Global Human Resource Management GLOBAL PERSPECTIVE

International Management Process of applying management concepts & techniques in a multinational environment

Globalization… “The shift towards a more integrated & interdependent world economy.” Markets Production

Why companies go global? To secure key supplies Market seeking behavior Economies of scale Desire to access low cost factors of production To extend a product’s life cycle Competitive positioning

IHRM/GHRM The interplay among the dimensions of Human resource activities Procurement Allocation Utilization Types of employees /national involved in IHRM Host country nationals (HCN) Parent country nationals (PCN) Third country nationals (TCN) – Countries of operation Host, Home, Other

Sources of Human Resources Home/Parent Country Nationals (PCN) -Citizens of country where MNC is headquartered -Headquarters nationals Host Country Nationals (HCN) – Local managers hired by MNC Third Country Nationals (TCN) – Managers who are citizens of countries other than the one in which MNC is headquartered or the one in which the managers are assigned to work by the MNC

Expatriate: is an individual/employee who is working and temporarily residing in a foreign country for an assignment. Inpatriates: expatriates who are citizens of a foreign country working in the home country of their multinational employer

Emotional State: adjustment High Low Adjustment Time Crisis/ Culture Shock The Culture Shock Pattern Honeymoon/ Tourist Recovery/ Pulling up

The phases of cultural adjustment Phase 1 : Honeymoon Excitement, anxiety, Sense of adventure, upswing in mood Phase 2: Crisis Novelty wears off, Realities of everyday life begin to intrude, homesickness, Emptiness or Rejection phase Culture shock is a term used to describe the anxiety & feelings (of surprise, disorientation, confusion, etc.) felt when people have to operate within an entirely different cultural or social environment, Difficulties in assimilating the new culture

The phases of cultural adjustment Phase 3: Recovery Coming to terms with the demands of the new environment Gradually begin to feel more comfortable in the new environment, feel more like expanding the social networks & exploring new ideas. Feel more flexible & objective about the experience, learning to accept parts of the new culture while holding onto one’s own cultural traditions Humor Stage – A phase of acceptance wherein there is new feeling of pleasure & sense of humor as an understanding of the new culture, its ideals & values takes place Phase 4: Adjustment Assimilation stage - Person adjusts to the new environment

Challenges of managing expatriates

Expatriate Failure Premature return from an international assignment “The inability of the expatriate or repatriate to perform according to the expectations of the organization”

Reasons for Expatriate Failure (in descending order of importance)

Repatriation of Expatriates Repatriation – Return to one’s home country from an overseas management assignment Reasons for returning – Formally agreed-on tour of duty is over – Expats want their children educated in the home country – Unhappiness with foreign assignment – Failure to perform well Major concerns of expatriates – Cultural Re-entry – Financial Implications – Nature of job assignment

Approach to staffing Ethnocentric - People of parent country developed for key positions everywhere in the world Polycentric – People of local nationalities developed for key positions in their own country Regiocentric – Regional people developed for key positions anywhere in the region Geocentric – Best people everywhere in the world developed for key positions everywhere in the world

Approach to staffing Ethnocentric staffing policy Advantages – Lack of qualified Host country nationals (HCN’s) – Need to maintain good control, coordination & communication links with corporate headquarters Disadvantages – Limits growth opportunities for HCN’s leading to reduced productivity & higher attrition – Costly to maintain expatriates in overseas location – Adaptation of expats (PCN’s) takes time during which there are higher instances of failures – Income gap between HCN & PCN’s viewed as unjustified by HCN’s

Approach to staffing Polycentric staffing policy Advantages – Eliminates language and cultural barriers, adjustment problems – Removes need for cultural training programs – Less expensive – Provides continuity to the mgmt of foreign subsidiaries – Allows MNC to take a lower profile in sensitive political situations Disadvantages – Limited growth opportunities for HCN’s outside their own country

Approach to staffing Regiocentric staffing policy Advantages – Reflects sensitivity to local conditions (local subsidiaries staffed by HCN’s) – Allows interaction between executives transferred to regional HQ from subsidiaries & PCN posted to regional HQ – Transition process for MNC to move from ethno or poly centric to geocentric approach Disadvantages – Can produce federalism at regional level, constrains from taking a global stance – Limited growth opportunities for staff outside their own regions

Approach to staffing Geocentric staffing policy Advantages – Enables MNE to develop an international executive team providing a global perspective & an internal pool of labor for deployment throughout the global organization – Overcomes federation drawback – Supports cooperation & resource sharing across units Disadvantages – Host country requirements for HCN employment – Time consuming & expensive documentation processes – (Why foreign national) – Expensive – Increased training & relocation costs – Require long time to develop a international team (by sending HCN, TCN & PCN to different countries) – Reduces autonomy of subsidiary mgmt

Staffing..PCN,HCN or TCN? Depends on – Top mgmt attitude – Maturity level of international operations – Socio-cultural environment – Importance of foreign market – Culture distance between HC & PC – Staff availability – Control requirement – Locus of decision – HC legal requirement

Selection criteria for International Assignments Willingness & Motivation Performance Technical Abilities Relational Skills Cross cultural adaptability Open mindedness Stress adaptation skills Administrative Skills Communication Skills Leadership Traits Marital Status Willingness & Motivation to become travelling spouse Spouse’s Adjustability Jobs & Career prospects Marriage stability Children’s education Individual Criteria Family Support Right Person for Expatriation

Dual Career Couples Increasing number of Dual career couples Making employees accept foreign assignments (when partner is working) Find a job for the trailing spouse Commuter assignments : spouse in home country or near by geog, Subsidized telephone bills & air tickets Sabbatical : break from career to accompany partner Intra company employment On assignment career support Payment for education expenses, seminar attendance, language training, upgrading work related skills Eg. Motorola : educational assistance Infosys: one year ‘s leave without pay for joining partner abroad

Provide information about things such as geography, climate, housing & schools Familiarize the individual with cultural institutions & value systems of the host country Cross-Cultural Training Programs Major types of cross-cultural training programs Environmental Briefings Cultural Orientation Language Training

Programmed learning techniques designed to expose members of one culture to some of the basic concepts, attitudes, role perceptions, customs, & values of another culture Develop attitudinal flexibility Send participant to the country of assignment to undergo some of the emotional stress of living and working with people from a different culture Cross-Cultural Training Programs Major types of cross-cultural training programs Cultural Assimilators Sensitivity Training Field Experience

Cross-Cultural Training Programs A variety of other approaches can be used to prepare managers for international assignments including: –Visits to the host country –Briefings by host-country managers –Training in local negotiation techniques –Analysis of behavioral practices that have proven most effective