CHAPTER 14: INTERNATIONAL/ GLOBAL HUMAN RESOURCE MANAGEMENT Copyright © 2005 South-Western. All rights reserved. footer.

CHAPTER 14:

INTERNATIONAL/ GLOBAL HUMAN RESOURCE MANAGEMENT

Copyright © 2005 South-Western. All rights reserved. footer

International ImperativeInternational ImperativeInternational ImperativeInternational Imperative

• Why organizations expand internationallyWhy organizations expand internationally– To capture enhanced market opportunities that foreign To capture enhanced market opportunities that foreign

countries may presentcountries may present– To achieve economies of scale in production and To achieve economies of scale in production and

administration by expanding scope and volume of operations administration by expanding scope and volume of operations to international marketsto international markets

– Keeping up with industry leaders may require organization to Keeping up with industry leaders may require organization to enter foreign marketsenter foreign markets

– Acquiring ownership of foreign-based organization or Acquiring ownership of foreign-based organization or subsidiarysubsidiary

• Why organizations expand internationallyWhy organizations expand internationally– To capture enhanced market opportunities that foreign To capture enhanced market opportunities that foreign

countries may presentcountries may present– To achieve economies of scale in production and To achieve economies of scale in production and

administration by expanding scope and volume of operations administration by expanding scope and volume of operations to international marketsto international markets

– Keeping up with industry leaders may require organization to Keeping up with industry leaders may require organization to enter foreign marketsenter foreign markets

– Acquiring ownership of foreign-based organization or Acquiring ownership of foreign-based organization or subsidiarysubsidiary

How International & Domestic HRM How International & Domestic HRM DifferDiffer

How International & Domestic HRM How International & Domestic HRM DifferDiffer

• International HRM requiresInternational HRM requires– Managing broader range of functional areasManaging broader range of functional areas– Becoming more involved in employees’ personal Becoming more involved in employees’ personal

liveslives– Setting up several different HRM systems for Setting up several different HRM systems for

different geographic locationsdifferent geographic locations– Dealing with more complex external constituenciesDealing with more complex external constituencies– Participating in international assignments that have Participating in international assignments that have

heightened exposure to personal riskheightened exposure to personal risk

• International HRM requiresInternational HRM requires– Managing broader range of functional areasManaging broader range of functional areas– Becoming more involved in employees’ personal Becoming more involved in employees’ personal

liveslives– Setting up several different HRM systems for Setting up several different HRM systems for

different geographic locationsdifferent geographic locations– Dealing with more complex external constituenciesDealing with more complex external constituencies– Participating in international assignments that have Participating in international assignments that have

heightened exposure to personal riskheightened exposure to personal risk

International ExpansionInternational ExpansionInternational ExpansionInternational Expansion

• Strategies for expanding internationallyStrategies for expanding internationally– Exporting locally produced goods to host countryExporting locally produced goods to host country– Subcontracting or licensing production of certain Subcontracting or licensing production of certain

goods or services to foreign partnergoods or services to foreign partner– Entering into joint venture with foreign partnerEntering into joint venture with foreign partner– Setting up operations (making a direct investment) in Setting up operations (making a direct investment) in

form of foreign branch or subsidiaryform of foreign branch or subsidiary

• Strategies for expanding internationallyStrategies for expanding internationally– Exporting locally produced goods to host countryExporting locally produced goods to host country– Subcontracting or licensing production of certain Subcontracting or licensing production of certain

goods or services to foreign partnergoods or services to foreign partner– Entering into joint venture with foreign partnerEntering into joint venture with foreign partner– Setting up operations (making a direct investment) in Setting up operations (making a direct investment) in

form of foreign branch or subsidiaryform of foreign branch or subsidiary

Assessing Culture:Assessing Culture: Hofstede’s Cultural Differences Hofstede’s Cultural Differences

Dimensions Dimensions

Assessing Culture:Assessing Culture: Hofstede’s Cultural Differences Hofstede’s Cultural Differences

Dimensions Dimensions

• Individualism or collectivismIndividualism or collectivism– Individualistic societies value development of, and focus on individualIndividualistic societies value development of, and focus on individual– Collective societies value group relationshipsCollective societies value group relationships

• Power distancePower distance– Extent to which society is hierarchical, and how power is distributed Extent to which society is hierarchical, and how power is distributed

among its membersamong its members

• Uncertainty avoidanceUncertainty avoidance– Extent to which society feels comfortable with ambiguity, and values and Extent to which society feels comfortable with ambiguity, and values and

encourages risk-takingencourages risk-taking

• Quantity versus quality of life (masculinity/femininity)Quantity versus quality of life (masculinity/femininity)– Emphasis on assertiveness and achievement, as compared to Emphasis on assertiveness and achievement, as compared to

interpersonal relationshipsinterpersonal relationships

• Individualism or collectivismIndividualism or collectivism– Individualistic societies value development of, and focus on individualIndividualistic societies value development of, and focus on individual– Collective societies value group relationshipsCollective societies value group relationships

• Power distancePower distance– Extent to which society is hierarchical, and how power is distributed Extent to which society is hierarchical, and how power is distributed

among its membersamong its members

• Uncertainty avoidanceUncertainty avoidance– Extent to which society feels comfortable with ambiguity, and values and Extent to which society feels comfortable with ambiguity, and values and

encourages risk-takingencourages risk-taking

• Quantity versus quality of life (masculinity/femininity)Quantity versus quality of life (masculinity/femininity)– Emphasis on assertiveness and achievement, as compared to Emphasis on assertiveness and achievement, as compared to

interpersonal relationshipsinterpersonal relationships

Exhibit 14-1Exhibit 14-1

Assessing CultureAssessing CultureExhibit 14-1Exhibit 14-1

Assessing CultureAssessing Culture

Hall’s Model of Cultural DifferencesHall’s Model of Cultural DifferencesHall’s Model of Cultural DifferencesHall’s Model of Cultural Differences

• TimeTime– Importance or sense of time in daily activitiesImportance or sense of time in daily activities

• Space (distance)Space (distance)– Amount of physical distance individuals attempt to maintain between themselves & Amount of physical distance individuals attempt to maintain between themselves &

othersothers

• Material goodsMaterial goods– Emphasis or inferences on possession of goods to signify power, success and Emphasis or inferences on possession of goods to signify power, success and

statusstatus

• FriendshipsFriendships– Importance of friendships in conferring status Importance of friendships in conferring status

• AgreementsAgreements– Considers how agreements are reachedConsiders how agreements are reached

• TimeTime– Importance or sense of time in daily activitiesImportance or sense of time in daily activities

• Space (distance)Space (distance)– Amount of physical distance individuals attempt to maintain between themselves & Amount of physical distance individuals attempt to maintain between themselves &

othersothers

• Material goodsMaterial goods– Emphasis or inferences on possession of goods to signify power, success and Emphasis or inferences on possession of goods to signify power, success and

statusstatus

• FriendshipsFriendships– Importance of friendships in conferring status Importance of friendships in conferring status

• AgreementsAgreements– Considers how agreements are reachedConsiders how agreements are reached

Strategic HR Issues in Global Strategic HR Issues in Global AssignmentsAssignments


• Approaches to sending employees abroadApproaches to sending employees abroad– Administrative approachAdministrative approach

• Assisting employee destined for international assignment with Assisting employee destined for international assignment with paperwork and minor logisticspaperwork and minor logistics

– Tactical approachTactical approach

• Managing “risk or failure” factor of overseas assignment by Managing “risk or failure” factor of overseas assignment by providing paperwork assistance and modest amount of trainingproviding paperwork assistance and modest amount of training

– Strategic approachStrategic approach • Extensive support and coordination of international Extensive support and coordination of international

assignment, and strategized repatriation program at the end of assignment, and strategized repatriation program at the end of the assignmentthe assignment

• Approaches to sending employees abroadApproaches to sending employees abroad– Administrative approachAdministrative approach

• Assisting employee destined for international assignment with Assisting employee destined for international assignment with paperwork and minor logisticspaperwork and minor logistics

– Tactical approachTactical approach

• Managing “risk or failure” factor of overseas assignment by Managing “risk or failure” factor of overseas assignment by providing paperwork assistance and modest amount of trainingproviding paperwork assistance and modest amount of training

– Strategic approachStrategic approach • Extensive support and coordination of international Extensive support and coordination of international

assignment, and strategized repatriation program at the end of assignment, and strategized repatriation program at the end of the assignmentthe assignment



Strategic management of global assignmentsStrategic management of global assignments1.1. Establish specific purpose for assignmentEstablish specific purpose for assignment2.2. Select appropriate employee for assignmentSelect appropriate employee for assignment3.3. Organizational and individual purposes for assignment Organizational and individual purposes for assignment

must be identified and matchedmust be identified and matched4.4. Assess adaptability to host culture of both employee and Assess adaptability to host culture of both employee and

any family members who will be accompanying employee any family members who will be accompanying employee 5.5. Provide appropriate training for employee and family Provide appropriate training for employee and family

membersmembers6.6. Simultaneous training should be conducted for Simultaneous training should be conducted for

headquarters staffheadquarters staff

Strategic management of global assignmentsStrategic management of global assignments1.1. Establish specific purpose for assignmentEstablish specific purpose for assignment2.2. Select appropriate employee for assignmentSelect appropriate employee for assignment3.3. Organizational and individual purposes for assignment Organizational and individual purposes for assignment

must be identified and matchedmust be identified and matched4.4. Assess adaptability to host culture of both employee and Assess adaptability to host culture of both employee and

any family members who will be accompanying employee any family members who will be accompanying employee 5.5. Provide appropriate training for employee and family Provide appropriate training for employee and family

membersmembers6.6. Simultaneous training should be conducted for Simultaneous training should be conducted for

headquarters staffheadquarters staff


Strategic IssuesStrategic IssuesExhibit 14-2Exhibit 14-2

Strategic IssuesStrategic Issues


Strategic HR IssuesStrategic HR IssuesExhibit 14-3Exhibit 14-3

Strategic HR IssuesStrategic HR Issues

Determining Expatriate Determining Expatriate CompensationCompensation

Determining Expatriate Determining Expatriate CompensationCompensation

• Balance sheetBalance sheet method method– Expatriate salary based Expatriate salary based

on home country pay on home country pay – Additional expenses Additional expenses

associated with associated with relocation and relocation and assignment assignment

– Hardship and incentives Hardship and incentives to determine overall to determine overall reimbursement and reimbursement and compensation levelcompensation level

• Balance sheetBalance sheet method method– Expatriate salary based Expatriate salary based

on home country pay on home country pay – Additional expenses Additional expenses

associated with associated with relocation and relocation and assignment assignment

– Hardship and incentives Hardship and incentives to determine overall to determine overall reimbursement and reimbursement and compensation levelcompensation level

• Higher-of-home-or-Higher-of-home-or-host host methodmethod

– Employee’s salary at Employee’s salary at home adjusted upward home adjusted upward to account for higher to account for higher cost of living (localization cost of living (localization approach)approach)

– Salary converted to host Salary converted to host country’s equivalent country’s equivalent when employee is on when employee is on permanent assignmentpermanent assignment

• Higher-of-home-or-Higher-of-home-or-host host methodmethod

– Employee’s salary at Employee’s salary at home adjusted upward home adjusted upward to account for higher to account for higher cost of living (localization cost of living (localization approach)approach)

– Salary converted to host Salary converted to host country’s equivalent country’s equivalent when employee is on when employee is on permanent assignmentpermanent assignment

Four Approaches to IHRMFour Approaches to IHRMFour Approaches to IHRMFour Approaches to IHRM

Make strategic decision as to level of Make strategic decision as to level of standardization desired across locationsstandardization desired across locations

– Ethnocentric approachEthnocentric approach• Exporting organization’s home country practices and policies to Exporting organization’s home country practices and policies to

foreign locationsforeign locations

– Polycentric approachPolycentric approach • Allowing each location to develop own practices and policiesAllowing each location to develop own practices and policies

– Regiocentric approachRegiocentric approach • Developing standardized practices and policies by geographic regionDeveloping standardized practices and policies by geographic region

– Geocentric approachGeocentric approach • Developing one set of global practices and policies applied at all Developing one set of global practices and policies applied at all

locationslocations

Make strategic decision as to level of Make strategic decision as to level of standardization desired across locationsstandardization desired across locations

– Ethnocentric approachEthnocentric approach• Exporting organization’s home country practices and policies to Exporting organization’s home country practices and policies to

foreign locationsforeign locations

– Polycentric approachPolycentric approach • Allowing each location to develop own practices and policiesAllowing each location to develop own practices and policies

– Regiocentric approachRegiocentric approach • Developing standardized practices and policies by geographic regionDeveloping standardized practices and policies by geographic region

– Geocentric approachGeocentric approach • Developing one set of global practices and policies applied at all Developing one set of global practices and policies applied at all

locationslocations


Setting Strategic HR StandardsSetting Strategic HR StandardsExhibit 14-4Exhibit 14-4

Setting Strategic HR StandardsSetting Strategic HR Standards


RepatriationRepatriationExhibit 14-5Exhibit 14-5

RepatriationRepatriation

Reading 14.1 (Roberts et al.)Reading 14.1 (Roberts et al.)

Managing Global Workforce: Managing Global Workforce: Challenges and StrategiesChallenges and Strategies

Reading 14.1 (Roberts et al.)Reading 14.1 (Roberts et al.)


• Challenges:Challenges:– Deployment in getting right skills to right place in Deployment in getting right skills to right place in

organization, regardless of geographic locationorganization, regardless of geographic location– Knowledge and innovation dissemination and Knowledge and innovation dissemination and

transfer, where all business units concurrently transfer, where all business units concurrently receive and provide informationreceive and provide information

– Talent identification and development of those Talent identification and development of those employees with abilities and skills to function employees with abilities and skills to function effectively in global organizationeffectively in global organization

• Challenges:Challenges:– Deployment in getting right skills to right place in Deployment in getting right skills to right place in

organization, regardless of geographic locationorganization, regardless of geographic location– Knowledge and innovation dissemination and Knowledge and innovation dissemination and

transfer, where all business units concurrently transfer, where all business units concurrently receive and provide informationreceive and provide information

– Talent identification and development of those Talent identification and development of those employees with abilities and skills to function employees with abilities and skills to function effectively in global organizationeffectively in global organization

Reading 14.1Reading 14.1




• Strategies for managing global workforceStrategies for managing global workforce– Develop aspatial careers for employees to provide rich Develop aspatial careers for employees to provide rich

contextual knowledge of environments and cultures. Provide contextual knowledge of environments and cultures. Provide specific awareness building assignments that develop cross-specific awareness building assignments that develop cross-sensitivity in high potential employees in short timesensitivity in high potential employees in short time

– Utilize expert SWAT teams deployed on short-term basis for Utilize expert SWAT teams deployed on short-term basis for operational problems technical projectsoperational problems technical projects

– Adopt virtual solutions by using electronic communication Adopt virtual solutions by using electronic communication technologies to connect local employees to distant problemstechnologies to connect local employees to distant problems

• Strategies for managing global workforceStrategies for managing global workforce– Develop aspatial careers for employees to provide rich Develop aspatial careers for employees to provide rich

contextual knowledge of environments and cultures. Provide contextual knowledge of environments and cultures. Provide specific awareness building assignments that develop cross-specific awareness building assignments that develop cross-sensitivity in high potential employees in short timesensitivity in high potential employees in short time

– Utilize expert SWAT teams deployed on short-term basis for Utilize expert SWAT teams deployed on short-term basis for operational problems technical projectsoperational problems technical projects

– Adopt virtual solutions by using electronic communication Adopt virtual solutions by using electronic communication technologies to connect local employees to distant problemstechnologies to connect local employees to distant problems


Diagnosing ChallengesDiagnosing ChallengesReading 14.1Reading 14.1

Diagnosing ChallengesDiagnosing Challenges

• Deployment challengeDeployment challenge– Contact time requiredContact time required– Extent to which skills can be applied out of cultural contextExtent to which skills can be applied out of cultural context

• Knowledge and innovation dissemination Knowledge and innovation dissemination challengechallenge

– Choosing among four strategies depends on technical Choosing among four strategies depends on technical complexity of information to be shared, and extent to which it complexity of information to be shared, and extent to which it must be culturally embeddedmust be culturally embedded

• Talent identification and development challengeTalent identification and development challenge– Organizations should select well, then developOrganizations should select well, then develop

• Deployment challengeDeployment challenge– Contact time requiredContact time required– Extent to which skills can be applied out of cultural contextExtent to which skills can be applied out of cultural context

• Knowledge and innovation dissemination Knowledge and innovation dissemination challengechallenge

– Choosing among four strategies depends on technical Choosing among four strategies depends on technical complexity of information to be shared, and extent to which it complexity of information to be shared, and extent to which it must be culturally embeddedmust be culturally embedded

• Talent identification and development challengeTalent identification and development challenge– Organizations should select well, then developOrganizations should select well, then develop

Reading 14.2 (Hallowell et al.)Reading 14.2 (Hallowell et al.)

Four Seasons Goes to ParisFour Seasons Goes to ParisReading 14.2 (Hallowell et al.)Reading 14.2 (Hallowell et al.)

Four Seasons Goes to ParisFour Seasons Goes to Paris

• Model of corporate culture consists of Model of corporate culture consists of four componentsfour components– Underlying assumptions, such as Underlying assumptions, such as

subordinates should fulfill job requirementssubordinates should fulfill job requirements– ValuesValues

• ““Espoused values”Espoused values”• ““Enacted values”Enacted values”

• Model of corporate culture consists of Model of corporate culture consists of four componentsfour components– Underlying assumptions, such as Underlying assumptions, such as

subordinates should fulfill job requirementssubordinates should fulfill job requirements– ValuesValues

• ““Espoused values”Espoused values”• ““Enacted values”Enacted values”


Four Seasons Goes to ParisFour Seasons Goes to ParisReading 14.2Reading 14.2

Four Seasons Goes to ParisFour Seasons Goes to Paris

– Employee perceptions of management practices – Employee perceptions of management practices – culture is what employees perceive management culture is what employees perceive management believesbelieves

– Cultural artifactsCultural artifacts• If espoused values are enacted, culture may emerge If espoused values are enacted, culture may emerge

in which senior management and employees share in which senior management and employees share similar service-relevant thoughts, feelings, and similar service-relevant thoughts, feelings, and patterns of behaviorpatterns of behavior

• Potential to enhance customer value and contribute Potential to enhance customer value and contribute to competitive advantageto competitive advantage

– Flexibility versus consistencyFlexibility versus consistency

– Employee perceptions of management practices – Employee perceptions of management practices – culture is what employees perceive management culture is what employees perceive management believesbelieves

– Cultural artifactsCultural artifacts• If espoused values are enacted, culture may emerge If espoused values are enacted, culture may emerge

in which senior management and employees share in which senior management and employees share similar service-relevant thoughts, feelings, and similar service-relevant thoughts, feelings, and patterns of behaviorpatterns of behavior

• Potential to enhance customer value and contribute Potential to enhance customer value and contribute to competitive advantageto competitive advantage

– Flexibility versus consistencyFlexibility versus consistency

Reading 14.3 (Sanchez et al.)Reading 14.3 (Sanchez et al.)

Adapting to a Boundaryless WorldAdapting to a Boundaryless WorldReading 14.3 (Sanchez et al.)Reading 14.3 (Sanchez et al.)

Adapting to a Boundaryless WorldAdapting to a Boundaryless World

• 90% of companies base international selections on 90% of companies base international selections on technical expertise, downplaying other areastechnical expertise, downplaying other areas

• Openness to profound personal transformation is Openness to profound personal transformation is most fundamental sign of expatriate readinessmost fundamental sign of expatriate readiness

• Personality aspects that impede adaptationPersonality aspects that impede adaptation– AuthoritarianismAuthoritarianism– RigidityRigidity– EthnocentrismEthnocentrism

• Clarification of expectancies beforehandClarification of expectancies beforehand

• 90% of companies base international selections on 90% of companies base international selections on technical expertise, downplaying other areastechnical expertise, downplaying other areas

• Openness to profound personal transformation is Openness to profound personal transformation is most fundamental sign of expatriate readinessmost fundamental sign of expatriate readiness

• Personality aspects that impede adaptationPersonality aspects that impede adaptation– AuthoritarianismAuthoritarianism– RigidityRigidity– EthnocentrismEthnocentrism

• Clarification of expectancies beforehandClarification of expectancies beforehand


Adapting to a Boundaryless WorldAdapting to a Boundaryless WorldReading 14.3Reading 14.3


• Need to provide on-going, hands-on training, Need to provide on-going, hands-on training, rather than just pre-departure awareness trainingrather than just pre-departure awareness training

• Training is opportunity to provide social supportTraining is opportunity to provide social support

• Executives should learn to view identification Executives should learn to view identification with host as compatible with identification with with host as compatible with identification with parent cultureparent culture

• Expatriates need to become aware of Expatriates need to become aware of consequences that old repertoire of coping consequences that old repertoire of coping responses has in host cultureresponses has in host culture

• Need to provide on-going, hands-on training, Need to provide on-going, hands-on training, rather than just pre-departure awareness trainingrather than just pre-departure awareness training

• Training is opportunity to provide social supportTraining is opportunity to provide social support

• Executives should learn to view identification Executives should learn to view identification with host as compatible with identification with with host as compatible with identification with parent cultureparent culture

• Expatriates need to become aware of Expatriates need to become aware of consequences that old repertoire of coping consequences that old repertoire of coping responses has in host cultureresponses has in host culture




• Employer should facilitate integration into a local Employer should facilitate integration into a local or regional network of other expatriatesor regional network of other expatriates

• Delicate equilibrium among multiple stakeholders Delicate equilibrium among multiple stakeholders calls for skills similar to those possessed by calls for skills similar to those possessed by political diplomatspolitical diplomats

• Parent organization should not create additional Parent organization should not create additional role conflict for the expatriate with policies that role conflict for the expatriate with policies that are insensitive to cultural differencesare insensitive to cultural differences

• Employer should facilitate integration into a local Employer should facilitate integration into a local or regional network of other expatriatesor regional network of other expatriates

• Delicate equilibrium among multiple stakeholders Delicate equilibrium among multiple stakeholders calls for skills similar to those possessed by calls for skills similar to those possessed by political diplomatspolitical diplomats

• Parent organization should not create additional Parent organization should not create additional role conflict for the expatriate with policies that role conflict for the expatriate with policies that are insensitive to cultural differencesare insensitive to cultural differences




• RepatriationRepatriation– Feeling that others do not share multicultural Feeling that others do not share multicultural

identification can create sense of isolationidentification can create sense of isolation– Frequent loss of autonomyFrequent loss of autonomy– Unrealistic expectations about being Unrealistic expectations about being

promoted upon returnpromoted upon return

• RepatriationRepatriation– Feeling that others do not share multicultural Feeling that others do not share multicultural

identification can create sense of isolationidentification can create sense of isolation– Frequent loss of autonomyFrequent loss of autonomy– Unrealistic expectations about being Unrealistic expectations about being

promoted upon returnpromoted upon return

CHAPTER 14: INTERNATIONAL/ GLOBAL HUMAN RESOURCE MANAGEMENT Copyright © 2005 South-Western. All rights reserved. footer.

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international markets

foreign partner

foreign markets

international assignments

ownership of foreign

foreign countries

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