CHAPTER 14: INTERNATIONAL/ GLOBAL HUMAN RESOURCE MANAGEMENT Copyright © 2005 South-Western. All rights reserved. footer

International Imperative Why organizations expand internationally To capture enhanced market opportunities that foreign countries may present To achieve economies of scale in production and administration by expanding scope and volume of operations to international markets Keeping up with industry leaders may require organization to enter foreign markets Acquiring ownership of foreign-based organization or subsidiary Copyright © 2005 South-Western. All rights reserved.

How International & Domestic HRM Differ International HRM requires Managing broader range of functional areas Becoming more involved in employees’ personal lives Setting up several different HRM systems for different geographic locations Dealing with more complex external constituencies Participating in international assignments that have heightened exposure to personal risk Copyright © 2005 South-Western. All rights reserved.

International Expansion Strategies for expanding internationally Exporting locally produced goods to host country Subcontracting or licensing production of certain goods or services to foreign partner Entering into joint venture with foreign partner Setting up operations (making a direct investment) in form of foreign branch or subsidiary Copyright © 2005 South-Western. All rights reserved.

Assessing Culture: Hofstede’s Cultural Differences Dimensions Individualism or collectivism Individualistic societies value development of, and focus on individual Collective societies value group relationships Power distance Extent to which society is hierarchical, and how power is distributed among its members Uncertainty avoidance Extent to which society feels comfortable with ambiguity, and values and encourages risk-taking Quantity versus quality of life (masculinity/femininity) Emphasis on assertiveness and achievement, as compared to interpersonal relationships Copyright © 2005 South-Western. All rights reserved.

Exhibit 14-1 Assessing Culture Copyright © 2005 South-Western. All rights reserved.

Hall’s Model of Cultural Differences Time Importance or sense of time in daily activities Space (distance) Amount of physical distance individuals attempt to maintain between themselves & others Material goods Emphasis or inferences on possession of goods to signify power, success and status Friendships Importance of friendships in conferring status Agreements Considers how agreements are reached Copyright © 2005 South-Western. All rights reserved.

Strategic HR Issues in Global Assignments Approaches to sending employees abroad Administrative approach Assisting employee destined for international assignment with paperwork and minor logistics Tactical approach Managing “risk or failure” factor of overseas assignment by providing paperwork assistance and modest amount of training Strategic approach Extensive support and coordination of international assignment, and strategized repatriation program at the end of the assignment Copyright © 2005 South-Western. All rights reserved.

Strategic HR Issues in Global Assignments Strategic management of global assignments Establish specific purpose for assignment Select appropriate employee for assignment Organizational and individual purposes for assignment must be identified and matched Assess adaptability to host culture of both employee and any family members who will be accompanying employee Provide appropriate training for employee and family members Simultaneous training should be conducted for headquarters staff Copyright © 2005 South-Western. All rights reserved.

Exhibit 14-2 Strategic Issues Copyright © 2005 South-Western. All rights reserved.

Exhibit 14-3 Strategic HR Issues Copyright © 2005 South-Western. All rights reserved.

Determining Expatriate Compensation Balance sheet method Expatriate salary based on home country pay Additional expenses associated with relocation and assignment Hardship and incentives to determine overall reimbursement and compensation level Higher-of-home-or-host method Employee’s salary at home adjusted upward to account for higher cost of living (localization approach) Salary converted to host country’s equivalent when employee is on permanent assignment Copyright © 2005 South-Western. All rights reserved.

Four Approaches to IHRM Make strategic decision as to level of standardization desired across locations Ethnocentric approach Exporting organization’s home country practices and policies to foreign locations Polycentric approach Allowing each location to develop own practices and policies Regiocentric approach Developing standardized practices and policies by geographic region Geocentric approach Developing one set of global practices and policies applied at all locations Copyright © 2005 South-Western. All rights reserved.

Exhibit 14-4 Setting Strategic HR Standards Copyright © 2005 South-Western. All rights reserved.

Exhibit 14-5 Repatriation Copyright © 2005 South-Western. All rights reserved.

Reading 14.1 (Roberts et al.) Managing Global Workforce: Challenges and Strategies Deployment in getting right skills to right place in organization, regardless of geographic location Knowledge and innovation dissemination and transfer, where all business units concurrently receive and provide information Talent identification and development of those employees with abilities and skills to function effectively in global organization Copyright © 2005 South-Western. All rights reserved.

Reading 14.1 Managing Global Workforce: Challenges and Strategies Strategies for managing global workforce Develop aspatial careers for employees to provide rich contextual knowledge of environments and cultures. Provide specific awareness building assignments that develop cross-sensitivity in high potential employees in short time Utilize expert SWAT teams deployed on short-term basis for operational problems technical projects Adopt virtual solutions by using electronic communication technologies to connect local employees to distant problems Copyright © 2005 South-Western. All rights reserved.

Reading 14.1 Diagnosing Challenges Deployment challenge Contact time required Extent to which skills can be applied out of cultural context Knowledge and innovation dissemination challenge Choosing among four strategies depends on technical complexity of information to be shared, and extent to which it must be culturally embedded Talent identification and development challenge Organizations should select well, then develop Copyright © 2005 South-Western. All rights reserved.

Reading 14.2 (Hallowell et al.) Four Seasons Goes to Paris Model of corporate culture consists of four components Underlying assumptions, such as subordinates should fulfill job requirements Values “Espoused values” “Enacted values” Copyright © 2005 South-Western. All rights reserved.

Reading 14.2 Four Seasons Goes to Paris Employee perceptions of management practices – culture is what employees perceive management believes Cultural artifacts If espoused values are enacted, culture may emerge in which senior management and employees share similar service-relevant thoughts, feelings, and patterns of behavior Potential to enhance customer value and contribute to competitive advantage Flexibility versus consistency Copyright © 2005 South-Western. All rights reserved.

Reading 14.3 (Sanchez et al.) Adapting to a Boundaryless World 90% of companies base international selections on technical expertise, downplaying other areas Openness to profound personal transformation is most fundamental sign of expatriate readiness Personality aspects that impede adaptation Authoritarianism Rigidity Ethnocentrism Clarification of expectancies beforehand Copyright © 2005 South-Western. All rights reserved.

Reading 14.3 Adapting to a Boundaryless World Need to provide on-going, hands-on training, rather than just pre-departure awareness training Training is opportunity to provide social support Executives should learn to view identification with host as compatible with identification with parent culture Expatriates need to become aware of consequences that old repertoire of coping responses has in host culture Copyright © 2005 South-Western. All rights reserved.

Reading 14.3 Adapting to a Boundaryless World Employer should facilitate integration into a local or regional network of other expatriates Delicate equilibrium among multiple stakeholders calls for skills similar to those possessed by political diplomats Parent organization should not create additional role conflict for the expatriate with policies that are insensitive to cultural differences Copyright © 2005 South-Western. All rights reserved.

Reading 14.3 Adapting to a Boundaryless World Repatriation Feeling that others do not share multicultural identification can create sense of isolation Frequent loss of autonomy Unrealistic expectations about being promoted upon return Copyright © 2005 South-Western. All rights reserved.