International Human Resource Management

1. 10 International Human Resource Management

2. Human Resource Management and Functions • HRM: deals with the entire relationship of the employee with the organization Functions: • Recruitment: process of identifying and attracting qualified people to apply for vacant positions • Selection: process of filling vacant positions in the organization

3. Basic HRM Functions • Training and development: giving employees the knowledge, skills, and abilities to perform successfully • Performance appraisal: system to measure and assess employees’ work performance • Compensation: organization’s entire reward package, including financial rewards, benefits, and job security • Labor relations: ongoing relationship between an employer and those employees represented by labor organizations

4. International Human Resource Management • All HRM functions, adapted to the international setting • Two added complexities compared to domestic HRM • Must choose a mixture of international employees • Must decide the extent of adaptation to local conditions

5. Types of Employees in Multinational Organizations • Expatriate: employee from a different country • Home country nationals: expatriate employees from the parent firm’s home country • Third country nationals: expatriate workers who come from neither the host nor home country • Host country nationals: local workers who come from the host country where the unit is located • Inpatriate: employees from foreign countries who work in the country where the parent company is located

6. Key Questions Regarding Local Employees • How can we identify talented local employees? • How can we attract these employees to apply for jobs? • Can we use our home country’s training methods with local employees? • What types of appraisal methods are customary? • What types of rewards do local people value? • How can we retain and develop employees with a high potential as future managers? • Do any local laws affect staffing, compensation, and training decisions?

7. The Expatriate or the Host Country Manager • Multinationals must decide whether to use expatriates or home country nationals • Need to look at some questions • Given the firm’s strategy, what is the preference for the position?

8. The Expatriate or the Host Country Manager • Using expatriate managers • Do parent country managers have the appropriate skills? • Are they willing to take expatriate assignments? • Do any laws affect the assignment of expatriate managers? • Using host country managers • Do they have the expertise for the position? • Can we recruit them from outside the company?

9. Is the Expatriate Worth It? • Decisions must take into account costs of such assignments • High cost • High failure rate

10. Exhibit 10.1: Paying for the Expatriate Manager: Indices of Cost of Living Abroad

11. Reasons for U.S. Expatriate Failure • Individual • Personality of the manager • Lack of technical proficiency • No motivation for assignment • Family • Spouse or family members fail to adapt • Family members or spouse do not want to be there

12. Reasons for U.S. Expatriate Failure (cont.) • Cultural • Manager fails to adapt • Manager fails to develop relationship with key people • Organizational • Excessively difficult responsibilities • Company fails to pick the right person • Company fails to provide the technical support

13. Strategic Role of Expatriate Assignments • Helps managers acquire international skills • Helps coordinate and control operations dispersed activities • Communication of local needs/strategic information to headquarters • In-depth knowledge of local markets

14. International Cadre: Another Choice • Separate group of expatriate managers who specialize in a career of international assignments • Have permanent international assignments • Move from international assignments to international assignments • Recruited from any country • Sent to worldwide locations to develop cross-cultural skills

15. Key Success Factors for Expatriate Assignments • Technical and managerial skills • Personality traits • Relational abilities • Family situation • International motivation • Language ability

16. Priority of Success Factors • Assignment length • Technical and professionals skills are key for short assignments • Cultural similarity • Required interaction with local people • Job complexity and responsibility

17. Training and Development • Cross-cultural training: increases the relational abilities of future expatriates and their spouses and families • Training rigor: extent of effort by both trainees and trainers required to prepare the trainees for expatriate positions

18. Training and Development (cont.) • Low rigor training • Short time period • Lectures and videos on local cultures • Briefings on company operations • High rigor training • Last over a month • Experiential learning • Extensive language training • Includes interactions with host country nationals

19. Expatriate Performance Appraisal: Challenges • Fit of international operation in multinational strategy • Unreliable data • Complex and volatile environments • Time difference and distance separation • Local cultural situation

20. Steps to Improve the Expatriate Performance Appraisal • Fit the evaluation criteria to strategy • Fine-tune the evaluation criteria • Use multiple sources of evaluation with varying periods of evaluation

21. Exhibit 10.7: Balance Sheet Approach To Expatriate Compensation

22. Additional Allowances and Perquisites • Foreign service premiums • Hardship allowance • Relocation allowances • Home-leave allowances

23. Expatriate Manager Compensation: Other Approaches • Headquarters-based compensation: paying home country wages regardless of location • Host-based compensation system: adjusting wages to local lifestyles and costs of living • Global pay systems: worldwide job evaluations, performance appraisal methods, and salary scales are used

24. Repatriation Problem • Difficulties faced coming back home • Three basic cultural problems—“reverse culture shocks” • Adapt to new work environment and culture of home • Expatriates must relearn own national and organization culture • Need to adapt to basic living environment

25. Strategies for Successful Repatriation • Provide a strategic purpose for the repatriation • Establish a team to aid the expatriate • Provide parent country information sources • Provide training and preparation for the return • Provide a home-leave policy to encourage expatriates to make regular visits to the home office • Provide support for the expatriate and family on return

26. International Assignments for Women: Two Myths • Myth 1: Women do not wish to take international assignments. • Myth 2: Women will fail in international assignments because of the foreign culture’s prejudices against local women. • Successful women expatriates • Foreign not female—emphasize nationality not gender

27. International Assignments for Women: Advantages • More visible • Strong in relational skills • Wider range of interaction options

28. International Assignments for Women: Disadvantages • Face the glass ceiling • Isolation and loneliness • Constant proving of themselves, working harder than male • Need to balance work and family responsibilities • Need to worry about accompanying spouse

29. What Can Companies Do To Ensure Female Expatriate Success? • Provide mentors • Provide opportunities for interpersonal networks as a form of organizational support • Remove sources of barriers • Provide support to cope with dual-career issues

30. Multinational Strategy and IHRM • IHRM orientation: company’s basic tactics and philosophy for coordinating IHRM activities for managerial and technical workers

31. Multinational Strategy and IHRM • Ethnocentric IHRM: all aspects of HRM for managers and technical workers tend to follow the parent organization’s home-country HRM practices

32. Benefits of Ethnocentric IHRM • Little need to recruit qualified host country nationals for higher management • Greater control and loyalty of home country nationals • Key decisions centralized

33. Costs of Ethnocentric IHRM • May limit career development for host country nationals • Host country nationals may never identify with the home company • Expatriate managers are often poorly trained for international assignments and make mistakes • Expatriates may have limited career development

34. Regiocentric and Polycentric IHRM • Regiocentric IHRM: region-wide HRM policies are adopted • Polycentric IHRM: firm treats each country-level organization separately for HRM purposes

35. Benefits of Polycentric and Regiocentric HRM Policies • Reduces costs for training of expatriate managers from headquarters • No investment in language training • Fewer problems with adjustments to local cultures • Less expensive

36. Costs of Polycentric and Regiocentric IHRM Policies • Coordination problems with headquarters • based on cultural, language, and loyalty differences • Limited career-path opportunities for host country and regional managers • Limited international experience for home country managers

37. Global IHRM Orientations • Recruiting and selecting worldwide • Assigning the best managers to international assignments regardless of nationality

38. Global IHRM Orientations • Benefits • Bigger talent pool • Develops international expertise • Helps build transnational organizational cultures • Costs • Importing managerial and technical employees not always possible • Added expense

39. IHRM Orientation and Multinational Strategy • Early stages of internationalization—ethnocentric IHRM • Multilocal strategies—ethnocentric or regiocentric • Regional strategy—regiocentric, polycentric or global

40. Exhibit 10.9: IHRM Orientations and Multinational Strategies