1. International Human Resources Management
Chapter 17

2. Why IHRM?
Should we staff the local offices abroad with local or Bangladeshi managers?
How should we appraise or pay local employees?
How should we identify and get right talent and skills?
How should we deal with the unions in our offices abroad?

3. Factors Affecting IHRM
Cultural Factors
- Countries differ widely in their cultures
Hofstede's cultural dimensions theory is a framework for cross-cultural communication, developed by Geert Hofstede. This theory presents 6 dimensions:
Power distance index (PDI): The power distance index is defined as “the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally.”
Individualism vs. collectivism (IDV): This indicates the “degree to which people in a society are integrated into groups.” Individualistic societies have loose ties and its counterpart, collectivism, describes a society in which tightly-integrated relationships tie extended families and others into in-group.
Uncertainty avoidance index (UAI): The uncertainty avoidance index is defined as “a society's tolerance for ambiguity,” in which people embrace or avert an event of something unexpected, unknown, or away from the status quo.

4. Factors Affecting IHRM (Cont’d)
Masculinity vs. femininity (MAS): In this dimension, masculinity is defined as “a preference in society for achievement, heroism, assertiveness and material rewards for success.” Its counterpart represents “a preference for cooperation, modesty, caring for the weak and quality of life.”
Long-term orientation vs. short-term orientation (LTO): This dimension associates the connection of the past with the current and future actions/challenges. A lower degree of this index (short-term) indicates that traditions are honored and kept, while steadfastness is valued. Societies with a high degree in this index (long-term) views adaptation and circumstantial, pragmatic problem-solving as a necessity.
Indulgence vs. restraint (IND): This dimension is essentially a measure of happiness; whether or not simple joys are fulfilled. Indulgence is defined as “a society that allows relatively free gratification of basic and natural human desires related to enjoying life and having fun.” Its counterpart is defined as “a society that controls gratification of needs and regulates it by means of strict social norms.”

5. Factors Affecting IHRM (Cont’d)
Economic System
Different economic systems also translate into differences in human resources management policies
Some countries in the Euro Zone tend to put more restrictions on the number of hours an employee can legally work (e.g. Portuguese workers average about 1980 hours of work annually, while German workers average 1,648 hours
Differences in labor costs are also significant. Hourly compensation for production workers range from $2.75 in Mexico to $6.43 in Taiwan, $23.82 in the U.S,, $27.10 in the UK and $34.21 in Germany

6. Factors Affecting IHRM (Cont’d)
Legal, Political and Labor Relations Factors
It is very important to understand the laws prior to entering the foreign market
Think for a moment about the impact of local laws on Walmart while operating in Germany
Firing people in the UK could be very expensive as compared to U.S.
Some courtiers (e.g. Germany) are concerned with codetermination which means that employees have the legal right to a voice in setting company policies

7. Staffing in Global Organization
Local- they are citizens of the countries in which they are working
Expatriates (expats)- They are noncitizens of the countries in which they are working (e.g. a Bangladeshi worker working in the U.S.)
Home-country nationals- they are the citizens of the country in which the multinational company has its headquarters
Third country nationals- They are the citizens of a country other than the parent or the host country (e.g. a Bangladeshi executive working in Cardiff branch of a U.S. multinational bank

8. Using Locals Many people are reluctant to work in a foreign country
The cost of using expropriates is far greater than the cost of using local workers
Generally expatriates are at the foreign country for only a few years and may overemphasize short-term results

9. Using Expats
Employers can’t find local candidates with the required skills and knowledge
Control is another reason for using expatriates. Companies might lose the control if they rely on the locals

10. Management Values and International Staffing Policy
Ethnocentric Practices
The notion that home-country attitudes, management style, knowledge, evaluation criteria, and managers are superior to anything the host country has to offer.
Polycentric Practices
A conscious belief that only the host-country managers can ever really understand the culture and behavior of the host-country market. Therefore, the foreign subsidiary should be managed by local people
Geocentric Practices
The belief that the firm’s whole management staff must be hired on a global basis, on the assumption that the best manager of a specific position anywhere may be in any of the countries in which the firm operates.
Sony appointed as CEO someone from Wales who would run the firm’s U.S. operations

11. Why Expatriate Assignments Fail
Personality
Personal intentions
Family pressures
Inability of the spouse to adjust
Inability to cope with larger overseas responsibility.
Lack of cultural skills

12. Helping Expatriate Assignment Succeed
Careful adaptability screening
Providing realistic previews of what to expect
Improved orientation
Cultural and language training
Improved benefits packages

13. Selecting Expatriate Managers
Adaptability screening
Assessing the expat’s (and spouse’s) probable success in handling the foreign transfer.
Overseas Assignment Inventory
A test that identifies the characteristics and attitudes international assignment candidates should have.

14. I. Job Knowledge
and Motivation
Managerial ability
Organizational ability
Imagination
Creativity
Administrative skills
Alertness
Responsibility
Industriousness
Initiative and energy
High motivation
Frankness
Belief in mission and job
Perseverance
III. Flexibility/Adaptability
Resourcefulness
Ability to deal with stress
Flexibility
Emotional stability
Willingness to change
Tolerance for ambiguity
Adaptability
Independence
Dependability
Political sensitivity
Positive self-image
V. Family Situation
Adaptability of spouse and family
Spouse’s positive opinion
Willingness of spouse to live abroad
Stable marriage
Five Factors Important in International Assignee Success, and Their Components
IV. Extracultural Openness
Variety of outside interests
Interest in foreign cultures
Openness
Knowledge of local language[s]
Outgoingness and extroversion
Overseas experience
II. Relational Skills
Respect
Courtesy and fact
Display of respect
Kindness
Empathy
Non-judgmentalness
Integrity
Confidence

15. Selecting Expatriate Managers
Realistic previews
The problems to expect in the new job as well as about the cultural benefits and unconventional behavior of the country.

16. Orienting and Training for International Assignment
Training is needed on:
The impact of cultural differences on business outcomes.
How attitudes (both negative and positive) are formed and how they influence behavior.
Factual knowledge about the target country.
Language and adjustment and adaptation skills.

17. Appraising Expatriate Managers
Challenges in appraising overseas managers
Determining who should appraise the manager
Deciding on which factors to base the appraisal
Improving the expatriate appraisal process
Weigh the evaluation more toward the on-site manager’s appraisal than toward the home-site manager’s
If the home-office manager does the actual written appraisal, use a former expatriate from the same overseas location for advice
Stipulate the assignment’s difficulty level, and adapt the performance criteria to the situation

18. Compensating Expatriates
The “Balance Sheet Approach”
Home-country groups of expenses—income taxes, housing, goods and services, and discretionary expenses—are the focus of attention.
The employer estimates what each of these four expenses is in the expatriate’s home country, and what each will be in the host country.
The employer then pays any differences such as additional income taxes or housing expenses.

19. The Balance Sheet Approach (Assumes Base Salary of $80,000)

20. Incentives Hardship allowances Mobility premiums
Payments to compensate expatriates for exceptionally hard living and working conditions at certain foreign locations.
Mobility premiums
Lump-sum payments to reward employees for moving from one assignment to another.
Foreign service premiums
Financial payments over and above regular base pay, and typically range between 10% and 30% of base pay.

21. Thank you. Finally, we are done with MGT 351
Thank you! Finally, we are done with MGT Thank you for tolerating me throughout the semester. I am so sorry about the unpleasant events. I wish you success in all your future endeavors. Good luck with the final exam!