International Human Resources Management Chapter 10, Part 2

Training and Development Cross-cultural training: increases the relational abilities of future expatriates and their spouses and families Training rigor: extent of effort by both trainees and trainers required to prepare the trainees for expatriate positions

Training and Development (cont.) Low rigor training – used for short-term assignments Short time period Lectures and videos on local cultures Briefings on company operations High rigor training – for long-term assignments Longer time period Experiential learning Extensive language training Includes interactions with host country nationals

Exhibit 10.4: Training Rigor: Techniques and Objectives

Expatriate Performance Appraisal: Challenges Fit of international operation in multinational strategy Different business environment Unreliable data Complex and volatile environments Time difference and distance separation Local cultural situation Home country managers may not understand the local situation

Steps to Improve the Expatriate Performance Appraisal Fit the evaluation criteria to strategy Fine-tune the evaluation criteria to the situation Get evaluations from different people

The Expatriate Manager: Compensation The balance-sheet approach Provides a compensation package that gives the expatriate the same standard of living he/she would have at home Allowances for cost of living, housing, food, recreation, personal care, clothing, education, home furnishing, transportation, and medical care

Exhibit 10.7: Balance Sheet Approach To Expatriate Compensation

Compensation Details Base salary: the amount of money that an expatriate would receive for doing the same job in the home country Used as a basis to establish salary in the host country Salary may be paid in home country currency, host country currency, or a combination of the two

Compensation Details (2) Benefits: a substantial portion of expatriate compensation Is the home country or the host country responsible for the expatriate's social security benefits? Should home-country benefits programs be available to host-country nationals?

Compensation Details (3) Allowances Relocation allowance Cost-of-living allowances are paid when the employee must incur extra costs that he would not pay in the home country Examples: housing allowance, and the costs of private schools for the employee's children Hardship allowance: Often paid to employees who work in a country with difficult living conditions Home-leave allowances: pays the cost of periodic trips home for the employee and family

Compensation Details (4) Allowances (continued) Foreign service premium In the past, a foreign-service premium was often a monthly payment that continued as long as the employee worked overseas Many firms have eliminated the ongoing foreign-service premium. Today, a one-time, lump sum foreign service premium is often paid at the start of the overseas assignment to provide cash for immediate expenses.

Compensation Details (5) Taxes An expatriate may be required to pay income taxes to both the host country and his/her native country The company compensates the employee for the extra amount of tax

Compensation Details Summary The cost of an expatriate employee = salary costs + benefit costs + allowance costs (goods and services + housing) + tax costs

Compensation Approaches The compensation package must be cost-effective and should be seen as fair Balance-sheet approach: ensure that the expatriate does not lose money from the foreign assignment Negotiation approach: Negotiate compensation with each employee – may be used with top-level managers Host-based compensation: Pay the expatriate a salary comparable to local nationals

Compensation Approaches (2) Lump sum method: give expatriate a pre-determined amount of money. Employee decides how to spend it. Cafeteria approach: Offer the employee a choice among various compensation options, with a limit on total costs

Compensation Approaches (2) Regional system: Set up a compensation system for all expatriates who are assigned to a particular region Global pay systems: worldwide job evaluations, performance appraisal methods, and salary scales are used

Repatriation Problem Difficulties faced coming back home Three basic cultural problems—“reverse culture shocks” Adapt to new work environment and culture of home Expatriates must relearn own national and organization culture Need to adapt to basic living environment

Strategies for Successful Repatriation Provide a mentor at the home office to help the expatriate stay in touch during the overseas assignment. Provide a home-leave policy to encourage expatriates to make regular visits to the home office Provide a strategic purpose for the repatriation – the foreign experience should help the expatriate's career Help the expatriate make good use of the foreign assignment. Provide information and assistance for relocation. Provide training and preparation for the return Provide support for the expatriate and family on return

International Assignments for Women: Two 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

International Assignments for Women: Advantages More visible Strong in relational skills

International Assignments for Women: Disadvantages Face the glass ceiling Isolation and loneliness Constant proving of themselves, working harder than male Need to balance work and family responsibilities Need to worry about accompanying spouse

More Women in the Future? Women expatriate managers are expected to grow Acute shortage of high-quality managers Increasing number of women provide role models

What Can Companies Do To Ensure Female Expatriate Success? Provide mentors and networking opportunities Remove sources of barriers – educate other employees about the role of women managers Provide support to cope with dual-career issues