Human Resource Selection and Development Across Cultures (Selection, Compensation, Training) chapter 10.

Human Resource Selection and Development Across Cultures(Selection, Compensation, Training)

chapter 10

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Chapter Objectives

1. IDENTIFY the three basic sources that MNCs can tap when filling management vacancies in overseas operations in addition to options of subcontracting and outsourcing.

2. DESCRIBE the selection criteria and procedures used by the organization and individual managers when making final decisions.

3. DESCRIBE the training process, the most common reasons for training and types of training often are provided.

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4. DESCRIBE the common compensation packages that organization normally give to an expatriates.

5. EXPLAIN the relocation experience face by an employees when completing a task or an assignment

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Sources of Human Resources

• MNCs can use four basic sources for filling overseas positions:

• (1) Home-Country Nationals (Expatriates): Expatriate managers are citizens of the country where the

multinational corporation is headquartered

Sometimes called headquarters nationals

Most common reason for using home-country nationals (expatriates) is to get the overseas operation under way

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Sources for Human Resources

(2) Host-Country Nationals:

Local managers hired by the MNC

They are familiar with the culture

They know the language

They are less expensive than home-country personnel

Hiring them is good public relations

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(3) Third-Country Nationals:

Managers who are citizens of countries other than the country in which the MNC is headquartered or the one in which the managers are assigned to work by the MNC

These people have the necessary expertise for the job

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(4) Inpatriates:

Individuals from a host country or a third-country national who are assigned to work in the home country

The use of inpatriates recognizes the need for diversity at the home office

Use of inpats helps MNCs better develop their global core competencies

MNCs can subcontract or outsource to take advantage of lower human resource costs and increase flexibility

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Selection Criteria for International Assignments: Managers

Adaptability

Independence

Self-reliance

Physical & emotional health

Age

Experience

Education

Knowledge of local language

Motivation

Support of spouse & children

Leadership

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Selection Criteria for International Assignments

• Organizations examine a number of characteristics to determine whether an individual is sufficiently adaptable.

– Work experiences with cultures other than one’s own

– Previous overseas travel– Knowledge of foreign languages – Recent immigration background or heritage– Ability to integrate with different people,

cultures, and types of business organizations

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• Those who were best able to deal with their new situation had developed coping strategies characterized by socio-cultural and psychological adjustments including:

– Feeling comfortable that their work challenges can be met

– Being able to adjust to their new living conditions

– Learning how to interact well with host-country nationals outside of work

– Feeling reasonably happy and being able to enjoy day-to-day activities

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• Applicants better prepare themselves for international assignments by carrying out the following three phases:

Phase 1: Focus on self-evaluation and general awareness include the following questions:

Is an international assignment really for me?

Does my spouse and family support the decision to go international?

Collect general information on available jobs

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Selection Criteria for International Assignments (continued)

Phase 2: Conduct a technical skills assessment – Do I have the

technical skills required for the job?

Start learning the language, customs, and etiquette of the region you will be posted

Develop an awareness of the culture and value systems of the geographic area

Inform your superior of your interest in the international assignment

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Selection Criteria for International Assignments (continued)

Phase 3:

Attend training sessions provided by the company

Confer with colleagues who have had experience in the assigned region

Speak with expatriates and foreign nationals about the assigned country

Visit the host country with your spouse before the formally scheduled departure (if possible)

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The Adjustment Process

In recent years, international HRM specialist have developed models that help to explain the factors involved in effectively adjusting to overseas assignments.

There are 2 types of adjustment :

1. Anticipatory Adjustment (carried out before the person leaves for the assignment)

– Training (pre-departure training)

cross cultural seminar or workshop

– Previous experience

2. In-country Adjustment

– Individual’s ability to adjust effectively

– Ability to maintain a positive outlook, interact well with host nationals, and to perceive and evaluate the host country’s cultural values and norms correctly

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– Clarity of expatriate’s role in the host management team

– Expatriate’s adjustment to the organizational culture

– Non-work matters

TRANSITION PROCESS

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1. Honeymoon phase• the feeling of enchantment and excitement in the new

environment.• Can last for months or weeks

2. Crisis phase• A deeper exploration of the environment and a

realization that it is fundamentally different from home.• Important – the expatriate ability to maintain a positive

outlook in the face of a high pressure situation, to interact well with host nationals and to perceive and evaluate the host country’s cultural values and norms correctly.

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3. Recovery• Letting go of past comfortable attitudes.• The realization that you are a stranger in a strange land.

4. Adjustment phase• Experimentation and testing of new approaches.• Practice phase, trying to do things differently.• Feedback of results, success and failure.• Understand reasons for success and failure.• Integrate of new skills and behavior and accept of the new

environment.• Balance personal and work demand in new environment

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Common Elements of Compensation Packages

• One of the ways in which MNCs often try to put potential expats at ease about new assignment is by presenting an attractive compensation package

• Compensating expatriates can be difficult because there are many variables to consider

• Most compensation packages are designed

around four common elements: • Allowances Taxes

• Base Salary Benefits

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• Base salary – Amount of money that an expatriate normally

receives in the home country– Expatriate salaries typically are set according to

the base pay of the home countries– Ex : German manager working for US MNC and

assigned to Spain would have a base salary that reflects the salary structure in Germany.

– The salaries usually are paid in home currency, local currency or a combination of the two.

– The base pay also serves as the benchmark against which bonuses and benefits are calculated

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• Benefits• A number of thorny issues surround compensation for expatriates,

that include :– Should host-country legislation regarding termination of

employment affects employee benefits entitlements? – Is the home or host country responsible for the expatriates’ social

security benefits?– Should benefits be subject to the requirements of the home or

host country?– Which country should pay for the benefits?– Should other benefits be used to offset any shortfall in coverage?– Should home-country benefits programs be available to local

nationals?– MNCs often provide expatriates with extra vacation and with

special leaves. The MNC typically will pay the airfare for the expats and their families to make an annual visit home, for emergency leave and for expenses when a relative in the home country is ill or dies.

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• Allowances

• Allowances are an expensive feature of expatriate compensation package. One of the common part is :

– Cost-of-Living Allowance

• Payment for differences between the home country and the overseas assignment.

• Designed to provide the expatriate the same standard of living enjoyed in the home country

– May cover a variety of expenses, including relocation, housing, education, and hardship

– Incentives

• A growing number of firms have replaced the ongoing premium for overseas assignments with a one-time, lump-sum premium

• Hardship allowances are designed to induce expats to work in hazardous areas or in area with a poor quality of life. Ex : China

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• Taxes– Tax equalization– An expatriate may have two tax bills for the same

pay. (In US)• Host country • U.S. Internal Revenue Service

– MNCs usually pay the extra tax burden– Any taxes that exceed what would have been imposed

in the home country are paid by the MNC and any windfall (any unexpected gain) is kept by the expat are a reward for taking the assignment.

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Repatriation of Expatriates

• Repatriation – the return to one’s home country from an overseas management assignment.

• To help smooth the adjustment from an overseas to a stateside assignment, some MNCs have developed transition strategies.

• Transition strategies – the firm tells an individual how long she or he will be posted overseas and promises to give the individual, on return, a job that is mutually accepted.– Repatriation Agreements

• Firm agrees with individual how long she or he will be posted overseas and promises to give the individual, on return, a job that is mutually acceptable

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Repatriation of Expatriates

• Reasons for returning to home country– Most expatriates return home from overseas assignments

when their formally agreed-on tour of duty is over– Some want their children educated in a home-country school – Some are not happy in their overseas assignment– Some return because they failed to do a good job

• Readjustment problems– “Out of sight, out of mind” syndrome

– Organizational changes

– Technological advances

– Adjusting to the new job back home

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– Some of the main problems of repatriation include:

• Adjusting to life back home

• Facing a financial package that is not as good as that overseas

• Having less autonomy in the stateside job than in the overseas position

• Not receiving any career counseling from the company

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• MNC can address these type of problems. Some of the suggested by experts are :

1. Arrange an event to welcome and recognize the employee and family either formally or informally

2. Establish support to facilitate family reintegration3. Offer repatriation counseling or workshops to ease the adjustment4. Assist the spouse with job counseling, resume writing and interviewing

technique5. Provide educational program for the children6. Provide the employee with a thorough debriefing by facilitator to

identify new knowledge, insights (an understanding of something) and skills and to provide a forum to showcase new competencies.

7. Offer international outplacement to the employee and reentry counseling to the entire family if no positions are possible.

8. Arrange a post assignment interview with the expatriate and spouse to review their view of the assignment and to address any repatriation issues.

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Training in International Management

• Training is a process of altering employee behavior and attitudes in a way that increase the probability of goal attainment.

• The most common topics covered in cultural training are social etiquette, customs, economics, history, politics and business etiquette

• Four basic philosophic positions that can influence the training program are:

– (1) Ethnocentric MNC• Stresses nationalism and often puts home-office people in charge

of key international management positions

– (2) Polycentric MNC• Places local nationals in key positions and allows these managers

to appoint and develop their own people

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Training inInternational Management

– (3) Regiocentric MNC• Relies on local managers from a particular geographic region to

handle operations in and around that area

– (4) Geocentric MNC• Seeks to integrate diverse regions of the world through a global

approach to decision making

• All four of these philosophical positions can be found in the multinational arena and each puts a different type of training demand on the MNC.

• Ex : ethnocentric MNCs will do all training at HQ, polycentric MNCs will rely on local managers to assume responsibility for seeing that the training function is carried out.

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Training in International Management

Reasons for training1. Corporate/ organizational Reasons for Training

– To overcome ethnocentrism• The belief that one’s own way of doing things is

superior to that of others• To improve the flow of communication between the

home office and the international subsidiaries and branches

• To increase overall efficiency and profitability

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2. Personal reasons

– To train overseas managers to improve their ability to interact effectively with local people in general and with their personnel in particular

– Increasing numbers of training programs address social topics – these programs also focus on dispelling myths and stereotypes by replacing them with facts about the culture

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Cross-Cultural Training Programs

• Major types of cross-cultural training programs1. Environmental Briefings

• Provide information about things such as geography, climate, housing, and schools

2. Cultural Orientation• Familiarize the individual with cultural

institutions and value systems of the host country – home and work

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3. Cultural Assimilators– Programmed learning techniques designed to expose members

of one culture to some of the basic concepts, attitudes, role perceptions, customs, and values of another culture

– Provide information about things such as geography, climate, housing and schools.

4. Language Training - Learn about the host country language

- English is a primary language of International Business – expatriate should know and learn this language and other languages especially for non-english country

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Cross-Cultural Training

5. Field Experience– Send participant to the country of assignment to

undergo some of the emotional stress of living and working with people from a different culture

6. Sensitivity Training– Develop attitudinal flexibility (do and don’t)

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• A variety of other approaches can be used to prepare managers for international assignments including:– Visits to the host country– Briefings by host-country managers– In-house management programs– Training in local negotiation techniques– Analysis of behavioral practices that have proven

most effective

Human Resource Selection and Development Across Cultures (Selection, Compensation, Training) chapter 10.

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