PowerPoint slides by R. Dennis Middlemist, Professor of Management, Colorado State University

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PowerPoint slides by R. Dennis Middlemist, Professor of Management, Colorado State University

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Sources of Human Resources

MNCs can use four basic sources for filling overseas positions:

Expatriate managers who are citizens of the country where the multinational corporation is headquartered

Sometimes called headquarters nationals

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

Home-country Nationals (Expatriates)


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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



Host-country NationalsHost-country Nationals

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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




Third-country NationalsThird-country Nationals


Emeric

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Third-country NationalsThird-country Nationals

InpatriatesInpatriates

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

Many criteria are used in selecting managers for overseas assignments including:

General Criteria

Education

Knowledge of local language

Motivation

Support of spouse & children

Leadership

Adaptability

Independence

Self-reliance

Physical & emotional health

Age

Experience

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Rank of Criteria in Expatriate Rank of Criteria in Expatriate SelectionSelection

Adapted from Table 14–1: Rank of Criteria in Expatriate Selection

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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

Adaptability to Cultural Change

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Organizations examine a number of characteristics to determine whether an individual is sufficiently adaptable. Ability to sense and accurately evaluate developments in

the host country Ability to solve problems within different frameworks

and perspectives Sensitivity to differences of culture, politics, religion, and

ethics Flexibility in managing operations on a continuous basis

despite lack of assistance and gaps in information


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Development of Satisfaction in Host Development of Satisfaction in Host CountryCountry

Adapted from Figure 14–1: Development of Satisfaction in Host Country over Time

Note: Satisfaction scale: 1 = extremely low; 7 = extremely high.

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Those who were best able to deal with their new situation had developed coping strategies characterized by sociocultural 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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Adapted from Table 14–2 :Activities That Are Important for Expatriate Spouses (scale: 1–5, 5 very important)

Activities That Are Important for Activities That Are Important for Expatriate SpousesExpatriate Spouses

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Activities That Are Important for Activities That Are Important for Expatriate SpousesExpatriate Spouses

Adapted from Table 14–2 :Activities That Are Important for Expatriate Spouses (scale: 1–5, 5 very important)

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

Other Considerations

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 job opportunities

Phase IPhase I

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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

Phase IPhase I

Phase IIPhase II

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Phase IPhase I

Phase IIPhase II

Phase IIIPhase III

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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International Human ResourceSelection Procedures

Anticipatory Adjustment Training Previous experience

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

Clarity of expatriate’s role in the host management team Expatriate’s adjustment to the organizational culture Nonwork matters

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The Relocation Transition CurveThe Relocation Transition Curve

Adapted from Figure 14–2: The Relocation Transition Curve

Perceived Competence

Beginning of Transition Time

1. UnrealityThe feeling that the relocation is a dream

2. FantasiaThe feeling of enchantment and excitement in the new environment

3. InterestA deeper exploration of the environment and a realization that it is fundamentally different from home 5. Experimentation and

Testing of New ApproachesPractice phase – trying to do things differently Feedback of results – success and failure

4. Acceptance of Reality“Letting go” of past comfortable attitudes and realizing you are a stranger in a strange land

6. Search for MeaningUnderstanding reasons for success and failure. New models/personal theories created 7. Integration

of New Skills and Behavior Acceptance of the new environment

1

2

3

4

5

6

7

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Common Elements of Compensation Packages

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

COMPENSATION PACKAGE

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Relative Cost of Living in Selected Relative Cost of Living in Selected CitiesCities

Adapted from Figure 14–3: Relative Cost of Living in Selected Cities (New York = 100)

Tokyo

Oslo

Zurich

Hong Kong

Copenhagen

Paris

London

New York

Singapore

Stockholm

Seoul

New York = 100

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Frankfurt

Beijing

Moscow

Rome

Tel Aviv

Mexico City

Toronto

Prague

Jakarta

Warsaw

Kuala Lumpur

New York = 100


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Johannesburg

Bangkok

Cairo

Buenos Aires

Sao Paulo

Manila

New York = 100


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Base salary Amount of money that an expatriate normally

receives in the home country Benefits

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?

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Allowances 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

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

same pay Host country U.S. Internal Revenue Service

MNCs usually pay the extra tax burden

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Employer Incentive Practices Employer Incentive Practices Around the WorldAround the World

Adapted from Table 14–3: Employer Incentive Practices Around the World

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Tailoring the Compensation Packages

Balance-sheet approach Ensure the expatriate is does not lose money from the

assignment Complementary approach

Negotiate to work out an acceptable ad hoc arrangement Localization

Pay the expatriate a salary comparable to local nationals Lump sum method

give expatriate a lump sum of money Cafeteria approach

Compensation package that gives the individual a series of options

Regional system Set a compensation system for all expatriates who are

assigned to a particular region

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Individual and Host-Country Viewpoints

Individual desires Why do individuals accept foreign assignments? Greater demand for their talents abroad than at home

Host-country desires Whom would it like to see put in managerial positions? Accommodating the wishes of HCOs can be difficult:

They are highly ethnocentric in orientation They want local managers to head subsidiaries They set such high levels of expectation regarding the desired

characteristics of expatriates that anyone sent by the MNC is unlikely to measure up

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Quality of Life in Select Major Quality of Life in Select Major Metropolises, 2002Metropolises, 2002

Adapted from Figure 14–4: Quality of Life in Select Major Metropolises, 2002 (New York 100)

New York = 100

ZurichVancouver

ViennaSydney

CopenhagenFrankfurt

StockholmAmsterdam

BrusselsSan Francisco

TokyoParis

Singapore

40 50 60 70 80 90 100 110

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Quality of Life in Select Major Quality of Life in Select Major Metropolises, 2002Metropolises, 2002

MadridNew York

LondonRome

Hong KongBuenos Aires

Kuala Lumpur Johannesburg

Sao PauloMexico City

ShanghaiMoscow

New DelhiBelgrade New York = 100

40 50 60 70 80 90 100 110

Adapted from Figure 14–4: Quality of Life in Select Major Metropolises, 2002 (New York 100)

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Beliefs of Home-Country Beliefs of Home-Country Organization ExpatriatesOrganization Expatriates

Adapted from Table 14–4: Beliefs of Home-Country Organization Expats

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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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Effectiveness of Returning Effectiveness of Returning ExpatriatesExpatriates

Adapted from Figure 14–5: Effectiveness of Returning Expatriates

Effectiveness

Mon

ths

Bac

k in

Hom

e C

ount

ry

1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0Low Neutral High

6 Years

5 Years

4 Years

3 Years

2 Years

1 Year

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Repatriation of Expatriates

Transition strategies 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

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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Human Resource Management Practices Human Resource Management Practices in Select Countriesin Select Countries

Adapted from Table 14–5: Human Resource Management Practices in Select Countries

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Training in International Management

Stresses nationalism and often puts home-office people in charge of key international management positions

Ethnocentric MNCEthnocentric MNC

Four basic philosophic positions

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Four basic philosophic positions Places local nationals in key

positions and allows these managers to appoint and develop their own people


Polycentric MNCPolycentric MNC

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Four basic philosophic positions Relies on local managers from a

particular geographic region to handle operations in and around that area



Regiocentric MNCRegiocentric MNC

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Four basic philosophic positions Seeks to integrate diverse regions of

the world through a global approach to decision making



Regiocentric MNCRegiocentric MNC

Geocentric MNCGeocentric MNC

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Corporate Reasons for Training Ethnocentrism

The belief that one’s own way of doing things is superior to that of others

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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Model for the Development of Multinational ManagersModel for the Development of Multinational Managers

Adapted from Figure 14–6: A Model for the Development of Multinational Managers

Feedback Knowledge about cultural, political, economic, business, legal, and social factors of the host country Awareness of the needs and expectations of the different parties interested in international operation Awareness of the problems of family relations in the host country

Increasing effectiveness of expatriate and repatriated executives

Evaluation Effectiveness of the expatriate executives

Feedback Re-entry training

Evaluation Effectiveness of the repatriated executives

Feedback How much development?

Feedback Review terms and conditions of assignment Increase cultural awareness Increase knowledge of the host country

Impart working knowledge of the foreign language Increase conflict management skills Minimize re-entry problems

Feedback Internal relations External relations

Family relations Relations with host government

Headquarters relations Relations with home government

Development method

Overall objective

Desired result

Development method

Desired result

Assessment of development needs

Development objectives

Problem recognition

Intermediate resultFeedback

Orientation Area study Language instruction Cross-cultural group

Predeparture training

Behavioral simulation

Orientation & training Intergroup problem solving

Case method Postarrival training Re-entry training

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Model for the Development of Multinational ManagersModel for the Development of Multinational Managers

Adapted from Figure 14–6: A Model for the Development of Multinational Managers

Use your cursor to “Click” on the text box you want to view in a larger format.

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

Cross-Cultural Training Programs

Major types of cross-cultural training programs

Environmental BriefingsEnvironmental Briefings

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Familiarize the individual with cultural institutions and value systems of the host country




Cultural OrientationCultural Orientation

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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





Cultural AssimilatorsCultural Assimilators

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






Language TrainingLanguage Training

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Develop attitudinal flexibility







Sensitivity TrainingSensitivity Training

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Send participant to the country of assignment to undergo some of the emotional stress of living and working with people from a different culture







Sensitivity TrainingSensitivity Training

Field ExperienceField Experience

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Send participant to the country of assignment to undergo some of the emotional stress of living and working with people from a different culture


Steps in cross-cultural training programs Local instructors and a translator observe the pilot

training program or examine written training materials

Educational designer debriefs the observation with the translator, curriculum writer, and local instructors

The group examines the structure and sequence, ice breaker, and other materials to be used in the training

The group collectively identifies stories, metaphors, experiences, and examples in the culture that fit into the new training program

The educational designer and curriculum writer make necessary changes in training materials

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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 Send participant to the country of assignment to undergo some

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

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Contingency Approach to Cross-Cultural Training

Adapted from Figure 14–7: A Contingency Approach to Cross-Cultural Training

LOW MODERATE HIGHDegree of Integration

LOW

Leve

l of R

igor

HIG

H

Length of Training

1–2 Months+

1–4 Weeks

Less than a Week

HIGH

LOW

Cross-Cultural Training Approach

Length of Stay 1 Month or less 2-12 Months 1-3 Years

Affective Approach

Immersion Approach

Information Giving

Approach

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Types of Training Programs

The Global Leadership Program (GLP) A consortium of leading U.S., European, and Japanese

firms, global faculty, and participating host countries Provide an intensive international experience Develop a global mindset Instill cross-cultural competency Provide an opportunity for global networking

Global Leadership Development

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Tichy Development Matrix

Adapted from Figure 14–8: The Tichy Development Matrix

Org

aniz

atio

n In

divi

dual

Pai

rT

eamDeep High Risk Long

Time

Superficial Low Risk Little Time

Target of Change

Deep SuperficialHigh Risk Low RiskLong Time Little Time

Developing Fundam

ental Change

Developing NewProblem

-Solving Approaches

DevelopingSkills

Developing Cognitive

Understanding

Developing Awareness

Depth of Change

RequiredApproachAction

Learning

CurrentApproachOld Way

EmergingTrend

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http://www.worldwide.edu/travel_planner/culture_shock.html

Culture Shock

PowerPoint slides by R. Dennis Middlemist, Professor of Management, Colorado State University

Documents

homecountry personnelhiring

host country ability

overseas positions

overseas assignments

overseas operation

basic sources

expatriate managers

flexibilityselection