MGT 430 – Spring 2016 Class 21 - Lecture Only GLOBAL HUMAN RESOURCES MANAGEMENT

CHANGING ROLE OF HRM From TMT/CEO Perspective - HR Must Help Us To Increase profit Decrease cost Emphasize HR’s ROI, a.k.a. Value-adding deliverables Align HR’s Strategy and Administration efforts with the company’s goals & strategies Maintain & increase our competitive advantages Link your work to our strategic business plan

WHAT’S GOING ON THAT IMPACTS HRM Two Things Globalism Technology

WHY DO COMPANIES GO GLOBAL Increased market share Tap into emerging markets Better business climateTechnologically feasible Lower production costsCloser to the customer Legal considerationsCompetition Better access to resourcesDiversity of business ideas and practices Lack of growth in domestic marketsTax considerations

Global Companies Doing Business In Albany Olive oil for pizza Mediterranean countries Silicone wafers at GFDubai GE turbinesAsia Hospital X-ray readingsIndia Lipton Tea – Dove Soap – Ben & JerryBritish / Dutch Hannaford GroceryBelgium Nanotech ResearchKorea, Japan, UK CaviarRussia Beer/WineGermany/France Honda / ToyotaJapan Mahogany Honduras CoffeeColumbia

Capital Region Companies Conducting Foreign Trade GETurbines Albany InternationalFine papers Schenectady InternationalChemicals Port of AlbanyShipping SUNY-PolySemiconductors ComfortexWindow Dressing Ducommun Aviation

Globalism – Falling Barriers Trade barriers – EU, NAFTA, 24/7, Internet Lines of business – Conglomerates vs. single product/service Banking in the US City-County-State – National – International Political changes Russia – China – Egypt – Syria – Middle East

Globalization’s Challenges Economic competence Production competence Politics – Fraud - Corruption Trade – Labor – Uneven playing field Capitalism vs. socialism Encouragement of creative thinking

GLOBALISM ENCOURAGES Re-thinking business strategies Re-thinking political support or blockages Examination of emerging markets – e.g. China, Asia, Gen Y, Millennials New ideas – products – services (think Cloud computing, iPads, cell phone apps;) Re-evaluating what we think and teach in B-School Multi-culturalism

TECHNOLOGY THAT ENCOURAGES GLOBALISM Internal External

Technology - External InternetSocial mediaE-everything e.g. books – film – travel tickets – payroll – on-line college degrees Tabulate everything – evaluate everything Smart apps, e.g. QR Labor reduction via technology = cost reduction (e.g. Panera's kiosks, self checkout lines at Home Depot/Price Chopper/Walmart)

Technology - External Easier to track performance Virtual management – Key focus for leadership Public availability of information Fraud & privacy/confidentiality concerns More work with less people at same pay = happy CFO

TECHNOLOGY - Internal Re-thinking all work processes Digitize everything Multi-media usage (LinkedIn, Facebook, Twitter) Matrix management Virtual management HRM - Delegating processes to line managers e.g. Payroll, benefits, recruiting Amazon.com (e.g. textbook purchases)

HRM in a Global Environment Global activities are simplified and encouraged by trade agreements among nations.  Increase and change demands on leadership.  Organizations need employees who understand customers and suppliers in foreign countries.  Organizations need to understand laws and customs that apply to employees in other countries. Global activities are simplified and encouraged by trade agreements among nations.  Increase and change demands on leadership.  Organizations need employees who understand customers and suppliers in foreign countries.  Organizations need to understand laws and customs that apply to employees in other countries.

Employers in the Global Marketplace Multinational company – an organization that owns or controls production of goods or services in one or more countries other than their home country. Also referred to as an international corporation, a transnational corporation. Examples: General Motors, McDonalds, Coca-Cola Global organization – chooses to locate a facility based on the ability to effectively, efficiently, and flexibly produce a product or service using cultural differences as an advantage. Expatriate—citizen of one country and lives and works in another country Multinational company – an organization that owns or controls production of goods or services in one or more countries other than their home country. Also referred to as an international corporation, a transnational corporation. Examples: General Motors, McDonalds, Coca-Cola Global organization – chooses to locate a facility based on the ability to effectively, efficiently, and flexibly produce a product or service using cultural differences as an advantage. Expatriate—citizen of one country and lives and works in another country

Employees in an International Workforce Parent-country national An employee who was born and works in the country in which an organization’s headquarters is located. Ex. Yvonne (France) works for Air France (France) in Paris (France) Host-country national An employee who is a citizen of the country (other than parent country) in which an organization operates a facility. Ex.Nigel (Great Britain) works for General Motors (US) in Liverpool, England Parent-country national An employee who was born and works in the country in which an organization’s headquarters is located. Ex. Yvonne (France) works for Air France (France) in Paris (France) Host-country national An employee who is a citizen of the country (other than parent country) in which an organization operates a facility. Ex.Nigel (Great Britain) works for General Motors (US) in Liverpool, England

Employees in an International Workforce Third-country national An employee who is a citizen of a country that is neither the parent country nor the host country of the employer. Ex: Siegfried (Austrian) works for Rolls-Royce (English) in Athens (Greece) Ex-patriate Native born employees of the parent company assigned to work in another country Ex: Ken (US) is assigned by McDonalds to work in Monte Carlo (France)

Transnational System Transnational system: makes decisions from a global perspective includes managers from many countries based on ideas contributed by people representing a variety of cultures Decisions that are the outcome of a transnational system balance uniformity (fairness) with flexibility (accounting for cultural and legal differences). Transnational system: makes decisions from a global perspective includes managers from many countries based on ideas contributed by people representing a variety of cultures Decisions that are the outcome of a transnational system balance uniformity (fairness) with flexibility (accounting for cultural and legal differences).

Factors Affecting HRM in International Markets Global HRM CultureEducation Economic Systems Political- Legal Systems

Culture Culture – a community’s set of shared assumptions about how the world works and what ideals are worth striving for. Is greatly affected by a country’s laws. Influences what people value, so it affects people’s economic systems and efforts to invest in education. determines effectiveness HRM practices. Culture – a community’s set of shared assumptions about how the world works and what ideals are worth striving for. Is greatly affected by a country’s laws. Influences what people value, so it affects people’s economic systems and efforts to invest in education. determines effectiveness HRM practices.

Culture Organizations must prepare managers to recognize and handle cultural differences. Recruit leaders with knowledge of other cultures Provide training For expatriate assignments, organizations may require HRM to conduct an extensive selection process to identify individuals who can adapt to new environments. Organizations must prepare managers to recognize and handle cultural differences. Recruit leaders with knowledge of other cultures Provide training For expatriate assignments, organizations may require HRM to conduct an extensive selection process to identify individuals who can adapt to new environments.

Education and Skill Levels Companies with foreign operations locate in countries where they can find suitable employees – with the right and necessary KSAs – and with the capability to acquire those KSAs. Education and skill levels of a country’s labor force affect how and extent to which companies want to operate there. In countries with a poorly educated population, companies will limit their activities to low-skill, low-wage jobs. Companies with foreign operations locate in countries where they can find suitable employees – with the right and necessary KSAs – and with the capability to acquire those KSAs. Education and skill levels of a country’s labor force affect how and extent to which companies want to operate there. In countries with a poorly educated population, companies will limit their activities to low-skill, low-wage jobs.

Economic System of a Country Economic systems provides many incentives or disincentives for developing the value of the labor force. In developed countries with great wealth, labor costs are relatively high, impacting compensation recruiting and selection decisions. Income tax differences between countries make pay structures more complicated when they cross national boundaries. Economic systems provides many incentives or disincentives for developing the value of the labor force. In developed countries with great wealth, labor costs are relatively high, impacting compensation recruiting and selection decisions. Income tax differences between countries make pay structures more complicated when they cross national boundaries.

Political-Legal System Country’s laws often dictate requirements for HRM practices, e.g. training, compensation, hiring, firing, layoffs & labor relations. An organization that expands internationally must gain expertise in the host country’s legal requirements and ways of dealing with its legal system. Organizations will hire one or more host-country nationals to help in the process, e.g. contractors or consultants. Country’s laws often dictate requirements for HRM practices, e.g. training, compensation, hiring, firing, layoffs & labor relations. An organization that expands internationally must gain expertise in the host country’s legal requirements and ways of dealing with its legal system. Organizations will hire one or more host-country nationals to help in the process, e.g. contractors or consultants.

HRM Planning in a Global Economy HR planning involves decisions about where and how many employees are needed for each international facility. Decisions about where to locate include considerations such as cost and availability of qualified workers which must be weighed against financial and operational requirements. HR planning involves decisions about where and how many employees are needed for each international facility. Decisions about where to locate include considerations such as cost and availability of qualified workers which must be weighed against financial and operational requirements.

Foreign Assignments - Practical Exercise 1.Before you take on a foreign assignment, what would you want to know? 2.What do you think are the positive career aspects of a foreign assignment? 3.What do you think are the negative aspects of a foreign assignment 1.Before you take on a foreign assignment, what would you want to know? 2.What do you think are the positive career aspects of a foreign assignment? 3.What do you think are the negative aspects of a foreign assignment

FOREIGN ASSIGNMENTS PRACTICAL EXERCISE #1 TYPICAL RESPONSES 1. Cost of living differences 2. Affect on my career 3. Cultural norms 4. Pay 5. Living situation (e.g. housing, education, day/elder care) 6. Healthcare availability & cost 7. Labor Laws 8. Language

FOREIGN ASSIGNMENTS PRACTICAL EXERCISE #2 TYPICAL RESPONSES Positive aspects on an international assignment 1 – Impact on my career 2 – Living and working with other cultures 3 - Challenges 4- New Perspectives 5- Gaining Knowledge 6- Get to travel 7- New career opportunities 8

FOREIGN ASSIGNMENTS PRACTICAL EXERCISE #3 TYPICAL RESPONSES Negative aspects on an international assignment 1 – Impact on my career 2 – Family concerns 3 – Lack of face time with peers & superiors 4 – Poor foreign language skills 5- Poor living conditions 6 7 8

Key Criteria for Selection of Employees for Foreign Assignments 1.Competency in employee’s area of expertise 2.Ability to communicate verbally and nonverbally in the foreign country 3.Flexibility, tolerance of ambiguity, and sensitivity to cultural differences 4.Motivation to succeed and enjoyment of challenges 5.Willingness to learn about the foreign country’s culture, language, and customs 6.Support from family members 7.Overcoming culture shock 1.Competency in employee’s area of expertise 2.Ability to communicate verbally and nonverbally in the foreign country 3.Flexibility, tolerance of ambiguity, and sensitivity to cultural differences 4.Motivation to succeed and enjoyment of challenges 5.Willingness to learn about the foreign country’s culture, language, and customs 6.Support from family members 7.Overcoming culture shock

Assessing Candidates for Overseas Assignments MotivationHealthLanguage ability Family Considerations ResourcefulnessAdaptabilityCareer PlanningFinancial

Compensating an International Workforce Compensation decisions affect a company’s costs and ability to compete. Challenge of competing with organizations in low-wage countries can be very difficult. Decisions about benefits must take into account the laws of each country involved, as well as employees’ expectations and values in those countries. Compensation decisions affect a company’s costs and ability to compete. Challenge of competing with organizations in low-wage countries can be very difficult. Decisions about benefits must take into account the laws of each country involved, as well as employees’ expectations and values in those countries.

Expatriate Compensation - Rule of Thumb Equal to or better than US Compensation Base salary Incentive pay Taxes Benefits Housing allowances Education

Compensating Expatriates Balance sheet approach – adjusts manager’s compensation so that it gives the manager same standard of living as in the home country plus extra pay for inconvenience of locating overseas. involves an effort by the global organization to ensure that its expatriates are “made whole.” Balance sheet approach – adjusts manager’s compensation so that it gives the manager same standard of living as in the home country plus extra pay for inconvenience of locating overseas. involves an effort by the global organization to ensure that its expatriates are “made whole.”

Most / Least Expensive Foreign Locations Most ExpensiveLeast Expensive 1.TokyoKarachi 2.OsakaMumbai 3.SydneyNew Delhi 4.OsloKathmandu (Nepal) 5.MelbourneAlgiers 6.SingaporeBucharest 7.ZurichColombo (Sri Lanka) 8.ParisPanama City 9.CaracasJeddah 10.GenevaTehran

Most / Least Expensive Locations in the US MOST EXPENSIVELEAST EXPENSIVE 1.New York, NYIdaho Falls, ID 2.San Francisco, CAConway, AR 3.Stamford, CTSpringfield, IL 4.San Jose, CAPueblo, CO 5.San Diego, CAWichita Falls, TX 6.Santa Barbara, CAFayetteville, AR 7.Bakersfield, CAMemphis, TN 8.Los Angeles, CANorman, OK 9.Fresno, CAMcAllen, TX 10.Boston, MAHarlingen, TX

Salary Comparison Albany Salary = $60,000 Brooklyn$95,689 Boston$77,260 Chicago$63,850 Los Angeles$71,666 Dallas$52,657 Philadelphia$66,768 St. Louis$51,118

International Cost of Living Index Prague, Budapest & Ankara= 100 London= 280 Zurich= 256 New York City= 237 Paris= 219 Lima= 97 Warsaw= 91 Cape Town= 88 Delhi= 57 Caracas= 30

Repatriate Issues Reverse Culture Shock Re-establishing network (out of sight – out of mind) Old work customs may become boring Can’t use new skills in old environment

Repatriate Solutions 1. Planning Before foreign assignment During foreign assignment After foreign assignment 2.Career management What will this assignment do for my career What are my next steps in career progression after an international assignment 3.Compensation Removal of overseas pay and perks Financial counseling