MA GLOBAL BUSINESS

CORE COURSE IN
HUMAN RESOURCE MANAGEMENT IN THE GLOBAL ENVIRONMENT
Academic year
2007 - 2008

Staffing the International Organization

Objectives
After studying this unit, you should be able to:

1. Develop strategic thinking on the international staffing question

2. Asses the advisability of local vs. expatriate executives
3. Know why international assignments fail
4. Understand the importance of cultural
competence to organizational and global business success
4. How to develop cultural intelligence

Copyright © 2003 by The McGraw

Challenges

„ How is the best employee mix (host-country and

expatriate) determined?
„ Why do international assignments fail?
„ How are returning employees re-integrated into the
firm?

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 Expatriate:A citizen of
one country living and

working in another country.

Stages of a Global Organization

Managing an International Subsidiary

„ Ethnocentric Approach
z Top management and key positions filled by people
from home country
„ Polycentric Approach
z International subsidiaries managed/staffed by
personnel from host country
„ Geocentric Approach
z Nationality deliberately downplayed
z Firm searches worldwide or regionally to hire best
people to fill key positions

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 Advantages of Using Local Employees to
Staff International Subsidiaries

„ Lower labor costs

„ Demonstrates trust in local citizens
„ Increases acceptance of firm by local community
„ Firm recognized as part of local economy
„ Represents local opinions in decision-making
„ Adaptation to local tastes and local way of doing things

Advantages of Using Expatriates to Staff

International Subsidiaries
„ Cultural similarity with parent company ensures transfer of business practices:
Japanese MNC
„ Closer control / coordination of international subsidiaries: interdependence Xerox
vs. McDonald's
„ Employees get multinational orientation
„ Political instability: expatriates
„ Differences between the countries high: expatriates. USA
„ Creates pool of internationally experienced executives
„ Local talent may not yet add value
„ Formalization / Control / Socialization

Disadvantages of Using Local Employees

to Staff International Subsidiaries

„ Difficult to balance local demands / global priorities

„ Leads to postponement of difficult local decisions (such
as layoffs)
„ Difficulty recruiting qualified personnel
„ Reduce amount of control by headquarters (different
kind of control…)

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 Disadvantages of Using Expatriates to Staff
International Subsidiaries

• Creates problems of adaptability to foreign

environment and culture
• Increases “foreignness” of subsidiary
• Involve high transfer, salary and added costs
• Result in personal and family problems
• May lower moral and motivation of local management
• Subject to local government restrictions

Why International Assignments Fail

USA failure rate three times higher…

„ Career blockage
„ Culture shock (USA cultural tolerance level)
„ Lack of pre-departure cross-cultural training
„ Overemphasis on technical qualifications
„ Getting rid of a troublesome employee
„ Family problems

Upon Return
(30% of repatriates resign)

„ Lack of Respect for Acquired Skills (USA

huge market…)
„ Loss of Status
„ Poor Planning for Return Position
„ Reverse Culture Shock (friendly-
competitive atmosphere, Spain-USA)

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 Selection Employees for
International Assignments
„ Emphasize cultural sensitivity as a selection criteria
„ Establish a selection board of expatriates with ex-expatriates
„ Require previous international experience: international
students, mormons…
„ Explore possibility of hiring foreign-born employees who serve
as “expatriates” at future date: Coca-Cola, Japanese MNC
„ Screen candidates’ spouses and families:Exxon

IHRM and national culture differences:

Hofstede (1980)
Contradiction HR-national values=failure
„ Power distance: status importance, hierarchy: Spain-Sweden
„ Individualism: group, socialization… vs. autonomy, personal challenges…
USA-Japan
„ Uncertainty avoidance: risk, instability tendency: Italy-Hong Kong
„ Masculinity/femininity: rigid sexual stereotypes: Germany-Finland
„ Long-term/short-term orientation: China-USA

Case

You work for a global pharmaceutical

company of 75,000 employees. Four of you
have been assigned to each of the following
four countries for one year: India, Australia,
Zimbabwe and Peru. You are to leave in six
months. How do you prepare for your year
away? What challenges do you expect?

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 Geert Hofstede´s Five Cultural Dimensions

Identity focuses on the degree the society

reinforces individual or collective achievement and
interpersonal relationships.
Power distance focuses on the degree of equality or
inequality between people in the country or society.

Gender focuses on the degree of traditional gender role

of achievement, control, and power.

Time focuses on the degree the society embraces long-

or short-term devotion to traditional forward thinking
values.
Uncertainty focuses on the level of avoidance or
tolerance for uncertainty and ambiguity within the
society.

COLLECTIVIST,FEMININE COLLECTIVIST,MASCULINE
THAILAND, KOREA CHINA, JAPAN
COSTA RICA, CHILE MEXICO, VENEZUELA
RUSSIA, BULGARIA ARAB WORLD
PORTUGAL, SPAIN GREECE

MALTA CZECHIA, HUNGARY

FRANCE POLAND, ITALY
NETHERLANDS GERMAN SPK CTRIES
NORDIC COUNTRIES ANGLO COUNTRIES, USA

INDIVIDUALIST, FEMININE INDIVIDUALIST,MASCULINE

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Cultural Intelligence Cultural Intelligence:

• The ability of people to deal effectively

with the cultural aspects of their
environment.

• Why do many people who are intelligence

and have good social skills and
demonstrate emotional maturity fail at
cross – cultural interactions?

Development of cultural intelligence

• Stage 1: Reactivity to external stimuli.

• Stage 2: Recognition of other cultural norms
and motivation to learn more about them.
• Stage 3: Accommodation of other cultural
norms and rules in one’s own mind.
• Stage 4: Assimilation of diverse cultural norms
into alternative behaviors.
• Stage 5: Proactivity in cultural behavior based
on recognition of changing cues that others do
not perceive.