chapter04
TRANSCRIPT
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4
GlobalHuman Resource
Management
McGraw-Hill/IrwinHuman Resource Management, 10/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
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Introduction
Integration of the world’s economies and business globalization continues unabated International trade is growing more rapidly than
world output Foreign direct investment (FDI) flows are increasing The number of cross-border, inter-firm agreements
has risen dramatically Social, economic, and political developments
throughout the world changed the way global business is conducted
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Introduction
The external environment greatly influences HRM activities Each country has its own:
LawsBusiness customsWorkforce characteristicsPolitical climate
The most difficult challenge to overcome is the “people challenge”
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Introduction
Key challenges to international effectiveness:Finding suitable candidatesIntercultural understandingCareer managementEmployee retentionAdjusting to environmentPartner dissatisfactionRelocation reluctance
Global human resource management has the same functions as domestic HRM, plus unique aspects
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Introduction
Organizations expand beyond domestic boundaries to achieve: Satisfied employees Competitive products and services New or broader markets New, more efficient manufacturing technology Large, inexpensive labor forces
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Introduction
Maquiladoras are Mexican assembly plants used by international companiesSometimes called “twin plants” Most owned by American,
Japanese, and Korean manufacturers Savings outweigh extra shipping costs After a slowdown in recent years, the maquiladora
industry is showing strong growth
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Introduction
Mexico is not the only area popular with American firms, nor is inexpensive labor the only driving force Intel built a manufacturing facility in Ireland in
exchange for a guaranteed tax break
Foreign direct investment in developed countries has decreased since 2001 Developing countries are seeing increases in foreign
direct investment
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The Cultural Nature of Global HRM
Cultural differences between nations can influence the effectiveness of HRM policies and practices HRM must be congruent with the cultural orientation
of the workers
Hefstede says cultures vary in five dimensions: Individualism versus collectivism Power distance Avoidance of uncertainty Masculinity Long-term versus short-term orientation
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The Concept of “Fit” in Global HRM
“Fit” is the degree to which HRM policies are congruent with the:Strategic plan of the organization Work-related values of the foreign
culture
Internal fit: making sure HRM policies facilitate the work values and motivation of employees
External fit: the degree to which HRM matches the context in which the organization is operating
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Multinational and Global Corporations
Multinational corporations (MNCs) are usually in the early stages of an international strategy Operations in many nations, but each is a separate
enterprise Each enterprise adapts products to the local culture Most control remains with the home office or with
an expatriate from the home country Most employees and managers are from the home
country (polycentric staffing)
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Multinational and Global Corporations
Global corporations (GC) are structured so that national boundaries disappear The best people are hired, regardless of national
origin (geocentric staffing) Subsidiaries are not limited to serving the local
culture The national affiliation of an employee becomes less
important than his/her area of expertise
GHRM in the 21st century will be challenging for both MNCs and GCs
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Multinational and Global Corporations
Three sources of employees for an international assignment: Host country nationals (HCNs)Parent country nationals (PCNs)Third country nationals (TCNs)
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Multinational and Global Corporations
MNCs generally take an ethnocentric perspectiveThey use HRM policies from home with minor
adaptations They believe key personnel should be PCNs
Ethnocentricity is strong in many foreign organizations conducting business in the U.S.Nearly every executive in Japanese-owned businesses
in the U.S. is a Japanese national
The geocentric organization ignores national boundaries for staffing overseas operations
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Multinational and Global Corporations
The biggest HR challenge facing any globally oriented corporation is finding competent managers An expatriate manager (PCN) comes from the
corporation’s home nation Relocation can be troublesome, regardless of the
managers country of origin The challenge is to capitalize on the diversity of a
global workforce without suppressing cultural heritage
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Multinational and Global Corporations
The biggest mistake global organizations make is:Assuming there is “one best way” to structure HRM
policies and practices
There are 120 critical differences between Japanese and American workplace norms These differences impact issues related to:
Feedback and performance evaluation methods Lines of authority Information management
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The Expatriate Manager in the MNC
Managing the expatriate’s adjustment process is a primary focus of GHRM The difficulty of this task has increased because:
Sales and production shifted closer to markets There is higher use of host country and third
country management There is a concurrent increase in the number of
“inpats” Both inpats and expats can have a difficult time
adapting to their new surroundings
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The Expatriate Manager in the MNC
80 percent of all middle- to large-size companies use expatriates Many companies are not effectively selecting and
preparing employees for overseas assignments American expatriates fail more often than their
Japanese and European counterparts Only 57 percent of companies provide cross-cultural
training
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Selecting the Expatriate Manager
Factors associated with expatriate failure: Uncertain technical competency Weak language skills Unsure about going overseas Family problems Low spouse supportBehavioral rigidityInability to adaptPoor relational abilityWeak stress management skills
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Selecting the Expatriate Manager
Factors associated with expatriate success: Good technical and language skillsStrong desire to work overseasSpecific knowledge of overseas cultureWell-adjusted family situationComplete support of spouseBehavioral flexibilityAdaptability and open-mindednessGood relational abilityGood stress management skills
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Selecting the Expatriate Manager
Success in domestic operations may have little to do with success overseasMany expatriates believe too little attention is paid to
other critical factors during the selection process
Expatriate selection should focus on the manager’s: Self-image Normal way of interacting
with others Perceptual orientation
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Selecting the Expatriate Manager
The role of the expatriate’s family should not be underestimatedDual career marriages are another difficult issue
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Culture Shock
Exposure to a foreign culture can produce a predictable series of reactions: A period of fascination Culture shockAdaptation
Dealing with culture shock involves:PreparationLanguage skillsPreparing the host country personnel who will work
with the expatriate
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Training the Expatriate Manager
Intercultural training improves the odds for success on an overseas assignment According to Tung, two things determine the training
an expatriate should receive: Level of contact the person will have with the host
culture Degree of dissimilarity between the home and host
cultures
Self-awareness is an important aspect of successfully preparing for an international assignment
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Training the Expatriate Manager
The second phase of training occurs at the host country site Language training continues Mentoring relationships may
be established Local support groups may
help the entire family Getting involved with daily
experiences as soon as possible
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Training the Expatriate Manager
The final phase occurs when the manager prepares to return to the parent country (repatriation) Repatriation can result in more culture shock than
was experienced while overseas Repatriates are more likely to leave the parent
company than their domestic counterparts Many returning managers feel they have lost ground
in terms of career advancement
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Training the Expatriate Manager
To help managers deal with such issues: Actively plan how the international assignment will
fit with the manager’s career aspirations Identify prospective international managers early in
their careers Treat every new hire as a prospective global
employee
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Compensating the Expatriate Manager
A middle- to upper-level expatriate can cost two to three times more than a domestic manager This is often due to the compensation practices of
multinational organizations
The balance-sheet approach ensures that the expatriate maintains a similar standard of living “Extras” are often provided as an incentive Foreign service premiums adjust the expatriate’s base
salary for the inconvenience the assignment causes
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Compensating the Expatriate Manager
The cost of living in foreign cities can be very high Expatriates usually receive a cost-of-living premium
to offset these differences, plus optional: Home furnishings and maintenance allowancesHelp with maintaining or selling a current home Transportation differential allowances Educational allowances Hardship premiums
To combat these costs, some firms have shifted to using more short-term assignees
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Host Country Nationals and the GNC
Global corporations use fewer expatriates HCNs have greater cultural sensitivity and better
understand local employees’ motivations and needs More companies are giving key managerial positions
in their foreign operations to HCNs and TCNs
Careful recruitment, selection, and training can reduce or eliminate many problems with HCNs Expatriates must learn to be more culturally sensitive Host country managers must learn to accept greater
responsibility
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Host Country Nationals and the GNC
When an organization recruits HCNs: Its HRM policies must be more flexible It must strive for a reasonable fit between HRM
policies and cultural values
Suggestions that can help: Use the same methods/sources as host country
organizationsUse a recruiting liaison Write job ads consistent with local custom and jargon Allow HCNs to use native language during
interviews
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Global Corporate Boards of Directors
Boards of directors of most American corporations have been slow to include foreign members A survey of 589 America businesses found a global
representative on these boards: 24 percent of manufacturing firms 14 percent of financial firms 9 percent of other, non-financial firms
European companies are progressing more quickly Nestlé, Unilever, Fiat, and Volvo all have global
representation on their boards
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Legal and Ethical Climate of GHRM
International business is conducted in a maze of:International trade agreementsParent country lawsHost country regulations
Ethical behavior challenges may also be encountered:Environmental regulation
may be weaker “Gift giving” or “greasing”
may be common practice
The Foreign Corrupt Practices Act of 1977 (FCPA) makes it illegal for employees of American corporations to offer money or other items to foreign officials in order to gain an unfair competitive advantage
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Legal and Ethical Climate of GHRM
Regulations regarding employment discrimination vary from country to country The U.S. has some of the more stringent
anti-discrimination laws Many countries have not created this kind of
enforcement The Civil Rights Act of 1991
applies to the overseas operations of American corporations
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Legal and Ethical Climate of GHRM
Ethical dilemmas between profits and the preservation of basic human rights may also exist Example: The clash between business, morality, and
politics that occurred in South Africa during apartheidSimilar dilemmas occur around the globe in
developing countries
Resolving ethical issues is not an easy task
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Legal and Ethical Climate of GHRM
The first African American on the board of General Motors proposed his Sullivan Principles: Non-segregation in all work facilities Equal and fair employment practices for all Equal pay for all employees performing equal work Training programs to prepare blacks and other
nonwhites for supervisory and technical jobs Increasing the number of blacks and other nonwhite
minorities in management Improving the quality of employees’ lives outside of
the work environment
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Labor Relations & the International Corp.
Labor relations issues that may arise in the international environment:Unions Labor lawsLess emphasis on written contractsHow much participation employees
are entitled to in HRM policies
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Labor Relations & the International Corp.
Employee participation is guaranteed in Germany South Korea’s giant industrial firms, the chaebol,
control every aspect of worker’s lives
Government business regulations may differIn Singapore, annual wage adjustments are set by a
national council and strikes are nearly impossible
There is no simple solution to the labor relations problems with which MNCs and GCs are confronted Labor has been trying to establish global labor
organizations