Part Six Managing International Operations Chapter Twenty Human

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Part Six Managing International Operations Chapter Twenty Human Resource Management 1 Copyright © 2009

Part Six Managing International Operations Chapter Twenty Human Resource Management 1 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

Chapter Objectives • To discuss the importance of human resource management in international business

Chapter Objectives • To discuss the importance of human resource management in international business • To profile principal types of staffing policies used by international companies • To explain the qualifications of international managers • To examine how MNEs select, prepare, compensate, and retain managers • To profile MNEs’ relations with organized labor 2 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

Human Resource Management (HRM) • Human resource management refers to activities necessary to staff

Human Resource Management (HRM) • Human resource management refers to activities necessary to staff the organization. • HRM is more difficult for the international company than its domestic counterpart due to: § Environmental differences. § Organizational challenges. 3 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

The Strategic Function of International HRM • Research and anecdotes show that the MNE

The Strategic Function of International HRM • Research and anecdotes show that the MNE whose HRM policies support its chosen strategy creates superior value • Many MNEs struggle to develop effective HRM policies • An expatriate is an employee who leaves her or his native country to live and work in another. • A third-country national is an employee who is a citizen of neither the home nor the host country. 4 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

Staffing Policies • Three perspectives describe how companies set about staffing their international operations,

Staffing Policies • Three perspectives describe how companies set about staffing their international operations, namely the: § ethnocentric - fills management positions with home-country nationals § polycentric - uses host-country nationals to manage local subsidiaries § geocentric approaches - seeks the best people for key jobs throughout the organization, regardless of their nationality • Companies may use elements of each staffing policy but one type normally predominates • While executive transferred from headquarters to local operations are more likely to best understand the company’s core competencies, an ethnocentric staffing can result in a narrow perspective in foreign markets 5 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

Selecting Expatriates • Technical competence often is the strongest determinant of who is selected

Selecting Expatriates • Technical competence often is the strongest determinant of who is selected for an international assignment. • Adaptiveness refers to a person’s potential for § Self-maintenance and personal resourcefulness. § Developing satisfactory relationships. § Interpreting the immediate environment. • Top managers in subsidiaries usually assume a greater range of leadership roles and broader duties than do managers of similar-size homecountry operations. 6 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

Expatriate Failure • Expatriate failure is operationally costly and professionally detrimental. • The improving

Expatriate Failure • Expatriate failure is operationally costly and professionally detrimental. • The improving sophistication of MNE selection procedures has reduced the rate of expatriate failure. • A leading cause of expatriate failure is the inability of a spouse to adapt to the host country. 7 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

Training Expatriates • Training and predeparture preparations can lower the probability of expatriate failure.

Training Expatriates • Training and predeparture preparations can lower the probability of expatriate failure. Increasingly, preparation activities include the spouse. • Training and predeparture preparations often includes: § general country orientation § cultural sensitivity § practical skills • MNEs usually anchor training programs to transfer specific information about the host country as well as improve the executive's cultural sensitivity. 8 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

Compensating Expatriates • Compensation must neither overly reward nor unduly punish a person for

Compensating Expatriates • Compensation must neither overly reward nor unduly punish a person for accepting a foreign assignment. • The most common approach to expatriate pay is the balance sheet approach. • MNEs often provide additional compensation or more fringe benefits to employees who work in remote or dangerous areas. • Companies struggle to determine the proper degree to which they should equalize pay for the same job done in different countries. 9 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

Repatriating Expatriates • Repatriation, the act of returning home from a foreign assignment, has

Repatriating Expatriates • Repatriation, the act of returning home from a foreign assignment, has many difficulties • Repatriation tends to cause dissonance in many areas, most notably § Financial. § Work. § Social. • The principal cause of repatriation frustrations is finding the right job for someone to return to 10 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

International Labor Relations • A labor union is association of workers who have united

International Labor Relations • A labor union is association of workers who have united to represent their collective views for wages, hours, and working conditions. • Collective bargaining refers to negotiations between labor union representatives and employers to reach agreement on a work contract. 11 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

How Labor Looks At The MNE • Labor claims it is disadvantaged in dealing

How Labor Looks At The MNE • Labor claims it is disadvantaged in dealing with MNEs because: § It is hard to get full data on MNEs’ global operations. § MNEs can manipulate investment incentives. § They can easily move value activities to other countries. § Ultimate decision making occurs in another country. 12 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

How Labor Responds To The MNE • Labor tries to strengthen its bargaining power

How Labor Responds To The MNE • Labor tries to strengthen its bargaining power through cross-national cooperation. • Labor may be at a disadvantage in MNE negotiations because the § Country bargaining unit is only a small part of MNE activities. § MNE may continue serving customers with foreign production or resources. • Falling union membership in many countries foreshadows lower bargaining power for labor, whereas the effort of MNEs to develop integrated labor relations across countries increases their bargaining power. 13 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall