Human Resource Management International Human Resource Management Good Evening – March 17th, 2011

Human Resource Management (HRM) Refers to the activities an organization carries out to use its human resources effectively Four major tasks of HRM A) Staffing policy B) Management training and development C) Performance appraisal D) Compensation policy

International Human Resource Management (IHRM) Strategic role: HRM policies should be congruent with the firm’s strategy and it’s formal and informal structure and controls Right People, Right Place, Right Time Task complicated by profound differences between countries in labor markets, culture, legal and economic systems

Implications for Managers What are the factors that would effect the choice and nature of H.R. policies in an international organization?

Main challenges in IHRM High failure rates of expatriation and repatriation Deployment – getting the right mix of skills in the organization regardless of geographical location Knowledge and innovation dissemination – managing critical knowledge and speed of information flow Talent identification and development – identify capable people who are able to function effectively Barriers to women in IHRM International ethics Language (e.g. spoken, written, body)

Main challenges in IHRM Different labor laws Different political climate Different stage(s) of technological advancement Different values and attitudes e.g. time, achievement, risk taking Roles of religion e.g. sacred objects, prayer, taboos, holidays, etc Educational level attained Social organizations e.g. social institutions, authority structures, interest groups, status systems

Types of “International" Organizations International organization:Any organization that exports to/ imports from organizations in other countries with primarily domestic production –Multidomestic. Multinational organization: An organization with operations in different countries but each is viewed as a relatively separate enterprise. Global organization: An enterprise structured so that national boundaries become blurred. The best people are hired irrespective of national origin, Transnational.

Global Staffing Issues Selecting candidates for overseas assignment Assignment terms and documentation Relocation processing and vendor management Immigration processing Cultural and language orientation and training Compensation administration and payroll processing Tax administration Career planning and development Handling of spouse and dependent matters

Expatriates An employee sent by his/her company in one country to work in a different country.

The Use of Expatriates Reliance on expatriates increase when: Sufficient local talent is not available. An important part of the firm’s overall business is the creation of a corporate global vision. International units and domestic operations are highly interdependent. The political situation is unstable. There are significant cultural differences between the host country and the home country.

Use of Expatriates Why do International Assignments Fail? Career blockage (“the home office has forgotten about me”) Culture Shock, resulting in frustration and poor cooperation abroad. Family problems, due to poor adjustment and/or lack of contact if family is left behind. Over-emphasis on technical qualifications. Getting rid of a problem employee.

Use of Expatriates Over-emphasis on technical qualifications. Why do International Assignments Fail? (con’t) Over-emphasis on technical qualifications. Getting rid of a problem employee.

The Roles of an Expatriate Agent of direct control Agent of socialization Network builder Boundary spanner Language node Expatriate’s home location Foreign Location

Satisfaction Time of Arrival Level of Satisfaction First arrive High Few months Lower After 2 years Higher than previous -Similar Language and religion are important factors for satisfaction -People over 35 yrs - higher level of satisfaction after 1st year -Men adjust faster to overseas assignments than women

Cross-Cultural Adjustment Expatriates must adjust to new work situation, interactions with locals, and new general environment Company can facilitate adjustment by providing training for expatriates and their families before and during the assignment Expatriates often experience cultural shock (psychological disorientation)

Factors Important in International Assignee Success I. Job Knowledge and Motivation Managerial & organizational ability Imagination, creativity Administrative skills Alertness Responsibility Industriousness Initiative and energy High motivation Frankness Belief in mission and job Perseverance II. Relational Skills Courtesy Display of respect Kindness Empathy Non-judgmentalness Integrity Confidence Source: Adapted from Arthur Winfred Jr., and Winston Bennett Jr., “The International Assignee: The Relative Importance of Factors Perceived to Contribute to Success,” Personnel Psychology 18 (1995), pp. 106–107.

IV. Extracultural Openness Factors Important in International Assignee Success III. Flexibility/ Adaptability Resourcefulness Ability to deal with stress Flexibility Emotional stability Willingness to change Tolerance for ambiguity Independence Dependability Political sensitivity Positive self-image IV. Extracultural Openness Variety of outside interests Interest in foreign cultures Openness Local language [s] known Outgoingness & extroversion Overseas experience V. Family Situation Adaptability of spouse and family Spouse’s positive opinion Willingness of spouse to live abroad Stable marriage

Environmental Briefings Cross Cultural Training Programs Environmental Briefings Cultural Orientation Language Training Sensitivity Training Field Experience

Compensation Two issues: Pay executives in different countries according to the standards in each country? or Equalize pay on a global basis? Method of payment

Components of Expatriate Pay Base Salary Same range as a similar position in the home country Foreign service premium Extra pay for work outside country of origin Allowances Hardship, housing, cost-of-living and education allowances Taxation Firm pays expatriate’s income tax in the host country Benefits Level of medical and pension benefits identical overseas

Typical Expatriate Benefits & Incentives Overseas premium Housing allowance Cost of living allowance (COLA) Moving expenses Tuition for dependent education Home leave Tax reimbursement plans Hardship allowances Mobility premiums

Appraising Expatriate Managers Challenges in appraising overseas managers Determining who should appraise the manager. Deciding on which factors to base the appraisal. Job abroad may include more than what it does at home

Guidelines for Performance Appraisal More weight given to onsite manager’s evaluation. Expat who worked in same location should assist home-office manager with evaluation. If foreign on-site manager preparing evaluation, home-office manager should be consulted before finalization.

A BIG THANK YOU TO ALL….