10-1IBUS 681, Dr. Yang International Human Resource Management Chapter 10

10-2IBUS 681, Dr. Yang Learning Objectives Define international human resource management (IHRM) Understand how corporate strategy influences IHRM

10-3IBUS 681, Dr. Yang Learning Objectives (cont.) Explain major IHRM functions: recruitment and selection, training and development, performance evaluation, compensation and benefits, and labor relations Discuss additional concerns of managing expatriate employees

Major HRM Functions Staffing Recruiting and selection Training and development Compensation and benefits Employee motivation Performance evaluation Labor relations

Intrinsic Participate in decision making Greater job freedom and discretion More responsibility More interesting work Opportunities for personal growth Diversity of activities Cost-of-living increases Labor market adjustment Time-in-rank increase Profit sharing Explicit Membership-based Protection programs Pay for time not worked Services and perquisites Non-Financial Preferred office furnishings Preferred lunch hours Assigned parking spaces Preferred work assignments Business Cards Own secretary Impressive titles Employee Compensation Financial Extrinsic - Performance- based Piecework Commission Incentive plans Performance bonuses Merit pay plans Implied Membership-based

Per Capita Incomes by Metropolitan Area (U.S. Average: $29,469) TOP 10 1San Francisco, Ca$57,4146 West Palm Beach, Boca Raton, Fla $41,007 2San Jose, Ca$55,1577Trenton, NJ$40,954 3 New Heaven, Bridgeport, Stamfort, Danbury, Waterbury, Conn. $46,5428 Seattle, Bellevue, Everett, Wash $40,686 4Bergen, Passaic, NJ$42,7269 Nassau, Suffolk, NY $40,353 5 Middelsex, Sommerset, Hunterdon, NJ $ Naples, Fla$40,121 Source: U.S. Department of Commerce Bureau of Economic Analysis, The Mercury News, August 4, 2002

Per Capita Incomes by Metropolitan Area (U.S. Average: $29,469) BOTTOM 10 1 McAllen, Edinburg, Mission, Texas $13,3446 Auburn, Opelika, Ala. $18,484 2 Brownsville, Harlingen, San Benito, Texas $14,9067El Paso, Texas$18,535 3Laredo, Texas$15,1148Merced, CA$18,536 4Yuma, Ariz.$16,0029Provo, Orem, Utah$19,128 5Las Cruces, N.M.$17,32110Pine Bluff, Ark.$19,826 Source: U.S. Department of Commerce Bureau of Economic Analysis, The Mercury News, August 4, 2002

Gender Pay Gap Developments in EU and the US.CountryTime PeriodWomen's Average Pay as Percentage of Men'sTrends Austria % → 67% (monthly gross earnings)Increasing Belgium % → 79.4% for blue-collar workers 64.2% → 70.1% for white-collar workers (gross annual earnings). Narrowing Denmark % → 82% in private sectorStable Finland % → 82% (monthly earnings).Stable France % → 88.2% for full-time employees (monthly pay) 75.1% → 75.8% for all employees including part-time No information Germany % → 75.8% for blue-collar workers (West Germany) 69.4% → 70.4% for white-collar workers (West Germany). Narrowing Greece % (average gross hourly earnings)Narrowing Ireland % → 84.5% (hourly earnings)Narrowing Italy % → 81.7% (annual income).No information Luxembourg % (1999 average, no overtime figures given)Narrowing Netherlands % → 77% (hourly pay)Narrowing Portugal % → 76.5% (monthly pay)Increasing Spain % → 76.9% (monthly pay)Narrowing Sweden % → 82% (monthly pay)Increasing UK % → 80.6% (hourly pay)Narrowing U.S % → 76.0% (weekly full-time wage and salary)Narrowing Source: Adapted from National data - EIRO; Eurostat data, May 2001, Theme 3; US DOL Bureau of Labor Statistics, August 2001

Women’s Average Earnings as Percentage of Men’s, 1999

Wal-Mart’s Gender-based Pay Differentials Job Categories Average Annual Earnings 2001 No. of Employees % of Women Male Salaries Female Salaries Gender Gap Regional VP 39 10%$419,400$279, District MGR ,500177, Store MGR 3, ,70089, Assistant MGR 18, ,80037, MGMT Trainee 1, ,20022, Dept Head 63, ,50021, Sales Associate100, ,50015, Cashier 50, ,50013, Based on Business Week March 3, 2003

Family Impact on Gender-based Pay Ratios (Corrected for Hours) Country All Workers Married Workers Single Workers Germany (monthly) United Kingdom (annual) United States (annual) Austria (monthly) Switzerland (monthly) Sweden (annual) Norway (annual) Australia (annual) Average Source: Adapted from The gender earning gaps: Learning from international comparisons, Blau and Kahn, American Economic Review, (82) 2, 1992

The Dual-career Penalty Lower Pay Average income of men with MBA and whose wives were: Working $95,067 Not Working $125,120 Up 48% in six years Up 59% in six years Fewer Promotions % entered top management positions whose wives were: Working 28% Not Working 38% Source: Effects of alternative family structures on managerial career paths, Schneer, and Reitman, Academy of Management Journal 30 (4), 1993

Why both are working? Source: Is your family wrecking your career, Fortune, March 17, 1997: 71 Percentage change Income vs. Costs

10-4IBUS 681, Dr. Yang Major Areas of International Human Resource Management The management of human resources in global corporations The management of expatriate employees The comparison of human resource management (HRM) practices in a variety of different countries

10-5IBUS 681, Dr. Yang Approaches to Managing and Staffing Subsidiaries Ethnocentric Polycentric Regiocentric Geocentric/Global

10-6IBUS 681, Dr. Yang Choosing an Approach to IHRM Corporate international strategy Political and legal concerns Level of development in foreign locations Technology and the nature of the product Organizational life cycle Cultural differences

10-7IBUS 681, Dr. Yang Recruitment and Selection Employee classification Parent country national (PCN) Host country national (HCN) Third country national (TCN) Managing and staffing approaches Selecting the right candidate

10-9IBUS 681, Dr. Yang Training and Development Planned individual learning, organization development, and career development Delivery of programs worldwide Developing globally minded managers

Cultural Impacts on Training and Development Practices Human resource development roles Analysis and design Development and delivery Administration and environment

Performance Evaluation Purpose Timeframe Standards Feedback Market conditions Economic factors

Compensation and Benefits Salary-related and non-salary related factors Organizational philosophy and strategy Cost to the organization Employee motivation Company image

10-16IBUS 681, Dr. Yang Typical Expatriate Benefits Overseas premium Housing allowance Cost of living allowance (COLA) Moving expenses Tuition for dependent education Home leave Tax reimbursement plans

Labor Relations Labor relations function Identify and define roles of management and workers in the workplace Collective bargaining Union organizations Union membership Labor law

Union Density Figures for a Selected Group of Countries Country Percentage of Union Membership Country Percentage of Union Membership Argentina28%Greece30% Brazil13-30%Italy15% Canada29.5%Japan24.2% Chile12.3%Malaysia9.1% China92%Mexico25-30% Costa Rica15%New Zealand34.4% Egypt50%Span11% France8-10%United States15.8% Germany39.5%Zimbabwe17% Source: U.S. Department of Labor, Bureau of International Labor Affairs, Foreign Labor Trends and Bureau of Labor Statistics, dates as indicated in the table.

10-14 IBUS 681, Dr. Yang How Situational Factors Influence the Selection of a CCT Method Degree of Training Rigor High Low High Low High Classroom Language Training Films FACTUAL Books Lectures Area Briefings Case Studies Culture Assimilators Sensitivity Training ANALYTICAL Interactive Language Training Role Plays Field Trips Simulations EXPERIENTIAL Degree of Job Novelty Degree of Culture Novelty Training Methods Degree of Interaction with Host Country Nationals

10-11IBUS 681, Dr. Yang Managing Expatriates Expatriate Failure Rates U.S.: 10-40% Western Europe: 5-15% Japan: Less than 5% Selection of Expatriates Technical competence Adaptability Communication skills Family stability Gender Age Ethnicity Expatriate Training Cross-Cultural Adjustment Expatriate Evaluation Expatriate Compensation Expatriate Reentry Minimize “reverse culture shock” Integrate the manager back into the home office Adjustments to a new or lower standard of living Allow for reentry time

Retaining the Expatriates 80% believe they would be promoted About 23% get the promotion 20% want to leave the company upon return Average turnover cost is $250,000

10-17IBUS 681, Dr. Yang Convergence or Divergence? Large corporations’ preference for consistent worldwide systems Smaller companies’ desire for more professional systems Need to follow local HRM laws Development of unique techniques and practices to suit local cultural and legal requirements

10-18IBUS 681, Dr. Yang Implications for Managers Every international manager has responsibility for effectively managing human resources, and therefore, must understand IHRM functions It is helpful to understand IHRM because of potential impact on your career

10-12IBUS 681, Dr. Yang Cross-Cultural Training Methods Explain the major aspects of the host country culture, including customs, traditions, every day behaviors. Explain the history, geography, economy, politics, and other general information about the host country and region. Portray a real-life situation in business or personal life to illustrate some aspect of living or working in the host culture.  Cultural Briefings  Area Briefings  Cases

Cross-Cultural Training Methods (cont.)  Role Playing  Culture Assimilator  Field Experiences Allows the trainee to act out a situation that he or she might face in living or working in the host country. Provides a written set of situations that the trainee might encounter in living or working in the host country. Trainee selects one from a set of responses to the situation and is given feedback as to whether it is appropriate and why. Provide an opportunity for the trainee to go to the host country or another unfamiliar culture to experience living and working for a short time. IBUS 681, Dr. Yang 10-13

10-15 IBUS 681, Dr. Yang Culture Shock Cycle Low High Months in a New Culture Mood

10-8IBUS 681, Dr. Yang Classifying Employees Parent Country National (PCN) Host Country National (HCN) Third Country National (TCN)

Comparing Paychecks Median Annual Earnings as a Share of White Men’s USN & WR-Basic Data: U.S. Department of Labor (Cited by U.S. News, February 13, 1995)

Who Does What?  Women represents 51.2% of the U.S. adult population, blacks 12.4%, and Hispanics 9.5%  USN & WR - basic Data: U.S. Department of Labor (Cited by U.S. News, February 13, 1995)