GLOBAL HUMAN RESOURCE MANAGEMENT WEEK 12 GLOBAL HUMAN RESOURCE MANAGEMENT

Human resource Management Refers to the activities an organization carries out to use its human resources effectively Strategic role: HRM policies should be congruent with the firm’s strategy and its formal and informal structure and controls Four major tasks of HRM Staffing policy Management training and development Performance appraisal Compensation policy

HRM Phases Hiring Developing Appraising Rewarding Policy Policy Ethnocentric Polycentric Developing Geocentric Appraising Rewarding Policy

International HRM More difficult for international companies than domestic companies due to; E nvironment differences Organizational challenges Task complicated by profound differences between countries in labor markets, culture, legal, and economic systems

Staffing Policy Staffing policy 3 types of Staffing Policy Selecting individuals with requisite skills to do a particular job Tool for developing and promoting corporate culture 3 types of Staffing Policy Ethnocentric Polycentric Geocentric

Ethnocentric Policy Key management positions filled by home-country nationals (headquarters) Reason – believed that home country are superior than host countries Advantages: Overcomes lack of qualified managers in host nation Unified culture Helps transfer core competencies Disadvantages: Local managers unmotivated and demoralized Impractical

Polycentric Policy Host-country nationals manage subsidiaries Parent company nationals hold key headquarter positions Best suited to multi-domestic businesses Advantages: Alleviates cultural myopia Helps transfer core competencies Increase employees moral Disadvantages: Limits opportunity to gain experience of host country nationals outside their own country Can create gap between home and host country operations – accountability problems

Geocentric Policy Seek best people for key jobs throughout the organization, regardless of nationality Advantages: Enables the firm to make best use of its human resources Equips executives to work in a number of cultures Helps build strong unifying culture and informal management network

Geocentric Policy Disadvantages: Costly to implement National immigration policies may limit implementation Expensive to implement due to training and relocation Compensation structure can be a problem

STAFFING expatriates (expats) - Nonnative employees who work in a foreign country parent (home) country nationals (PCNs) - employees who come from the parent country of the multinational enterprise (MNE) and work at its local subsidiary third country nationals (TCNs) - employees who come from neither the parent country nor the host country 10

The Expatriate Expatriate: citizens of one country working in another country

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ROLES OF EXPATRIATES strategists - representing interests of the MNE’s headquarters daily managers - run operations, to build local capabilities and gain international management experience ambassadors - representing headquarter’s interests in the subsidiaries and representing the interests of the subsidiaries when interacting with headquarters trainers - for their replacements 13

Reasons for Expatriate Failure US multinationals Inability of spouse to adjust Manager’s inability to adjust Other family problems Manager’s personal or emotional immaturity Inability to cope with larger overseas responsibilities European multinationals Almost similar to the US Japanese Firms Inability to cope with larger overseas responsibilities Difficulties with the new environment Personal or emotional problems Lack of technical competence Inability of spouse to adjust

Expatriate Selection Reduce expatriate failure rates by improving selection procedures An executive’s domestic performance does not (necessarily) equate to his/her overseas performance potential Employees need to be selected not solely on technical expertise, but also on cross-cultural fluency

PREPARATION EXPATRIATES Pre-departure training General country understanding – information about the host country Culture sensitivity - Practical skills – to be familiar with the routine life in the host country

Compensation expatriates Two issues: Pay executives in different countries according to the standards in each country or equalize pay on a global basis Method of payment Two issues are raised in every discussion of compensation practices in an international business. One is how compensation should be adjusted to reflect national differences in economic circumstances and compensation practices. The other issue is how expatriate managers should be paid. From a strategic perspective, the important point is that whatever compensation system is used, it should reward managers for taking actions that are consistent with the strategy of the enterprise.

Compensation in Various Countries Table 18.3, p. 633

Components of Expatriate Pay Base Salary Same range as a similar position in the home country Foreign service premium Extra pay for work outside country of origin Allowances Hardship, housing, cost-of-living, and education allowances Taxation Firm pays expatriate’s income tax in the host country Benefits Level of medical and pension benefits identical overseas

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International Labor Relations Key Issue Degree to which organized labor can limit the choices of an international business Aims to foster harmony and minimize conflicts between firms and organized labor

How labor actions respond to international companies? union engage several tactics to encounter international companies bargaining power through cross-national cooperation in term of exchanging information coordination activities calling upon transactional organization – through ILO