Human Resource Management Lecture 25 MGT 350

Last Lecture The Industrial Revolution Time and Motion Studies for one best way. Abraham H. Maslow Theory. Theory X and Y. Japanese Type Organization. American Type Organization. The Hawthorne Effect. TQM—Total Quality Management. Hygiene Factors. David McClelland’s Three-Needs Theory. J. Stacey Adams Equity Theory.

Topic International Human Resource Management

4 Globalization of Business and HR Global Communications Global Population Changes Global Economic Interdependence Regional Alliances NAFTA, EU Globalization Forces

5 Reasons for Globalization of Businesses Increased Travel Extensive Global communication Transfer of New technology Growing Trade Foreign Competition Improved Education Emigration

6 Business Drivers of Globalization Increased Pressure on cost Search for New Markets Greater Customer demand (product and service qualities) Government Policy Technological development World wide communication and information flow Interdependence of nations in trading blocs (European Union, NAFTA) Cultural Integration Highly educated workforce worldwide Decreased trade barriers E-Commerce

7 Role Of HR Managers When Firm Goes International Once decision is made to go international, the task of HR managers is to implement that decision, to convert the strategic plan into action and get on with whatever needs to be done to achieve the international vision and targeted objectives.

8 Staffing Finding the best low cost employee anywhere in the world Executive Development Ensuring management group has the knowledge And ability to operate effectively in the international arena Labour Relations Vary from country to country International HRM Concerns Need for IHRM PROFRSSIONAL

9 Factors Affecting Global HR Management

10 The Expatriate Workforce: Terms Traditional Expatriate, older and experienced, selected for experience and knowledge International Cadre, individuals who move from one assignment to another Permanent Expatriate, employees who are permanently assigned to overseas locations Young Expatriate, needs experience, is sent for rotating assignments Temporary Expatriate, goes on short assignments

11 The Expatriate Workforce: Terms Expatriate Trainee, placed abroad for management experience as part of Multinational Enterprise initiation Virtual Expatriate, the expatriate who takes on foreign assignments while staying in the home office

12 Employee Categories The three categories of employees of an international firm: host-country nationals (HCNs) parent-country nationals (PCNs) third-country nationals (TCNs) Nationality of the employee is major factor in determining the person’s ‘category’. Hence, IHRM is an interplay among human resource activities, types of employees and countries of operation.

13 What is an Expatriate? An employee who is working and temporarily residing in a foreign country. They are also called ‘international assignees’ by some firms. All three categories of employees, i.e. PCNs, TCNs, and HCNs are expatriates.

14 What is an Inpatriate? Transfer of subsidiary staff into the parent country (headquarters) operations.

15 Global Assignment Management Cycle

16 Staffing the MNE: The Ranks Staffing the Multinational Enterprise’s employees is also a difficult endeavor. Firms go through stages where they use: Ethnocentric Staffing – PCNs almost exclusively Polycentric Staffing – HCN in key positions Regiocentric Staffing – Regional basis Geocentric Staffing – TCN, HCN, PCN equal status

17 Global Employee Selection Factors

18 Expatriate Failure Failure is frequent. It occurs when the assignee returns prematurely or when performance does not meet expectations. Rates range from 15% to 80%. The highest failure rate is for United States nationals.

19 Failure Costs The costs for failure are substantial, ranging from $55,000 to $150,000 per failure in direct costs. The real cost if higher as it includes cost of selection and replacement, training, preparation, moving, lost revenue, lost reputation, lost opportunity, and lost future value.

20 Failure Reasons The reasons for failure are numerous. They include spouse unhappiness, inability to adjust, immaturity, inability to cope with responsibility, stress, lack of technical competence. Lack of motivation is also a problem.

21 Causes of Expatriate Assignment Failure Source: Based on data from Global Relocation Trends Survey Report (New York: GMAC GRS/Windham International, 2000), 48.

22 Expatriate Adjustment Stages Source: GMAC Relocation Services, used with permission.

23 Differences between Domestic HRM and IHRM 1.More HR activities 2.The need for a broader perspective 3.More involvement in employees’ personal lives 4.Changes in emphasis as the workforce mix of expatriates and locals varies 5.Risk exposure 6.Broader external influences

24 MORE HR ACTIVITIES International taxation International relocation Orientation Administrative services for expatriates Host-government relations Language translation services

25 THE NEED FOR A BROADER PERSPECTIVE Designing and administering programs for more than one national group of employees. A broader, more international perspective on expatriate benefits would endorse the view that all expatriates employees, regardless of nationality, should receive a foreign service or expatriate premium when working in foreign location. Complex equity issues arise when employees of various nationalities work together.

26 BROADER EXTERNAL INFLUENCES 3 Major External Factors That Influence IHRM Type of Government State of Economy Generally accepted practices of doing business in each of the various host countries in which the multinational operates.

Summary International HRM Globalization of Business and HR Reasons for Globalization of Businesses International HRM Concerns Factors Affecting Global HR Management Traditional Expatriate, older and experienced, selected for experience and knowledge International Cadre, individuals who move from one assignment to another Permanent Expatriate, employees who are permanently assigned to overseas locations Young Expatriate, needs experience, is sent for rotating assignments Temporary Expatriate, goes on short assignments – host-country nationals (HCNs) – parent-country nationals (PCNs) – third-country nationals (TCNs) Global Employee Selection Factors Expatriate Failure Expatriate Adjustment Stages