Ch11

CHAPTER 11

INTERNATIONAL HUMAN

RESOURCE MANAGEMENT

COMPONENTS OF COMPONENTS OF HRM HRM

• Recruitment• Selection• Training & Development• Performance Appraisal• Compensation• Labor Relations

INTERNATIONAL INTERNATIONAL HRM (IHRM)HRM (IHRM)

• Basic HRM issues remain• Must choose a mixture of

international employees• How much to adapt to local

conditions?

EMPLOYEES IN EMPLOYEES IN MULTINATIONAL MULTINATIONAL ORGANIZATIONSORGANIZATIONS

• Host country nationals• Expatriates• Home country nationals• Third country nationals• Inpatriates

MULTINATIONAL MULTINATIONAL MANAGERSMANAGERS

•Host country or expatriate?

USING HOST COUNTRY USING HOST COUNTRY MANAGERSMANAGERS

• Do they have the expertise for the position?

• Can we recruit them from outside the company?

USING EXPATRIATE USING EXPATRIATE MANAGERSMANAGERS

• Do parent country managers have the appropriate skills?

• Are they willing to take expatriate assignments?

• Do any laws affect the assignment of expatriate managers?

•IS THE EXPATRIATE IS THE EXPATRIATE WORTH IT?WORTH IT?

• High cost• High failure rate

•EXHIBIT 11.1 PAYING FOR THE EXPATRIATE MANAGER

0

50000100000

150000

200000

250000300000

350000

400000

$

Hom

eSa

lary

Toky

o

Hong

Kon

g

Lond

on

Taip

ei

Sing

apor

e

•REASONS FOR U.S. REASONS FOR U.S. EXPATRIATE FAILUREEXPATRIATE FAILURE

• Spouse fails to adapt • Manager fails to adapt • Other problems within the

family• Personality of the manager• Level of responsibilities

• Lack of technical proficiency• No motivation for assignment

•Reasons for expatriate Reasons for expatriate failure, continuedfailure, continued

•MOTIVATIONS TO USE MOTIVATIONS TO USE EXPATSEXPATS

• Managers acquire international skills

• Coordinate and control operations dispersed activities

• Communication of local needs/strategic information to headquarters

•KEY EXPATRIATE SUCCESS KEY EXPATRIATE SUCCESS FACTORS FACTORS

• Professional/technical competence• Relational abilities • Motivation • Family situation • Language skills

• Willingness to accept position

•PRIORITY OF PRIORITY OF SUCCESS SUCCESS

FACTORS FACTORS

• Depends on : •assignment length•cultural distance•amount of required interaction with local people

•job complexity/responsibility

•EXHIBIT 11.3 SHOWS A EXHIBIT 11.3 SHOWS A DECISION MATRIX USED DECISION MATRIX USED TO SET PRIORITIES OR TO SET PRIORITIES OR DIFFERENT SUCCESS DIFFERENT SUCCESS FACTORS DURING FACTORS DURING SELECTIONSELECTION

Assignment Characteristics Expatriate Success Factors

Longer Duration

More Cultural Dis-similarity

Greater Interaction and Communica-tion Requirements with Locals

More Complex or Respon- sible Job

Professional/ Technical Skills

High Neutral Moderate High

Relational Abilities

Moderate High High Moderate

International Motivation

High High High High

Family Situation

High High Neutral Moderate

Language Skills

Moderate High High Neutral

•EXPATRIATE TRAININGEXPATRIATE TRAINING

•TRAINING RIGOR TRAINING RIGOR

• The extent of effort by trainees and trainers required to prepare the trainees for expatriate positions

•LOW RIGOR LOW RIGOR TRAINING TRAINING

• Short time period• Lectures• Videos on local culture• Briefings on company

operations company operations

•HIGH RIGOR HIGH RIGOR TRAININGTRAINING

• Lasts over a month • Experiential learning• Extensive language training• Often includes interactions

with host country nationals

•EXHIBIT 11.4 SHOWS EXHIBIT 11.4 SHOWS VARIOUS TRAINING VARIOUS TRAINING TECHNIQUES AND THEIR TECHNIQUES AND THEIR OBJECTIVES AS THE RIGOR OBJECTIVES AS THE RIGOR OF THE CROSS- CULTURAL OF THE CROSS- CULTURAL TRAINING GROWS TRAINING GROWS

Techniques: Field trips tohost country, meetingswith managers experiencedin host country, meetingswith host countrynationals, intensivelanguage training.

Objectives: Developcomfort with host countrynational culture, businessculture, and socialinstitutions.

HighTraining

Rigor

Techniques:Experiential learningexercises, role playing,simulations, casestudies, survivallanguage training.

Objectives: General andspecific knowledge ofhost country culture,reduce ethnocentrism.

Mid-level

TrainingRigor

Techniques: Lectures,videotapes, readingbackground material.

Objectives: Providebackground information onhost country business andnational cultures, basicinformation on companyoperations.

LowTraining

Rigor

•CHALLENGES OF CHALLENGES OF EXPATRIATE PERFORMANCE EXPATRIATE PERFORMANCE

APPRAISALAPPRAISAL

• Unreliable data• Complex and volatile

environments• Time differences and distance

separation• Local cultural situations

•STEPS TO IMPROVE STEPS TO IMPROVE THE PROCESS THE PROCESS

• 1. Fit the evaluation criteria to strategy.

• 2. Fine tune the evaluation criteria

• 3. Use multiple evaluators with varying periods of evaluation

•EXHIBIT 11.6 Shows EXHIBIT 11.6 Shows several sources of several sources of information a superior or information a superior or the HRM professionals the HRM professionals may use to evaluate an may use to evaluate an expatriate managers expatriate managers

Evaluation Sources Criteria Periods

Self evaluation Meeting objectives Management skills Project successes

Six months and at the completion of a major project

Subordinates Leadership skills Communication skills Subordinate development

After completion of major project

Peer expatriate and host country manages

Team building Interpersonal skills Cross-cultural interaction skills

Six months

On-site supervisor Management skills Leadership skills Meeting objectives

At the completion of significant projects

Customers and clients Service quality and timeliness Negotiation skills Cross-cultural interaction skills

Yearly

•EXPATRIATE EXPATRIATE COMPENSATION COMPENSATION

•THE BALANCE THE BALANCE SHEET SHEET

APPROACH APPROACH

• Provides a compensation package that equates purchasing power

•BALANCE SHEET BALANCE SHEET COSTSCOSTS

• Allowances for cost of living, housing, utilities, furnishing, educational expenses, medical expenses, club memberships, and car and/or driver expenses

Domestic Assignment Expenses and Spendable Income

Expatriate Assignment Expenses and Balanced Spendable Income + Allowances

Base Salary = Base Salary

+ Allowances as an incentive to take position, foreign service premium, hardship pay, R&R

Taxes = Taxes + Allowances to balance extra tax payments Goods and Services

= Goods and Services

+ Allowances to cover cost of living differences, housing, children’s education, medical costs, automobile, recreation, home leave travel

Housing = Housing

+ Allowances for moving expenses, settling in expenses, initial housing costs, and furnishing allowances

Spendable Income

= Spendable Income

•OTHER OTHER APPROACHESAPPROACHES

• Parent country wages everywhere • Wean expatriates from allowances• Pay based on local or regional

markets• Cafeteria selection of allowances• Global pay systems

•THE REPATRIATION THE REPATRIATION PROBLEMPROBLEM

• Difficult for many organizations • "Reverse culture shock" • Expatriates must relearn own

national and organizational culture

• Includes whole family

•STRATEGIES FOR STRATEGIES FOR SUCCESSFUL REPATRIATION SUCCESSFUL REPATRIATION

PROVIDE: PROVIDE:

• A strategic purpose for repatriation• A team to aid the expatriate• Home country information sources• Training and preparation for the

return• Support for expatriate and family

•WOMEN EXPATRIATES: WOMEN EXPATRIATES: TWO IMPORTANT "MYTHS"TWO IMPORTANT "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 SUCCESSFUL WOMEN EXPATRIATESEXPATRIATES

• Foreign not female •emphasize nationality not gender

• The woman's advantage•strong in relational skills•wider range of interaction options

•MULTINATIONAL MULTINATIONAL STRATEGY AND IHRMSTRATEGY AND IHRM

•IHRM ORIENTATIONSIHRM ORIENTATIONS

•Ethnocentric •Polycentric•Regiocentric•Global

•IHRM ORIENTATION AND IHRM ORIENTATION AND MULTINATIONAL MULTINATIONAL

STRATEGYSTRATEGY

• Early stages of internationalization = ethnocentric IHRM

• Multilocal strategies = ethnocentric or regiocentric

• Regional strategy = closer to the global

• International strategy = ethnocentric or polycentric IHRM

• Transnational strategies = a global IHRM

•CONCLUSIONSCONCLUSIONS

• HRM functions• IHRM challenges• Expatriate managers• The role of women in

multinational organizations• Multinational strategies and

IHRM orientations