Class 8

1. Class 8 Mgmt 446 Spring, 2011 Sully Taylor Ellen Devlin

2. Agenda • Guest speaker: IHRM • Explanations: posters, final papers, guest speaker next week • International HRM – designing and implementing • International News reports

3. Global Human Resource Management • Is about managing the global workforce of a MNC, which includes • Identifying the best locales worldwide for obtaining the employees it needs, regardless of hierarchical or skill level (e.g. video on India; project). • Managing operations worldwide with technical and managerial employees, and designing the system that manages worldwide employees in a way appropriate to the strategic requirements of the firm.

4. How do you identify the best locales worldwide for obtaining the employees the MNC needs?

6. Offshoring choices…..

7. Challenges in India: • Turnover in call-centers run 35-40%/yr. • Wage rates rising: 10%/year • “Backlash” – trade unions in England; concern in the U.S.; third-country competition (e.g. Philippines; China); government meddling. • Trying to reposition themselves up the software value-chain • Infrastructure: e.g., need to provide back-up electricity supplies and telecom links.

8. India – rising challenges

9. Location within a country of a labor force also matters!

11. How do you design the system that manages technical and managerial employees in a way appropriate to the strategic requirements of the firm?

12. Recruitment Philosophy and Approach • Home Country Approach • Host Country Approach • Regional Approach • Global Approach What are the advantages and disadvantages of each approach?

13. Benefits and drawbacks of host country staffing…. Advantages: No relocation costs Lower salary No family adjustment Knowledge of language, laws, & culture Relations with government, local customers & community

14. Benefits and drawbacks of host country staffing…. Disadvantages: *little familiarity with HQs or with global industry, *constraints on hiring and firing, *possible language and culture gap with HQs, *lack of global experience for home country managers.

15. Four general roles for expatriates: • Chief executive • Head of a functional department • Troubleshooter • Operator What attributes are most important for each type of position?

16. Characteristics of an Effective International Executive – sometimes! • Technical and Managerial Skills • At various levels different skills are needed • Interpersonal skills, intelligence, emotional stability • Motives and Desire • Social Skills, Flexibility, Adaptability • Language Skills

17. Characteristics of an Effective International Executive (cont’d) • Diplomatic Skills • How to deal with host government • Representing the home country • Maturity and Stability • Family Factors, including support • Locally contingent factors • Older People, Females QUESTION: HOW DO YOU KNOW SOMEONE HAS A CHARACTERISTIC?

18. Product Life Cycle and HRM Four stages and relationship to selecting international executives: • High Tech or Product Orientation • Growth and Internationalization (market orientation) • Multinationalization and Price Competition • Globalization

19. Product Life Cycle and HRM • High Tech or Product Orientation • New and Unique Products • High Price Relative to Direct Costs • Dominance of Product Development Function • Home Market Dominance • Monopoly Power • Buyers (foreign) Absorb the Cost of Mismatch • Customer Must Speak the language of the MNC • Customer Must Accept Managerial Practices of MNC - Ethnocentric: Home Country Approach • Personnel Selection- Ability to do the Job

20. Product Life Cycle and HRM • Growth and Internationalization (Market Orientation) • Competition -> Expansion to New Markets • Standardization -> Price Competition Begins • Short Product Life Cycle • Local Responsiveness • Products: Culturally Appropriate • Cultural Adaptability and Sensitivity • Selection: Technical Competence, Expatriates and Locals, Language and Cultural Skills (Host Country approach) • At the Headquarters: Foreign Skills are Not Valued • Foreign Nationals Do Not Reach High Levels at HQ

21. Product Life Cycle and HRM • Multinationalization (Price Competition) • Undifferentiated Products • Price Competition • Integration of Worldwide Operations • Standardization of Products & Centralization • Reduced Importance of Cultural Factors in Products • Decreasing Importance of Market Segmentation Based on Cultural Considerations. • Personnel Selection - Best People, Other Nationals (Home/Global) • Integration by Creating or Assuming Similarities: • Generic Products and Services, Economies of Scale • Home Country Language • Home Country Values and Culture • Emphasize Corporate Culture

22. Product Life Cycle and HRM • (Continued)– Integration by Creating or Assuming Similarities. • Ignore Cultural Differences • Reduce the Impact of Cultural Factors • Home Country or Third Country Managers Who Assimilate Into HQ’s Corporate Culture Advance.

23. Product Life Cycle and HRM • Globalization • Top Quality, Least Cost, Differentiated Products • Attention to Local Tastes of Global Customers • Global Integration-National Responsiveness • Home Country Market is Not Dominant • National Boundaries are Less Important • Cultural Diversity Within the Firm – Global Approach • Market Segmentation Based on Culture • Cultural Sensitivity and Language Skills Important– nationality not important

24. Expatriate Cultural Adjustment • Pre Departure • Previous Foreign Assignments • Training: Cross-Cultural, International Management • Pre-departure Expectations • After Arrival at Host Country • Work Related Skills: Technical, Functional, Language • Individual Attributes: Social, Diplomatic, Maturity • Non Work factors: Family, Cultural Distance, Locally Contingent

25. International and Intercultural Training • General Aims: • To Reduce Cultural Biases and Develop “Global” Perspective • To Increase Awareness about Diversity of Managerial Practices – see Chapter 5 • To improve Understanding of Business and Management Philosophies and Practices Around the World.

26. Assessing Training Needs for Expatriates: Three Factors • Job Novelty/Position Level • Cultural Novelty • Degree of Interaction with HCNs Together, these determine the “rigor” of the training. Rigor goes from low (e.g. lectures, little time) to high (e.g. simulations, lot of time).

27. Note that the few studies of pre-departure training for expatriates do indicate that integrated cross-cultural training results in higher proficiency earlier and greater job satisfaction. • The truth of the matter is that few MNCs actually do, or measure the impact of, pre-departure training.

28. International Management Education and Training can be divided by…. • Types: • Specific , e.g. Japanese Management • General or Regional, e.g. Southeast Asian • Location: • In-house • Educational and Training Institutions • Methods: • Documentary • Business Games • Role Playing Scenarios

29. Intercultural Training Purposes • Useful for All MNC Managers Operating Abroad: • Expatriates • Host Country Nationals • Third Country Nationals

30. Host-Country managers need training too! • Specific Intercultural Training • Generalized International Management Education • Introduction and Orientation to the Firm and Corporate Culture: - Purpose, Mission, Policies, etc. - Socialization and Indoctrination Formal e.g. promotion, salary increase Informal e.g. Superior-Sub Relationship - Employee Work Relations / Managers Favoring Own Culture / Host Country & the MNC Cultural Differences

31. Intercultural training… • Intends to Develop: • Self Awareness: Recognition of personal assumptions, values, needs, etc. • Cultural Understanding: To understand inherent logic in cultural norms • Multiple Perspectives: The ability to suspend judgment about other cultures and appreciate others’ perspectives

32. Intercultural Training tries to develop… • Intercultural Communication • Send and Receive messages accurately in different cultures • Cultural Flexibility • Adjust and change expectations and plans in accordance with host country cultural requirements • Cultural Resilience: to handle cultural shock • Skills in Building Interpersonal Relationships • Intercultural facilitation skills • Manage cultural differences constructively.

33. Training Methods: The Training of Host-Country and Non-Managerial Employees needs to be culturally sensitive….. • Technology Transfer- Training Locals - Observe Cultural Factors e.g. Ethnic Problems (e.g. Moslem-Hindu problem) - Modify Methods for LDC - Cultural Idiosyncrasies of Training, e.g. It may not be appropriate to admit a gap in knowledge. - American Active Learning (by participation) is Not Favored Universally

34. Compensation of international execs • Equitable and Adequate Compensation Package • Consider the Difference in Cost of Living, Taxes Exchange Fluctuations, etc. • Should Result in no Significant Gain or Loss • Comparable to Other MNC Compensation Packages • Equitable Compared to Domestic Compensation • Allows MNC to Transfer Employees Between Subsidiaries

35. Compensation Methods • Compensation Methods - The Headquarters Scale plus Affiliate Differential - The Citizenship Scale - The Global Scale

36. Headquarter and Affiliate Differential Scale • Cost of Living Allowance • Tax Equalization • Children’s Education, Home Leave, Medical • Inflation and Currency Devaluation • Expenses for Professional Obligations • Hardship Bonus for Working Abroad