CHAPTER 14 INTERNATIONAL HUMAN RESOURCE MANAGEMENT

The 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 the scope and volume of operations to international markets. Keeping up with industry leaders may require that an organization enter foreign markets. Acquiring ownership of a foreign-based organization or subsidiary.

How International and Domestic HRM Differ International HRM requires: Managing a broader range of functional areas. Becoming more involved in employees’ personal lives. Setting up several different HRM systems for different geographic locations. Participating in international assignments that have sensitive exposure to personal risk.

Assessing Culture: Hofstede’s Cultural Differences Dimensions Individualism or collectivism Individualistic societies value the development of and focus on the individual; collective societies value group relationships. Power distance The extent to which a society is hierarchical, and how power is distributed among its members. Uncertainty avoidance The extent to which a society feels comfortable with ambiguity and values and encourages risk-taking. Quantity (Masculinity) versus Quality of Life (Femininity)

Assessing Culture

Hall’s Model of Cultural Differences Five silent languages that define patterns of communication in the culture: Time- the importance or sense of time in daily activities. Space (distance)- the amount of physical distance individuals attempt to maintain between themselves and others. Material goods- the emphasis or inferences on the possession of goods to signify power, success and status Friendships- the importance of friendships in conferring status on an individual. Agreements- considers how agreements are reached.

Staffing in Global Organization Local- they are citizens of the countries in which they are working Expatriates (expats)- They are noncitizens of the countries in which they are working (e.g. a Bangladeshi worker working in the U.S.) Home-country nationals- they are the citizens of the country in which the multinational company has its headquarters Third country nationals- They are the citizens of a country other than the parent or the host country (e.g. a Bangladeshi executive working in Cardiff branch of a U.S. multinational bank

Why Expatriate Assignments Fail Personality Personal intentions Family pressures Inability of the spouse to adjust Inability to cope with larger overseas responsibility. Lack of cultural skills

Management Values and International Staffing Policy Ethnocentric Practices The notion that home-country attitudes, management style, knowledge, evaluation criteria, and managers are superior to anything the host country has to offer. Polycentric Practices A conscious belief that only the host-country managers can ever really understand the culture and behavior of the host-country market. Therefore, the foreign subsidiary should be managed by local people Geocentric Practices The belief that the firm’s whole management staff must be hired on a global basis, on the assumption that the best manager of a specific position anywhere may be in any of the countries in which the firm operates. Sony appointed as CEO someone from Wales who would run the firm’s U.S. operations

Strategic HR Issues in International Assignments Approaches to sending employees abroad: Administrative approach involves merely assisting the employee destined for an international assignment with paperwork and minor logistics Tactical approach involves managing the “risk or failure” factor of overseas assignment by providing paperwork assistance and a modest amount of training. Strategic approach involves extensive support and coordination of the international assignment and a strategized repatriation program at the end of the assignment.

Strategic HR Issues in International Assignments (cont’d)

Selecting Expatriate Managers Adaptability screening Assessing the expat’s (and spouse’s) probable success in handling the foreign transfer. Sending the employee and family members to the host country for several weeks. Overseas Assignment Inventory A test that identifies the characteristics and attitudes international assignment candidates should have.

I. Job Knowledge and Motivation Managerial ability Organizational ability Imagination Creativity Administrative skills Alertness Responsibility Industriousness Initiative and energy High motivation Frankness Belief in mission and job Perseverance III. Flexibility/Adaptability Resourcefulness Ability to deal with stress Flexibility Emotional stability Willingness to change Tolerance for ambiguity Adaptability Independence Dependability Political sensitivity Positive self-image V. Family Situation Adaptability of spouse and family Spouse’s positive opinion Willingness of spouse to live abroad Stable marriage Five Factors Important in International Assignee Success, and Their Components IV. Extracultural Openness Variety of outside interests Interest in foreign cultures Openness Knowledge of local language[s] Outgoingness and extroversion Overseas experience II. Relational Skills Respect Courtesy and fact Display of respect Kindness Empathy Non-judgmentalness Integrity Confidence

Orienting and Training for International Assignment Training is needed on: The impact of cultural differences on business outcomes. How attitudes (both negative and positive) are formed and how they influence behavior. Factual knowledge about the target country. Language and adjustment and adaptation skills.

Appraising Expatriate Managers Challenges in appraising overseas managers Determining who should appraise the manager Deciding on which factors to base the appraisal Improving the expatriate appraisal process Weigh the evaluation more toward the on-site manager’s appraisal than toward the home-site manager’s If the home-office manager does the actual written appraisal, use a former expatriate from the same overseas location for advice Stipulate the assignment’s difficulty level, and adapt the performance criteria to the situation

Compensating Expatriates The “Balance Sheet Approach” Home-country groups of expenses—income taxes, housing, goods and services, and discretionary expenses—are the focus of attention. The employer estimates what each of these four expenses is in the expatriate’s home country, and what each will be in the host country. The employer then pays any differences such as additional income taxes or housing expenses.

The Balance Sheet Approach (Assumes Base Salary of $80,000)

Incentives Hardship allowances Mobility premiums Payments to compensate expatriates for exceptionally hard living and working conditions at certain foreign locations. Mobility premiums Lump-sum payments to reward employees for moving from one assignment to another. Foreign service premiums Financial payments over and above regular base pay, and typically range between 10% and 30% of base pay.

Setting Strategic HR Standards

Repatriation

Thank you. Finally, we are done with HRM 480 Thank you! Finally, we are done with HRM 480. Thank you for tolerating me throughout the semester! I am so sorry about the unpleasant events. I wish you success in all your future endeavors! Good luck with the final exam, report and presentation!