International HRM or Personnal Management

8/12/2019 International HRM or Personnal Management

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International HRM/ Personnel

Management :

Sapna suri


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Developments leading to IHRMECONOMIC DEVELOPMENTS

I. International division of labourII. Emergence of service sctor

III. Demand has moved from protected economy to market

economy


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Second source of change is associated in the

area of technology after 1980s

I. Technical revolution

II. Computerization paradox


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Third area of change is relationship

between strategy and organization

I. First generation model had organization structures on basis of

strategic concern such as productivity, centralization,decentralization, etc

II. Second generation models while accepting the link between

strategy and structure


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Focus in Development processEconomic

Development

Technology

Strategy

Structure of theorganization


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Forms of International BusinessParentcountry

Goods andservicesservices

Hostcountry

Parentcountry

Primarily technicalknow-how Host country

Parent

country

Managerial and

technical know-howParent country

Host country

Materialsservices and

personnelParentcountry

Host country

Parent country Capital and know how

Capital and know how

Host country

Host country

Host country


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Types of organizations :

GLOBAL

Views the world as a singlemarket operations are

controlled centrally from thecorporate office

TRANSACTIONAL

Specialized facilitiespermit local

responsiveness; complexcoordination mechanismsprovide global

integration

INTERNATIONAL

Domestic firm that usesexisting capabilities to expandinto foreign market

MULTINATIONAL

Several subsidiariesoperating as stand-alonebusiness units in multiple

countries


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International Corporation

International corporation is essentially a domestic firm that builds

on its existing capabilities to penetrate overseas markets.Companies Honda, General Electric, & Procter & Gamble


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A Multinational Corporation :

MNC is a more complex form that usually has fully

autonomous units operating in multiple countries.Companies Shell, Philips, ITT


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The Global Corporation :

The Global Corporation on the other hand can be

viewed as a multinational firm that maintains controlof operations back in the home office.

Companies Matsushita and NEC


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A Transactional Corporation

A Transactional Corporation attempts to achieve thelocal responsiveness of an MNC while also achieving

the effectiveness of a global world.

Companies such as Ford, Unilever, & British Petroleum.


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Define International HRM :

HRM refers to those activities undertaken by anorganization to utilize its human resourceseffectively

The following are the activities would include atleast the following :

I. Human resource planning

II. Staffing (recruitment, selection, placement)

III. Performance managementIV. Training & development

V. Compensation (remuneration) & benefits

VI. Industrial relations


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Model developed by MORGAN

: There are 3 dimensions on IHRM :

I. The broad human resource activities of

procurement, allocation & utilization

II. The national or country categories involved in

HRM activities:

A. The host country where a subsidiary may be located

B. The home country where the firm is headquartered&

C. Other countries that may be the source of labour,

finance & other inputs


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A Model of IHRM :

HUMAN RESOURCE ACTIVITIES

ST-COUNTRY

NATIONALS

(HCNS)

PARENT

COUNTRY NATIONALS

(PCNS)

THIRD-

COUNTRY NATIONAL

(TCNS)


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CONTD >>>>>>>>>>>>>

The three categories of employees of an internationalfirm :

I. Host-country nationals (HCNS)II. Parent-country nationals (PCNS)

III. Third-country nationals (TCNS)

Thus an example : The US multinational IBM employsAustralian citizens in its Australian operations

(HCNS) often sends US citizens (PCNS) to Asia-Pacific countries on assignment & may send some ofits Singaporean employees on an assignment to on itsJapanese operations (as TCNS). The nationality ofthe employee is a major factor in determining the

persons category


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Define an Expatriate:

One obvious difference between domestic &

international HRM is that staff are moved across

national boundaries into various roles within the

international firms foreign operations these

employees have traditionally been called expatriates

An expatriate is an employee who is working &

temporarily residing in a foreign country.


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Difference between domestic

& international HRM :

There are 6 factors on which International can be divided

such as :

More HR activities

The need for a broader perspective

More involvement in employees personal lives

Changes in emphasis as the workforce mix ofexpatriates & locals varies

Risk exposure

Broader external influences

V i bl h d diff


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Variables that moderate differences

between domestic & international

HRM :

There are 4 moderators :

The cultural environment The industry (or industries) with which the

multinational is primarily involved

The extent of reliance of the multinational on its home-country domestic market

The attitudes of senior management


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Diagram

The cultural environment

Extent of reliance of the

Multinational on its home-country

Or domestic market

Attitudes of

Senior management

Complexity involved inOperating in different countries

& employing different rational categories of employees

The Industry (or industries within

Which the multinational is

Primarily involved

Domestic & International activities

Of the HRM function


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The Cultural environment :

Define : Culture >>>>>>> the term is usually used todescribe a shaping process. That is, members of a

group or society share a distinct way of life with

common values, attitudes & behaviors that are

transmitted over time in a gradual, yet dynamic,

process.


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Contd

A person is not born with a given culture:rather, she or he acquires it through thesocialization process that begins at birth : anAmerican is born with a liking for hot dogs, ora German with a natural preference for beer:these behavioral attributes are culturallytransmitted.:


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Define Culture Shock :

A phenomenon experienced by people who move acrosscultures. They experience a shock reaction (or

psychological disorientation) when exposed to new

cultural experiences, because they misunderstand or do

not recognize important cues.


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The cultural environment:

the convergence hypothesis

The hypothesis that management practices around theworld would converge, based on two assumptions:

That the principles of sound managementwould hold, regardless of national environment.

That the universality of sound managementpractices would lead to societies becomingmore and more alike in the future.


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The cultural environment:

the divergence hypothesis

In opposition to the convergence hypothesis,

the notion that societies and managementpractices around the world will remain, orbecome more, dissimilar.


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Industry type

Multidomestic industry:

An industry in which competition in eachcountry is essentially independent ofcompetition in other countries.

Global industry:

An industry in which a firms competitiveposition in one country is significantlyinfluenced by its position in other countries.


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Reliance of the MNE on its

home-country domestic market

The top ten MNEs on the UNCTAD index oftransnationality

Rio Tinto (United Kingdom/Australia)

Thomson Corporation (Canada) ABB (Switzerland)

Nestl (Switzerland)

British American Tobacco (United Kingdom)

Electrolux (Sweden)

Interbrew (Belgium)

Anglo American (United Kingdom)

Astrazeneca (United Kingdom)

Philips Electronics (Netherlands)


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Attitudes of senior management to

international operations

Ethnocentrism

The assumption that ones own cultural approach is

superior to any other.

An ethnocentric approach to international staffingtypically results in all key management positionsbeing held by PCNs.

Also, international HRM activities are typicallydeveloped and administered by PCNs.


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A model of strategic HRM inmultinational enterprises


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Aspects of culture you can see

Dress

Food

Climate

Housing


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Aspects of culture you cant see:

Communication style

What motivates people

Role expectations

Negotiation styles

Non-verbal communication

Tempo of work How tasks are assigned

Attitude toward authority


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Cross-cultural differencesin Workplace :

How interviews should be conducted How managers should act with their subordinates

How negotiations should be conducted

How training should be delivered

How people should be paid for work


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Cross Cultural Differences in

Communications :

Cross-cultural communication is becoming

increasingly important as organizations expandtheir business operations beyond their national

boundaries


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4problems relating to language:

There are barriers caused by word connotations There are barriers caused by semantics

There are barriers caused by tone differences

There are barriers caused by differences among

perceptions


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Communication: Telephonic

Conversations

Criterion America Japan RussiaMiddle-east

Objective Action-

orientationinformation

Information Information Personal

relationships;Commitment

Opening Full name;

Purpose of

call

Company

nameFull

introduction;

Purpose of

the call

Personal

Greeting

Process Task-

oriented;

Direct

questions

Information

gathering by

listening

Indirect;

Small general

talk

Indirect

approach;

Inquire first

about

self/family,

then get on to


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International Recruitment &

Selection :

In the recruitment process, three points require to be

decided:

From what countries to recruit ? Whether home, host

or any other

Techniques to be used when recruitment is planned

outside home country

Whether to centralize recruitment activities in home

country or decentralize in foreign subsidiaries.


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Four approaches used for

recruitment by the MNCS are :

Ethno-centric :

Here primary positions are held by citizens of home

country. Three factors are to be considered in the staff:

Should be able to adjust in family, culture &

personality problems to avoid failure

To succeed, should enjoy local entertainment, develop

local relationships & communicate with locals

To achieve success, expatriates to have open attitude &

take training toward host country


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Poly-centric :

Here primary positions are filled by nationals from hostcountry. Advantages of this are :

Better local knowledge

Reduces personal problems

Host country manager can protect a MNC from hostiletreatment by host government

Top people are limited to subsidiary & not forcorporate positions


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Regio-centric

Here primary positions are by people from countries withsimilar cultures, experiences & management practices.

For example, posting in srilanka, Indians can be

considered.


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Geo-centric :

Under this the best qualified individuals are hired at

home & abroad regardless of nationality. Whole world

is treated as market to implement global approach

In designing staffing policies

First determine its needs

Then identify approach to hiring ------- who, how &

from where

Finally recruits are trained for living in a foreign land.

Selection criteria are based on wide range of skills,

family factors, business knowledge & experience


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Recruitment for Overseas

Assignments:

1. Recruit from home office or country. These are calledexpatriates or home country nationals. Some

advantages are: Familiar with goals, policies & practices of home

office.

More technically & managerially competent as they

are tried persons Can keep effective liaison with home office personnel

It is easier to exercise control over operations ofsubsidiary


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Contd >>>>>>>>>>.

o Recruit native of host country or local nationals forforeign subsidiary

o Third country national is another approach. It is toemploy manager from England to manage United Statesoperations in France.

o An another recruiting approach is having an internationalgrade at a higher salary, by his agreeing to accept atransfer anywhere in the world

o Last recruiting approach in transferring a manager forspecific duties/assignment for fixed period.

o For example : , when opening a new manufacturing unitsthere is an increased demand for specialists, so a managerfrom existing cadre is transferred


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Incentives or Attractions for

Managers To Go Abroad :

To gain job experience

Better compensation

Sense of obligation to company Possibility of advancement upon return

Improved life style abroad

Exposure to new culture

To shoulder greater professional responsibility Desire to escape from personal problems at home

Restricted career possibilities within parent company


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Expatriate selection criteria :

Should have technical & managerial skills & to able to

do his job as he is at distance from headquarters &

cannot consult readily

Motive & desire of manager interested to go overseas

assignment such as interest in host country, financial

incentives, gain self-confidence

Has social skills to interact & understand people

norms. Mixing in social activities such as sports, eatinglanguage. Ability to deal effectively with superiors,

peers & clients, etc.


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Contd >>>>>>>>

Diplomatic skills is ability to interact with business

associates, govt officials, leaders abroad.

Maturity & Stability to deal with situations, logically,

adaptability, resourcefulness & initiative

Ability to cope up with environmental variables such as

political, legal, & socio-economic structures in host

country.

Attitude towards company & performance

E t i t P f


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Expatriate Performance

Appraisal :

Performance management aims at creating alignment

of individual goals with those of company & enables an

individual to effectively manage performance for

himself & his team

Performance management embraces both planning &

executing

It is the process of managing your strategy

Strategy is of paramount importance & is senior

managements primary responsibility.


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Performance management has

3 key goals :

Creating a workplace where top performers want to

stay

Transforming people who are not stars into top

performers

Aligning behavior & actions toward the goals of thebusiness enterprise


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Benefits of Performance

Management :

Help people reach their potential

Encourage people to take risk to accept change

Build confidence

Align behavior with company goals, principles, &

values

Even the playing field Stimulate action

Create new habits


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Criteria for Performance Appraisal of

Expatriates :

Influencing factors for expatriates performance :

I. Compensation package on Foreign Assignment

II. The task & responsibilities of Expatriate

III. Support from the head office

IV. Work environment in Host Country

V. Cultural Adjustment of Expatriate & his family


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Criteria to be used for Appraisal of

Expatriates Or International Staff :

Person to evaluate

Performance appraisal forms

Frequency of the appraisal should be such that it is

possible to provide feedback for mid-course correction,

regular feedbackis important for meeting targets &

revising goals & consequent involvement & motivation.


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Who Should Appraise the

Expatriate:

2 Experts make five suggestions for improving theexpatriate appraisal process:

Stipulate the assignments difficulty level. For example,

being an expatriate manager in china is generallyconsidered more difficult than working in England, &the appraisal should take such difficulty leveldifferences into account

Weight the evaluation more toward the one-side

managers appraisal than toward the home-sitemanagers distant perceptions of the employeesperformance


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Characteristics to be evaluated :

Cross-cultural interpersonal skills, sensitivity foreign

norms, values & case of adjustment to unfamiliar

environments are some common characteristics

considered for evaluation of international managers


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Criteria for Appraisal of

Performance :

Strategic thinking

Initiating change

Relationship Management

C i i f f l


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Criteria for successful

performance for managers :

Flexibility ------ capacity to change structures to

implement changed strategies

Inter-personal understanding & respect

Empowermentto share information, delegate

responsibilities & motivate employees to feel more

capable

Team support cause employees to cooperate &

Versatilitycapacity to adjust in new environment


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International Training &Development :

T i i f E i f


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Training of Expatriates for

Assignments Abroad:

As companies go global, there arises the need fortraining employees for international assignments

As is well-known, habits & practices relating to workmotivation, profit motivation, negotiating skills, giftgiving customs, eating & dressing, body gestures, hedelaying, interpretation of co lour & numbers varyacross countries.

Some countries such as Japan, are more committed tothe importance of training for internationalassignments


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Diagram :

Analysis of

Training needs

Determination of

Training goals

Content training

Material Method Media Sequence

Implementation


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Contd >>>>>>>>>>>

Profiles in terms of competencies needed for success on

international assignments may form an important basis

for development of effective training for international

staff, continuous research required.

An ideal people which summarizes the competencies

needed for international success can be drawn.


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Contd>>>>>>>>>>

Six competencies that were perceived, in one study are as

follows:

Leadership skills

Initiative

Emotional stability

Motivation

Ability to handle responsibility Cultural sensitivity

To handle stress

Flexibility


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Contd>>>>>>>

Training & Development of international staff should

be approached as process & not as a one-time event

just prior to departure.

The goals of cross-cultural training : goals is statement

of intent. Whereas objectives are very specific

statements what candidate should be able to do at the

end of learning session.

Personally adjusted ie: he feels happy & satisfied withsituation abroad.

Professionally effective if he performs his tasks, duties,

& responsibilities on-the-job competently.


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Contd>>>>>>>

Inter-personally adjusted & effective if

he takes interest in interacting withlocals capably.


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Contd>>>>>>>>>.

Cross-cultural training is seen as short duration one-short remedy

First phase of training & development soon afterselection & joining company with internationalprospects

Second phase: after selection for international career.Focus on fulfillment, of an international assignment.

Third phase: training is for specific skills needed for hisassignment & knowledge of specific cultural issues inhost country, logistical information & businesspractices & procedures is imparted.


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Contd>>>>>

Inclusion of the partner of host country in cross-

cultural training is vital as inability of the partner to

adapt to different environment is cause for failure of

international assignment.

Inclusion of HCNS in cross-cultural training as

ultimate success of an expatriate assignment depends

not only on the expatriate himself but also upon the

local people with whom he has to work.


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Designs of Training:

First level training> focuses on learning about hostcountrys--- culture, language, politics, business,geography, religious values & history.

Second level training> deals about assignment itself.Requirements of the position---- technical, managerialknowledge needed company officials can do that beforeleaving.

Third level training > deals with preparing him for new

job at new location to be done by whom he is replacing.

Fourth level training> how he adjusts & adapts to newenvironments, by providing assistance.


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Contd>>>>>>>

Fifth level>training addresses re-entry back home &

contact with people at home & visit home during

vacation.

T i i & D l t f


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Training & Development of

international Staff:

3 aspects to be considered for training & development of

international staff:

The Deployment cycle for international assignments.

Preparatory training for foreign assignments &

Design of training overseas assignment, i.e. during the

assignment itself & training during the re-entry phase.

Th D l t C l f


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The Deployment Cycle for

International Assignments:

The employee is accepted into a position in the home organization

that offers him international prospects.

Once he has shown that he possesses the basic abilities &

motivation needed for international career he is selected &

receives further training.

After selection for a specific assignment, country specific

preparation follows both for the future expatriate & his partner.

On the assignment he receive onsite orientation & briefing, as well

as support & monitoring from home organization. Upon completion of the assignment, he is given support during the

re-entry process.

Finally, he resumes a position in the home organization.


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P t T i i f F i


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Preparatory Training for Foreign

Assignment:

Training is not to be thought as effective

The period of time selection & expatriates departure is

short leaving little time for in-depth training prior to

departure

Temporary nature of most assignments does not

warrant expenditure for training.

There is a belief that technical skills are main success

factors on assignment abroad. Relational skills &international cultural competencies are not seen as

being of importance for success

Design of training for o erseas


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Design of training for overseas

assignment:

First level training to focus on learning about host countries-----culture, language, politics, business, geography, religious values &history through seminars, meetings with citizens of the country

Second level training deals about assignment itself. Requirementsof the position & technical, managerial knowledge needed.

Third level deals with preparing him for new job at new locationto be done by whom he is replacing.

Fourth level training--- how we adjust & adapts to new

environments , by providing assistance. Fifth level training addresses re-entry back home & contact with

people at home. A visit home during vacation can be beneficial


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Performance

Management in MNCS

Meaning of Performance


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Meaning of Performance

Management:

Performance management aims at creating alignment of

individual goals with those of the company & enables

an individual to effectively manage performance forhimself & his team.

3 goals of performance


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3 goals of performance

management:

Creating a workplace where top performers want to

stay

Transforming people who are not stars into top

performers.

Aligning behaviour & actions toward the goals of the

business enterprise



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Management :

Help reach people reach their potential

Encourage people to take risks to accept change.

Build confidence

Align behaviour with company goals, principles, &

values

Even then playing field Stimulate action

Create new habits

Performance Management

C l


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Cycle

Corporate Budget

Unit/business sector draft budget end

February

Offline performance

Planning

On-line performance

Planning

Mid- year

review

Final review

And feedback

Normalization

And score

Criteria for Performance


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Criteria for Performance

Appraisal of expatriates :

Factors influencing Expatriates Performance :

Compensation package on foreign assignment

The task & responsibilities of Expatriate

Support from the head office

Work environment in Host Office

Cultural Adjustment of Expatriate & his family



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Performance :

Flexibility

Inter-personal understanding & respect

Empowerment---- to share information, delegateresponsibilities & motivate employees to more capable.

Team support cause employees to cooperate

Versatility------ capacity to adjust in new environment.

Comparative summary off i & ti


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performance review & compensation

practices of some countries :Criteria America Japan Russia Middle-East

Objective Periodic review based on

present goals;

Identify personal strengths& weakness

Find out why the

performance is not

in harmony with the

group

Periodic

review based

on present

goals;

Identify

personal

strengths &

weakness

Set employee on

the track;

reprimand for bad

performance

Structure Formal procedure; every

6/12 months; in managers

office

Informal ;

Ad hoc with

employee; frequent

reporting to

administration;

In office, coffee

shop, bar

Formal

Annual;

In mangers

office

Informal, ad-hoc;

recorded in

managers office


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Compensation in International

Perspective & Practices in

Countries :

Purposes or objectives of International


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Purposes or objectives of International

Compensation :

Compensation serves several purposes:

Should enable organization to attract potentialcandidates, should match local & regional standards.

Internally equitable, externally competitive in order to

retain, & system should have ease of administration.

Stimulate performance/ behavior for organizationsuccess


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Contd >>>>>>>>>>

Programme should be in line with existing status

hierarchy in the organization.

Enable the organization to optimize its total wage level,

Compensate for inconveniences, &

Facilitate the transfer of international employees


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Miscellaneous

Non- work Award

(vacations, pension)

Sacrifice Reward

(overtime, shift allowance)

Seniority Increase (Increments)

Adjustment cost of living ---DA

Basic Pay


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Four systems contribute something

to economic reward : Basic pay, motivates for higher responsibility,

Performance incentive to improve performance,

Profit sharing bonus motivates toward team work inthe organization

Reward for extended service & encourages him toremain with organization.

Factors for compensation- differences


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Factors for compensation- differences

between countries :

First these differences are result of differences inprosperity & spending power of the company.

Secondly, the institutional frameworks within which

wage bargaining takes place are quite different incountries. In Germany & Switzerland bargaining takesplace at the national or industry level.

Thirdly, cultural differences between countries have animportant impact. These differences do not so much

influence the rates of pay as the total apportioning ofthe total sum between wages, incentives & benefits &due to appraisal methods


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Contd >>>>>>>>>

Fourthly, there may be considerable differences

between organizations & industries. This may result of

a deliberate policy, or differences in productivity,labour- capital ratios & situations on the relevant

labour market.


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International HRM or Personnal Management

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