Managing HR Globally Chapter 13 Copyright 2009 Pearson

HR and the Internationalization of Business • More and more companies are doing business abroad • Globalization requires that employees who never leave the home office need to be “internationalized” to some extent • Cultural diversity must be addressed Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 2

HR Challenges of International Business • Employers face political, social, legal and cultural differences among countries abroad • Effective human resource practices must be developed for each country’s local facility and for the company as a whole • Vast distances add to the challenges Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 3

HR Managers Top Global Concerns • Deployment • Knowledge and innovation dissemination • Identifying

What Is International HRM? • Human resource management concepts and techniques employers use to manage the HR challenges of their international operations • Focuses on three main areas: 1. Management of HR in global corporations 2. Management of expatriate employees 3. Compare HRM practices in variety of countries Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 5

Which Inter-Country Differences Affect HRM • Cultural factors • Economic systems • Legal and

Cultural Factors • Cultural differences influence HR policies and procedures that work best in a particular place • Researchers have concluded that countries different along four cultural dimensions: 1. Assertiveness 2. Future orientation 3. Performance orientation 4. Humane orientation Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 7

Economic Systems Factors From country to country, economic systems vary in the following: • Labor laws, regulations and costs • Hourly compensation and a typical work week • Vacation and benefits requirements Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 8

Legal and Industrial Relations Factors • The interplay of directives and country laws means HR practices must vary from country to country – Some EU countries have minimum wages systems in place while others set national limits – The EU sets the workweek at 48 hours but most countries set it at 40 hours per week – EU countries have many levels of employee representation Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 9

Improving International Assignments Through Selection • 80% of Financial Times top 100 company CEOs recently had overseas assignments • Often the assignments fail due to poor expatriate entry and reentry preparation • Companies are taking steps to reduce expat problems by selecting expats more carefully, helping spouses get jobs abroad and providing more ongoing support to the expat and family Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 10

When International Assignments Succeed • They focus on knowledge creation and global leadership development • They assign overseas people whose technical skills are matched or exceeded by their crosscultural abilities • Their expatriate assignments include a deliberate repatriation process Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 11

Expatriate Personality • Expats are increasingly younger and single • Tend to be extroverted, agreeable and emotionally stable individuals • Tend to have great cultural empathy Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 12

International Staffing: Home or Local? • Locals are citizens of the countries where they are working • Expatriates are noncitizens of the countries in which they are working • Host country nationals are citizens of the country in which the multinational company has its headquarters (can be expatriates) • Third-country nationals are citizens of a country other than the parent or the host country Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 13

International Staffing: Home or Local? , cont. • Using locals can be cost effective and help the multinational gain favor with the host country • Using expats helps multinationals meet required technical qualifications and help the multinational implement headquarters instructions and culture • A hybrid solution that utilizes both locals and expats can help smooth the multinational’s transition Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 14

Pros and Cons of Offshoring • Offshoring is having local employees abroad do jobs previously done in-house • It is growing rapidly and remains controversial • Opponents cite job drain means millions of fewer white-collar jobs for Americans • Proponents cite global competitiveness and increased R&D that will increase domestic jobs Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 15

Values and International Staffing Policy • Ethnocentric companies will make sure the home country’s attitudes, management style, knowledge, evaluation criteria, etc. , prevail through filling key management jobs with parentcountry nationals • Polycentric companies believe that only host country managers can understand the culture and behavior of the host country market and the foreign subsidiary should be managed by hostcountry nationals and home office with parentcountry nationals Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 16

Values and International Staffing Policy, cont. • Geocentric companies believe that the best manager for the firm could be located anywhere so they look at all management for potential and staff on the basis of choosing the best people for key jobs regardless of nationality Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 17

Ethics and Codes of Conduct • Exporting a firm’s ethics is problematic as the code might not translate to the host-country and can be undermined by cultural norms • Lawyers recommend a company focus on creating and distributing a global code of conduct that creates standards for adhering to U. S. law that has cross-border impact Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 18

Selecting International Managers • Screening and testing • Realistic previews • Adaptability screening Copyright

Sending Women Managers Abroad • Women expats are underrepresented • Misconceptions about familial decisions and safety concerns add to the problem Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 20

Sending Women Managers Abroad, cont. Misperception can be short-circuited by: 1. Formalize a process for identifying employees willing to be expats 2. Train managers to understand how employees really feel about going abroad 3. Let successful female expats recruit prospective female expats 4. Provide the expat’s spouse with employment assistance Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 21

Training and Maintaining International Employees, cont. Expats can also be trained by a 4 -step approach: • Level 1 focuses on the impact of cultural differences • Level 2 aims at getting participants to understand who attitudes are formed and influence behavior • Level 3 provides a factual knowledge of the target country • Level 4 provides skill building in areas like language, adjustment and adaptation skills Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 22

Other Expatriate Training • Documentary programs about the country’s geography and socioeconomic/political history • Cultural assimilation to display the sorts of social and interpersonal situations expats are likely to encounter • Language training • Sensitivity training • Actual interactions with people from other countries Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 23

Trends • To provide continuing, in-country, cross-cultural training during early stages of overseas assignment • Using returning managers as resources to cultivate the “global mindsets” of the home-office staff • Increased use of software and the Internet for cross-cultural training Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 24

International Compensation • Balance Sheet Approach based on the following: – Income taxes – Housing – Goods and services – Discretionary expenses • Premiums • Incentives Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 25

Establishing a Global Pay System • Phase I: Formulate a global compensation framework • Phase II: Organize jobs and appraisals • Phase III: Create detailed pay policies • Phase IV: Talent management framework • Phase V: Ongoing program assessment Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 26

Performance Appraisal of International Managers • Stipulate the assignment’s difficulty level and adapt performance criteria to the situation • Weigh the evaluation more toward the onsite manager’s appraisal than toward the home-site manager’s • If the home-office manager does the actual written appraisal have him or her use a former expatriate from the same overseas location for advice Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 27

Safety and Fair Treatment Abroad • Provide expats with training about traveling, living abroad and the place they’re going to • Tell them not to draw attention to the fact that they’re American • Have travelers arrive at airports as close to departure time as possible and wait in areas away from the main flow of traffic • Equip the expat’s car and home with adequate security systems Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 28

Safety and Fair Treatment Abroad, cont. • Tell employee to vary their departure and arrival times and take different routes • Keep employees current on crime and other problems by regularly checking the State Department’s travel advisory service and consular information sheets • Advise employees to remain confident at all times Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 29

Repatriation: Problems and Solutions • 40 -60% of expats will quit within 3 years of returning home • Formal repatriation programs are useful • Make sure the expat and family do not feel the company has left them adrift Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 30

How to Implement a Global HR System • Form global HR networks • Remember that it’s more important to standardize ends and competencies than specific methods • Remember that global systems are more accepted in truly global organizations • Investigate pressures to differentiate; then determine legitimacy Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 31

How to Implement a Global HR System, cont. • Remember, “You can’t communicate enough” • Dedicate adequate resources for the global HR effort Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 32

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