HRM HRM Defined: –The design of formal systems in an organization to ensure effective and efficient use of human talent to accomplish organizational.

HRM HRM HRM Defined:

– The design of formal systems in an organization to ensure effective and efficient use of human talent to accomplish organizational goals

– Deals with the entire relationship of the employee with the organization

SHRM Defined:– It involves designing and implementing a set of

internally consistent policies and practices that ensure a firm’s human capital contribute to the achievement of its business objectives

– This includes both vertical (linking HRM practices with strategic management process) and horizontal (the integration of the various HRM practices) integration as well

– Additionally, linking the people of the firm (in terms of their skills and actions) to the strategic needs of the firm

IHRM: Applied to international setting

COMPONENTS OF COMPONENTS OF HRM HRM

• HR Planning• Recruitment• Selection• Orientation/Socialization• Training & Development• Performance Appraisal• Compensation• Labor Relations• Repatriation

The Strategic View

Strategic Goals

HumanResource

ManagementFinance

Researchand

Development

Marketing Production

INTERNATIONAL INTERNATIONAL HRM (IHRM)HRM (IHRM)

• Basic HRM issues remain• Must choose a mixture of

international employees• How much to adapt to local

conditions?

IHRMIHRM

MultinationalStrategy

HRM Activity

IHRM Orientation

HR

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Recru

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Sele

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Perfo

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Appra

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Com

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Labor R

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Repatria

tion

Multilocal Polycentric

Regional Regiocentric

International Ethnocentric

Transnational Global

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

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50000100000

150000

200000

250000300000

350000

400000

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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

HR Planning HR Planning

• Process by which organizations anticipate future staffing needs and plan programs to ensure that the correct number and type of employees are available when they are needed.

• Concerned with the flow of people into, through, and out of an organization.

RECRUITMENTRECRUITMENT

• Attract qualified applicants• The ability to locate, attract, and

have available when needed, an adequate but appropriate number (supply) of qualified individuals who are a good match for the job and the overall organization and to accomplish this at the least possible expense.

US RECRUITMENT US RECRUITMENT STRATEGIESSTRATEGIES

•Open and public•See Exhibit 12.3

0 10 20 30 40 50

Newspapers

Walk-ins

Employee Referrals

Promotion from Within

Universities

State Employment Service

Private Employment Service

Percent Recruited

Office/Clerical Production/Service Professional/Technical Sales

KOREAN KOREAN RECRUITMENT: A RECRUITMENT: A

COLLECTIVIST COLLECTIVIST APPROACHAPPROACH

•Backdoor •School contacts

SELECTIONSELECTION

To identify from a pool of applicants those individuals who will be hired.

THE US THE US APPROACH TO APPROACH TO

SELECTIONSELECTION

•Match skills and job requirements

•Universalistic criteria•See Exhibit 12.4

APPLICATION

INITIAL INTERVIEWS

EMPLOYMENT TESTS

REFERENCES CHECKS

PRELIMINARY SELECT ORREJECT

FINAL INTERVIEWS

HIRING DECISION

SELECTION IN SELECTION IN COLLECTIVIST COLLECTIVIST

CULTURESCULTURES

•The in-group •Preference for family•Value personal

characteristics•High school and university

ties substitute for family membership

IMPLICATIONS IMPLICATIONS FOR THE FOR THE

MULTINATIONALMULTINATIONAL

•Managers must follow local norms to get best workers

•Often a tradeoff with benefits of home country practices

A Model for Selecting Expatriates

- Belief in the mission- Career path congruence

- Interest in overseas experience

- Interest in host country- Willingness to adapt behavior and attitudes

- Interest/willingness of spouse and family to go

overseas- Adaptability of spouse

and family- Stability of marriage

- Technical skills and self-confidence

- Managerial/administrative skills

- HQ and host country operational knowledge

- Perceptual skills/flexibility- Language ability

- Willingness to use the language

- Nonverbal communication ability

- Tolerance for ambiguity- Behavior flexibility- Cultural empathy

- Reinforcement substitution- Ability to reduce stress

- Interpersonal skills- Relationship development

Positive family situation Ability to communicateAbility to formrelationships

Willingness to go Ability to do the job Ability to adapt The

right person for foreign assignment

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

ExpatriateSuccessFactors

LongerDuration

MoreCulturalDis-similarity

GreaterInteractionandCommunica-tionRequirementswith Locals

MoreComplex orRespon-sible Job

Professional/TechnicalSkills

High Neutral Moderate High

Relational Abilities

Moderate High High Moderate

InternationalMotivation

High High High High

FamilySituation

High High Neutral Moderate

LanguageSkills

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

PERFORMANCE PERFORMANCE APPRAISALAPPRAISAL

• Identifying people to reward, promote, demote, develop and improve, retain, or fire

•The process by which an employee’s contribution to the organization during a specified period of time is assessed.

CHALLENGES OF EXPATRIATE CHALLENGES OF EXPATRIATE PERFORMANCE APPRAISALPERFORMANCE APPRAISAL

• 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

EvaluationSources

Criteria Periods

Self evaluation Meeting objectivesManagement skillsProject successes

Six months and atthe completion ofa major project

Subordinates Leadership skillsCommunication skillsSubordinatedevelopment

After completionof major project

Peer expatriate andhost countrymanages

Team buildingInterpersonal skillsCross-culturalinteraction skills

Six months

On-site supervisor Management skillsLeadership skillsMeeting objectives

At the completionof significantprojects

Customers andclients

Service quality andtimelinessNegotiation skillsCross-culturalinteraction skills

Yearly

EXPATRIATE EXPATRIATE COMPENSATION COMPENSATION

Wages and salaries, incentives such as bonuses, and benefits such as retirement contributions

COMPENSATION COMPENSATION IN THE U.S.IN THE U.S.

•Wages and salaries differ based on two major factors –external– internal

COMPENSATION IN JAPAN: COMPENSATION IN JAPAN: TRADITIONAL APPROACHTRADITIONAL APPROACH

•Base salaries for positions •Skill and educational

requirements •Age•Marital status and family

size may count•Bonuses

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

DomesticAssignmentExpenses andSpendableIncome

Expatriate Assignment Expenses and BalancedSpendable 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 andServices

= 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 inexpenses, initial housing costs, and furnishingallowances

SpendableIncome

= 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 SUCCESSFUL STRATEGIES FOR SUCCESSFUL REPATRIATION PROVIDE: REPATRIATION 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

IHRMIHRM

Multi-nationalStrategy

HRM Activity

IHRM Orientation

HR

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Labor R

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Repatria

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Multilocal Polycentric

Regional Regiocentric

International Ethnocentric

Transnational Global

• International strategy = ethnocentric or polycentric IHRM

• Transnational strategies = a global IHRM