International Human Resource Management

● Internationalization of Business
● Types of International Business
● How Intercountry differences affect HRM
● Why International Assignments fail
● International Staffing Policy
● Selecting International Managers
● Adaptability Screening
 ➲ Closed to Open
➲ Technologically forging
forward
Growth of
International ➲ Resource-rich
Business ➲ Quality comes of age
➲ Managing RAPID change
 ➲ Convergence &
➲ Diversification
➲ Virtual Work
Trends
in ➲ Customer intimacy
International ➲ War for talent
Business ➲ “Speenovation”
➲ Operational Excellence
 ➲ Exporting

➲ Franchising

➲ Foreign Direct Investment

Types of
International ➲ Multinational Enterprise
Business
➲ Whole owned Subsidiary

➲ Multinational Corporation

➲ Global Corporation
 ☛ Understanding of
the business
☛ Delivery of HR
Practices
HR & International
☛ Managing RAPID
Business
Change
☛ Managing Culture
☛ Professional
Credibility
 ✔ New Strategies
✔New Organization
New Orientation capabilities
& Outlook !! ✔ New Employee
Behaviors
✔ New Processes
 ✒ Intellectual Capital
✒ Strategic Intent
Organizational ✒ Learning Culture
Capabilities ✒ Leadership
✒ Customer Intimacy
✒ Innovation
 ❐ Buy
❐ Build
Competence ❐ Borrow
❐ Bind
❐ Bounce
 Talent is everything
Era!
❖ Baby Boomers(46-64)
❖ Gen X-ers(65 - 78)
Talent Era !!
❖ Gen Y-ers(1978-)
❖ Fading Loyalty
❖ Strategic Outsourcing
 Critical Success Factors for HR in
International Business
● Build a Brand Image

● Build Strong Managerial Bandwidth

● Manage Talent well

● New Performance Culture
● Hone HR Competencies
● Generalist
● Manager employee Aspirations
Intercountry differences affect HRM...
✾ Vision: Different country leaders have different
point of view & vision

✾ Cultural Factors: Japan - US - Europe - Asia

✾ Economic Factors:Financial Health of the Country

✾ Cost Impact:India, China,US,Hong Kong

✾ Communication: Language Advantage.

✾ IR Factors
 Why International Assignment fail ?
❏ Adjustment Factors - Self & Family
❏ Health related problems
❏ Inability to understand the Govt. Rules &
Regulations
❏ Selection on the basis of technical competence
rather than adaptability issues
❏ Lack of preparations (Cross-Cultural, Linguistic
Skills) for the intending expatriate
❏ A failure to plan for repatriation to the parent
Company
 International Staffing
Sources of Managers
• Locals - are citizens of the countries where they are working
• Home Country Nationals - are the citizens of the country in which
the multinational company’s headquarters are based

• Third Country Nationals - are citizens of a country other than the

parent or the host country

International Staffing Policy

Four types of headquarters orientation toward subsidiaries
in a multinational enterprise

✔ Ethnocentric
✔ Polycentric
✔ Regiocentric
✔ Geocentric
 Orientation
Aspects of the Regiocentric
Ethnocentric Polycentric
enterprise
Complex in home Highly interdependent
Complexity of Varied &
country, simple in
Organization Independent on a regional basis
subsidiaries
High regional headquarters
Authority; High in head- Relatively low in
&/or high collaboration
decision Making quarters headquarters
among subsidiaries
Home standards
Evaluation & Determined Determined regionality
applied for persons
Control & performance locally
Rewards & High in head Wide variation;
can be high or Rewards for contribution
punishments; quarters, low rewards for
to regional objectives
incentives subsidiary
low in subsidiaries performance
High volume of Little to & from Little to & from corporate
Communication; headquarters, but may be high
orders, commands, headquarters, little to & from regional
Information flow headquarters & among
among subsidiariescountries
advice to subsidiaries
Geographical Nationality of Nationality of Regional Company
Identification the owner host country
Perpetuation People of home People of local Regional people
country developed nationality
(recruiting, developed for key positions
for key positions developed for key
Staffing, everywhere in thepositions in theiranywhere in the region
development) world own country
 Orientation
Aspects of the
Geocentric
enterprise

Complexity of Increasingly Complex & highly interdependent on a

Organization worldwide basis
Authority; Collaboration of headquarters & subsidiaries around
decision Making the world

Evaluation &
Control Standards which are universal & local

Rewards &
punishments; Rewards to international & local executives for
incentives reaching local & worldwide objectives

Communication;
Information flowBoth ways & among subsidiaries around the world
Geographical Truly worldwide company, but identifying with
Identification national interests
Perpetuation Best people everywhere in the world developed for
(recruiting,
key positions everywhere in the world
Staffing,
development)
 International Staffing Strategies
lls
nsformational Skills - the ability to move from a domestic (ethnocentri
International (Geocentric) focus
rnational Skills - Knowledge & Skills in comparative HRM practices
nsnational Skills - how to market the business & how to involve employe
fferent national context
eign Language Skills
its
ptability & Flexibility - ability to adapt to new circumstances & situat
pond flexibility to different & often novel ideas & viewpoints
ural Toughness - the ability to succeed in an alien culture
ple Orientation - Rapport Building & Relationship building with host- cou
nals
ceptual ability - the ability to understand why people behave as they do &
thize with them
mily adaptability - the ability of the spouse & children to adapt to & be ha
n environment
5 Factors for International Assignee

Job Knowledge & Motivation

Managerial Ability
Organizational Ability
Imagination

1
Creativity
Administration Skills
Alertness
Responsibility
Industriousness
Initiative & energy
High motivation
Frankness
Belief in mission & job
Perseverance
5 Factors for International Assignee

Relational Skills
Respect

2
Courtesy & tact
Display of respect
Kindness
Empathy
Nonjudgmentalness
Integrity
Confidence
5 Factors for International Assignee

Flexibility/Adaptability
Resourcefulness
Ability to deal with stress

3
Flexibility
Emotional Stability
Willingness to Change
Tolerance for ambiguity
Adaptability
Independence
Dependability
Political sensitivity
Positive self-image
5 Factors for International Assignee

Extra-Cultural Openness

4
Variety of outside interests
Interest in foreign cultures
Openness
Knowledge of local Languages
Outgoingness & extraversion
Overseas experience
5 Factors for International Assignee

5
Family Situation
Adaptability of spouse & family
Spouse’s positive opinion
Willingness of spouse to live abroad
Stable marriage
 Adaptability Screening
Normally conducted by Psychologists or psychiatrist

Work experience

Education

Language Skills

Paper & Pencil Tests

Aptitude Tests

Personality Tests
ining & Maintaining International Employe
vel 1: Impact of Cultural Differences

vel 2: Focus on attitudes

vel 3: Skill Building

vel 4: : Language
Adaptation Skills
Adjustment

Fundamental Cross-Cultural Training Methodologies

Information or Fact-Oriented Training

Attribution Training

Cultural Awareness Training

Cognitive-Behaviour Modification

Experiential Learning

Interaction Training
Fundamental Cross-Cultural Training Methodologies
Information or Fact-Oriented
Training
Attribution Training
Cultural Awareness Training
Cognitive-Behaviour Modification
Experiential Learning
Interaction Training

Trainees are presented with various facts through

• Live Lectures

• Videotapes

• Reading Materials
Fundamental Cross-Cultural Training Methodologies
Information or Fact-Oriented Training
Attribution Training
Cultural Awareness Training
Cognitive-Behaviour Modification
Experiential Learning
Interaction Training

Focuses on explanations of behaviour

• Point of View of the Native

• Learn the cognitive standards

• Standards of Behaviour
 International Compensation
The objectives
• Consistency & equity for all employees
• Attraction & retention of skilled staff
• Facilitation of International transfers
• Consistency with the overall business strategies
• Motivation
Broad Approaches for Compensation
• Home based policies
• Host based policies
• Region based policies
 International Compensation
Balance sheet approach
• Aims to “equalise” the purchasing power of
expatriates & their home country colleagues
• “Incentive”amount to compensate quality of life
issues (e.g.housing,education,recreation & social)
Designing Appropriate International Reward System

• “Base Salary + additional benefits (eg. currency

protection,taxation,housing & education allowances)

• Expectation Management

• “Grapevine” Management
 Pay Principles

❐ Job Bands
❐ Market match and pricing
❐ Setting the budget
✔Market Position
✔Market Movement
✔Affordability
❐ Delivering Pay
✔Performance Bands
✔Budget
 Pay Strategy
$$

Upper
Quartile
(75P)

Median

Lower
Quartile
(25P)
New New to Competent Solid High Critical High
Employee the job Performer Contributor Performer Jobs Potential

Performance Bands
 Components of Pay

❐ Base Pay
✔ Market Position
✔ Performance
✔ Value Delivery
 International Compensation
India
Workers
Monthly Direct Components
• Basic
• House Rent Allowance
• Food Coupons
• Conveyance Allowance
• Factory Allowance
• Uniform Allowance
Annual Direct Components
• Medical Reimbursement
• Leave Travel Allowance
Indirect Benefits
• Provident Fund
• Employee State Insurance
(ESI)
• Group Mediclaim Insurance
• Group Gratuity
Executives &
Managers
Monthly Direct Components
• Basic
• House Rent Allowance
• Conveyance Allowance
• Food Coupons
• Special Allowance
Annual Direct Components
• Medical Reimbursement
• Leave Travel Allowance
Indirect Benefits
• Provident Fund
• Group Mediclaim Insurance
• Group Personal Accident
• Group Gratuity