Managing Human Resources Globally HRM in a Global

Managing Human Resources Globally

HRM in a Global Environment o The environment in which organizations operate is rapidly becoming a global one. o Foreign countries can provide a business with new markets. o Companies set up operations overseas because of lower labor costs. o Technology makes it easier for companies to spread work around the globe. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

o Global activities are simplified and encouraged by trade agreements among nations. o As these trends and arrangements encourage international trade, they increase and change demands on human resource management. o Organizations need employees who understand the customers and suppliers in foreign countries. o Organizations need to understand the laws and customs that apply to employees in other countries. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Employees in an International Workforce o Parent-country national – employee who was born and works in the country in which an organization’s headquarters is located. o Host-country national – employee who is a citizen of the country (other than parent country) in which an organization operates a facility. o Third-country national – employee who is a citizen of a country that is neither the parent country nor the host country of the employer. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

o When organizations operate overseas, they hire a combination of parent-country nationals, hostcountry nationals, or third-country nationals. o Expatriates – employees assigned to work in another country. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Factors Affecting HRM in International Markets Education Economic Systems Culture Global HRM Political. Legal Systems

Culture o Organizations must prepare managers to recognize and handle cultural differences. o Recruit managers with knowledge of other cultures o Provide training o For expatriate assignments, organizations may need to conduct an extensive selection process to identify individuals who can adapt to new environments. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Education and skill levels o Companies with foreign operations locate in countries where they can find suitable employees. o The educations and skill levels of a country’s labor force affect how and the extent to which companies want to operate there. o In countries with a poorly educated population, companies will limit their activities to low-skill, low-wage jobs. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Economic System o The economic system provides many of the incentives or disincentives for developing the value of the labor force. o In developed countries with great wealth, labor costs are relatively high. This impacts compensation and staffing practices. o Income tax differences between countries make pay structures more complicated when they cross national boundaries. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Political-Legal System o The country’s laws often dictate the requirements for HRM practices: training, compensation, hiring, firing, and layoffs. o An organization that expands internationally must gain expertise in the host country’s legal requirements and ways of dealing with its legal system. o Organizations will hire one or more host- country nationals to help in the process. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Human Resource Planning in a Global Economy o Human resource planning involves decisions about where and how many employees are needed for each international facility. o Decisions about where to locate include considerations such as the cost and availability of qualified workers. o These considerations must be weighed against financial and operational requirements. o Other location decisions involve outsourcing. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Criteria for Selection of Employees for Foreign Assignments o Competency in the employee’s area of expertise o Ability to communicate verbally and nonverbally in the foreign country o Flexibility, tolerance of ambiguity, and sensitivity to cultural differences o Motivation to succeed and enjoyment of challenges o Willingness to learn about the foreign country’s culture, language, and customs o Support from family members Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Training and Developing a Global Workforce o Training and development programs should be effective for all participating employees, regardless of their country of origin. o When organizations hire employees to work in a foreign country or transfer them to another country, the employer needs to provide the employees with training in how to handle the challenges associated with working in a foreign country. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Delivering Training in Other Countries o Know your goals – clarify what overseas training is supposed to achieve. o Consider international differences among trainees when developing the training plan. o Keep an eye on quality – overseas trainers should meet the same quality standards as training at headquarters. o Be clear about standards for confidentiality and intellectual property. o Know the local laws that affect training programs. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Cross-Cultural Preparation o This is training to prepare employees and their family members for an assignment in a foreign country. o The training covers all three phases of an international assignment: o Preparation for departure o The assignment itself o Preparation for the return home Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Performance Management Across National Boundaries • When establishing performance management methods in other countries, organizations have to consider: – Legal requirements – Local business practices – National cultures • Differences may include: – Which behaviors are rated – How and the extent to which performance is measured – Who performs the rating – How feedback is required Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Compensating an International Workforce o Market pay structures can differ substantially across countries in terms of both pay level and the relative worth of jobs. o This creates a dilemma for global companies: o Should pay levels and differences reflect what workers are used to in their own countries? o Should pay levels and differences reflect the earnings of colleagues in the country of the facility, or earnings at the company headquarters? Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

o Compensation decisions affect a company’s costs and ability to compete. o The challenge of competing with organizations in low-wage countries can be very difficult. o Decisions about benefits must take into account the laws of each country involved, as well as employees’ expectations and values in those countries. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

International Labor Relations o Labor relations on an international scale involves differences in laws, attitudes, economic systems, and differences in negotiation styles. o Organizations establish overall policies and goals for labor relations, overseeing labor agreements, and monitoring labor performance. o The day-to-day decisions about labor relations are usually handled by each foreign subsidiary. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Managing Expatriates: Selecting Expatriate Managers o Expatriate managers need technical competence in the area of operations. o In addition, many other skills are necessary to be successful in an overseas assignment: o Ability to maintain a positive self-image and feeling of well-being o Ability to foster relationships with host-country nationals o Ability to perceive and evaluate the host country’s environment accurately Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Compensating Expatriates o Balance sheet approach – this approach adjusts the manager’s compensation so that it gives the manager the same standard of living as in the home country plus extra pay for the inconvenience of locating overseas. o This approach involves an effort by the global organization to ensure that its expatriates are “made whole. ” Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Helping Expatriates Return Home o Repatriation – the process of preparing expatriates to return home from foreign assignment. o Communication: the expatriate receives information and recognizes changes at home while abroad o Validation: giving the expatriate recognition for the overseas service when this person returns home. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright

Summary o More and more companies are entering international markets by exporting and operating foreign facilities. o Organizations therefore need employees who understand customers and suppliers in other countries. o They need to understand local laws and customs and be able to adapt their plans to local situations. o To do this organizations may hire a combination of parent-country, host-country, and third-country nationals. Fundamentals of Human Resource Management 4 th edition by R. A. Noe, J. R. Hollenbeck, B. Gerhart, and P. M. Wright