Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Human Resource Management Human Resource Management includes Estimation of work force needs Recruitment and selection Training and development Motivation Compensation Discipline Employment termination 19-3

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Worldwide Labor Conditions In % of the world’s six billion people under the age of % of the total population unemployed and looking for work 11% decline in manufacturing jobs worldwide Global industrial output up 30% Worldwide increased participation of women in the work force Largest pool of skilled workers in the U.S. Still only represent 11.2% of corporate officers in the U.S. 59% of business worldwide include women in senior management More women starting their own business Attitudes toward women vary tremendously worldwide 19-4

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Worldwide Labor Conditions Immigrant Labor Large movement of unskilled labor between nations Significant illegal immigrant populations In U.S. number of immigrant workers increasing EU has huge influx from Eastern Europe 19-5 Child Labor One out of six children worldwide work Often dangerous or filthy conditions and little or no compensation Majority in Asia and Africa Have no other option in poor countries ILO and UNICEF campaign against

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved The Global Mindset Combines an openness to and awareness of diversity across cultures and markets with a propensity and ability to synthesize across this diversity Open minds Respect other cultures Push the limits of the culture Find opportunities to innovate 19-8

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved The International HRM Approach Ethnocentric Staffing International strategic orientation Most decisions made at headquarters Utilize citizens of their own country in key foreign positions May encounter difficulties overcoming cultural biases Broadens their experience 19-9 Polycentric Staffing Multidomestic orientation Use HCNs for subsidiaries and and PCNs for HQ HCNs familiar with local customs, culture and language Generally lower cost Some countries require hiring of local nationals

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved The International HRM Approach Regiocentric Staffing Regional strategic approach Regional employees selected for key positions Can use Third Country Nationals (TCNs) Salaries may actually be higher Similarity in language does not mean similarity of culture Geocentric Staffing Transnational strategic orientation Select the best person for each job without regard for national origin Capitalizes on each staffing policy HRM strategy consistent across all subsidies

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Training Home or PCN Encouraged to study the language and culture of the country to which they are going Sent on short trips for exposure Can send to business school Families of executives transferred overseas a major problem 19-11

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Training Host Country National (HCN) Hired in the home country Students graduating from home country business schools First sent to IC headquarters Hired in the host country May set up in-house training programs in the host country May use business courses in the host country’s universities May send to home country school or training 19-12

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Training Third Country National (TCN) Third country nationals may accept lower wages and benefits than will employees from the home country They may also come from a culture similar to that of the host country May have worked for another unit of the IC and be familiar with policies, procedures and people Common approach in developing countries May not be welcome by host country May come from an international agency Will see greater use of TCNs as companies take the geocentric view 19-13

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Expatriates A person living outside of his or her country of citizenship Arrange mentor Cleary define expectations Learn the new market Learn the language Network Excellent training opportunity 19-14

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Expatriates Family Nine out of ten expatriate’s failures are family-related Unhappy spouses are the biggest reason for employees asking to go home early The company will be losing a “million-dollar corporate-training investment” in the executive Children Can wreak havoc with children’s lives Personal computers and help Trailing Spouses Two-career families complicate matters More companies trying to help spouses with job search Spouse may not be allowed to work

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Repatriation When expatriate returns home Reverse culture shock Can also prove traumatic for the family Company should provide counseling and assistance before family heads home 19-17

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Best Practices Provide cross-cultural and language training Provide benefits package suitable to assigned region Provide cross-cultural assistance for family members Provide regular communication regarding health and safety issues Provide assistance in balancing personal and professional needs 19-19

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Compensation  Salaries  Paying home country nationals the same salaries as their domestic counterparts permits worldwide consistency  Because of increasing use of third country nationals, those personnel are generally treated in the same way  Some pay same base pay to HCNs 19-20

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Allowances Housing Allowance Permits executive to live at same standard as at home Cost-of-Living Allowance Based on differences in price of food, utilities, transportation, entertainment, clothing, personal services, and medical expenses as compared to home Allowances for Tax Differentials Ensures expatriates will not have less after-tax pay than they would at home Education Allowances Insures children receive education equal to that at home Moving and Orientation Allowances Household effects and language instruction

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Compensation Bonuses Expatriate employee compensation payments in addition to base salaries and allowances because of hardship, inconvenience, or danger Bonuses include Overseas premiums Contract termination payments Home leave reimbursement 19-22

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved Compensation Packages Can Be Complicated What Percentage? All allowances and a percentage of the base salary are usually paid in the host country currency In practice, the percentage varies from 65 to 75 percent, and the remainder being banked where the employee wishes What Exchange Rate? An exchange rate must be chosen Harder in countries with exchange controls and nonconvertible currencies Stock Plan Problems 19-23