International Human Resource Managment. Human Resource Management (HRM) Refers to the activities an organization carries out to use its human resources.

International Human Resource Managment

Human Resource Management (HRM)

Refers to the activities an organization carries out to use its human resources effectively

Four major tasks of HRM A) Staffing policyB) Management training and developmentC) Performance appraisal D) Compensation policy

Factors which differentiate international from domestic HRM

More HR activitiesMore HR activities: taxation, culture : taxation, culture orientation, administrative servicesorientation, administrative services

The need for a broader perspectiveThe need for a broader perspective: cater to : cater to multiple needsmultiple needs

More involvement in employees’ personal livesMore involvement in employees’ personal lives: : adjustment, spouses, childrenadjustment, spouses, children

Changes in emphasis as the workforce mix of Changes in emphasis as the workforce mix of expatriates and locals variesexpatriates and locals varies: fairness: fairness

Risk exposureRisk exposure: expatriate failure, terrorism: expatriate failure, terrorism Broader external influencesBroader external influences: government : government

regulations, ways of conductregulations, ways of conduct

Different Types of Companies

International corporationDomestic firm that uses

its existing capabilities to move into overseas markets.

Multinational corporation (MNC)Firm with independent

business units operating in multiple countries./Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units.

Global corporationFirm that has integrated

worldwide operations through a centralized home office.

Main Challenges in IHRM

Main challenges in IHRM

Issues of expatriation and repatriationDeployment – getting the right mix of skills in the

organization regardless of geographical locationKnowledge and innovation dissemination –

managing critical knowledge and speed of information flow

Talent identification and development – identify capable people who are able to function effectively

Workforce Diversity issues International ethicsLanguage (e.g. spoken, written, non-verbal)

Main challenges in IHRM(cond..)

Different labor lawsDifferent political climateDifferent stage(s) of technological

advancementDifferent values and attitudes e.g. time,

achievement, risk takingRoles of religion e.g. sacred objects, prayer,

taboos, holidays, etcEducational level attainedSocial organizations e.g. social institutions,

authority structures, interest groups, status systems

Types of international work Expatriation

An employee sent by his/her company in one country to work in a different country.

Global team projectBringing together employees from different locations

to complete a specific team project. Short-term assignments

Sending employees on assignments, such as a three-month assignment, to a foreign location.

Virtual assignment. Assignments requiring employees in different locations

to use information technology to communicate on job projects and tasks.

Source: Adapted from P.V. Morgan, ‘International human resource management: Fact or fiction?’, Personnel Administrator, 31(9), 1986, p.44.

Model of IHRM

Types of employees in an MNE

Parent-country nationals (PCNs)  Employees who were born and live in a parent country.A parent (or home) country: the country in which

a company’s corporate headquarters is located.Host-country nationals (HCNs) 

Employees born and raised in a host country.Host country: a country in which the MNE seeks

to locate or has already located a facility.Third-country nationals (TCNs) 

Employees born in a country other than a parent or host country.

Global Staffing Issues Selecting candidates for overseas assignment

Assignment terms and documentation

Relocation processing and vendor management

Immigration processing

Cultural and language orientation and training

Compensation administration and payroll processing

Tax administration

Career planning and development

Handling of spouse and dependent matters

Staffing policy

Staffing policySelecting individuals with requisite skills to do a

particular jobTool for developing and promoting corporate

cultureView People as Resource

Types of Staffing PolicyEthnocentricPolycentricGeocentric

Firms pursue an ethnocentric staffing policy for three reasons:

i. First, the firm may believe there is a lack of qualified individuals in the host country to fill senior management positions.

ii. Second, the firm may see an ethnocentric staffing policy as the best way to maintain a unified corporate culture.

iii. Third, if the firm is trying to create value by transferring core competencies to a foreign operation.

Ethnocentric Approach

Parent-Country Nationals

Advantages• Organizational control and coordination is maintained and

facilitated.• Promising managers are given international experience.• PCNs may be the best people for the job because of special skills

and experience.• There is assurance that subsidiary will comply with company

objectives, policies, and so on.Disadvantages• The promotional opportunities of HCNs are limited.• Adaptation to host country may take a long time.• PCNs may impose an inappropriate HQ style.• Compensation for PCNs and HCNs may differ.

The host country nationals are recruited to manage subsidiaries in their own country, while parent country nationals occupy the key positions at corporate headquarters.

The policy is best suited to firms pursuing a multi-domestic strategy.

The Polycentric Approach

Host-Country Nationals

Advantages• Language and other barriers are eliminated• Hiring costs are reduced, and no work permit is required• Continuity of management improves, since HCNs stay longer in positions• Government policy may dictate hiring of HCNs• Morale among HCNs may improve as they see career potential

Disadvantages• Control and coordination of HQ may be impeded• HCNs have limited career opportunity outside the subsidiary• Hiring HCNs limits opportunities for PCNs to gain foreign experience• Hiring HCNs could encourage a federation of national rather than global units

A geocentric staffing policy is one in which the best people are sought for key jobs throughout the organization, regardless of nationality. It is well suited to firms pursuing either a global or transnational

strategy.

Geocentric Staffing

Third-Country Nationals

Advantages

• Salary and benefit requirements may be lower than for PCNs• TCNs may be better informed than PCNs about host-country

environment

Disadvantages• Transfer must consider possible national animosities (e.g.,

India and Pakistan)• The host government may resent hiring TCNs• TCNs may not want to return to their own countries after

assignment

Staffing Policies

• The Ethnocentric Approach –PCNs

• The Polycentric Approach- HCNs & PCNs

• The Geocentric Approach- PCNs,TCNs & HCNs

• The Regiocentric Approach-Limited PCNs, TCNs & HCNs

Technical Ability

SELECTION DECISIONINDIVIDUAL SITUATION

Cross-Cultural Suitability/ Personality

Language

FamilyRequirements

Country-CulturalRequirements

MN Exposure Requirements

Selection Criteria for International Assignments

Factors Important in International Assignee Success

I. Job Knowledgeand Motivation•Managerial & organizational ability•Imagination, creativity•Administrative skills•Alertness•Responsibility•Industriousness•Initiative and energy•High motivation•Frankness•Belief in mission and job•Perseverance

II. Relational Skills• Courtesy • Display of respect• Kindness• Empathy• Non-judgmentalness• Integrity• Confidence

Source: Adapted from Arthur Winfred Jr., and Winston Bennett Jr., “The International Assignee: The Relative Importance of Factors Perceived to Contribute to Success,” Personnel Psychology 18 (1995), pp. 106–107.

IV. Extracultural Openness

• Variety of outside interests

• Interest in foreign cultures

• Openness• Local language [s]

known• Outgoingness &

extroversion• Overseas experience

V. Family Situation

• Adaptability of spouseand family

• Spouse’s positive opinion

• Willingness of spouse to live abroad

• Stable marriage

III. Flexibility/Adaptability

• Resourcefulness

• Ability to deal with stress

• Flexibility

• Emotional stability

• Willingness to change

• Tolerance for ambiguity

• Adaptability

• Independence

• Dependability

• Political sensitivity

• Positive self-image

Factors Important in International Assignee Success

Training and Development

Essential training program content to prepare employees for working internationally: Language training Cultural training Assessing and tracking career development Managing personal and family life

Culture shock Perpetual stress experienced by people who

settle overseas. Repatriation

Training MethodsReviewing available information about the

host company: books, magazines, video tapes.

Conversations with host country natives.

Sensitivity training to become familiar with the customs and overcome prejudices.

Temporary assignments to encourage shared learning.

Performance Appraisal of International ManagersWho Should Appraise Performance?

Home-country evaluationsHost-country evaluations

Adjusting Performance CriteriaAugmenting job dutiesIndividual learningOrganizational learning

Providing FeedbackDebriefing interview

Expatriate Compensation Systems

Home-Based Pay Pay based on an expatriate’s home

country’s compensation practices Balance-Sheet Approach

A compensation system designed to match the purchasing power in a person’s home country1. Calculate base pay2. Figure cost-of-living allowance (COLA)3. Add incentive premiums4. Add assistance programs

Expatriate Compensation Systems (cont’d)Host-Based Pay

Expatriate pay comparable to that earned by employees in a host country to which the expatriate is assigned.

LocalizationAdapting pay and other compensation

benefits to match that of a particular countryOther Issues

Adequacy of medical carePersonal securityEducation

Thank You

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