International Business, 4th Edition Griffin & Pustay Chapter 20: International Human Resource Management and Labor Relations International Business, 4th Edition Griffin & Pustay ©2004 Prentice Hall

Chapter Objectives_1 Describe the nature of human resource management in international business Detail how firms recruit and select managers for international assignments Explain how international businesses train and develop expatriate managers Describe labor relations in international business ©2004 Prentice Hall

Chapter Objectives_2 Discuss how international firms conduct performance appraisals and determine compensation for their expatriate managers Analyze retention and turnover issues in international business Explain basic human resource issues involving non-managerial employees ©2004 Prentice Hall

Human Resource Management (HRM) Set of activities directed at attracting, developing, and maintaining the effective workforce necessary to achieve a firm’s objective Differences in culture, levels of economic development, and legal systems among countries may force changes in HRM systems ©2004 Prentice Hall

Figure 20.1 The International Human Resource Management Process HRM’s Strategic Content Recruitment and Selection Training and Development Performance Appraisal Compensation and Benefits Labor Relations Contribution to Organizational Effectiveness ©2004 Prentice Hall

International Managerial Staffing Needs Staffing Issues Recruiting Training Retaining Staffing Categories Managerial and Executive Employees Non-managerial Employees ©2004 Prentice Hall

Scope of Internationalization Size of staffing tasks depends on scope of firm’s international involvement Export department International division Global organization ©2004 Prentice Hall

Centralization versus Decentralization of Control Centralized firms Favor home country managers Most common amongst international division form Decentralized firms Favor host country managers Most common amongst multidomestic firms ©2004 Prentice Hall

Staffing Philosophy Parent Country Nationals (PCNs) Host Country Nationals (HCNs) Third Country Nationals (TCNs) ©2004 Prentice Hall

Strategies for Staffing Ethnocentric staffing model Polycentric staffing model Geocentric staffing model ©2004 Prentice Hall

Figure 20.2 Necessary Skills and Abilities for International Managers Necessary to Do The Job Technical Functional Managerial Skills and Abilities Necessary to Work In a Foreign Location Adaptability Location-specific skills Personal characteristics Improved Chances of Succeeding in An International Job Assignment ©2004 Prentice Hall

Recruitment Experienced Managers Younger Managers ©2004 Prentice Hall

Selecting expatriates in an important element in international human resource management ©2004 Prentice Hall

Managerial Selection Managerial competence Appropriate training Adaptability to new situations ©2004 Prentice Hall

Do you enjoy the challenge of making your own way in new situations? Table 20.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees_1 Would your spouse be interrupting a career to accompany you on an international assignment? If so, how do you think this will affect your spouse and your relationship with each other? Do you enjoy the challenge of making your own way in new situations? Securing a job upon reentry will be primarily your responsibility. How do you feel about networking and being your own advocate? How able are you in initiating new social contacts Can you imagine living without a television? ©2004 Prentice Hall

Has it been your habit to vacation in foreign countries? Table 20.1 Questions from AT&T’s Questionnaire for Screening Overseas Transferees_2 How important is it for you to spend significant amounts of time with people of your own ethnic, racial, religious, and national background? As you look at your personal history, can you isolate any episodes that indicate a real interest in learning about other peoples and cultures? Has it been your habit to vacation in foreign countries? Do you enjoy sampling foreign cuisine? What is your tolerance for waiting for repairs? ©2004 Prentice Hall

Culture Shock Psychological phenomenon that may lead to feelings of fear, helplessness, irritability, and disorientation ©2004 Prentice Hall

Figure 20.3 Phases in Acculturation Honeymoon Disillusionment Adaptation Biculturalism ©2004 Prentice Hall

Honeymoon Phase New culture seems exotic and stimulating Excitement of working in new environment makes employee overestimate ease of adjusting Lasts for first few days or months ©2004 Prentice Hall

Disillusionment Phase Differences between new and old environments are blown out of proportion Challenges of everyday living Many stay stuck in this phase ©2004 Prentice Hall

Adaptation Phase Employee begins to understand patterns of new culture Gains language competence Adjusts to everyday living ©2004 Prentice Hall

Biculturalism Anxiety has ended Employee gains confidence in ability to function productively in new culture Repatriation may be difficult ©2004 Prentice Hall

Overseas Success Likelihood of managers being successful at overseas assignment increases if the managers Can freely choose whether to accept or reject the assignment Have been given a realistic preview of the job and assignment Have been given a realistic expectation of what their repatriation assignment will be Have a mentor back home who will guard their interests and provide support See a clear link between the expatriate assignment and their long-term career path ©2004 Prentice Hall

Training and Development Assessing training needs Basic training methods Standardized Customized Developing younger managers ©2004 Prentice Hall

Performance Appraisal Process of assessing how effectively people are performing their jobs Purpose To provide feedback to individuals about how well they are doing To provide a basis for rewarding top performers To identify areas in which additional training and development may be needed To identify problem areas that may call for a change in assignment ©2004 Prentice Hall

Compensation Packages Include salary and nonsalary items Determined by Labor market forces Occupational status Professional licensing requirements Standards of living Government regulations Tax codes ©2004 Prentice Hall

Table 20.2 Annual Cost of Living in Selected Locations Worldwide, 2003 Rank City Index 1 Tokyo, Japan 126.1 11 Shanghai, China 98.4 2 Moscow, Russia 114.5 12 St. Petersburg, Russia 97.3 3 Osaka, Japan 112.2 13 Oslo, Norway 92.7 4 Hong Kong 111.6 14 Hanoi, Vietnam 89.5 5 Beijing, China 105.1 15 Copenhagen, Denmark 89.4 6 Geneva, Switzerland 101.8 16 Ho Chi Minh City, Vietnam 88.5 7 London, UK 101.3 17 Milan, Italy 87.2 8 Seoul, South Korea 101.0 18 Shenzhen, China 86.7 9 Zurich, Switzerland 100.3 19 Guangzhou, China 10 New York City, USA 100.0 20 White Plains, NY, USA 86.2 ©2004 Prentice Hall

Differential Compensation Cost-of-living allowance Hardship premium or foreign-service premium Tax equalization system ©2004 Prentice Hall

Figure 20.5 An Expatriate Balance Sheet Foreign and Excess U.S. Taxes Paid by company Excess Foreign Costs Paid by company Foreign Service Premium/ Hardship Added by company U.S. Domestic Base Salary Taxes Consumption Savings U.S. Spendable Income U.S. Hypothetical Housing and Utilities U.S. Auto Purchase U.S. Hypothetical Tax and Social Security U.S. Levels ©2004 Prentice Hall

Labor Relations Labor relations in a host country often reflects laws, culture, social structure, and economic conditions Union membership may be high ©2004 Prentice Hall

These striking South Korean workers are picketing government offices in Seoul ©2004 Prentice Hall