International HRM- Lecture 11

8/2/2019 International HRM- Lecture 11

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UGB320 HR STRATEGIES

International HRM- Lecture 11


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Managing Across Borders

International corporation Domestic firm that

uses its existingcapabilities to move

into overseas markets. Multinational corporation

(MNC)

Firm with independent

business unitsoperating in multiplecountries.

Global corporation

Firm that hasintegrated worldwideoperations through acentralized

home office.

Transnational corporation

Firm that attempts tobalance local

responsiveness andglobal scale via anetwork of specializedoperating units.


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Types of Organizations


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Increasing Importance of UnderstandingGlobal Human Resources Management

InternationalMergers andAcquisitions

Global HumanResources

Management

Foreign HumanResources

GlobalCompetition

Market AccessOpportunities


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How International Companies Affect

the World Economy

Their production and distribution extend beyondnational boundaries, making it easier to transfertechnology.

They have direct investments in many countries,affecting the balance of payments.

They have a political impact that leads to

cooperation among countries and to thebreaking down of barriers of nationalism.


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How Does the Global EnvironmentInfluence Management?

Unified Economies

Closely partnered nations such as the European

Union (EU) have developed into strong competitors. Promotes job growth in trading nations.

Cultural Environment

The communication patterns, religion, values and

ideologies, education, and social structure of a hostcountry influence how HR is conducted in thatcountry.


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Domestic versus InternationalHRM

Issues in international HRM in helpingemployees adapt to a new and differentenvironment outside their own country:

Relocation

Orientation

Translation services


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Why is international HRM morechallenging than domestic HRM Dealing with a more diversified external environment (

PEST)

Geographical distances makes control by HQ moredifficult

Dealing with an international staff of managers andworkforce who come from diverse cultures, religion,customs and educational backgrounds

Having to operate with different currency levels in paythat are subject to fluctuation

Dealing with the complexity of expatriate management

Training and development initiatives must be adapted tosuit local conditions and it is not possible to implementuniform standadized programs


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International Staffing

Expatriates, or Home-country Nationals

Employees from the home country who are oninternational assignment. for ethnocentricorientation

Host-country Nationals

Employees who are natives of the host country.More for polycentric orientation

Third-country Nationals Employees who are natives of a country other than

the home country or the host country.- more forgeocentric and regio-centric orientation


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Hiring Host-Country Nationals

Advantages:

1. Hiring local citizens is generally less costly thanrelocating expatriates.

2. Since local governments usually want good jobs fortheir citizens, foreign employers may be required tohire locally.

3. Most customers want to do business with companiesthey perceive to be local versus foreign.

4. Local employees will be more supportive of localmanagers

5. Facilitates technology transfer where local managersare trained to use sophisticated technology fromdeveloped nations


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Hiring parent country nationals

Support ethnocentric orientation with centralised HQcontrol

Protect sensitive information and confidential technologyand knowledge

Business venture is only short term and there is no needto train locals

Provide career development opportunities for theirmanagers

Where the host country managers are too nationalisticand loyalty to their own country comes before loyalty totheir employers at the parent country


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Recruiting Internationally

Work Permit, or Visa

Government document granting a foreign individualthe right to seek employment.

Guest Workers

Foreign workers invited to perform needed labor. Apprenticeships

Vocational training programs in skilled trades.

Transnational Teams

Teams composed of members of multiplenationalities working on projects that span multiplecountries.


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Selecting Global Managers

Global Manager

A manager equipped to run an international business( PCN & HCN)

Skills Categories for Global Managers Ability to seize strategic opportunities in the global

environment

Ability to manage highly decentralized organizations

Awareness of global issues Sensitivity to issues of diversity

Competence in interpersonal relations

Community-building skills


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Comparison of Advantages in Sources of Overseas Managers


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Selecting Global Managers

1. Begin with self-selection.

2. Create a candidate pool.

3. Assess core skills.

Skills considered critical

to an employees successabroad.

4. Assess augmented skills andattributes.

Skills helpful in facilitating theefforts of expatriate managers


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2

Skills of Expatriate Managers

CORE SKILLS

Experience

Decision-making

ResourcefulnessStrategic thinking

Adaptability

Cultural sensitivity

Change management

Team building

Maturity

AUGMENTED SKILLS

Technical skills

Negotiation skills

Strategic thinking

Delegation skills

Change management


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Expatriate Selection Criteria


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Issues in International ExpatriateSelection- Reasons for assignment

failure

Expatriate failurethe inability of the expatriate to

complete the overseas assignment or the inability to meet

expected levels of performance

Common reasons

Family adjustment wife & children experience problems

Lifestyle issues unable to accept changes in style of living

Work adjustment cannot adapt to new work culture, loneliness

Bad selection expatriate who does not hold the right credentials

Poor performance business difficulties that are unexpected Other opportunities arise more attractive job offers

Business reasons Expatriate cannot accept the nature of businesspractices overseas that conflicts with home country practices

Repatriation issues Expatriate is disappointed with arrangements

made for homecoming


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Training and Development

Essential training program content to prepare employeesfor working internationally:

Language training

Cultural training

Assessing and tracking career development

Managing personal and family life

Repatriation

Culture shock Perpetual stress experienced by people who settle

overseas.


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Preparing for an International Assignment

To prepare for an international assignment, one should becomeacquainted with the following aspects of the host country:

1. Social and business etiquette

2. History and folklore

3. Current affairs, including relations between the host country andthe United States

4. Cultural values and priorities

5. Geography, especially its major cities

6. Sources of pride and great achievements of the culture

7. Religion and the role of religion in daily life

8. Political structure and current players

9. Practical matters such as currency, transportation, time zones, andhours of business

10.The language


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Nonverbal Communications in Different Cultures


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Training Methods

Reviewing available information about thehost company: books, magazines, videotapes.

Conversations with host country natives.

Sensitivity training to become familiar with

the customs and overcome prejudices.

Temporary assignments to encourageshared learning.


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Assessing and Tracking CareerDevelopment

Developmental and Career Advantages of anInternational Assignment:

Increases the expatriates responsibilities and

influence within the corporation Provides a set of unique experiences beneficial to

both the individual and the firm

Enhances understanding of the global marketplace

Offers the opportunity to work on a project importantto the organization


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Repatriation Checklist

Before they go:

Make sure there is a clear need for the internationalassignment. Dont send someone abroad unnecessarily.

Develop a clear set of objectives and expectations and timeframes in which they should be met.

Make sure that your selection procedures are valid. Select the

employee and also look at and involve the employees family.

Provide (or fund) language and cultural training for theemployee and the employees family.

Offer counseling and career assistance for the spouse.

Establish career planning systems that reward internationalassignments and lead to promotion and knowledge sharing.


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Repatriation Checklist (contd)

While they are away:

Jointly establish a developmental plan that focuseson the goal to be achieved.

Tie performance objectives to the achievement of

the goal. Identify mentors who can be a liaison and support

person from home.

Keep communications open so that the expatriate is

aware of job openings and opportunities.

Arrange for frequent visits back home (for theemployee and the family). Make certain they do notlose touch with friends and relatives.


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Repatriation Checklist (contd)

When they come back home:

Throw a welcome home party and arrange for ameeting with other former expatriates.

Offer counseling to ease the transition.

Arrange conferences and presentations to makecertain that knowledge and skills acquired awayfrom home are identified and disseminated.

Set up an expatriate database to help other

employees who go abroad later.

Get feedback from the employee and the familyabout how well the organization handled therepatriation process..


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Global CompensationChallenges

Different countries have different norms for employeecompensation:

Financial (money) incentives versus nonfinancialincentives (prestige, independence, and influence)

Individual rewards versus collectivist concerns forinternal equity and personal needs

General rule: Match the rewards to the values of the

local culturecreate a pay plan that supports theoverall strategic intent of the organization butprovides enough flexibility to customize particularpolicies and programs to meet the needs ofemployees in specific locations.


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Compensation of Host-CountryEmployees

Hourly wages can vary dramatically fromcountry to country.

Pay periods are different.

Seniority may be an important factor.

High pay rates can upset localcompensation practices.

Bonuses, profit-sharing, benefits and paidleave may be more extensive and legallyrequired.


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Compensation of Host-CountryManagers

Global CompensationSystem

A centralized pay system

whereby host-countryemployees are offered a fullrange of training programs,benefits, and pay comparablewith a firms domestic

employees but adjusted forlocal differences


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Compensation of ExpatriateManagers

An effective international compensation program must:

1. Provide an incentive to leave the United States

2. Allow for maintaining an American standard of living

3. Provide for security in countries that are politically unstable orpresent personal dangers

4. Include provisions for good health care

5. Reimburse the foreign taxes the employee is likely to have to pay(in addition to having to pay domestic taxes) and help him or herwith tax forms and filing

6. Provide for the education of the employees children abroad, if

necessary

7. Allow for maintaining relationships with family, friends, andbusiness associates via trips home and other communicationtechnologies

8. Facilitate the expatriates reentry home

9. Be in writing


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Expatriate Compensation System

Split Pay

A system whereby expatriates are given a portion oftheir pay in the local currency to cover their day-to-day expenses and a portion of their pay in their home

currency to safeguard their earnings from changes ininflation or foreign exchange rates

Host-Based Pay

Expatriate pay is comparable to that earned by

employees in a host country to which the expatriate isassigned.


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Expatriate Compensation Systems

Localization

Adapting pay and other compensationbenefits to match that of a particular country

Reduces resentment among local staffmembers if they are earning significantly less.

Other Issues

Adequacy of medical care Personal security

Compensation policies of competitors


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Performance Appraisal

of International Managers

Who Should Appraise Performance?

Home-country evaluations

Host-country evaluations

Adjusting Performance Criteria Augmenting job duties

Individual learning

Organizational learning

Providing Feedback

Debriefing interview


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The Labor EnvironmentWorldwide

International Differences in Unions:

The level at which bargaining takes place(national, industry, or workplace)

The degree of centralization of union-management relations

The scope of bargaining (parties and issues)

The degree to which government intervenes The degree of unionization and union strength

The political affiliations of unions


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TUTORIAL QUESTIONS

Identify the types of organizational forms usedfor competing internationally.

Explain the economic, political-legal, and culturalfactors in different countries that HR managers

need to consider. Explain how domestic and international HRM

differ. Discuss the staffing process for individuals

working internationally. Identify the unique training needs for

international assignees and their employees


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TUTORIAL QUESTIONS

Identify the characteristics of a goodinternational compensation plan.

Reconcile the difficulties of home- andhost-country performance appraisals.

Explain how labor relations differ aroundthe world.

International HRM- Lecture 11

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Transcript of International HRM- Lecture 11