International Human Resource Management Copyright © Texas Education Agency, All rights reserved

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The Global Environment  The terms international, global, multinational, and transnational are used interchangeably; however, there are distinct differences. An international market is one in which a company may find that it has saturated the domestic market for the product, so it seeks out international markets in which to sell its product. 3 Copyright © Texas Education Agency, All rights reserved

The Global Environment (continued) A global organization is one in which a product is being sold globally, and the organization looks at the world as its market. A transnational company is a complex organization with a corporate office, but the difference is that the onus of the decision making, research and development, and marketing is left up to the individual foreign market. 4 Copyright © Texas Education Agency, All rights reserved

Culture 5  Culture, language, management styles, and laws are all considerations when implementing HRM strategies.  Culture is a key component in managing HRM on a global scale.  Geert Hofstede developed a list of five cultural dimensions that can help define how cultures are different. Copyright © Texas Education Agency, All rights reserved

Hofstede’s Dimensions 6 1. Individualism-Collectivism  Individualism: Tendency of people to look after themselves and their immediate family only.  Countries high in individualism: High individual initiative. Promotions are based on achievement. Salaries are based on market value.  Collectivism: Tendency of people to belong to groups or collectives and to look after each other in exchange for loyalty.  Countries high in collectivism: Low individual initiative. Salaries and promotions may be based on seniority. Copyright © Texas Education Agency, All rights reserved

Hofstede’s Dimensions 7 2. Power Distance  Power distance: The extent to which less powerful members of institutions and organizations accept that power is distributed unequally. High power distance countries: people may blindly obey the orders of their superiors and are less likely to question authority. Companies tend to use centralized decision- making and tall organization structures (many levels of management). Low power distance countries: flatter and decentralized organization structures, smaller ratio of supervisors. Employees are more likely to question their bosses. Participative management may be used. Copyright © Texas Education Agency, All rights reserved

Hofstede’s Dimensions 8 3. Uncertainty Avoidance  Uncertainty avoidance: Extent to which people feel threatened by ambiguous situations and have created beliefs and institutions that try to avoid such situations. High uncertainty avoidance countries: people have high need for security, strong belief in experts and their knowledge, more written rules and procedures, less risk taking by managers. Low uncertainty avoidance countries: people are more willing to accept risks associated with the unknown, fewer written rules and procedures, more risk taking by managers, higher employee turnover, more ambitious employees. Copyright © Texas Education Agency, All rights reserved

Hofstede’s Dimensions 9 4. Masculinity and Femininity  Masculinity: the dominant social values are success, money, and things.  Femininity: the dominant social values are caring for others and the quality of life Countries high in masculinity: People place great importance on earnings, recognition, advancement, challenge, and wealth. High job stress. Countries high in femininity: great importance on cooperation, friendly atmosphere, employment security, and the natural environment. Low job stress. Copyright © Texas Education Agency, All rights reserved

Hofstede’s Dimensions Long term and short term orientation—based on Confucianism, added by Hofstede later.  Long-term orientation: interpreted as dealing with society’s search for virtue.  Short-term orientation: generally have a strong concern with establishing the absolute truth. In countries with a long-term orientation, people believe that truth depends very much on situation, context and time. They show an ability to adapt traditions to changed conditions, a strong propensity to save and invest, thriftiness, and perseverance in achieving results. Countries with a short-term orientation are normative in their thinking. They exhibit great respect for traditions, a relatively small propensity to save for the future, and a focus on achieving quick results. Copyright © Texas Education Agency, All rights reserved

International Staffing  Home country national strategy  This staffing strategy uses employees from the home country to live and work in the host country (also known as expatriates).  Host country national strategy  This strategy employs people who were born in the country in which the business is operating.  Third country national strategy  This strategy employs people who were born in a country different from the host country and the home country. 11 Copyright © Texas Education Agency, All rights reserved

International Staffing (continued)  Advantages of the staffing strategies  (Adapted from Human Resource Management, v. 1.0, by Laura Portolese Dias) 12 Home country nationalHost country nationalThird country National Greater control of organizationLanguage barrier eliminatedMay be better equipped to bring an international perspective to the business Managers gain experience in local markets Possible better understanding of local rules and laws Costs associated with hiring may be less expensive than home country nationals Possible greater understanding and implementation of business strategy Hiring costs virtually eliminated Cultural understanding of home culture Morale builder for employees of host country Copyright © Texas Education Agency, All rights reserved

International Staffing (continued)  Disadvantages of the staffing strategies  (Adapted from Human Resource Management, v. 1.0, by Laura Portolese Dias) 13 Home country nationalHost country nationalThird country National Adapting to foreign environment may be difficult for the expatriate and his/her family – therefore leading to less productivity Host country manager may not understand business objectives as well without appropriate training There is a need to consider traditional national hostilities Expatriate may not have cultural sensitivity May create a perception of “us” versus “them” The host government and/or local business may resent hiring a third country national Language barriers Can affect motivation of local workers Cost of visa and hiring factors Copyright © Texas Education Agency, All rights reserved

 An ideal candidate for an overseas assignment normally has the following characteristics (Dias, 2011): Managerial competence: technical skills, leadership skills, knowledge specific to the company operations. Training: The candidate either has or is willing to be trained on the language and culture of the host country. Adaptability: The ability to deal with new, uncomfortable, or unfamiliar situations and the ability to adjust to the culture in which the candidate will be assigned. 14 Copyright © Texas Education Agency, All rights reserved International Staffing (continued)

Compensation and Benefits 15  Maintaining pay scales and policies across the entire company.  Localized compensation strategy: provides a balance between cost of living considerations.  Balance sheet approach: expatriates are offered a similar base salary companywide or region wide, and are given an allowance based on specific market conditions in each country. Copyright © Texas Education Agency, All rights reserved

Performance Evaluations 16  A balanced set of raters from host and home countries is a good solution while conducting performance evaluations of expatriates.  Also, more frequent appraisals relate positively to the accuracy of performance evaluations. Copyright © Texas Education Agency, All rights reserved

17 Copyright © Texas Education Agency, All rights reserved  It is important to stay updated on international labor laws.  Laws that related to host country employees and expatriates can vary from country to country.  Logistical considerations have implications on success too, such as visas, housing, furloughs, schooling, spousal jobs, etc. International Labor Environment