Global Human Resource Management

Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt)

Professor Al-Qurmoshi Institute of Business Management, Hyderabad - 500005

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Global Human Resource ManagementGlobal HRM treat the entire world as one

large country and carries out activities to use its human resources effectively.

These activities include:i. HR Strategyii.Staffingiii.Performance Evaluationiv.Management Developmentv.Compensationvi.Labour Relations, etc.

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Staffing PolicyStaffing policy is concerned with the

selection of employees for particular jobs.

i. Selecting individuals who have the skill to do a particular job.

ii. Tool for developing and promoting the desired corporate culture of the firm.

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Types of staffing policiesThere are three types of staffing policies: i. Ethnocentric approachii. Polycentric approachiii. Geocentric approach

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Ethnocentric Approach All key management positions are filled by

parent – country nationals. One’s own culture is superior Overlooks important cultural factors Host country lacks qualified professionals Maintain a unified corporate culture Create value by transferring core competencies Limits advancement opportunities for host

country nationals Leads to resentment, lower productivity, and

high turnover in employees.

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Polycentric Approach Decentralized control Business Units in different countries have

autonomy from home office, like a local Co. No standard forms or procedures Recruits host country nationals to manage

subsidiaries, while parent country nationals occupy key positions at corporate HQ.

Firm is less likely to suffer from cultural myopia. Less expensive to implement Host country nationals have limited opportunities

to gain experience outside their own countries Gap due to language barriers, cultural

differences may isolate corporate HQ from foreign subsidieries.

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Geocentric Approach It seeks the best people for key jobs, throughout

the organization, regardless of nationality. Hybrid of Ethnocentric and Polycentric approach Based on informed knowledge of home and host

countries. Enables firms to make best use of its HR Helps the firm to build a cadre of international

executives, who feel at home working in no. of countries.

Helps building a strong unifying corporate culture and informal management network.

Reduces cultural myopia Enhance local responsiveness

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Expatriate & Inpatriate Managers Expatriates are citizens of one country, who

are working in another country. Inpatriates are citizens of a foreign country,

working in the home country of the multinational employer. (e.g., Citizen of India, who moves to U.S to work for Microsoft)

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Expatriate selectionFour dimensions that predict success in a foreign

posting: Self orientation – self esteem, self confidence, mental

well being, adapt their interest in food, sports, music and hobbies.

Others orientation – ability to interact with host country’s nationals, relationship development and willingness to communicate by learning local language.

Perceptual ability – to understand the particular behaviour of people in host countries, empathise.

Cultural toughness – relationship between country of assignment and how well an expatriate adjusts

Expatriate Selection Criteria

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Training & Management DevelopmentAfter selection, the next step is training the

manager to do the specific job. MDP is a broader concept, it is intended to

develop a manager’s skills over his career in the firm, e.g., sending managers on various foreign postings over years to build his cross cultural sensitivity and experience.

To enhance management and leadership skills of executives.

MDP has a strategic purpose, and helps reinforce desired culture of the firm by creating an informal network.

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Types of Trainingi. Cultural training – understanding the culture

of host country, enhancing effectiveness, familiarization trip before formal transfer.

ii. Language training – manager’s ability to interact, help build rapport and improve manager’s effectiveness.

iii. Practical training – adjust to day to day life in host country, establish a routine, successful adaptation, support network of friends

Management Development & Strategy

Development programs designed to increase the overall skill levels of managers through:On going management educationRotation of managers through a number of jobs

within the firm to give broad range of experiences

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

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Performance AppraisalThese are the systems used to evaluate the

performance of managers against some criteria, that the firm judges to be important for the implementation of strategy and attainment of competitive advantage.

Important elements of control system.2 groups evaluate the performance of Host country

managers and home country managers.Biasness by cultural frame of reference and

expectationsUnfair evaluationDue to proximity, onsite manager should evaluate soft

variables of expatriate’s performance.Consultation of home country manager to balance out.

Expatriate CompensationHome-Based PayPay based on an expatriate’s home country’s

compensation practicesBalance-Sheet ApproachA compensation system designed to match the

purchasing power in a person’s home countryCalculate base payFigure cost-of-living allowance (COLA)Add incentive premiumsAdd assistance programs

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Components Global Compensation Packagei. Base Salary – in same range as base salary for

similar position in home country.ii. Foreign Services Premium – extra pay to work

outside country of origin; offered as inducements to accept foreign postings; compensates for living in an unfamiliar country.

iii. Allowances – a) Hardship allowance – difficult location, where basic

amenities like health care, schools, etc. are deficient.

b) Housing allowance – to afford same quality of housing

c) Cost of living allowance – to maintain std. of livingd) Education Allowance – expatriate’s children receive

same std. of education as in home countryiv. Taxationv. Benefits – medical, pension, etc.