2

Module 2

IHRM

Employee Hiring

Human Resource Planning

Human Resource Planning consists of developing and implementing plans and programs to ensure that the right number and type of individuals are available at the right time and right place to fulfil organisational needs. (Schuler et al 1992)

Involves forecasting human resource needs for the organisation and planning the steps necessary to meet these needs.

The Required Number ofEmployees

THE SYSTEMATIC REVIEW OF HUMAN THE SYSTEMATIC REVIEW OF HUMAN RESOURCE REQUIREMENTS TO ENSURE RESOURCE REQUIREMENTS TO ENSURE

THAT:THAT:

With The RequiredSkills

Are Available When Needed

PRODUCTIVITY

ECONOMICDEVELOPMENT

GROWTH

EFFECTIVE

UTILIZATION

OF

HUMANCAPABILITY

Two dimensions of HRP

• HRP plays a strategic role in deciding organizational objectives and plans. It provides an insight into the organizational capabilities that could be leveraged for developing business plan.

• HRP is the process of forecasting a MNC’s future demand and supply of the right type of people in the right number

• The HRP process is linked to the business plan of the MNC

• HRP facilitates the realization of the organization’s objective.

IHRP

IHRP

• Is the first component of HRM strategy.• All other functional HR activities are derived

from and flow out of the HRP process.• Has its basis in considerations of future HR

requirements in light of present HR capabilities and capacities.

• Is proactive in anticipating and preparing flexible responses to changing HR requirements.

• Has both an internal and external focus.

Steps in Recruitment and Selection Process

The recruitment and selection process is a series of hurdles aimed at selecting the best candidate for the job.

The Recruitment and Selection Process

1. Decide what positions to fill through personnel planning and forecasting.

2. Build a candidate pool by recruiting internal or external candidates.

3. Have candidates complete application forms and undergo initial screening interviews.

4. Use selection tools to identify viable candidates.

5. Decide who to make an offer to, by having the supervisor and others interview the candidates.

Environmental Scanning

impact of strategy/goals on diff. units

Forecastingquantity & quality of personnel needed

Involving Line Managersdetermining HR needs of departments

Analysis of Supplymatching current HR supply & reqmnt

HRP

PROCESSPlan of Action

recruitment, selection, training, etc.

THE HUMAN RESOURCE PLANNING THE HUMAN RESOURCE PLANNING PROCESSPROCESS

Strategic Planning

HR Planning

ForecastingHR Requirements

Comparison ofRequirements &

Availability

ForecastingHR Availability

Demand=

Supply

No Action

Surplus ofWorkers

Restricted Hiring,Reduced Hours,

Early Retirement,Layoffs

Shortage ofWorkers

Selection

Recruitment

STAFFING APPROACHES

StaffingThe process by which organisations meet their human resource needs, including forecasting future requirements, recruiting and selecting candidates and orienting new employees.

Staffing Involves• Manpower Planning• Recruitment• Selection• Training• Development• Performance Appraisal• Transfers• Promotions.

Staffing NeedsFirms that centralize decision making at

headquarters typically favor home-country managers

Firms that decentralize decision making to the subsidiary level often employ host country nationals.

Since most companies do not fall at one extreme or the other, most companies have a combination of both home and host country managers.

TYPES OF GLOBAL EMPLOYEESTYPES OF GLOBAL EMPLOYEES

Approaches to Staffing

Ethnocentric key managerial positions are filled by parent-

country nationals.Consistent with international strategyDisadvantage: cultural myopiacultural differences & environmental differences

will be huge and expatriates may not be able to cope up with. Thus resulting in costly management mistakes.

e.g., Procter & Gamble – Associate with higher incidence of IHRM problems.

Types Of International Staffing PolicyPolycentric Key positions are filled with HCN’s Host country nationals manage

subsidiariesConsistent with multidomestic strategyDisadvantage: create a gap between

home and host operations.

•

Geocentric or global Best managers are recruited from

within or outside the company regardless of nationality.

Help build an informal management network.

Disadvantage: may be subject to the immigration policies.

Types Of International Staffing Policy Regiocentric Recruiting on a regional basis. For example, a U.S. based firm could create three regions; Europe, the Americas, and Asia-pacific. European staff would be transferred throughout the

European region (say a Briton to Germany, a French national to Belgium, and a German to Spain).

Eg:Ford Motor Company.Disadvantage: produce federalism at a regional rather

than a country basis and constrain the organization from taking a global stance.

EXAMPLESKorean MNC's Hyundai, Samsung , Indian MNC's

TCS, Infosys, Wipro. US MNC's GE, Citi corp, Exxon appoint a home country nationals to lead the foreign subsidiary. (Ethnocentric approach)

US MNC's P&G, Pepsi, Coca cola. Indian MNCs Ranbaxy appoint a host country executive along with a home country executive to support or vice-versa (polycentric approach).

EXAMPLESNestle, Unilever, HP, Nortel. Appoint the best person for

the job irrespective of the nationality (Geocentric approach).

Intel, Microsoft, Oracle, Sun Microsystems. Appoint the best host country national who has worked in the home country or at the headquarters.

Electrolux (the vacuum cleaner company) has for many years attempted to recruit and develop a group of international managers from diverse countries. These people constitute a mobile base of managers who are used in a variety of facilities as the need arises.

Necessary Skills and Abilities for International Managers:

Skills and abilities necessary to do the job:•Technical•Managerial•Functional

Skills and abilities necessary to work in foreign location:•Adaptability•Location-specific skills(language etc)•Personal characteristics

IMPROVED CHANCES OF SUCCEEDING IN AN INTERNATIONAL JOB ASSIGNMENT

Staffing For International Assignment

• Today, as businesses globalize, the market for executive talent is also globalizing.

• Top management teams are increasingly diverse in their members.

• While most MNCs do not hire new college graduates to take foreign positions immediately, many hire graduates with the intention of sending them abroad in the future.

EXPAT SELECTION

TYPES OF GLOBAL EMPLOYEESTYPES OF GLOBAL EMPLOYEES

Recruitment Methods

Using head-HuntersCross-national advertisingE-recruitmentInternational Graduate

Program.

Issues in Employee SelectionIssues in Employee Selection

Staffing MNC’s

Staffing orientation

Linkage between staffing

and growth of

MNC

Managing expatriates Female

expatriates

Linkage between staffing and growth of MNCSLinkage between staffing and growth of MNCSStage in Host Unit’s life cycle

Staffing impetus Staffing challenges

Setting up the host unit (0 to 9-12months).

Usually a geocentric approach, top and Senior management positions is the foocus, slow, micromanaged closely by the parent company, usually work with a retainer-ship arrangement with a international staffing company, key positions could be outright assigned to parent company personnel

Extremely critical phase in the subsidiary’s evolution, time consuming, multiple interviewing rounds, expensive as it might involve travel to parent country for final interview and discussions

Establish the technology team to begin core operations activities (6 – 18 months).

Recruitment activities step up, processes emulated from local market to get access to local talent, selection criteria focus on very high quality technical competency levels ,

Apply stringent hiring techniques, building a preferred employer brand, offering high-end compensation to attract the desired talent, careful screening to ensure top quality hires

Full blown operations (1.5 -3yrs).

Polycentric approach, hiring targets get aggressive, numbers become a critical success determinant for recruitment, quality focus moves to competent people, using global selection tests, fresher hiring

Using multiple sourcing vendors and methods, moderated compensation, creating a branding on vocational campuses

Subsidiary consolidation with global goals.

Extremely geocentric approach to staffing, focus is on efficiency and this influences somewhat conservative staffing, inward looking processes, headhunting approach is practiced rampantly

High process focus on recruitment and selection, stringent entry criteria for lateral hires

32

Staffing orientationStaffing orientationOrientation Approach Advantages Disadvantages

Ethnocentricism

Parent company/ country national are employed at all senior and key positions.Local employees fill only lower level and supporting jobs

Transfer of parent company goals, objectives and know how /technologyEnsures control and coordination with HQ

Lack of localization of response to host country demands and needsLack of knowledge of local culture and work methods

Polycentricism Host country nationals are employed to staff all positions

Familiarity with business practices, socio-economic, political and legal environmentLower cost of staffingEffective localization of the subsidiary's operations

Communication challenges in dealing with parent country personnelChallenges in effective control and coordination over sub’s operationsLack of parent company nationals to gain international and cross cultural exposure

Staffing orientationStaffing orientation

Orientation Approach Advantages Disadvantages

Geocentricism The multinational runs the subsidiary as a independent entity. Focus building a center of excellence at a global level. Hiring the best person for the job….. could be a third country national

Globally competent personnelExposure to global best practices

Lack of sensitivity to all culturesTendency to run the subsidiary as a independent unit

Female expatriatesFemale expatriatesSeveral reasons account for minimal presence of females in foreign assignments :

Lack of Motivation: there is a perceived lack of motivation for female employees to relocate internationally

Sterotyping : common impression that women are best fit to work in their own coutrnies

Host Country limitations : certain countries do not encourage women expats.

Female expatriatesFemale expatriatesAdvantages of Female

expatriates:

Good Relational Skills Rarity of women expats make

them uniqueFemale Role Models will

facilitate more female managers entering the pool .

Managing expatriatesManaging expatriates An expatriate is an individual who works anywhere but not in his or her own country of origin.

With increasing globalization more and more employees work overseas and have expats on their payroll.

Recruiting expat success depends on identifying potential expats:

Willingness and passion for working on overseas

assignment

Explore multiculturist, multilinguist,

mulitfucntionalist, citizens of the world and not of one

country

Possess appropriate (technical/technological)skills

for the position overseas

Family background

Local laws of host country that determine expat

posting.

Managing expatriates:Managing expatriates: Four Dimensional Four Dimensional Framework for expat Framework for expat

selection :selection :

Self Orientation •Self confidence•Self esteem•Mental hygiene

Others Orientations

•Expats ability to interact with host citizens•Build close relationships•Acculturate more easily in over

Perceptual Dimension•Ability to understand and appreciate why foreign nationals behave the way they do•Ability to make correct attributions about the reasons or causes of host nationals behavior

Cultural Toughness Dimension

•How culturally different is the host country from the expat’s own country determines the degree of cultural toughness•The lesser the difference the lower is the cultural toughness

Managing expatriates:Romen’s Model on five predictors for a successful Romen’s Model on five predictors for a successful

international assignment :international assignment :

Selection Criteria

Technical abilityCross-cultural suitabilityFamily requirementsCountry-cultural requirementsMNC requirementsLanguage.

Factors in Expatriate Selection

Selection Techniques

• Screening the applicant’s background• Testing ability to adapt to new culture and

environment• Investigate family situation• Assess the capacity of the manager to adjust in

the said culture• Use psychological tests to investigate the overall

personality of the candidate• Use of database to track international managers• Use of international graduate program• Using assessment centre.

Expatriate Failure The selection process in international firms is

particularly important because of the high cost of expatriate failure.

Expatriate failure is the early return of an expatriate manager to his or her country because of an inability to perform in the overseas assignment.

The cost of expatriate failure ranges between $40,000-$250,000.

Expatriate failure rates may be as high as 20-50 percent in many U.S. companies, higher than for either European or Japanese companies.

Reason for Expatriate Failure

•Inability of spouse to adjust•Manager’s inability to adjust•Other family problems•Manager's personal or emotional immaturity.•Inability to cope with larger overseas responsibilities

•Inability to cope with larger overseas responsibilities•Difficulties with the new environment•Personal or emotional problems•Lack of technical competence•Inability of spouse to adjust

•Inability of spouse to adjust

US FIRMS JAPANESE FIRMS

European Multinationals

International Assignments: Factors Moderating Performance

Causes of Expatriate Assignment Failure

Reasons For Expatriates Failure

Spouses in 90% of cases come back early They faces isolation,loneliness,boredom.

Financial package, cost in foreign country may be higher. Example's family overseas in Japan may face such a situation.

Lack of inability to adapt. In host country they have to face uncertainties ,relate with people with different values and beliefs.

Reasons for expatriates failure

• Lack of support from HQ.• Inadequate preperation,training and

orientation prior to assignment.• Managers sent on foreign assignments may

experience culture shock, a psychological phenomenon that may lead to feelings of fear, helplessness, irritability, and disorientation.

Process of AdjustmentProcess of Adjustment

• Acculturation typically proceeds through four phases

Honeymoon

Crisis

Learning

A Adjustment

Costs of Expatriate Failure

• Averaged $250,000 per early return

• Direct costs:AirfaresAssociated relocation

expensesSalary and benefitsTraining and

development.

Costs vary according to:

•Level of position •Country of destination•Exchange rates•Whether ‘failed’ manager is replaced by another expatriate.

Indirect Cost of Expatriate Failure

• Damaged relationships with key stakeholders in the foreign location.• Negative effects on local staff .• Family relationships may be

affected.

How to minimize failuresSteps For Reducing Expatriates Failure:

• Firms are now beginning to pay more attention to repatriation--bringing a manager back home after a foreign assignment has been completed.

• Individuals that successfully adapted to the foreign environment may experience culture shock upon returning to their own country.

Steps For Reducing Expatriates Failure

• Regarding “non-cultural” issues leading to success or failure overseas, managers tend to be more successful in foreign assignments when 5 conditions are met: They can freely decide whether or not to

accept a foreign assignment. They have a realistic understanding of

the new job and assignment.

Steps For Reducing Expatriates Failure

They have a realistic expectation of a repatriation assignment.

They have a mentor in the parent firm who will look out for their careers.

There is a clear link between the foreign assignment and the manager’s long-term career path.

Steps For Reducing Expatriates Failure

• Compensating expatriate managers can be a complex process because factors such as differences in currency valuation, standards of living, lifestyle norms, and so forth must be taken into consideration.

Steps For Reducing Expatriates Failure

• A cost-of-living allowance may be given to managers to offset differences in the cost-of-living in the home and host countries.

• A hardship premium (also known as a foreign service premium) may be paid to mangers who accept assignments in relatively unattractive locations.

• Special benefits packages that may be provided to expatriate managers include housing, education, medical treatment, travel to the home country, and club memberships.

Recent trends in International staffing Recent trends in International staffing

International Staffing

OffshoringDual Career

Couples

Recruiting sources

Background Checks

Work Force

Diversity

Work force diversity Work force diversity Diversity is a key metric on which

organizations measure themselves . Diversity implies a workforce mix

with fair representation of gender and races .

Organizations have diversity policies that drive focused hiring to ensure the desired workforce blend.

Diversity costs money and a heightened exposure to business risk, however organizations remain committed to it year after year .

Offshoring Offshoring It is the act of moving some of the

organisation’s internal activities and decision responsibilities to external service providers.

The spurt in hiring to staff these new-order companies in the emerging and the developing countries has hugely contributed to the revenue and growth of these countries.

On the other hand the outsourcing country, usually in the developed economies, stands to loose jobs to low cost and high skills countries making it ‘outplacement and retrenchment a core activity.

Background checks Background checks Background checks are carried

out to verify personal, professional and other mandated information related to safe employment of candidates

Priced by quantum/scope of the personal and professional level of check that is being carried out, it is a core responsibility of the staffing team to ensure that the employee being on-boarded is cleared from all sides.

Recruiting sources Recruiting sources Increasing demand for

resources has driven widespread innovation in sourcing.

Job portals and employee referrals are among the newer and more common sources .

Focus on hiring at entry level and then grooming employees for growth is a also gaining popularity as another high retention sourcing strategy.

Dual career couplesDual career couples

Dual career couples refer to situation where both husband and wife are in jobs.

Managing dual career couples:

Find a job for the trailing spouse

Commute/remote assignments

Sabbaticals Intra-company employment On assignment career

support.

The secret of your future is hidden in your daily routine.