Global Gl b l Human H R Resource Management M t

Human Resource Management (HRM)

Refers to the activities an organization carries out to use its human resources effectively Four major tasks of HRM
Staffing policy Management training and development Performance appraisal Compensation policy

International Human Resource Management

Strategic role: HRM policies should be congruent with the firms strategy and its formal and informal structure and controls Task complicated by profound differences between countries i in i labor l b markets, k culture, l legal, l l and d economic systems

International Human Resource Management

Staffing g Policy y
Staffing policy
- Selecting individuals with requisite skills to do a particular job - Tool for developing and promoting corporate culture

Types of Staffing Policy

- Ethnocentric - Polycentric - Geocentric

Ethnocentric Policy y
Key management positions ii filled fill d by b parent-country nationals Best suited to international businesses Advantages:
- Overcomes lack of qualified managers in host nation - Unified culture - Helps transfer core competencies

Disadvantages:
- Produces resentment in host country - Can lead to cultural myopia

Polycentric Policy
Host-country nationals manage subsidiaries Parent company nationals hold key headquarter positions Best suited to multi multi-domestic domestic businesses Advantages:
- Alleviates cultural myopia - Inexpensive I i t to implement i l t - Helps transfer core competencies

Disadvantages:
- Limits opportunity to gain experience of host country nationals outside their own country - Can create gap between home and host country operations

Geocentric Policy
Seek best people, regardless of nationality Best suited to global and trans-national businesses Advantages:
- Enables the firm to make best use of its human resources - Equips executives to work in a number of cultures - Helps build strong unifying culture and informal management network

Disadvantages:
- National N ti li immigration i ti policies li i may li limit it i implementation l t ti - Expensive to implement due to training and relocation - Compensation structure can be a problem

Comparison of Staffing Approaches

The Expatriate Problem

Expatriate: citizens of one country working in another
- Expatriate failure: premature return of the expatriate manager to t his/her hi /h h home country t
Cost of failure is high: estimate = 3X the expatriates annual salary plus the cost of relocation (impacted by currency exchange h rates t and d assignment i tl location) ti )

Inpatriates: expatriates who are citizens of a foreign country working in the home country of their multinational employer

Reasons for Expatriate Failure

US multinationals li i l
Inability of spouse to adjust Managers inability to adjust Other family problems Managers personal or y emotional immaturity - Inability to cope with larger overseas responsibilities

Japanese Firms
- Inability to cope with larger overseas responsibilities p - Difficulties with the new environment - Personal or emotional problems - Lack of technical p competence - Inability of spouse to adjust

European multinationals Inability of spouse to adjust

Expatriate Selection
Reduce expatriate failure rates by improving selection procedures An executives domestic performance does not (necessarily) equate to his/her overseas performance potential i l Employees need to be selected not solely on technical e pertise but expertise, b t also on cross-cultural cross c lt ral fluency fl enc

Four Attributes that P di t Success Predict S

Self-Orientation
- Possessing high self-esteem, self-confidence and mental well-being g

Others-Orientation
- Ability to develop relationships with host country nationals - Willingness Willi t to communicate i t

Four Attributes that P di t Success Predict S

Perceptual Ability
- The ability to understand why people of other countries b h behave th the way th they d do - Being nonjudgmental and flexible in management style

Cultural Toughness
- Relationship between country of assignment and the expatriates adjustment to it

Training and Management D l Development t

Training: Obtaining skills for a particular foreign posting
- C Cultural lt l training: t i i Seeks S k to t foster f t an appreciation i ti of f the th host h t countrys culture - Language training: Can improve expatriates effectiveness, aids in relating more easily to foreign culture, and fosters a better firm image - Practical training: Ease into day-to-day day to day life of the host country

Training and Management Development

Development: Broader concept involving developing managers skills over his or her career with the firm
- Several foreign postings over a number of years - Attend management education programs at regular intervals

Repatriation of Expatriates

A critical issue in the training and development of expatriate managers is preparing them for reentry into th i home their h country t Repatriation should be seen as the final link in an integrated circular process that selects, integrated, selects trains, trains sends, sends and brings home expatriate managers Research shows that there is a problem with the repatriation process

Repatriation of Expatriates

Didnt know what position they hold upon return. Firm vague about return, role and career progression. Took lower level job. Leave firm within one year. Leave firm within three years

10

20

30

40 percent

50

60

70

Management Development and Strategy

Development programs designed to increase the overall skill levels of managers through:
- Ongoing management education - Rotation of managers through a number of jobs within the firm to give broad range of experiences

Used as a strategic tool to build a strong unifying culture and informal management g network Above techniques support transnational and global strategies

Performance Appraisal
Problems:
- Unintentional bias
H Host t nation ti bi biased db by cultural lt l f frame of f reference f Home country biased by distance and lack of experience working abroad

Expatriate managers believe that headquarters unfairly evaluate and under-appreciate them In a survey of personnel managers in U.S. multinationals, 56% stated foreign assignment either d ti detrimental t l or immaterial i t i l to t ones career

Guidelines for Performance Appraisal

More weight should be given to on-site managers evaluation as they are able to recognize the soft variables Expatriate who worked in same location should assist home-office home office manager with evaluation If foreign on-site managers prepare an evaluation, home-office manager should be consulted before completion of formal evaluation

Compensation
Two issues:
- Pay executives in different countries according to the standards in each country or equalize pay on a global basis - Method of payment

Expatriate Pay y
Typically use balance sheet approach
- Equalizes purchasing power to maintain same standard of living across countries - Provides financial incentives to offset qualitative differences between assignment locations

Components of Expatriate Pay

Base Salary
- Same range as a similar position in the home country

Foreign service premium

- Extra pay for work outside country of origin

Allowances
- Hardship Hardship, housing, ho sing cost cost-of-living, of li ing and ed education cation allowances

Taxation
- Firm pays expatriates income tax in the host country

Benefits
- Level e e o of medical ed ca a and d pe pension s o be benefits e ts identical de t ca overseas

International Labor Relations

Key Issue
- Degree to which organized labor can limit the choices of an i t international ti lb business i

Aims to foster harmony and minimize conflicts between firms and organized labor

Concerns of Organized Labor

Multinational can counter union bargaining power with threats to move production to another country Multinational will keep highly skilled tasks in its home country and farm out only low-skilled tasks to foreign g p plants
- Easy to switch locations if economic conditions warrant - Bargaining power of organized labor is reduced

Attempts to import employment practices and contractual agreements from multinationals home country

Strategy of Organized Labor

Attempts to establish international labor organizations Lobby y for national legislation g to restrict multinationals Attempts to achieve international regulations on multinationals through such organizations as the United Nations