Chapter 3

1. Chapter 3 IHRM: Sustaining International Business Operations IBUS 618 Dr. Yang

2. Chapter objectives The previous two chapters concentrated on the global environment and organizational contexts. We now focus on the ‘managing people’ aspect. The aim is to establish the role of HRM in sustaining international business operations and growth. We cover the following: • issues relating to the various approaches to staffing foreign operations • the reasons for using international assignments: position filling, management development and organizational development (cont.) IBUS 618 Dr. Yang

3. Chapter objectives (cont.) • the various types of international assignments: short-term, extended and longer-term; and non-standard arrangements: commuter, rotator, contractual and virtual • the role of expatriates and non-expatriates (international business travellers) in supporting international business activities • the role of the corporate HR function. IBUS 618 Dr. Yang

4. Approaches to staffing • Factors affecting approaches to staffing • General staffing policy on key positions at headquarters and subsidiaries • Ethnocentric • Polycentric • Geocentric • Regiocentric • Constraints placed by host government • Staff availability IBUS 618 Dr. Yang

5. Ethnocentric • Strategic decisions are made at headquarters • Limited subsidiary autonomy • Key positions in domestic and foreign operations are held by headquarters’ personnel; PCNs manage subsidiaries IBUS 618 Dr. Yang

6. Polycentric • Each subsidiary is a distinct national entity with some decision-making autonomy • HCNs manage subsidiaries who are seldom promoted to HQ positions • PCNs rarely transferred to subsidiary positions IBUS 618 Dr. Yang

7. Geocentric • A global approach - worldwide integration • View that each part of the organization makes a unique contribution • Nationality ignored in favour of ability: • Best person for the job • Colour of passport does not matter when it comes to rewards, promotion and development IBUS 618 Dr. Yang

8. Figure 3-1: Geocentric staffing requirements IBUS 618 Dr. Yang

9. Regiocentric • Reflects a regional strategy and structure • Regional autonomy in decision making • Staff move within the designated region, rather than globally • Staff transfers between regions are rare IBUS 618 Dr. Yang

10. Table 3-1: The advantages and disadvantages of using PCNs, TCNs and HCNs IBUS 618 Dr. Yang

11. Figure 3-2: Determinants of IHRM approaches and activities IBUS 618 Dr. Yang

12. Reasons for international assignments • Position filling • Eg. Skills gap, launch of new endeavour, technology transfer • Management development • Training and development purposes, assisting in developing common corporate values • Organizational development • Need for control, transfer of knowledge, competence, procedures and practices IBUS 618 Dr. Yang

13. Types of international assignments • Short term • Up to 3 months • Extended • Up to 1 year • Long term • Varies from 1 to 5 years • The traditional expatriate assignment IBUS 618 Dr. Yang

14. Non-standard assignments • Commuter assignments • Rotational assignments • Contractual assignments • Virtual assignments Some of these arrangements assist in overcoming the high cost of international assignments but are not always effective substitutes for the traditional expatriate assignment IBUS 618 Dr. Yang

15. Figure 3-3: Factors influencing virtual assignments IBUS 618 Dr. Yang

16. Roles of an expatriate • Agent of direct control • Agent of socialization • Network builder • Boundary spanner • Language node • Transfer of competence and knowledge IBUS 618 Dr. Yang

17. Figure 3-4: The roles of an expatriate IBUS 618 Dr. Yang

18. The role of non-expatriates • People who travel internationally yet are not considered expatriates as they do not relocate to another country • Road warriors, globetrotters, frequent fliers • Much of international business involves visits to foreign locations, eg. • Sales staff attending trade fairs • Periodic visits to foreign operations IBUS 618 Dr. Yang

19. A glamorous life? • International business travelers cite the positives as: • Excitement and thrills of conducting business deals in foreign locations • Life style (top hotels, duty-free shopping, business class travel) • General exotic nature IBUS 618 Dr. Yang

20. But a high level of stress! • Home and family issues – frequent absences • Work arrangements – domestic side of position still has to be attended to • Travel logistics – waiting in airports, etc. • Health concerns – poor diet, lack of sleep, etc. • Host culture issues – limited cultural training IBUS 618 Dr. Yang

21. Table 3-2: Various roles of corporate HR IBUS 618 Dr. Yang

22. The role of the corporate HR function • Can we manage our people like a global product? The feasibility of: • The concept of a global internal labour market • Standardization of work practices and HR activities • What HR matters require central control and what can be decentralized? IBUS 618 Dr. Yang

23. Chapter summary This chapter has expanded on the role of IHRM in sustaining international business operations. We have: • Looked at the various approaches to staffing international operations – ethnocentric, polycentric, geocentric and regiocentric – examining their advantages and disadvantages and factors that may determine the choice of these options. • Considered the reasons for using international assignments: position filling, management development and organization development. (cont.) IBUS 618 Dr. Yang

24. Chapter summary (cont.) • Discussed the various types of international assignments: short, extended and long-term (traditional); and non-standard forms such as commuter, rotational, contractual and virtual assignments. • Examined the various roles of the expatriate: as an agent for direct control, as an agent for socialization, as network builders, as boundary spanners and as language nodes. These various roles of the expatriate help to explain why expatriates are utilized and illustrates why international assignments continue to be an important aspect of international business from the organization’s perspective. (cont.) IBUS 618 Dr. Yang

25. Chapter summary (cont.) • Recognized that non-expatriates are also critical to international business operations. International business travelers present their own challenges, such as the effect of frequent absences on family and home life, the possible negative health effects and other stress factors. The management of such individuals, however, does not appear to fall within the domain of the HR department. • Looked at the role of the corporate HR function as the firm grows internationally, building on sections from Chapters 1 and 2. IBUS 618 Dr. Yang