International Human Resources Strategy Internationale Unternehmensführung Ao. Univ.-Prof. Dr. Josef Windsperger BIART Sébastien FLAMAND Astrid KAL Ali

Overview Introduction Emerging markets Knowledge-based view of the firm International staffing strategies Global mindset Model of management staffing strategy for emerging markets Conclusion Case study: Gillette

Introduction - 1 Globalization  4 drivers : Market Drivers Cost Drivers Competitive Drivers Government Drivers

Introduction - 2  Need for completely new competitive differentiation  Importance of development and retention of globally efficient managers  SIHRM = Strategic International Human Resources Management

Emerging markets Characteristics : Low level of economic development Rapidly expanding population Acceptable opportunity / risk ratio Example : Mexico, Poland, China, etc.

Knowledge-based view Main barrier to knowledge transfer Firm = institution for integrating knowledge Development b y selecting and retaining global managers with : Local social knowledge of emerging markets Understanding of the global objectives of the organization

International staffing strategies 3 kinds of approach : Ethnocentric Polycentric Geocentric

Ethnocentric approach Tight control of HQ Key positions filled by PCNs Drawbacks : Slow adaptation of PCNs Limited promotion opportunities for HCNs PCNs not always cultural sensitive

Polycentric approach Scattered control through different HQs HCNs are recruited to manage foreign subsidiaries Drawbacks : Loss of control Limited opportunities for HCNs to gain experience outside of their own country

Geocentric approach Best people for key jobs, regardless of nationality Development of a pool of senior international managers Reduces identification of managers with subsidiary units

Global mindset It a way of being rather than a set of skills It means the ability to scan the world from a broad perspective Need for knowledge and skills to sustain and develop it !

Managerial mindsets The defender The explorer The controller The integrator

Model of management staffing strategy Analyse of the contextual factors influencing the staffing choices Based on knowledge-based view of the firm Consists of 4 propositions

The model Firm global HRM orientation (i.e. Geocentric Global Mind-Set) Percieved Value of Taciteness of Local Country Knowledge RELEVANCE OF THE CONTEXT OF HOST COUNTRY IN EMERGING MARKETS Economic level difference Cultural distance Variability CONTROL VARIABLES Industry structure, MNC structure, Etc. Equivocality of subsidiarity Performance goals Value-Adding Staffing Choices For Emerging Markets Teachability Codifiability Complexity Expatriate HCN TCN Inpatriate

The degree of the firm’s geocentric strategic HRM orientation will be positively related to the perceived value of tacit local knowledge for the firm’s strategy in emerging markets Proposition 1

The model Firm global HRM orientation (i.e. Geocentric Global Mind-Set) Percieved Value of Taciteness of Local Country Knowledge RELEVANCE OF THE CONTEXT OF HOST COUNTRY IN EMERGING MARKETS Economic level difference Cultural distance Variability CONTROL VARIABLES Industry structure, MNC structure, Etc. Equivocality of subsidiarity Performance goals Value-Adding Staffing Choices For Emerging Markets Teachability Codifiability Complexity Expatriate HCN TCN Inpatriate

Proposition 2 Low difference in economic development and low cultural distance between home and host countries will increase the association between the firm’s TMT’s global mindset and the perceived value of the tacit local knowledge. High difference in economic development and high cultural distance between home and host countries will reduce the association between the firm’s TMT’s global mindset and the perceived value of the tacit local knowledge.

The model Firm global HRM orientation (i.e. Geocentric Global Mind-Set) Percieved Value of Taciteness of Local Country Knowledge RELEVANCE OF THE CONTEXT OF HOST COUNTRY IN EMERGING MARKETS Economic level difference Cultural distance Variability CONTROL VARIABLES Industry structure, MNC structure, Etc. Equivocality of subsidiarity Performance goals Value-Adding Staffing Choices For Emerging Markets Teachability Codifiability Complexity Expatriate HCN TCN Inpatriate

Proposition 3 In emerging markets, equivocality of subsidiary goals to corporate management is positively related to the perceived value of tacit local knowledge for the firm.

The model Firm global HRM orientation (i.e. Geocentric Global Mind-Set) Percieved Value of Taciteness of Local Country Knowledge RELEVANCE OF THE CONTEXT OF HOST COUNTRY IN EMERGING MARKETS Economic level difference Cultural distance Variability CONTROL VARIABLES Industry structure, MNC structure, Etc. Equivocality of subsidiarity Performance goals Value-Adding Staffing Choices For Emerging Markets Teachability Codifiability Complexity Expatriate HCN TCN Inpatriate

Proposition 4 If the value of the local tacit knowledge is perceived as high by the firm management, then the preferred management staffing strategy in emerging markets will be impatriation If the value of the local tacit knowledge is perceived as low by the firm management, then the preferred management staffing strategy in emerging markets will be expatriation

The model Firm global HRM orientation (i.e. Geocentric Global Mind-Set) Percieved Value of Taciteness of Local Country Knowledge RELEVANCE OF THE CONTEXT OF HOST COUNTRY IN EMERGING MARKETS Economic level difference Cultural distance Variability CONTROL VARIABLES Industry structure, MNC structure, Etc. Equivocality of subsidiarity Performance goals Value-Adding Staffing Choices For Emerging Markets Teachability Codifiability Complexity Expatriate HCN TCN Inpatriate

Value-adding staffing choices (1) Expatriates: cost/failure/performance records are questionable Reintegration problems Dual-career couple (women…)

Value-adding staffing choices (2) Inpatriates: linking-pin role between headquarters and the foreign subsidiary. provide valuable specialized knowledge input about HR function in emerging markets provide mentoring to high potential managers from emerging host country nations to insure a succession plan BUT must not be viewed as peripheral but as a part of the core global management team

Value-adding staffing choices

Globalization strategy = insure an adequate number of qualified global managers Inpatriation fulfils the need for social knowledge in global decision making Concept should be adapted to particular situation Conclusion

Case study Gillette’s Prescription for International Business Success : In-House Training and Expat Experience

Background on Gillette Multinational company (57 manufactures in 28 countries) 90 years of international experience Divisions / Geographic groups Regiocentric approach to international management regiocentric approach to international management

International HR strategy “ One of my key objectives is to identify, recruit and develop competent managers. I am confident that these good people will generate a flow of business growth and profits for the future. ” - Dieu Eng Seng, Vice-President Asia Pacific

Key Strategies 1. International Trainee Program 2. Development through expatriate experience

International Trainee Program Program launched in 1983 “Inpatriation” of students from subsidiary countries 18 months of training at regional headquarter (Boston, London or Singapore)

ITP : 3 main objectives Personal development Better communication between headquarters and subsidiaries Emergence of a new breed of multilingual, open-minded global managers

Development trough expatriate experience Hiring and assigning foreign nationals to staff operations not only in their home countries but around the world They teach and develop other potential managers within the organization (next generation…)

Conclusion Inpatriate concept adapted in the future Increasing transferability of management