Chapter

1. 18 Chapter Global Human Resource Management

2. World’s second largest manufacturer of electronic components 50 manufacturing plants, 21 countries HRM viewed as most localized of all the functions Hires experienced , educated foreign nationals in the US for foreign postings Moves people around the world In house management development programs Case: Molex

3. Refers to the activities an organization carries out to use its human resources effectively Four major tasks of HRM Staffing policy Management training and development Performance appraisal Compensation policy Human resource management (HRM)

4. Strategic role: HRM policies should be congruent with the firm’s strategy and it’s formal and informal structure and controls Task complicated by profound differences between countries in labor markets, culture, legal and economic systems International human resource management

5. Strategy, structure and control systems

6. Staffing policy Selecting individuals with requisite skills to do a particular job Tool for developing and promoting corporate culture Types of Staffing Policy Ethnocentric Polycentric Geocentric Staffing policy

7. Comparison of staffing approaches

8. Key management positions filled by parent-country nationals Best suited to international businesses Advantages: Overcomes lack of qualified managers in host nation Unified culture Helps transfer core competencies Disadvantages: Produces resentment in host country Can lead to cultural myopia Ethnocentric policy

9. Host-country nationals manage subsidiaries Parent company nationals hold key headquarter positions Best suited to multi-domestic businesses Advantages: Alleviates cultural myopia. Inexpensive to implement Helps transfer core competencies Disadvantages: Limits opportunity to gain experience of host-country nationals outside their own country. Can create gap between home-and host-country operations Polycentric policy

10. Seek best people, regardless of nationality Best suited to Global and trans-national businesses Advantages: Enables the firm to make best use of its human resources Equips executives to work in a number of cultures Helps build strong unifying culture and informal management network Disadvantages: National immigration policies may limit implementation Expensive to implement due to training and relocation Compensation structure can be a problem. Geocentric policy

11. Expatriate: citizens of one country working in another Expatriate failure: premature return of the expatriate manager to his/her home country Cost of failure is high: estimate = 3X the expatriate’s annual salary plus the cost of relocation (impacted by currency exchange rates and assignment location) Inpatriates: expatriates who are citizens of a foreign country working in the home country of their multinational employer The expatriate problem

12. Expatriate failure rates

13. US multinationals Inability of spouse to adjust Manager’s inability to adjust Other family problems Manager’s personal or emotional immaturity Inability to cope with larger overseas responsibilities European multinationals Inability of spouse to adjust Japanese Firms Inability to cope with larger overseas responsibilities Difficulties with the new environment Personal or emotional problems Lack of technical competence Inability of spouse to adjust. Reasons for expatriate failure

14. Reduce expatriate failure rates by improving selection procedures An executive’s domestic performance does not (necessarily) equate his/her overseas performance potential Employees need to be selected not solely on technical expertise but also on cross-cultural fluency Expatriate selection

15. Self-Orientation Possessing high self-esteem, self-confidence and mental well-being Others-Orientation Ability to develop relationships with host-country nationals Willingness to communicate Perceptual Ability The ability to understand why people of other countries behave the way they do Being nonjudgmental and being flexible in management style Cultural Toughness Relationship between country of assignmentand the expatriate’s adjustment to it Four attributes that predict success

16. Training: Obtaining skills for a particular foreign posting Cultural training : Seeks to foster an appreciation of the host-country’s culture Language training : Can improve expatriate’s effectiveness, aids in relating more easily to foreign culture and fosters a better firm image Practical training: Ease into day-to-day life of the host country Training and management development

17. Development: Broader concept involving developing manager’s skills over his or her career with the firm Several foreign postings over a number of years Attend management education programs at regular intervals Training & management development continued

18. Didn’t know what position they hold upon return. Firm vague about return, role and career progression. Took lower level job. Leave firm within one year. Leave firm within three years 10 20 30 40 50 60 70 percent Repatriation of expatriates

19. Development programs designed to increase the overall skill levels of managers through: On going management education Rotation of managers through a number of jobs within the firm to give broad range of experiences Used as a strategic tool to build a strong unifying culture and informal management network Above techniques support transnational and global strategies Management development & strategy

20. Problems: Unintentional bias Host-nation biased by cultural frame of reference Home-country biased by distance and lack of experience working abroad Expatriate managers believe that headquarters unfairly evaluates and under appreciates them In a survey of personnel managers in U.S. multinationals, 56% stated foreign assignment either detrimental or immaterial to one’s career. Performance appraisal

21. More weight should be given to onsite manager’s evaluation as they are able to recognize the soft variables Expatriate who worked in same location should assist home-office manager with evaluation If foreign on-site managers prepare an evaluation, home-office manager should be consulted before completion of formal the terminal evaluation Guidelines for performance appraisal

22. Two issues: Pay executives in different countries according to the standards in each country? or Equalize pay on a global basis? Method of payment Compensation

23. Compensation for four positions in 26 countries

24. National differences in compensation Table 18.4 b

25. National differences in CEO pay for midsize companies Fig 18.1

26. Compensation issues

27. Typically use balance sheet approach Equalizes purchasing power to maintain same standard of living across countries Provides financial incentives to offset qualitative differences between assignment locations. Expatriate pay

28. Base Salary Same range as a similar position in the home country Foreign service premium Extra pay for work outside country of origin Allowances Hardship, housing, cost-of-living and education allowances Taxation Firm pays expatriate’s income tax in the host country Benefits Level of medical and pension benefits identical overseas Components of expatriate pay

29. The balance sheet Fig 18.2

30. Key Issue Degree to which organized labor can limit the choices of an international business Aims to foster harmony and minimize conflicts between firms and organized labor International labor relations

31. Multinational can counter union bargaining power with threats to move production to another country Multinational will keep highly skilled tasks in its home country and farm out only low-skilled tasks to foreign plants Easy to switch locations if economic conditions warrant Bargaining power of organized labor is reduced Attempts to import employment practices and contractual agreements from multinationals home country Concerns of organized labor

32. Attempts to establish international labor organizations Lobby for national legislation to restrict multinationals Attempts to achieve international regulations on multinationals through such organizations as the United Nations Strategy of organized labor