Global Human Resource Management (HRM)

1. Global Human Resource Management(HRM)

2. Human Resource Management • Human resource management refers to the activities an organization carries out to utilize its human resource effectively. • Staffing Policy • Management training and development • Performance appraisal • Compensation policy • Labor relations • An expatriate manager is a citizen of one country who is working abroad in one of the firm’s subsidiaries. • Coca-Cola sees the HRM function as a vital link in the implementation of its strategic goal of thinking globally and acting locally.

3. Human Resource Management • Four strategies pursued by international business • Multidomestic firms try to create value by emphasizing local responsiveness • International firms try to create value by transferring core competencies overseas • Global firms try to create value by realizing experience curve and location economies. • Transnational firms try to create value by doing all these things simultatneously. • “Think globally, act locally” is a good definition of a transnational strategy

4. Human Resource Management • Staffing Policy is concerned with the selection of employees for particular jobs. • Select individuals who have the skills required to do particular jobs. • Develop and promote corporate culture(organization’s norms and value system) • Transnational and global firms need strong unifying corporate culture. • International firms have lower needs and multidomestic firms have lowest needs. • GE which is positioned toward the transnational end of the strategic spectrum is not just concerned with hiring people who have the skills required for performing particular jobs; it also wants to hire individuals whose behavioral styles, beliefs and value systems are consistent with those of GE.

5. Three types of staffing policy in international business • The ethnocentric staffing policy is one in which all key management positions are filled by parent country nationals(inernational firms e.g. P&G, Matsushita, Toyota & Philips). • A lack of qualified individuals in the host country to fill senior management position • The best way to maintain a unified corporate culure • The best way to create value by transferring core competencies is to transfer parent company nationals who have knowledge of that competency to the foreign operation. • This limits advancement opportunities for host country nationals and this can lead to resentment, lower productivity and increased turnover. • The firms fail to understand host country cultural differences that require different approaches to marketing and management.

6. Three types of staffing policy in international business • The polycentric staffing policy requires host-country nationals to be recruited to manage subsidiaries, while parent-country nationals occupy key positions at corporate headquarters(multidomestic firms). • The firm is less likely to suffer from cultural myopia. Host-country managers are unlikely to make the mistakes arising from cultural misunderstandings that expatriate managers are vulnerable to . • It is less expensive to implement ; using them can reduce the costs of value creation. • Host-country nationals have limited opportunities to gain experience outside their own country. • Language barriers, national loyalties and a range of cultural differences may isolate the headquarters staff from the various foreign subsidiaries.

7. Three types of staffing policy in international business • The geocentric staffing policy seeks the best people for key jobs through the organization, regardless of nationals(global and transnational firms). • The best use of human resources. • This enables the firm to build a cadre of international executives who feel at home working in a number of different cultures. The creation of such a cadre may be a critical first step toward building a strong unifying corporate culture and an informal management network. Firms pursuing a geocentric staffing policy may be better able to create value from the pursuit of experience curve and location economies and from the multidirectional transfer of core competencies. • Immigration laws require extensive documentation. • This policy can be very expensive to implement ; increase training cost, relocation cost and the need for a compensation structure.