INTERNATIONAL HUMAN RESOURCE MANAGEMENT CHAPTER 11 INTERNATIONAL HUMAN RESOURCE MANAGEMENT

HRM HRM Defined: The design of formal systems in an organization to ensure effective and efficient use of human talent to accomplish organizational goals Deals with the entire relationship of the employee with the organization SHRM Defined: It involves designing and implementing a set of internally consistent policies and practices that ensure a firm’s human capital contribute to the achievement of its business objectives This includes both vertical (linking HRM practices with strategic management process) and horizontal (the integration of the various HRM practices) integration as well Additionally, linking the people of the firm (in terms of their skills and actions) to the strategic needs of the firm IHRM: Applied to international setting

COMPONENTS OF HRM HR Planning Recruitment Selection Orientation/Socialization Training & Development Performance Appraisal Compensation Labor Relations Repatriation

Research and Development Human Resource Management Finance Strategic The Strategic View Strategic Goals Human Resource Management Finance Research and Development Marketing Production

INTERNATIONAL HRM (IHRM) Basic HRM issues remain Must choose a mixture of international employees How much to adapt to local conditions?

IHRM Multinational Strategy HRM Activity IHRM Orientation HR Planning Recruiting Selection Training and Developing Orientation / Socialization Performance Appraisal Compensation Labor Relations Repatriation Multilocal Polycentric Regional Regiocentric International Ethnocentric Transnational Global

EMPLOYEES IN MULTINATIONAL ORGANIZATIONS Host country nationals Expatriates Home country nationals Third country nationals Inpatriates

MULTINATIONAL MANAGERS Host country or expatriate?

USING HOST COUNTRY MANAGERS Do they have the expertise for the position? Can we recruit them from outside the company?

USING EXPATRIATE MANAGERS Do parent country managers have the appropriate skills? Are they willing to take expatriate assignments? Do any laws affect the assignment of expatriate managers?

IS THE EXPATRIATE WORTH IT? High cost High failure rate

EXHIBIT 11.1 PAYING FOR THE EXPATRIATE MANAGER

REASONS FOR U.S. EXPATRIATE FAILURE Spouse fails to adapt Manager fails to adapt Other problems within the family Personality of the manager Level of responsibilities

Reasons for expatriate failure, continued Lack of technical proficiency No motivation for assignment

MOTIVATIONS TO USE EXPATS Managers acquire international skills Coordinate and control operations dispersed activities Communication of local needs/strategic information to headquarters

HR Planning Process by which organizations anticipate future staffing needs and plan programs to ensure that the correct number and type of employees are available when they are needed. Concerned with the flow of people into, through, and out of an organization.

RECRUITMENT Attract qualified applicants The ability to locate, attract, and have available when needed, an adequate but appropriate number (supply) of qualified individuals who are a good match for the job and the overall organization and to accomplish this at the least possible expense.

US RECRUITMENT STRATEGIES Open and public See Exhibit 12.3

KOREAN RECRUITMENT: A COLLECTIVIST APPROACH Backdoor School contacts

SELECTION To identify from a pool of applicants those individuals who will be hired.

THE US APPROACH TO SELECTION Match skills and job requirements Universalistic criteria See Exhibit 12.4

SELECTION IN COLLECTIVIST CULTURES The in-group Preference for family Value personal characteristics High school and university ties substitute for family membership

IMPLICATIONS FOR THE MULTINATIONAL Managers must follow local norms to get best workers Often a tradeoff with benefits of home country practices

A Model for Selecting Expatriates The right person for foreign assignment

KEY EXPATRIATE SUCCESS FACTORS Professional/technical competence Relational abilities Motivation Family situation Language skills Willingness to accept position

PRIORITY OF SUCCESS FACTORS Depends on : assignment length cultural distance amount of required interaction with local people job complexity/responsibility

EXHIBIT 11.3 SHOWS A DECISION MATRIX USED TO SET PRIORITIES OR DIFFERENT SUCCESS FACTORS DURING SELECTION

EXPATRIATE TRAINING

TRAINING RIGOR The extent of effort by trainees and trainers required to prepare the trainees for expatriate positions

LOW RIGOR TRAINING Short time period Lectures Videos on local culture Briefings on company operations company operations

HIGH RIGOR TRAINING Lasts over a month Experiential learning Extensive language training Often includes interactions with host country nationals

EXHIBIT 11.4 SHOWS VARIOUS TRAINING TECHNIQUES AND THEIR OBJECTIVES AS THE RIGOR OF THE CROSS- CULTURAL TRAINING GROWS

PERFORMANCE APPRAISAL Identifying people to reward, promote, demote, develop and improve, retain, or fire The process by which an employee’s contribution to the organization during a specified period of time is assessed.

CHALLENGES OF EXPATRIATE PERFORMANCE APPRAISAL Unreliable data Complex and volatile environments Time differences and distance separation Local cultural situations

STEPS TO IMPROVE THE PROCESS 1. Fit the evaluation criteria to strategy. 2. Fine tune the evaluation criteria 3. Use multiple evaluators with varying periods of evaluation

EXHIBIT 11.6 Shows several sources of information a superior or the HRM professionals may use to evaluate an expatriate managers

EXPATRIATE COMPENSATION Wages and salaries, incentives such as bonuses, and benefits such as retirement contributions

COMPENSATION IN THE U.S. Wages and salaries differ based on two major factors external internal

COMPENSATION IN JAPAN: TRADITIONAL APPROACH Base salaries for positions Skill and educational requirements Age Marital status and family size may count Bonuses

THE BALANCE SHEET APPROACH Provides a compensation package that equates purchasing power

BALANCE SHEET COSTS Allowances for cost of living, housing, utilities, furnishing, educational expenses, medical expenses, club memberships, and car and/or driver expenses

OTHER APPROACHES Parent country wages everywhere Wean expatriates from allowances Pay based on local or regional markets Cafeteria selection of allowances Global pay systems

THE REPATRIATION PROBLEM Difficult for many organizations "Reverse culture shock" Expatriates must relearn own national and organizational culture Includes whole family

STRATEGIES FOR SUCCESSFUL REPATRIATION PROVIDE: A strategic purpose for repatriation A team to aid the expatriate Home country information sources Training and preparation for the return Support for expatriate and family

WOMEN EXPATRIATES: TWO IMPORTANT "MYTHS" Myth 1: women do not wish to take international assignments Myth 2: women will fail in international assignments because of the foreign culture's prejudices against local women

SUCCESSFUL WOMEN EXPATRIATES Foreign not female emphasize nationality not gender The woman's advantage strong in relational skills wider range of interaction options

MULTINATIONAL STRATEGY AND IHRM

IHRM ORIENTATIONS Ethnocentric Polycentric Regiocentric Global

IHRM ORIENTATION AND MULTINATIONAL STRATEGY Early stages of internationalization = ethnocentric IHRM Multilocal strategies = ethnocentric or regiocentric Regional strategy = closer to the global

IHRM Multi-national Strategy HRM Activity IHRM Orientation HR Planning Recruiting Selection Training and Developing Orientation / Socialization Performance Appraisal Compensation Labor Relations Repatriation Multilocal Polycentric Regional Regiocentric International Ethnocentric Transnational Global

International strategy = ethnocentric or polycentric IHRM Transnational strategies = a global IHRM