Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall International HRM Challenge 17-1 Chapter 17

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Chapter 17 Objectives  Specify the HRM strategies that are most appropriate for firms at different stages of internationalization.  Identify the best mix of host-country and expatriate employees given the conditions facing the firm.  Explain why international assignments often fail and the steps a firm can take to ensure success in this area. 17-2

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Chapter 17 Objectives  Reintegrate returning employees into the firm after they complete an international assignment.  Develop HRM policies and procedures that match the needs and values of different cultures.  Consider ethical implications of HRM policies and procedures on a global basis. 17-3

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Stages of International Involvement  Expatriate —citizen of one country and lives and works in another country 17-4   Multinational corporation (MNC)   Firm with assembly and production facilities in several regions of the world   Transnational corporation   Firm with highly decentralized operations in many countries   Has little allegiance to its country of origin and weak ties to any country

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Stages of International Involvement 17-5

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Stages of International Involvement  Outsourcing  Used extensively by firms in stages 3 to 5  Challenges include  Online security  Safety issues  Client complaints 17-6   Falling Barriers   Trade, production, services, and finances barriers largely disappeared

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall The Mix of Host-Country and Expatriate Employees  Wholly owned subsidiary and joint ventures  Must decide who will manage overseas unit  Three approaches  Ethnocentric approach  Polycentric approach  Geocentric approach 17-7

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall The Mix of Host-Country and Expatriate Employees Reliance on expatriates increases when: 17-8   Sufficient local talent is not available   Part of firm’s overall business strategy is to create a corporate-wide global vision   International units and domestic operations are highly interdependent   The political situation is unstable   Are significant cultural differences between the host and home countries

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Challenges of Expatriate Assignments  20–40% failure rate for U.S. expatriates  3–4 times higher than Europeans or Asians 17-9   Many reasons assignments end in failure   Career blockage   Culture shock   Lack of pre-departure cross-culture training   Overemphasis on technical qualifications   Getting rid of a troublesome employee   Family problems

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Challenges of Expatriate Assignments  Difficulties on Return   Lack of respect of acquired skills   Loss of status   Poor planning for return position   Reverse culture shock

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Using HRM to Effectively Manage Expatriates Selection  Emphasize cultural sensitivity as a selection criterion  Establish a selection board of expatriates  Require previous international experience  Consider hiring foreign-born employees who can serve as future expatriates  Screen candidates’ spouses and families 17-11

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Training  9–12 months before assignment  At least some training should go to the expatriate’s family  Three approaches to training:  Information-giving approach  Affective approach  Impression approach  Local managers need to be prepared to train incoming expatriates 17-12

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Career Development  Position the international assignment as a step toward advancement within the firm  Provide support for expatriates  Provide career support for spouse 17-13

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Compensation  Provide a disposable income equivalent to what the expatriate would receive at home  Provide an explicit “add-on” incentive for accepting an international posting  Don’t put expatriates in the same jobs held by locals or lower-ranking jobs  Calculating compensation for expatriates is very difficult  Fluctuating exchange rates  Cost of living varies tremendously 17-14

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Using HRM to Effectively Manage Expatriates  Role of HR Department  Women and International Assignments 17-15

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Developing HRM Policies in a Global Context  Western-style management likely to clash with foreign norms and values  Must mold practices to culture   Hofstede’s 5 Dimensions of Culture   Power distance   Individualism   Uncertainty avoidance   Masculinity/femininity   Long-term/short-term orientation

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall EEO in the International Context  EEO prohibition of discrimination based on age, sex, race, etc. apply to international assignments too  Foreign national employees of U.S. companies working outside the US are not covered by U.S. employment law  Immigration and Control Act (1986)  Non-U.S. citizens living and working in the U.S.  May not be discriminated against 17-17

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Developing HRM Policies: Caveats “National culture” may be an elusive concept Culture changes over time Companies sometimes blame international personnel problems on culture without study Virtually no data on the success/failure of HRM practices as a function of culture Different cultures often have very different notions of right and wrong The business laws of other countries often force companies to change their practices 17-18

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Human Resource Management and Exporting Firms  Key impediments to exporting:  Lack of knowledge about international markets, business practices, and competition  Lack of management commitment to generating international sales  Impediments can be attributed to lack of utilization of human resources 17-19

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Other International HR Considerations  Ethics and Social Responsibility  Many ethical dilemmas face expatriates  Ethical and legal are not the same Foreign Corrupt Practices Act (1977)   Political Risk   Government pressures can impact operations negatively.   Expatriates often get caught in the middle

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Summary and Conclusions  Five stages of international involvement  Three approaches to managing foreign operations  Ethnocentric, polycentric and geocentric  Emphasize cultural sensitivity when selecting people for international assignments  Position international assignments as step towards advancement in the firm  Don’t transfer home HRM practices abroad  Reinforce export activities with HR practices 17-21

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