Global HRM 25 Matakuliah: J0124 – Manajemen Sumber Daya Manusia Tahun : 2010

Learning Outcomes After studying this chapter, the students should be able to : Identify the types of organizational forms used for competing internationally Explain how domestic and international HRM differ Bina Nusantara University 3

Managing Across Borders International corporationInternational corporation  Domestic firm that uses its existing capabilities to move into overseas markets. Multinational corporation (MNC)Multinational corporation (MNC)  Firm with independent business units operating in multiple countries. Global corporationGlobal corporation  Firm that has integrated worldwide operations through a centralized home office. Transnational corporationTransnational corporation  Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units. © 2010 South-Western, a part of Cengage Learning. All rights reserved

Increasing Importance of Understanding Global Human Resources Management International Mergers and Acquisitions Global Human Resources Management Global Human Resources Management Foreign Human Resources Global Competition Market Access Opportunities © 2010 South-Western, a part of Cengage Learning. All rights reserved

Cultural Environment of International Business © 2010 South-Western, a part of Cengage Learning. All rights reserved

Domestic versus International HRM Issues in international HRM in helping employees adapt to a new and different environment outside their own country:Issues in international HRM in helping employees adapt to a new and different environment outside their own country:  Relocation  Orientation  Translation services © 2010 South-Western, a part of Cengage Learning. All rights reserved

International Staffing Expatriates, or Home-country NationalsExpatriates, or Home-country Nationals  Employees from the home country who are on international assignment. Host-country NationalsHost-country Nationals  Employees who are natives of the host country. Third-country NationalsThird-country Nationals  Employees who are natives of a country other than the home country or the host country. © 2010 South-Western, a part of Cengage Learning. All rights reserved

Hiring Host-Country Nationals Advantages:Advantages: 1. Hiring local citizens is generally less costly than relocating expatriates. 2. Since local governments usually want good jobs for their citizens, foreign employers may be required to hire locally. 3. Most customers want to do business with companies they perceive to be local versus foreign. © 2010 South-Western, a part of Cengage Learning. All rights reserved

Selecting Global Managers Global ManagerGlobal Manager  A manager equipped to run an international business Skills Categories for Global ManagersSkills Categories for Global Managers  Ability to seize strategic opportunities  Ability to manage highly decentralized organizations  Awareness of global issues  Sensitivity to issues of diversity  Competence in interpersonal relations  Community-building skills © 2010 South-Western, a part of Cengage Learning. All rights reserved

Comparison of Advantages in Sources of Overseas Managers © 2010 South-Western, a part of Cengage Learning. All rights reserved

Expatriate Selection Criteria © 2010 South-Western, a part of Cengage Learning. All rights reserved

Causes of Expatriate Assignment Failure Family adjustment Lifestyle issues Work adjustment Bad selection Poor performance Other opportunities arise Business reasons Repatriation issues © 2010 South-Western, a part of Cengage Learning. All rights reserved

Training and Development Essential training program content to prepare employees for working internationally:Essential training program content to prepare employees for working internationally:  Language training  Cultural training  Assessing and tracking career development  Managing personal and family life  Repatriation Culture shockCulture shock  Perpetual stress experienced by people who settle overseas. © 2010 South-Western, a part of Cengage Learning. All rights reserved

3 Nonverbal Communications in Different Cultures © 2010 South-Western, a part of Cengage Learning. All rights reserved

Assessing and Tracking Career Development Developmental and Career Advantages of an International Assignment:Developmental and Career Advantages of an International Assignment:  Increases the expatriate’s responsibilities and influence within the corporation  Provides a set of unique experiences beneficial to both the individual and the firm  Enhances understanding of the global marketplace  Offers the opportunity to work on a project important to the organization © 2010 South-Western, a part of Cengage Learning. All rights reserved

Global Compensation Challenges Different countries have different norms for employee compensation:Different countries have different norms for employee compensation:  Financial (money) incentives versus nonfinancial incentives (prestige, independence, and influence)  Individual rewards versus collectivist concerns for internal equity and personal needs  General rule:  Match the rewards to the values of the local culture—create a pay plan that supports the overall strategic intent of the organization but provides enough flexibility to customize particular policies and programs to meet the needs of employees in specific locations. © 2010 South-Western, a part of Cengage Learning. All rights reserved

Compensation of Host-Country Managers Global Compensation SystemGlobal Compensation System  A centralized pay system whereby host-country employees are offered a full range of training programs, benefits, and pay comparable with a firm’s domestic employees but adjusted for local differences © 2010 South-Western, a part of Cengage Learning. All rights reserved

Expatriate Compensation Systems Home-Based PayHome-Based Pay  Pay based on an expatriate’s home country’s compensation practices Balance-Sheet ApproachBalance-Sheet Approach  A compensation system designed to match the purchasing power in a person’s home country 1. Calculate base pay 2. Figure cost-of-living allowance (COLA) 3. Add incentive premiums 4. Add assistance programs © 2010 South-Western, a part of Cengage Learning. All rights reserved

Expatriate Compensation Systems (cont’d) Split PaySplit Pay  A system whereby expatriates are given a portion of their pay in the local currency to cover their day-to- day expenses and a portion of their pay in their home currency to safeguard their earnings from changes in inflation or foreign exchange rates Host-Based PayHost-Based Pay  Expatriate pay is comparable to that earned by employees in a host country to which the expatriate is assigned. © 2010 South-Western, a part of Cengage Learning. All rights reserved

Expatriate Compensation Systems (cont’d) LocalizationLocalization  Adapting pay and other compensation benefits to match that of a particular country  Reduces resentment among local staff members if they are earning significantly less. Other IssuesOther Issues  Adequacy of medical care  Personal security  Compensation policies of competitors © 2010 South-Western, a part of Cengage Learning. All rights reserved

Performance Appraisal of International Managers Who Should Appraise Performance?Who Should Appraise Performance?  Home-country evaluations  Host-country evaluations Adjusting Performance CriteriaAdjusting Performance Criteria  Augmenting job duties  Individual learning  Organizational learning Providing FeedbackProviding Feedback  Debriefing interview © 2010 South-Western, a part of Cengage Learning. All rights reserved