International Human Resources Management Managing Human Resources Bohlander
International Human Resources Management Managing Human Resources Bohlander • Snell © 2007 Thomson/South-Western. All rights reserved. 14 th edition Power. Point Presentation by Charlie Cook The University of West Alabama
Increasing Importance of Global Human Resource Understanding International Mergers and Acquisitions Foreign Human Resources Importance of Global Human Resources Management Global Competition Market Access Opportunities © 2007 Thomson/South-Western. All rights reserved. 15– 2
Managing Across Borders • International corporation Ø Domestic firm that uses its existing capabilities to move into overseas markets. • Multinational corporation (MNC) Ø Firm with independent business units operating in multiple countries. © 2007 Thomson/South-Western. All rights reserved. • Global corporation Ø Firm that has integrated worldwide operations through a centralized home office. • Transnational corporation Ø Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units. 15– 3
Figure 15– 1 Types of Organizations © 2007 Thomson/South-Western. All rights reserved. 15– 4
How Does the Global Environment Influence Management? • Unified Economies Ø Closely partnered nations such as the European Union (EU) have developed into strong competitors. Ø Promotes job growth in trading nations. • Cultural environment Ø The communication patterns, religion, values and ideologies, education, and social structure of a host country influence how HR is conducted in that country. © 2007 Thomson/South-Western. All rights reserved. 15– 5
Figure 15– 3 Cultural Environment of International Business © 2007 Thomson/South-Western. All rights reserved. 15– 6
International Staffing • Expatriates, or Home-country Nationals Ø Employees from the home country who are on international assignment. • Host-country Nationals Ø Employees who are natives of the host country. • Third-country Nationals Ø Employees who are natives of a country other than the home country or the host country. © 2007 Thomson/South-Western. All rights reserved. 15– 7
Figure 15– 4 Changes in International Staffing over Time © 2007 Thomson/South-Western. All rights reserved. 15– 8
Hiring Host-Country Nationals • Three main advantages: 1. Hiring local citizens is generally less costly than relocating expatriates. 2. Since local governments usually want good jobs for their citizens, foreign employers may be required to hire locally. 3. Most customers want to do business with companies they perceive to be local versus foreign. © 2007 Thomson/South-Western. All rights reserved. 15– 9
Recruiting Internationally • Work Permit, or Visa Ø Government document granting a foreign individual the right to seek employment. • Guest Workers Ø Foreign workers invited to perform needed labor. • Apprenticeships Ø Vocational training programs in skilled trades. • Transnational Teams Ø Teams composed of members of multiple nationalities working on projects that span multiple countries. © 2007 Thomson/South-Western. All rights reserved. 15– 10
Selecting Global Managers • Global manager Ø A manager equipped to run an international business • Skills Categories 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 © 2007 Thomson/South-Western. All rights reserved. 15– 11
Selecting Global Managers 1. 2. 3. 4. Begin with self-selection. Create a candidate pool. Assess core skills. Assess augmented skills and attributes. © 2007 Thomson/South-Western. All rights reserved. 15– 12
Highlights in HRM 2 Skills of Expatriate Managers CORE SKILLS Experience Decision making Resourcefulness Adaptability Cultural sensitivity Team building Maturity © 2007 Thomson/South-Western. All rights reserved. AUGMENTED SKILLS Technical skills Negotiation skills Strategic thinking Delegation skills Change management 15– 13
Figure 15– 5 Comparison of Advantages in Sources of Overseas Managers HOST-COUNTRY NATIONALS HOME-COUNTRY NATIONALS (EXPATRIATES) THIRD-COUNTRY NATIONALS Less costly Talent available within company Broad experience Preferred by host-country outlook governments Greater control International Intimate knowledge of environment and culture Company experience Multilingualism Language facility Mobility Experience provided to corporate executives © 2007 Thomson/South-Western. All rights reserved. 15– 14
Figure 15– 6 Expatriate Selection Criteria © 2007 Thomson/South-Western. All rights reserved. 15– 15
Figure 15– 7 Causes of Expatriate Assignment Failure • Family adjustment • Lifestyle issues • Work adjustment • Bad selection • Poor performance • Other opportunities arise • Business reasons • Repatriation issues © 2007 Thomson/South-Western. All rights reserved. 15– 16
Training and Development • Essential training program content to prepare employees for working internationally: Ø Language training Ø Cultural training Ø Assessing and tracking career development Ø Managing personal and family life Ø Repatriation • Culture shock Ø Perpetual stress experienced by people who settle overseas. © 2007 Thomson/South-Western. All rights reserved. 15– 17
Training Methods • Reviewing available information about the host company: books, magazines, video tapes. • Conversations with host country natives. • Sensitivity training to become familiar with the customs and overcome prejudices. • Temporary assignments to encourage shared learning. © 2007 Thomson/South-Western. All rights reserved. 15– 18
Compensation • Different countries have different norms for employee compensation. Ø Financial (money) incentives versus nonfinancial incentives (prestige, independence, and influence) Ø Individual rewards versus collectivist concerns for internal equity and personal needs Ø General rule: match the rewards to the values of the local culture—create a pay plan that supports the overall strategic intent of the organization but provides enough flexibility to customize particular policies and programs to meet the needs of employees in specific locations. © 2007 Thomson/South-Western. All rights reserved. 15– 19
Figure 15– 11 Forces Driving Global Pay CULTURAL PREFERENCES Importance of status Role of individual vs. organization vs. government Equality vs. disparity Achievement vs. relationships PERSONAL PREFERENCES Attitudes toward risk Quality of life vs. work Short- vs. long-term Competitiveness vs. solidarity ECONOMIC CONDITIONS Size of economy Types of industries, natural resources Inflation, unemployment Protectionism vs. open market SOCIAL CONSTRAINTS Income tax rates, social costs Laws and regulations Collective bargaining, worker participation Skills, education of workforce Source: Steven Gross and Per Wingerup, “Global Pay? Maybe Not Yet!” Compensation and Benefits Review 31, no. 4 (July/August 1999): 25– 34. © 2007 Thomson/South-Western. All rights reserved. 15– 20
Expatriate Compensation Systems • Home-Based Pay Ø Pay based on an expatriate’s home country’s compensation practices • Balance-Sheet Approach Ø A compensation system designed to match the purchasing power in a person’s home country 1. Calculate base pay 2. Figure cost-of-living allowance (COLA) 3. Add incentive premiums 4. Add assistance programs © 2007 Thomson/South-Western. All rights reserved. 15– 21
Expatriate Compensation Systems (cont’d) • Host-Based Pay Ø Expatriate pay comparable to that earned by employees in a host country to which the expatriate is assigned. • Localization Ø Adapting pay and other compensation benefits to match that of a particular country • Other Issues Ø Adequacy of medical care Ø Personal security Ø Education © 2007 Thomson/South-Western. All rights reserved. 15– 22
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