International HR - 2 1

Causes of Expatriate Assignment Failure Family adjustment Lifestyle issues Work adjustment Bad selection Poor performance Other opportunities arise Business reasons Repatriation issues

Training and Development Essential training program content to prepare employees for working internationally: Language training Cultural training Assessing and tracking career development Managing personal and family life Repatriation Culture shock Perpetual stress experienced by people who settle overseas.

Preparing for an International Assignment To prepare for an international assignment, one should become acquainted with the following aspects of the host country: Social and business etiquette History and folklore Current affairs, including relations between the host country and the United States Cultural values and priorities Geography, especially its major cities Sources of pride and great achievements of the culture Religion and the role of religion in daily life Political structure and current players Practical matters such as currency, transportation, time zones, and hours of business The language

Training Methods Reviewing available information about the host company: books, magazines, video tapes. Conversations with host country natives. Sensitivity training to become familiar with the customs and overcome prejudices. Temporary assignments to encourage shared learning.

Assessing and Tracking Career Development Developmental and Career Advantages of an International Assignment: Increases the expatriate’s responsibilities and influence within the corporation Provides a set of unique experiences beneficial to both the individual and the firm Enhances understanding of the global marketplace Offers the opportunity to work on a project important to the organization

Repatriation Checklist Before they go: Make sure there is a clear need for the international assignment. Don’t send someone abroad unnecessarily. Develop a clear set of objectives and expectations and time frames in which they should be met. Make sure that your selection procedures are valid. Select the employee and also look at and involve the employee’s family. Provide (or fund) language and cultural training for the employee and the employee’s family. Offer counseling and career assistance for the spouse. Establish career planning systems that reward international assignments and lead to promotion and knowledge sharing.

Repatriation Checklist (cont’d) While they are away: Jointly establish a developmental plan that focuses on the goal to be achieved. Tie performance objectives to the achievement of the goal. Identify mentors who can be a liaison and support person from home. Keep communications open so that the expatriate is aware of job openings and opportunities. Arrange for frequent visits back home (for the employee and the family). Make certain they do not lose touch with friends and relatives.

Repatriation Checklist (cont’d) When they come back home: Throw a “welcome home” party and arrange for a meeting with other former expatriates. Offer counseling to ease the transition. Arrange conferences and presentations to make certain that knowledge and skills acquired away from home are identified and disseminated. Set up an expatriate database to help other employees who go abroad later. Get feedback from the employee and the family about how well the organization handled the repatriation process..

Global Compensation Challenges Different countries have different norms for employee compensation: Financial (money) incentives versus nonfinancial incentives (prestige, independence, and influence) Individual rewards versus collectivist concerns for internal equity and personal needs General rule: Match the rewards to the values of the local culture—create a pay plan that supports the overall strategic intent of the organization but provides enough flexibility to customize particular policies and programs to meet the needs of employees in specific locations.

Hourly Wages in Different Countries* COUNTRY $/HOUR Norway 41.05 Denmark 35.45 Germany 34.21 Netherlands 32.34 Belgium 31.85 Sweden 31.80 Switzerland 30.67 Austria 30.46 Finland 29.90 Luxembourg 27.74 United Kingdom 27.10 Australia 26.14 Ireland 25.96 Canada 25.74 Italy 25.07 France 24.90 United States 23.82 COUNTRY $/HOUR Japan 20.20 Spain 18.83 Greece 16.10 Korea, Republic of 14.72 New Zealand 14.47 Israel 12.98 Singapore 8.55 Portugal 7.65 Czech Republic 6.77 Taiwan 6.43 Hungary 6.29 Hong Kong SAR (1) 5.78 Poland 4.99 Brazil 4.91 Mexico 2.75 Philippines 1.07 Sri Lanka 0.54 *Hourly compensation costs in U.S. dollars for production workers in manufacturing.

Compensation of Host-Country Employees Hourly wages can vary dramatically from country to country. Pay periods are different. Seniority may be an important factor. High pay rates can upset local compensation practices. Bonuses, profit-sharing, benefits and paid leave may be more extensive and legally required.

Compensation of Host-Country Managers Global Compensation System A centralized pay system whereby host-country employees are offered a full range of training programs, benefits, and pay comparable with a firm’s domestic employees but adjusted for local differences

Expatriate Compensation Provide the expatriate with a disposable income that is equivalent to what he or she would receive at home. Provide and explicit “add-on” incentive for accepting an international assignment. Compensation country-based or company-based? Employment laws Double taxation / FICA / Value Added Taxes Currency stability Benefits and Health Care Firms can use compensation packages to enhance the effectiveness of expatriate assignments. However, compensation policies can create conflict if locals compare their pay packages to the expatriate’s and conclude that they are being treated unfairly. Listed here are some considerations when designing a compensation package for expatriates.

Expatriate Compensation Systems (cont’d) Localization Adapting pay and other compensation benefits to match that of a particular country Reduces resentment among local staff members if they are earning significantly less. Other Issues Adequacy of medical care Personal security Compensation policies of competitors

Performance Appraisal of International Managers Who Should Appraise Performance? Home-country evaluations Host-country evaluations Adjusting Performance Criteria Augmenting job duties Individual learning Organizational learning Providing Feedback Debriefing interview

The Labor Environment Worldwide International Differences in Unions: The level at which bargaining takes place (national, industry, or workplace) The degree of centralization of union-management relations The scope of bargaining (parties and issues) The degree to which government intervenes The degree of unionization and union strength The political affiliations of unions