Human Resources Management Strategy

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Slide 14.1

Rugman and Collinson, International Business, 6th Edition, © Pearson Education Limited 2013

Human resource

management strategy

Chapter 14



Slide 14.2


Human resource

management strategy• Objectives

• Introduction

• Selection and repatriation

• Training and development• Compensation

• Labor relations

• Strategic management and IHRM strategies.



Slide 14.3


Objectives

• Define the term “international human resourcemanagement” and discuss human resource strategies inoverseas operations.

• Describe the screening and selection criteria often used inchoosing people for overseas assignments.

• Relate some of the most common types of training anddevelopment that are offered to personnel who are goingoverseas.

• Discuss the common elements of an internationalcompensation package.

• Explain some of the typical labor relations practices usedin the international arena.

• Describe some of the HRM strategies that are currentlyreceiving a great deal of attention from MNEs.



Slide 14.4


Introduction

• International human resource management(IHRM): the process of selecting, training,

developing and compensating personnel in

overseas positions.

• Three basic sources of personnel talent thatMNEs can tap for these positions:

– Home-country nationals (expatriates)

– Host-country nationals

– Third-country nationals.



Slide 14.5


Figure 14.1 The management of multinational enterprisesSource: Reprinted from Columbia Journal of World Business, Summer 1973, Lawrence G. Franko, “Who Manages Multinational Enterprises?” page 33, Copyright 1973, with permission

from Elsevier Science



Slide 14.6


Selection and repatriation



Slide 14.7


International screening

criteria and selection procedures

• International screening criteria: – Adaptability

– Self-reliance

– Age, experience and education – Health and family status

– Motivation and leadership.

• Selection procedures:

– Interviews (often including spouse)

– Tests.



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Repatriation of expatriates

• Reasons for repatriation: – The pre-determined time assignment is

completed.

– Expatriates’ desire to have their children educated

in the home country.

– Expatriate might be unhappy overseas.

– Expatriate might have performed poorly.



Slide 14.9


Readjusting

• Expatriates might find it difficult to adjust back tothe home environment. A number of reasons canbe cited: – The home-office job lacks the high degree of

authority and responsibility that expatriates had in

their overseas job. – A feeling that the company does not value

international experience. – They may no longer be well known among people

at headquarters. – Their old job may have been eliminated or

drastically changed. – Technological advances at headquarters may have

rendered their existing skills and knowledge

obsolete.



Slide 14.10


Adjustment strategies

• Transition strategies are designed to helpsmooth the move from foreign to domesticassignments. – The repatriation agreement, which spells out how

long a person will be posted overseas and setsforth the type of job the person will be given uponreturning.

– To rent or maintain the expatriate’s home duringthe overseas tour.

– To assign a senior executive as a sponsor for eachmanager who is posted abroad.

– To maintain ongoing communications withexpatriate managers, thereby ensuring that theyare aware of what is happening in the home office.

S



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Training and development

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Slide 14.12


Training and development

• Training: the process of altering employeebehavior and attitudes in a way that increases the

probability of goal attainment.

• Managerial development: the process by which

managers obtain the necessary skills,experiences and attitudes they need to become

or remain successful leaders.

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Slide 14.13


Training programs

• Types of training: – Standardized training programs: generic

programs that can be used with managers

anywhere in the world.

– Tailor-made training programs: designed to meetthe specific needs of the participants and typically

include a large amount of culturally based input.

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• Research shows that the following six types ofprograms are most popular: – Environmental briefings used to provide information about

such things as geography, climate, housing and schools.

– Cultural orientation designed to familiarize the individual with

cultural institutions and value systems of the host country. – Cultural assimilators using programmed learning approaches

designed to provide the participants with intercultural

encounters.

– Language training.

– Sensitivity training designed to develop attitudinal flexibility.

– Field experience, which sends the participant to the country

of assignment to undergo some of the emotional stress of

living and working with people from a different culture.

Training programs (Continued)

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Slide 14.15


Compensation

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Slide 14.16


International compensation package

• Common elements in an internationalcompensation package: – Base salary: the amount of cash compensation

that an individual receives in the home country.

– Benefits

– Allowances

• Cost-of-living allowance: payment to compensatefor differences in expenditures between the homecountry and the foreign location.

• Hardship allowance: a special payment made toindividuals who are posted to areas that areregarded as less desirable.

– Tax protection and/or tax equalization.

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Slide 14.17


Current compensation trends

• Owing to the high costs of expatriates, MNEs aretaking the following steps:

– Not sending expatriates to overseas positions

unless there is a need for their specific services.

– Increasingly replacing permanent relocation andlong-term assignment with as-needed short trips

that typically last less than a year.

– A growing number of MNEs are now dropping

bonuses or premiums for overseas assignments

and replacing them with lump-sum premiums.

– Many companies are beginning to phase out

incentive premiums.

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Slide 14.18


Figure 14.2 Cost of expatriate managersSource: C. Reynolds, “Compensation of Overseas Personnel,” in J. J. Famularo (ed.), Handbook of Human Resource Administration, 2nd ed. (New York: McGraw-Hill, 1986), p. 51.

Reproduced with permission of The McGraw-Hill Companies

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Slide 14.19


Table 14.1 Employer incentive practices around the worldSource: Geoffrey W. Latta, “Expatriate Incentives: Beyond Tradition,” HRfocus, March 1998, p. S4. Reprinted by permission © HRfocus, March 1998. 212/244 –0360. http://www.ioma.com

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Labor relations

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Figure 14.3 Labor unions worldwide, 1995 (percentage of labor force that is unionized)Source: International Labor Organization, World Labour Report , November 1997

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Labor relations practices

• Labor unions traditionally have been strong inGermany.

– Unions set the pay scale for around 90 percent of

the country’s workers, with wages determined by

job classifications. – Union membership is voluntary, but there is only

one union in each major industry.

• In Japan, union –management relationships are

extremely cooperative.

– Social custom dictates nonconfrontational behavior.

Slide 14.23




Industrial democracy

• Industrial democracy: the legally mandated rightof employees to participate in significantmanagement decisions.

• Forms of industrial democracy

– Codetermination: a legal system that requiresworkers and their managers to discuss majorstrategic decisions before companies implementthe decisions.

– Work councils: groups that consist of both worker

and manager representatives and are charged withdealing with matters such as improving companyperformance, working conditions and job security.

– Shop floor participation.

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Industrial democracy in action

• In Germany, industrial democracy andcodetermination are both very strong, especially

in the steel and auto industries.

• In Denmark, industrial democracy gives workers

the right to participate in management on both adirect and an indirect basis.

• Japan’s use of industrial democracy concepts is

not tied to political philosophy, as in Europe, butmore oriented toward Japanese culture and the

belief in group harmony.

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Strategic management andIHRM strategies

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Human resource

management strategies

• There are a number of human resourcemanagement (HRM) strategies currently receiving

attention from MNEs, including: – language training

– cultural adaptationCf. cultural assimilator

– competitive compensation

– specially designed HRM programs

structural empowerment accelerated resource development

employee welfare emphasis

efficiency emphasis

long-termism.

Slide 14.27




Cultural assimilators

• A cultural assimilator is a programmed learningtechnique that is designed to expose members of

one culture to some of the basic concepts,

attitudes, role perceptions, customs and values of

another culture. – Cultural assimilators are developed for pairs of

cultures, such as to familiarize managers from the

US with the culture in Germany.

Slide 14.28




Table 14.3 Cost of living in select cities (New York = 100), 2009Source: Adapted from UBS, Price and Earnings, 2009.

E-resources: http://www.ubs.com/1/e/wealthmanagement/wealth_management_research/prices_earnings.html

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http://www.ubs.com/1/e/wealthmanagement/wealth_management_research/prices_earnings.html





R d C lli I t ti l B i 6th Editi © P Ed ti Li it d 2013

Table 14.4 HRM practices in select countriesSource: Adapted from Journal of World Business, Vol. 32, No. 3, 1997, Paul R. Sparrow and Pawan S. Budhwar,

“Competition and Change: Mapping the Indiana HRM Recipe Against World-Wide Patterns,” p. 233, Copyright © 1997 with

permission from Elsevier Science

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