importance of global human resource

8/8/2019 Importance of Global Human Resource

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CHALLENGESOF

OPERATING GLOBALLY

Human Resource


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International HRM

Scope much broader than managingdomestic HR

Issues : International taxation International orientation/relocation Admn services for expatriates

Host government regulations Language translation service Each function of HRM has a new dimension


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Objectives After studying this chapter,

you should be able to:1. Identify the types of organizational forms used

for competing internationally.2. Explain how domestic and international HRM

differ.3. Discuss the staffing process for individuals

working internationally.4. Identify the unique training needs for

international assignees.5. Reconcile the difficulties of home-country and

host-country performance appraisals.


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Objectives (contd) After studying this chapter,

you should be able to:6. Identify the characteristics of a good

international compensation plan.

7. Explain the major differencesbetween U.S. and European laborrelations.


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Increasing Importance of Global Human Resource Understanding

InternationalInternationalMergers andMergers andAcquisitionsAcquisitions

Importance of Global Human

ResourcesManagement

Foreign HumanForeign HumanResourcesResources

GlobalGlobalCompetitionCompetition

Market AccessMarket AccessOpportunitiesOpportunities

Presentation Slide 151


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Managing Across Borders

Internationalcorporation Domestic firm that uses

its existing capabilitiesto move into overseasmarkets.

Multinationalcorporation (MNC)

Firm with independentbusiness units operatingin multiple countries.

Global corporation Firm that has integrated

worldwide operationsthrough a centralized home

office. Transnational corporation

Firm that attempts tobalance local responsivenessand global scale via anetwork of specializedoperating units.


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How International CompaniesAffect the World Economy

Production and distribution extend beyondnational 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 tocooperation among countries and to thebreaking down of barriers of nationalism.


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How Does the GlobalEnvironment Influence

Management? Unified Economies

Closely partnered nations such as the EuropeanUnion 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 ahost country influence how HR is conducted inthat country.


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Brief survey report- Far EasternEconomic survey

Gender based pay One-third of respondents in Asia Pacific countriesagreed that a family man should bepaid more for the same job than asingle woman strongly in Korea,Singapore, Japan/Indonesia

Conviction is weak and opposed byfemale employees in Asia


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survey

Nepotism traditionally, hiring relations hasbeen accepted practice, especially in smallerbusinesses = this is changing In Hongkongand singapore where non relatives are seenas being easier to manage

As for romance at work, Koreans see it as anatural social development, whileIndonesians, Malaysians and Filipions feel

that that becoming romantically involvedwith co-workers is inappropriate


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survey

When workload increases, Australiansand Singaporean firms are mostlylikely to add staff, while Koreans and

Japanese firms are most willing toinsist that existing staff work longerhours.

Promotions: Difference of opinionwhether seniority or merit is to berecognized


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Growing interest inInternational HRM

Globalization HR as a major determinant of

success Underperformance in overseas

assignments is costly

Competency of HR professionals Network organization Implementation strategy


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CulturalEnvironment of InternationalBusiness

Figure 15.4Presentation Slide 153

Values/Ideologies Work ethic Time orientation Individualism/collectivism Risk propensity Achievement

Social Structure

Kinship/family Mobility Nationalism Urbanization Social stratification Paternalism/

materialism

Communication Language(s) Dialects Nonverbal Media Technology

Education/

Human Capital Primary/secondary Vocational Professional Literacy

Religious Beliefs Denominations Totems/taboos Rituals Holy days


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Domestic versusInternational HRM

Issues in international HRM in helpingemployees adapt to a new anddifferent environment outside theirown country: Relocation Orientation

Objective Translation services


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Challenges in HRP

Identifying top mgt potential early Critical success factors for future

international managers Providing dev. Opportunities Tracking and monitoring

commitment to individuals ininternational career paths


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Challenges in recruitment

Right number and right type Mix with organizational culture

GE is just not hiring people who haveskills it wants to have employees

whose styles, beliefs and valuesystems are consistent with those of the firm


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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 hostcountry.

Third-country Nationals

Employees who are natives of a countryother than the home country or the hostcountry.


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Ethnocentric approach

Key manager positions are held byparent country nationals

Appropriate initially P&G, Philips and Matsushita follow this

approach In Dutch film Philips all imp. Positions

were held by Dutch nationals who werereferred by others as Dutch Mafia


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Ethnocentric approach

Japanese and South Korean firmstoday such as Toyota, Matsushita andSamsung key positions in mostoperations are still held today by thehome country nationals

According to Japanese overseas

Enterpreuners Association, in 1996,only 29% of Japanese companies hadpresidents who were not Japanese


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Polycentric

Host country nationals to be hired Parents co. nationals occupy key positions

in Corporate hqs

Many MNCs use home country managers toget the operations started and then handthem over to home country managers HUL

In Brazil, two-third of employees in anyforeign subsidiary to be Brazilians


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Geographic approach

Best people, regardless of nationality Colgate Palmolive is a good example

60% of the companies expatriatesare from countries other than US Coca Cola believes in think globally

and act locally approach


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Advantages/disadvantages

PCN Parent Company nationals

HCN Host country nationals

TCN third country nationals


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Advantages in Sources of

Overseas Managers Host-country

Nationals

Less cost

Preference of host-countrygovernments

Intimateknowledge of environmentand culture

Languagefacility

Home-countryNationals(Expatriates) Talent

availablewithincompany

Greatercontrol

Companyexperience

Mobility Experience

provided tocorporateexecutives

Figure 15.5

Third-countryNationals Broad

experience Internation

al outlook

Multilingualism



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Changes in International Staffing

over Time

Figure 15.6


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Overseas RecruitmentIssues

Work Permit, or Work Certificate Government document granting a foreign

individual the right to seek employment.

Guest Workers Foreign workers invited to perform needed

labor.

Transnational teams Teams composed of members of multiplenationalities working on projects that spanmultiple countries.


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Selecting Expatriates

Begin with self-selection. Create a candidate pool.

Assess core skills. Assess augmented skills andattributes.


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Measured ExpatriateCharacteristics

Core Skills Skills that are considered

critical to an employees

success abroad. Augmented Skills Skills that are helpful in

facilitating the efforts of expatriate managers.

Failure rate Percentage of

expatriates who do notperform satisfactorily.


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ExpatriateSelectionCriteria

Figure 15.7


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challenges- expatriates

Technical ability Cross-cultural sensitivity

Family requirements Country cultural requirements Languages

MNC requirements


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Causes of ExpatriateAssignment Failure

Figure 15.8

Why Do Expats Fail?

Family adjustment Poor performance

Lifestyle issues Other opportunities arise

Work adjustment Business reasonsBad selection Repatriation issues


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Skills Of ExpatriateManagers

Core Skills Experience Decision making Resourcefulness Adaptability Cultural sensitivity Team building Maturity

Augmented Skills Computer skills

Negotiation skills Strategic thinking Delegation skills

Change management

HRM 3


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Training and Development

Global Manager A manager equipped to run an international

business.

Skills of a Global Manager 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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Training Programs forInternational Managers

Essential training program content toprepare employees for workinginternationally: Language training Cultural training Assessing and tracking career development

Managing personal and family life Culture shock

Perpetual stress experienced by people whosettle overseas.


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Preparing for an InternationalAssignment

1. Social and business

etiquette2. History and folklore

3. Current affairs, includingrelations between thehost country and the

4. United States

5. Cultural values andpriorities

6. Geography, especially itsmajor cities

7. Sources of pride and greatachievements of theculture

8. Religion and the role of religion in daily life

9. Political structure andcurrent players

10.Practical matters such ascurrency, transportation,time zones, hours of business

11.The language

Figure 15.10

To prepare for an international assignment, one shouldbecome acquainted with the following aspects of the hostcountry:


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Challenges T&D

Cross cultural training Language training

Practical training Managing dev. strategy


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Training Methods

Reviewing available information about thehost company: books, magazines, videotapes.

Conversations with host country natives.

Sensitivity training to become familiar withthe customs and overcome prejudices.

Temporary assignments to encourageshared learning.


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Challenges - PMS

Linking with organizational strategy Setting performance goals

Variables impacting poor appraising Feedback Opportunity for improvement

Linking rewards and results


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compensation

Base pay Benefits

Allowances Incentives Taxes

Tailoring the packages Repatriation


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Synthesi

s of CountryClusters

Figure 15.11Source: Simcha Ronen and Oded Shenkar,Clustering Countries on Attitudinal Dimensions:A Review and Synthesis, Academy of Management Review 10, no. 3 (July 1985): 43554.Copyright Academy of Management Review.Reprinted with permission of the Academy of Management Review and the authors; permissionconveyed through the Copyright Clearance Center,Inc.


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Returning from an OverseasAssignment

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 makecertain that knowledge and skills acquired away fromhome are identified and disseminated.

Get feedback from the employee and the familyabout how well the organization handled therepatriation process.


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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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Forces Driving Global Pay

Cultural Preferences Importance of status Role of individual vs.

organization vs.

government Equality vs. disparity Achievement vs.

relationships Economic Conditions

Size of economy

Types of industries,natural resources Inflation, unemployment Protectionism vs. open

market

Personal Preferences Attitudes toward risk Quality of life vs. work Short- vs. long-term

Competitiveness vs.solidarity

Social Constraints Income tax rates, social

costs Laws and regulations Collective bargaining,

worker participation Skills, education of

work force

Figure 15.13Source: Steven Gross and Per Wingerup, Global Pay? Maybe Not Yet!Compensation and Benefits Review 31, no. 4 (July/August 1999): 2534.


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Compensation of ExpatriateManagers

To be effective, an internationalcompensation program must: Provide an incentive to leave the United

States. Allow for maintaining a U.S. standard of

living. Facilitate reentry into the United States. Provide for the education of children. Allow for maintaining relationships with

family, friends, and business associates.Presentation Slide 157


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Expatriate CompensationPrograms

Balance-SheetApproach

A compensationsystem designedto match thepurchasing powerin a personshome country

1. Calculate base pay.

2. Figure cost-of-livingallowance (COLA)

3. Add incentive

premiums4. Add relocation

assistance programs


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International Organizationsand Labor 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

The degree to which government intervenes

The degree of unionization.

importance of global human resource

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