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Part Four: Organizational

Behavior and Human Resource Management

International Management,5th ed.

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International Management,

5th ed.

Hodgetts and Luthans

Chapter Fifteen

Human Resource Selection and Repatriation

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IDENTIFY the three basic sources that MNCs can tap in filling management vacancies in overseas operations

SET FORTH some of the most common selection criteria used in identifying the best people for overseas assignments

DESCRIBE the selection procedures used in making the final decisions on the part of both the organization and the individual manager

DISCUSS the reasons for people’s returning from overseas assignments and present some of the strategies used in ensuring a smooth transition back into the local operation

Objectives of the Chapter

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Sources of Human Resources

Home Country Nationals Expatriate managers who are citizens of the country

where the MNC is headquartered Expatriates

Those who live and work away from their home country Citizens of the country where the MNC is headquartered

Expatriates are useful for: starting up operations providing technical expertise helping the MNC maintain financial control over the operation

Expatriates almost always were men Situation is changing

Expatriates typically used in top management positions

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Sources of Human Resources (cont.)

Host-Country Nationals Local managers who are hired by the MNC Used in middle- and lower-level management

positions Nativization

Requirement of host-country government that mandates employment of host-country nationals

U.S. companies tend to rely fairly heavily on host-country managers

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Sources of Human Resources (cont.)

Third-Country Nationals (TCNs) Citizens of countries other than the one in which the

MNC is headquartered or the one in which the managers are assigned to work by the MNC

Found in MNCs that have progressed through the initial and middle stages of internationalization

Advantages of using TCNs Require less compensation Good working knowledge of the region Given home office experience, often can achieve objectives

better than other types of managers Offer different perspectives

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Sources of Human Resources (cont.)

Inpatriates Individual from a host country or a third-

country national who is assigned to work in the home country

Help develop MNC’s global core competencies Able to manage across borders Do not fit the mold of traditional third-country

nationals

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Selection Criteria for International Assignments

Factors used to choose personnel for international assignments

General criteria Technical and human abilities Adaptability to cultural change Independence and self-reliance Physical and emotional health Age, experience, and education Language training Motivation for a foreign assignment

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Selection Criteria for International Assignments (cont.)

General criteria (cont.) Spouses and dependents or work-family issues

Adaptability screening Process of evaluating how well a family is likely to stand up to

the stress of overseas life

Leadership ability Based on maturity, emotional stability, communication

skills, independence, initiative, creativity, and good health

Preparing oneself for overseas assignment Self-evaluation and general awareness Concentration on activities that should be completed

prior to and subsequent to selection

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International Human Resource Selection Procedures

Testing Procedures Not extremely popular because:

Testing is expensive Lack of good measures of job performance in overseas jobs Testing did not do as good a job of selecting as other selection

procedures

Interviewing Procedures Popular screening method for international assignments May require both expatriate and local interviewers

Adjustment Model Explains the factors involved in effective adjustment

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Figure 15-3 Theoretic Model for Explaining International Adjustment

of ExpatriatesIn-Country AdjustmentAnticipatory Adjustment

Individual

Individual expectations

TrainingPrevious

experience

Organization

Selection mechanismsand criteria

AnticipatoryAdjustment

Individual

(1,2,3) Self-efficacy(1,2,3) Relation skills(1,2,3) Perception skills

Organizational Culture

(1) Organization culture novelty(1) Social support(2,3) Logistical help

Nonwork

(1) Culture novelty(1,2,3) Family-spouse adjustment

Mode of Adjustment

Degree of Adjustment

1. Work adjustment2. Interaction adjustment3. General adjustment

Job

(1) Role clarity(1) Role discretion(1) Role novelty(1) Role conflict

OrganizationSocialization

Socialization tacticsSocialization content

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Figure 15-4 The Relocation Transition Curve

1. Unreality The feeling of that the relocation is a dream

2. Fantasia The feeling of enchantment and excitement in the new environment

3. Interest A deeper exploration of the environment and a realization that it is fundamentally different from home

4. Acceptance of reality “Letting go” of past comfortable attitudes. The realization that you are a stranger in a strange land

5. Experimentation and testing of new approaches. Practice phase, trying to do things differently. Feedback of results, success and failure

6. Search for meaning. Understanding reasons for success and failure. New models/personal theories created

7. Integration of new skills and behavior. Accept- ance of the new environment

TimeBeginning of transition

Perceived Competence

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The Compensation Issue

Common Elements of Compensation Packages Base salary

Amount of money that an expatriate normally receives in the home country

Used to establish expatriate pay Serves as benchmark against which bonuses and

benefits are calculated Benefits

Substantial portion of expatriate compensation Many thorny issues surround the amount and nature

of the benefit package for expatriates

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The Compensation Issue (cont.)

Common Elements of Compensation Packages (cont.) Allowances

Expensive feature of expatriate packages Cost of living Relocation Housing Education Hardship

Incentives Used to motivate expatriates Lump-sum payments

Tax equalization Expatriates get two tax bills

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Figure 15-5 Relevant Cost of Living in Selected Cities:

New York = 100; December 2000

0

20

40

60

80

100

120

140

160

180

Tokyo

Hong

KongSeo

ul

New Y

ork

Lond

on

Beijing

Paris

Mos

cowCair

o

Carac

as

Sao P

auloLim

a

Istan

bul

Jaka

rta

Bangk

ok

Joha

nnes

burg

Man

ila

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The Compensation Issue (cont.)

Tailoring the Compensation Package Several approaches to tailor the compensation packa ge

Balance sheet approach Ensures the expat is ‘made whole’ and does not lose money by taking the

foreign assignment Localization

Pays the expat a salary comparable to that of local nationals Lump sum approach

Expat receives a predetermined amount of money and the individual makes her/his own decisions regarding how to spend it

Cafeteria approach Expat receives a series of options and decides how to spend funds

Regional approach Compensation system for all expats who are assigned to a particular

region and everyone paid in accord with that system

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Individual and Host-Country Viewpoints

Candidate Motivations for Accepting a Foreign Assignment Reasons for accepting a foreign assignment include:

Greater demand for their talents abroad than at home Enhancement of one’s international business career Attraction of overseas assignments

Motives affected by occupation Motives affected by home country of manager

Host Country Preferences for Managerial Personnel Ethnocentric, by and large

Prefer local managers

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Figure 15-6 Quality of Life in Select Major Metropolises

0

20

40

60

80

100

120

Zurich

Vanco

uver

Copen

hage

n

Stock

holm

Bruss

elsParis

Lond

on

New Y

ork

Mad

rid

Rome

Hong

Kong

Pragu

e

Istan

bul

Rio de

Jane

iroCair

o

Beijing

Mos

cow

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Repatriation of Expatriates

Repatriation Return to one’s home country from an overseas management

assignment Reasons for returning

Formally agreed-on tour of duty is over Expats want their children educated in the home country Unhappiness with foreign assignment Failure to perform well

Readjustment problems Permanent position upon return constitutes a demotion Lack opportunity to use skills learned abroad upon return Salary and benefits may decrease upon return

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Repatriation of Expatriates (cont.)

Transition Strategies Help smooth the adjustment from an overseas to a

stateside assignment Repatriation agreements

Individual and firm agree upon the length of the tour of duty Mutually agreeable job identified when expat returns

Keep expat involved in home office communication and projects while s/he is abroad

Proactive strategy that provides an effective support system to allay concerns about career issues

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Figure 15-7 Effectiveness of Returning Expatriates

5.0

4.5

4.0

3.5

2.5

2.0

1.5

1.0

3.0

Eff

ecti

ven

ess

High

Low

Neutral

Months back in home country

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