PART FIVE

EMPLOYEE RELATIONS

C H A P T E R

S e v e n t e e n

Managing Global
Human Resources

17

Lecture Outline

Copyright 2013 Pearson Education

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Strategic Overview
The Managers Global Challenge
Adapting HR Activities to Intercountry
Differences
Cultural Factors
Economic Systems
Legal, Political, and Labor Relations Factors
Ethics and Codes of Conduct
HR Abroad: The European Union
HR Abroad: China
Staffing the Global Organization
International Staffing: Home or Local?
Offshoring
Management Values and International
Staffing
Selecting Expatriate Managers
Avoiding Early Expatriate Returns
Training and Maintaining Employees Abroad
Orienting and Training Employees on
International Assignment
Appraising Managers Abroad
Compensating Managers Abroad
Labor Relations Abroad
Terrorism, Safety, and Global HR
Repatriation: Problems and Solutions
Improving Productivity Through HRIS
Managing HR Locally: How to Put into Practice a
Global HR System
Developing a More Effective Global HR
System
Making the Global HR System Acceptable
Implementing the Global HR System

In Brief: This chapter outlines some

of the HR problems and issues
involved
with
international
businesses. The subjects covered
include understanding intercountry
differences, using selection to
improve international assignments,
and training and maintaining
international employees.
Interesting Issues: Many companies
desire to rotate managers through
international assignments but find
that work visa requirements of the
host countries (including the U.S.)
can sometimes greatly hinder these
efforts. Federal anti-terrorism laws
also make moving employees across
borders more challenging.

LEARNING OUTCOMES
1.
2.
3.
4.

List the HR challenges of international business.

Illustrate with examples how intercountry differences affect HRM.
List and briefly describe the main methods for staffing global organizations.
Discuss some important issues to keep in mind in training, appraising, and compensating
international employees.
5. Explain with examples how to implement a global human resource management
program.
ANNOTATED OUTLINE

The Managers global challenges include deployment, knowledge, and

innovation dissemination, as well as identifying and developing talent on
a global basis. Complicating these decisions are the cultural, political,
legal, and economic differences among countries and their peoples.
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I.

Adapting Human Resource Activities to Intercountry Differences - A

company operating multiple units abroad does not have the luxury of dealing
with a relatively limited set of economic, cultural, and legal variables.
A. Cultural Factors Countries differ widely in their cultures, which are the
basic values to which their citizens adhere. Cultural differences from
country to country necessitate corresponding differences in management
practices among a companys subsidiaries because local cultural norms
can undermine employers attempts to have uniform codes of conduct.
B.

Economic Systems Differences in economic systems translate into

differences in HR practices. Differences in labor costs are substantial.

C.

Legal, Political, and Industrial Relations Factors Such factors vary

dramatically from country to country. In many European countries, work
councils replace the informal or union-based worker-management
mediations typical in U.S. firms. In Germany and several other countries
that adhere to codetermination, employees have a legal voice in setting
company policies.

D. Ethics and Codes of Conduct Employers should have set policies on

things like discrimination, harassment, bribery, and Sarbanes-Oxley.
E. HR Abroad: The European Union (EU) The EU refers to the unification of
separate European countries in the 1990s into a common market for
goods, services, capital, and labor. EU directives are binding on all
member countries, which necessitate adjustments to both EU directives
and individual country laws. Variances in HR practices affect minimum
EU wages, working hours, and employee representation.
F. HR Abroad: China There are relatively scarce employment services, and
there is an active union movement in China. The ownership of the firm
affects how these issues need to be handled. Sporadic labor shortages
are fairly widespread. Employees tend to gravitate toward employers that
can provide the best career advancement training and opportunities.
Employees are primarily selected on the basis of their resum and an
interview. The need to save face and avoid confrontation can make
employee appraisal very sensitive. Compensation issues also exist.
China implemented a new labor contract which adds numerous new
employment protections for employees and makes it correspondingly
more expensive for employers to implement certain personnel actions.

II.

NOTES

Educational Materials to Use

Staffing the Global Organization

A. International Staffing: Home or Local? Multinational companies (MNCs)
employ several types of international managers. Locals are citizens of
the countries where they are working. Expatriates (expats) are noncitizens of the countries in which they are working. Home-country
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nationals are citizens of the country in which the multinational company

has its headquarters. Third-country nationals are citizens of a country
other than the parent or the host country. More flexible expatriate
assignments involving no formal relocation are becoming increasingly
popular and are aided by technological advances.
B. Offshoring Having local employees abroad perform jobs that the firms
domestic employees previously did in-house is growing by leaps and
bounds. The idea of offshoring jobs is very controversial. In the 1980s
and 1990s, it was mostly manufacturing jobs that employers shipped
overseas.
C. Management Values and International Staffing Policy Ethnocentric-run
firms staff foreign subsidiaries with parent-country nationals because
they believe that home country attitudes, management styles, and
knowledge are superior to the host country. Polycentric-run firms staff
foreign subsidiaries with host-country nationals because they are the
only ones that can really understand the culture and the behavior of the
host country market. Geocentric-run firms staff foreign subsidiaries with
the best people for key jobs regardless of nationality because they
believe that the best manager for any specific position anywhere on the
globe may be in any of the countries in which the firm operates.
D. Selecting expatriate managers is similar to selecting domestic managers,
but firms need to determine whether managers for foreign assignments
can cope internationally.
E. Avoiding Early Expatriate Returns International assignments fail for
various reasons including personality, the persons intentions, and nonwork factors. Family pressures are frequent. Three things help the
adjustment: language fluency, having preschool age children rather than
school-age or no children, and a strong bond between spouse and ex-pat
partner.
NOTES

Educational Materials to Use

III.

Training and Maintaining Employees Abroad

A. Orienting and Training Employees on International Assignment Some
claim there is generally little or no systematic selection and training for
assignments overseas. Some recommended programs provide the
following: (1) the basics of the new country's history, politics, business
norms, education system, and demographics; (2) an understanding of
how cultural values affect perceptions, values and communications; and
(3) examples of why moving to a new country can be difficult, and how to
manage these challenges.
B. Appraising Managers Abroad The appraisal process can be improved
by:
1. Stipulating the assignments difficulty level;
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2. Weighing the evaluation more toward the on-site managers

appraisal than toward the home-site managers distant perceptions
of the employees performance; and
3. If the home-office manager does the actual written appraisal, having
him or her use a former expatriate from the same overseas location
for advice.
C. Compensating Managers Abroad Compensation presents some tricky
problems due to the question of whether or not to maintain companywide
pay scales and policies.
1. The Balance Sheet Approach This common approach to expatriate
pay refers to equalizing purchasing power across countries.
2. Incentives Many firms offer overseas managers long-term
incentives that are tied more closely to performance at the foreign
subsidiary level.
3. Steps in Establishing a Global Pay System The steps are as
follows: set pay strategy, identify crucial executive behaviors, create
a global philosophy framework, identify gaps, systemize pay
systems, and adapt pay policies.
D. Labor relations abroad differ from those in the U.S. Four issues have
been identified as characteristics of European labor practices: 1)
centralization, 2) employer organization, 3) union recognition, and 4)
content and scope of bargaining.
E. Terrorism, Safety, and Global HR New federal anti-terrorism laws are
affecting an employers ability to import and export workers.
1. Taking Protective Measures Many firms retain crisis management
team services. Firms face resistance from employees who are
reluctant to accept foreign assignments. Kidnappings have been on
the rise.
2. Kidnapping and Ransom (K&R) Insurance The insurance itself
typically covers several costs associated with kidnappings,
abductions, or extortion attempts. These costs might include, for
instance, hiring a crisis team, the actual cost of the ransom payment
to the kidnappers or extortionists, ensuring the ransom money in
case its lost in transit, legal expenses, and employee death or
dismemberment.
F. Repatriation: Problems and Solutions Some common repatriation
problems arefearing that out of sight is out of mind; returning to mediocre
or makeshift jobs; returnees are taken aback when the trappings of the
overseas job are lost upon return; being overlooked for promotions; and
experiencing culture shock.
Some possible solutions are written
repatriation agreements, sponsors, career counselors, open
communications, and reorientation programs.
G. Improving Productivity through HRIS: Taking the HRIS Global As a
company grows relying on manual HR systems to manage activities like
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worldwide safety, benefits administration, payroll, and succession

planning becomes unwieldy. For global firms, it makes particular sense
to expand the firms human resource information systems abroad.
IV.

Managing HR Locally: How to Put into Practice a Global HR System

A. Developing a More Effective Global HR System
1. Form global HR networks.
2. Remember that its more important to standardize ends and
competencies than specific methods.
B. Making the Global HR System More Acceptable
1. Remember global systems are more accepted in truly global
organizations.
2. Investigate pressures to differentiate and determine their legitimacy.
3. Try to work within the context of a strong corporate culture.
C. Implementing the Global HR System
1. Remember, You cant communicate enough.
2. Dedicate adequate resources for the global HR effort.

NOTES

Educational Materials to Use

KEY TERMS
codetermination

Employees have the legal right to a voice in setting company

policies.

expatriates (expats)

Non-citizens of the countries in which they are working.

home country nationals

Citizens of the country in which the multinational company has

its headquarters.

third country nationals

Citizens of a country other than the parent or the host country.

virtual teams

Groups of geographically dispersed coworkers who interact

using a combination of telecommunications and information
technologies to accomplish an organizational task.

ethnocentric

The notion that home-country attitudes, management style,

knowledge, evaluation criteria, and managers are superior to
anything the host country has to offer.
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polycentric

A conscious belief that only the host-country managers can ever

really understand the culture and behavior of the host-country
market.

geocentric

The belief that the firms whole management staff must be

scoured on a global basis, on the assumption that the best
manager of a specific position anywhere may be in any of the
countries in which the firm operates.

adaptability screening

A process that aims to assess the assignees (and spouses)

probable success in handling a foreign transfer.

foreign service premiums

Financial payments over and above regular base pay, typically

ranging between 10% and 30% of base pay.

hardship allowances

Compensate expatriates for exceptionally hard living and

working conditions at certain locations.

mobility premiums

Typically, lump-sum payments to reward employees for moving

from one assignment to another.

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