INTERNATIONALHRM

International HRM DifferencesGreater Number of ServicesSpecial Services to Unique GroupCompensation ComplexityForeign Exchange Rate AttentionLanguage and Cultural Differences

Increasing Importance of Global Human Resources UnderstandingInternational Mergers and AcquisitionsGlobal CompetitionImportance of Global Human Resources ManagementForeign Human ResourcesMarket Access Opportunities

Composition of the Cultural Environment of International BusinessValues and AttitudesToward:timeachievementworkwealthchangescientific methodrisk-takingEducationformal educationvocational trainingprimary educationsecondary educationhigher educationliteracy levelhuman resources planningSocial Organizationkinship social institutionsauthority structuresinterest groups social mobilitysocial stratificationstatus systemsLanguagespokenwritten languageofficial languagelinguistic pluralismlanguage hierarchyinternational languagesmass mediaLawcommon lawcode lawforeign lawhome country lawantitrust policyinternational lawregulationPoliticsnationalismsovereigntyimperialismpowernational interestsideologiespolitical risk

Key Issues in International HRMWorldwide Human Resources PlanningRecruiting and SelectionExpatriate orientation and trainingRepatriationPerformance appraisalCompensationDealing with inflation and unexpected changes in exchange ratesProviding sufficient pay to keep individualsShould company pay hardship allowance?Dissatisfaction with cost of living allowancesHousing (Complex problems at home and overseas)

Key Issues in International HRMBenefits PlanningDeveloping equity among employeesSeveral plans necessary for different categories of personnelTaxation (Proliferation of new laws)Communication of HR Policies and Programs WorldwideTreat communication as a continuous processFace-to-Face contact frequentlyMake policy manuals brief and simpleBe sensitive to needs of receiverSend regular written explanations of policy changesPeriodic rotation of overseas HR managers desirableSecurity

Global Manufacturing

International CorporationDomestic firm that uses its existing capabilities to move into overseas markets.

Multinational Corporation (MNC)Firm which independent business units operating in multiple countries.

Global CorporationFirm that had integrated worldwide operations through a centralized home office.

Transnational CorporationFirm that attempts to balance local responsiveness and global scale via a network of specialized operating units.

Types of Organizations

The Multi-National Corporation (MNC)Home Country EmploymentExternal Country Employment

Managing in a Foreign EnvironmentAttitudes VaryMotivational Tools are Distinctly Different

Cultural Environmentof International Business

Clustering Nations ApproachGeographyLanguagesReligionJob AttitudesWork GoalsValuesNeeds

Managerial ValuesRole of CompetitionRole of BlameRole of ShameRole of Participation: Japan (hi)Role of Autocratic: Europe (hi) and South America (hi)

Sources of Managerial Talent Home Country Nationals (Expatriates)Host Country Nationals (Natives)Third Country Nationals (Non-Home/Host)

Advantages of Different Sourcesfor Overseas Managers

SOME OF THE LARGEST U.S. MULTINATIONALS

6 Major Reasons for American Expatriate Failures in Foreign EnvironmentInability of the managers spouse to adjust to a different cultural environment.The managers inability to adapt to a different physical or cultural environment. Other family-related problems.The managers personality or emotional immaturity.The managers inability to cope with the responsibilities posed by the overseas work.The managers lack of technical competence.The managers lack of motivation to work overseas.

Selection MethodsInterviews (executives and psychologists)Assessment Centers (exercises)Tests (language and special tests)Role of Family

Flowchart of the Selection-Decision ProcessStart the Selection ProcessCan the position be filled by a local national?Identify degree of interaction required with local community using a 7- or 9- point scale, ranging from low to high, indicate the degree of interaction with local community required for successful performance on the job.Select local national and subject him/her to training basically aimed at improving technical and managerial skills.Emphasis* on tasks variables.Second but by no means unimportant question is to ask whether the individual is willing to serve abroad.Is candidate willing?Probably not suitable for positionEmphasis* on task variablesIdentify degree of similarity / dissimilarity between cultures using a 7- or 9-point scale, ranging from similar to highly diverse, indicate the magnitude of differences between the two cultures,Emphasis* on relational abilities factor.Family situation factor must also be taken into consideration.Start orientation (most rigorous)Start orientation(moderate to high rigor)Start orientation(moderate to high rigor)Probably not suitable for positionYESNOYESYESNONOHIGHLOWHIGHLY DIVERSEVERY SIMILAR

Preparing for an International AssignmentStudy the following subjects:Social and business etiquette.History and folklore.Current affairs, including relations between the country and the United States.The cultures values and priorities.Geography, especially the cities.Sources of pride: artists, musicians, novelists, sports, great achievements of the culture, including things to see and do.Religion and the role of religion in daily life.Political structure and current players.Practical matters such as currency, transportation, time zones, hours of business.The language.

Cultural Shock"A Disorientation that Causes Perpetual Stress" Disorienting IncidentsImpossible CommunicationTelephone DifficultiesFamily Frustrations

Special ConsiderationsCareer Development RisksReentry ProblemsManaging Family LifeTerrorism

RecruitmentGovernment RegulationsWork Permits Universally RequiredRecruitment of Locals VariesGuest WorkersRole of Church, Family, Politics

SelectionMerit Versus Best FamilyFamily TiesSocial StandingOriginIndustrialized versus Less Developed

Training IssuesLocal ResourcesLess Technical CapabilitiesApprenticeship Strengths in EuropeManagement Development (US Leader)Language (English Need)

CompensationHost Country EmployeesProduction Standard or Time or CombinationBenefits (often higher than U.S.)Profit Sharing (may be Required)ManagersNarrowing of Salary Gap with USA

Expatriate CompensationBase PayDifferentialsIncentivesCompany AssistanceCost: 3-4 times USA Rate

Compensation of Expatriate ManagersProvide an incentive to leave the united states.Maintain an American standard of living.Facilitate reentry into the united states.Provide for the education of children.Maintain relationships with family, friends, and business associates.To be effective, a compensationprogram must:

Compensation Elements of an ExpatriatePrograms used by most U.S. Based MNCs have four elements:Base pay equal to pay of domestic counterparts in comparably evaluated jobs.Differentials to offset the higher costs of overseas goods, services, and housing.Incentives to compensate the person for separation from family, friends, and domestic support systems.Company assistance programs to cover added costs such as moving and storage costs, automobile, and education expenses.

The Price of an ExpatriateNote: Additional costs often incurred arent listed above, including language and cross-cultural training for employee and family, and costs of selling home and cars in the U.S. before moving.*Figures take into account payments by employee to company based on hypothetical U.S. income tax and housing costs.*It is not unusual to triple costs compared to USA earnings.