International Human

Resources Management

Managing Human Resources

Belcourt * Bohlander * Snell 5th Canadian edition

Copyright © 2008 by Nelson, a division of Thomson PowerPoint Presentation by

Canada Limited.
All rights reserved. Monica Belcourt, York University and
Charlie Cook, The University of West Alabama
 Objectives
After studying this chapter, you should be able to:

1. Identify the types of organizational forms used for

competing internationally.
2. Explain the economic, political-legal, and cultural
factors in different countries that HR managers
need to consider.
3. Explain how domestic and international HRM differ.
4. Discuss the staffing process for individuals working
internationally.
5. Identify the unique training needs for international
assignees and their employees.

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 Objectives (cont’d)
After studying this chapter, you should be able to:

6. Identify the characteristics of a good international

compensation plan.
7. Reconcile the difficulties of home- and host-country
performance appraisals.
8. Explain how labour relations differ around the
world.

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 Increasing Importance of Global Human Resource
Understanding
International
International
Mergers
Mergersandand
Acquisitions
Acquisitions

Importance
Importanceof
of
Foreign Global
GlobalHuman
Human
ForeignHuman
Human Global
Global
Resources
Resources Resources
Resources Competition
Competition
Management
Management

Market
MarketAccess
Access
Opportunities
Opportunities

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 Managing Across Borders
• International corporation • Global corporation
 Domestic firm that uses its  Firm that has integrated
existing capabilities to move worldwide operations
into overseas markets. through a centralized home
• Multinational corporation office.
(MNC) • Transnational corporation
 Firm with independent  Firm that attempts to
business units operating in balance local
multiple countries. responsiveness and global
scale via a network of
specialized operating units.

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 Types of Organizations

Figure 15.1

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 Top International Companies

MARKET VALUE
(BILLIONS OF U.S. DOLLARS)

1. General Electric $286.10

2. Microsoft 263.99
3. ExxonMobil 244.93
4. Pfizer 244.89
5. Wal-Mart Stores 232.22
6. Citigroup 210.86
7. Johnson & Johnson 161.36
8. Royal Dutch/Shell Group 158.48
9. BP 153.24
10. AIG 150.97 Figure 15.2

Source: Chester Dawson, “The Global 1000,” Business Week, July 14, 2003, 34.
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 Top International Companies (cont’d)

SALES
(BILLIONS OF U.S. DOLLARS)

1. Wal-Mart Stores $244.52

2. ExxonMobil 204.51
3. General Motors 184.21
4. Royal Dutch/Shell 179.43
5. BP 178.72
6. Ford Motor 162.59
7. DaimlerChrysler 156.84
8. Toyota Motor 134.23
9. General Electric 131.70
10. Allianz 126.80 Figure 15.2

Source: Chester Dawson, “The Global 1000,” Business Week, July 14, 2003, 34.
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 Top International Companies (cont’d)

PROFITS
(BILLIONS OF U.S. DOLLARS)

1. Citigroup $15.32
2. General Electric 15.13
3. Altria Group 11.10
4. ExxonMobil 11.01
5. Royal Dutch/Shell 9.42
6. Bank of America 9.25
7. Pfizer 9.18
8. Wal-Mart Stores 8.04
9. Toyota Motor 7.90
10. Microsoft 7.83 Figure 15.2

Source: Chester Dawson, “The Global 1000,” Business Week, July 14, 2003, 34.
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 How International Companies Affect the
World Economy
• Their production and distribution extend beyond
national boundaries, making it easier to transfer
technology.
• They have direct investments in many countries,
affecting the balance of payments.
• They have a political impact that leads to
cooperation among countries and to the
breaking down of barriers of nationalism.

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 How Does the Global Environment
Influence Management?
• Unified Economies
 Closely partnered nations such as the European
Union (EU) have developed into strong competitors.
 Promotes job growth in trading nations.
• Cultural environment
 The communication patterns, religion, values and
ideologies, education, and social structure of a host
country influence how HR is conducted in that
country.

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 The
TheNations
Nationsof
ofthe
the
European
EuropeanUnion
Union

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 Cultural Environment of International Business

Figure 15.3

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 Domestic versus International HRM
• Issues in international HRM in helping
employees adapt to a new and different
environment outside their own country:
 Relocation
 Orientation
 Objective
 Translation services

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 International Staffing
• Expatriates, or Home-country Nationals
 Employees from the home country who are on
international assignment.
• Host-country Nationals
 Employees who are natives of the host country.
• Third-country Nationals
 Employees who are natives of a country other than
the home country or the host country.

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Changes in International Staffing over Time

Figure 15.4

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 Hiring Host-Country Nationals
• Three main advantages:
1. Hiring local citizens is generally less costly than
relocating expatriates.
2. Since local governments usually want good jobs for
their citizens, foreign employers may be required to
hire locally.
3. Most customers want to do business with
companies they perceive to be local versus foreign.

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 Recruiting Internationally
• Work Permit, or Visa
 Government document granting a foreign individual
the right to seek employment.
• Guest Workers
 Foreign workers invited to perform needed labour.
• Apprenticeships
 Vocational training programs in skilled trades.
• Transnational Teams
 Teams composed of members of multiple
nationalities working on projects that span multiple
countries.
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 Selecting Global Managers
• Global manager
 A manager equipped to run an international business
• Skills Categories
Ability to seize strategic opportunities
Ability to manage highly decentralized organizations
Awareness of global issues
Sensitivity to issues of diversity
Competence in interpersonal relations
Skill in building community

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 Selecting Global Managers
1. Begin with self-selection.
2. Create a candidate pool.
3. Assess core skills.
4. Assess augmented skills and attributes.

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 Highlights in HRM

Skills of Expatriate Managers

CORE SKILLS AUGMENTED SKILLS
Experience Technical skills
Decision making Negotiation skills
Resourcefulness Strategic thinking
Adaptability Delegation skills
Cultural sensitivity Change management
Team building
Maturity

Highlights 15.4

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 Measured Expatriate Characteristics
• Core Skills
 Skills that are considered
critical to an employee’s
success abroad.
• Augmented Skills
 Skills that are helpful in
facilitating the efforts of
expatriate managers.
• Failure rate
 Percentage of expatriates who
do not perform satisfactorily.

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 Comparison of Advantages in Sources of Overseas Managers

HOST-COUNTRY HOME-COUNTRY NATIONALS THIRD-COUNTRY

NATIONALS (EXPATRIATES) NATIONALS

Less costly Talent available within company Broad experience

Preferred by host-country Greater control International

outlook governments
Intimate knowledge of Company experience Multilingualism
environment and culture
Language facility Mobility
Experience provided to corporate
executives

Figure 15.6

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 Expatriate Selection Criteria

Figure 15.7

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Causes of Expatriate Assignment Failure

• Family adjustment
• Lifestyle issues
• Work adjustment
• Bad selection
• Poor performance
• Other opportunities arise
• Business reasons
• Repatriation issues

Figure 15.8

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 Training and Development
• Essential training program content to prepare
employees for working internationally:
 Language training
 Cultural training
 Assessing and tracking career development
 Managing personal and family life
 Repatriation
• Culture shock
 Perpetual stress experienced by people who settle
overseas

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Preparing for an International Assignment

To prepare for an international assignment, one should become

acquainted with the following aspects of the host country:
1. Social and business etiquette
2. History and folklore
3. Current affairs, including relations between the host country
and Canada
4. Cultural values and priorities
5. Geography, especially its major cities
6. Sources of pride and great achievements of the culture
7. Religion and the role of religion in daily life
8. Political structure and current players
9. Practical matters such as currency, transportation, time zones,
hours of business
10. The language Figure 15.9

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 Training Methods
• Reviewing available information about the host
company: books, magazines, video tapes.
• Conversations with host country natives.
• Sensitivity training to become familiar with the
customs and overcome prejudices.
• Temporary assignments to encourage shared
learning.

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 Highlights in HRM
Stressors and Coping Responses in the Developmental Stages of
Expatriate Executives
PRIMARY
STRESSOR RESPONSE

Expatriate selection Cross-cultural unreadiness.

Assignment acceptance Unrealistic evaluation of stressors to come.
Hurried time frame.
Pre- and post-arrival Ignorance of cultural training differences.
Arrival Cultural shock.
Stressor reevaluation.
Feelings of lack of fit and differential treatment.
Novice Cultural blunders or inadequacy of coping responses.
Ambiguity owing to inability to decipher meaning of situations.
Transitional Rejection of host or parent culture.
Mastery Frustration with inability to perform boundary spanning role.
Bothered by living with a cultural paradox.
Repatriation Disappointment with unfulfilled expectations.
Sense of isolation.
Loss of autonomy. Highlights 15.5
Source: J. Sanchez, P. Spector, and C. Cooper, “Adapting to a Boundaryless World: A Developmental
Expatriate Model,” Academy of Management Executive 14, no. 2 (May 2000): 96–106.
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 Returning from an Overseas Assignment
• Repatriation
 The process of an employee transitioning home from
an international assignment.
 Throw a “welcome home” party.
 Offer counseling to ease the transition.
 Arrange conferences and presentations to make certain
that knowledge and skills acquired away from home are
identified and disseminated.
 Get feedback from the employee and the family about
how well the organization handled the repatriation
process.

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 Compensation
• Different countries have different norms for
employee compensation.
 Financial (money) incentives versus nonfinancial
incentives (prestige, independence, and influence)
 Individual rewards versus collectivist concerns for
internal equity and personal needs
 General rule: match the rewards to the values of the
local culture—create a pay plan that supports the
overall strategic intent of the organization but
provides enough flexibility to customize particular
policies and programs to meet the needs of
employees in specific locations.

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 Forces Driving Global Pay

CULTURAL PREFERENCES PERSONAL PREFERENCES

Importance of status Attitudes toward risk
Role of individual vs. organization Quality of life vs. work
vs. government Short- vs. long-term
Equality vs. disparity Competitiveness vs. solidarity
Achievement vs. relationships

ECONOMIC CONDITIONS SOCIAL CONSTRAINTS

Size of economy Income tax rates, social costs
Types of industries, natural resources Laws and regulations
Inflation, unemployment Collective bargaining, worker
Protectionism vs. open market participation
Skills, education of workforce

Figure 15.11
Source: Steven Gross and Per Wingerup, “Global Pay? Maybe Not Yet!”
Compensation and Benefits Review 31, no. 4 (July/August 1999): 25–34.
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 Compensation of Host-Country Employees
• Hourly wages vary dramatically from country to
country.
• Pay periods are different.
• Seniority may be an important factor.
• High pay rates can upset local compensation
practices.
• Bonuses, profit-sharing, benefits and paid leave
may be more extensive and legally required.

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 Hourly Wages in Different Countries*
COUNTRY $/HOUR

Norway 31.55
Germany (former West) 31.25
Switzerland 27.87
Belgium 27.73
Sweden 25.18
United States 21.97
France 21.13
Britain 20.37
Japan 20.09
Australia 20.05
Canada 19.28
Italy 18.35
Spain 14.96
Israel 11.73
Korea 10.28
Portugal 6.23
Taiwan 5.84
Brazil 2.67
Mexico 2.48
China 0.63
*Hourly compensation costs in U.S. dollars Figure 15.12
for production workers in manufacturing. Sri Lanka 0.49
Source: U.S. Department of Labor, Bureau of Labor Statistics, November
2004.
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 Compensation of Expatriate Managers
• Provide an incentive to • Consider foreign taxes the
leave Canada employee is likely to have
• Allow for maintaining a to pay (in addition to
N.A. standard of living domestic taxes) and help
with tax forms and filing
• Provide for security in
countries that are • Allow for maintaining
politically unstable or relationships with family,
present personal dangers friends, and business
associates.
• Include provisions for
good healthcare • Facilitate reentry home
• Be in writing
• Provide for the education
of children

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 Expatriate Compensation Systems
• Home-Based Pay
 Pay based on an expatriate’s home country’s
compensation practices
• Balance-Sheet Approach
 A compensation system designed to match the
purchasing power in a person’s home country
1. Calculate base pay
2. Figure cost-of-living allowance (COLA)
3. Add incentive premiums
4. Add assistance programs

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 Expatriate Compensation Systems (cont’d)
• Host-Based Pay
 Expatriate pay comparable to that earned by
employees in a host country to which the expatriate is
assigned
• Localization
 Adapting pay and other compensation benefits to
match that of a particular country
• Other Issues
 Adequacy of medical care
 Personal security
 Education

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 Performance Appraisal of International
Managers
• Who Should Appraise Performance?
 Home-country evaluations
 Host-country evaluations
• Adjusting Performance Criteria
 Augmenting job duties
 Individual learning
 Organizational learning
• Providing Feedback
 Debriefing interview

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 Boosting ROI of Expatriates

Major initiatives planned to improve assignment

return on investment (ROI):
Better candidate selection 32%
Career-planning skills 26
Communicating objectives 24
Assignment preparation 20
Monitoring program 17
Cross-cultural training 10
Developing or expanding intranet 7
Communication/recognition 6
Web-based cultural training 5
Mandating destination support 4
Other 17 Business Case

Source: Andrea Poe, “Selection Savvy,” HRMagazine 47, no. 4 (April 2002): 77–83.
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 International Organizations and Labour
Relations
• International Differences in Unions
 The level at which bargaining takes place (national,
industry, or workplace)
 The degree of centralization of union-management
relations
 The scope of bargaining (parties and issues)
 The degree to which government intervenes
 The degree of unionization and union strength.

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 Key Terms
• augmented skills • home-based pay
• balance-sheet approach • host-based pay
• codetermination • host country
• core skills • host-country nationals
• cultural environment • international corporation
• culture shock • localization
• expatriates, or home-country • multinational corporation
nationals (MNC)
• failure rate • repatriation
• global corporation • third-country nationals
• global manager • transnational corporation
• guest workers • transnational teams
• work permit, or visa

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