• Unilever maintains a global talent pool -- a searchable database of Unilever maintains a global talent pool -- a searchable database of employees profiling their international skill set and potential for employees profiling their international skill set and potential for supporting the firm’s global aspirations. HR managers search the supporting the firm’s global aspirations. HR managers search the database for the right recruit regardless of where he/she may be database for the right recruit regardless of where he/she may be located. located.

global human resource management

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