2. chapter 4
Global Human Resource Management

3. Integration of the world’s economies and the globalization of business continue unabated at the beginning of the 21st century.

4. Indicators of Globalization
International trade is growing at a more rapid rate than world output
Foreign direct investment (FDI) flows have set record levels in recent years
Cross-border inter-firm agreements have risen dramatically during the last 20 years
Social, economic, and political developments throughout the world have changed the way global business is conducted

5. The People Factor
Firms need to strengthen their presence, involvement, and relative positions in the domestic and global marketplace
This can be done by utilizing their global human resources in a manner that helps them establish and sustain competitive advantage

6. Global Human Resource Management (GHRM)
Refers to the policies and practices related to managing people in an internationally oriented organization
Includes the same functions as domestic HRM
There are many unique aspects to human resource management in the international organization

7. Major HRM Problems for the International Corporation (1 of 2)
Selecting and training local managers
Companywide loyalty and motivation
Speaking local language and understanding local culture
Appraising managers’ overseas performance
Planning systematic management succession
Hiring local sales personnel

8. Major HRM Problems for the International Corporation (2 of 2)
Compensating local foreign managers
Hiring and training foreign technical employees
Selecting and training American managers for overseas
Dealing with foreign unions and labor laws
Promoting or transferring foreign managers
Compensating American managers for an overseas assignment

9. Comparison of Hourly Compensation Costs of Manufacturing (in U. S
Comparison of Hourly Compensation Costs of Manufacturing (in U.S. dollars)

10. The Cultural Nature of Global HRM
The cultural differences between nations influence the effectiveness of HRM policies and practices
Of critical importance:
understanding these differences
ensuring that HRM and the cultural orientation of workers are congruent with one another

11. Hofstede’s Dimensions of Culture
Avoidance of
Uncertainty
Masculinity
Long-term
versus
Short-term
Orientation
Individualism
Collectivism
Power
Distance 9

12. The Concept of “Fit” in Global HRM
Internal Fit
Concerned with making sure that HRM policies facilitate the work values and motivations of employees
Policies must be structured in ways that allow headquarters and foreign subsidiaries to interact efficiently
External Fit
The degree to which HRM matches the context in which the organization is operating
The organization must understand the cultural and socioeconomic environment of the foreign subsidiary

13. HRM Focus for Multinational and Global Corporations
HRM Philosophy
Corporate Structure
Critical HRM Focus
Expatriate Adjustment
Ethnocentric
Multinational
The International Decision
Selection & Training Appraisal & Compensation Repatriation
Utilizing Global Managerial Talent
Geocentric
Global
Local Recruiting Methods Managing Cultural Diversity

14. Sources of Employees for International Assignment: (1 of 2)
Host Country Nationals (HCNs)
employees from the local population
referred to as local nationals
Parent Country Nationals (PCNs)
employees sent from the country in which the organization is headquartered
referred to as expatriates

15. Sources of Employees for International Assignment: (2 of 2)
Third Country Nationals (TCNs)
employees from a country other than where the parent organization’s headquarters or operations are located

16. Major reasons for the high failure rates of American expatriates:
Selection processes that focus too much on technical skills and too little on cultural factors
Lack of systematic training for the overseas assignment
Too little involvement of family members in the selection process
Lack of clear expectations about the role of the overseas assignment in the manager’s career plans

17. Selecting the Expatriate Manager
Technical competency is necessary but not sufficient for the manager’s success
Expatriate manager selection should focus on three other major categories of skills:
1. Manager’s self-image
2. Manager’s normal way of interacting with others
3. Manager’s perceptual orientation

18. Characteristics of the Expatriate Manager:
High Probability for Success
Strong analytical skills
Good language skills
Strong desire to work overseas
Specific knowledge of overseas culture
Well-adjusted family situation
Complete support of spouse
Behavioral flexibility
Adaptability and open-mindedness
Good relational ability
Good stress management skills
Low Probability for Success
Uncertain technical competency
Weak language skills
Unsure about going overseas
Family problems
Low spouse support
Behavioral rigidity
Unadaptability – closed to new ideas
Poor relational ability
Weak stress management skills

19. Culture Shock and the Expatriate Manager
Culture Shock – the frustration and confusion that result from being constantly subjected to strange and unfamiliar cues about what to do and how to get it done
Does not typically occur during the earliest days of an overseas assignment

20. Training the Expatriate Manager
Overseas Assignment
Predeparture
Repatriation
Language skills
Nation & culture orientation
Personal & family orientation
Career planning
Language skills
Local mentoring
Stress training
Business issues
Financial management
Reentry shock
Career management

21. Compensating the Expatriate Manager
Maintaining an expatriate manager on an overseas assignment is very expensive
Base salary
Foreign service premiums
Cost-of-living premium
Home maintenance allowance
Transportation differential allowances
Educational allowances
Hardship premiums for hazardous assignments

22. Sample Costs of a Short-Term Expatriate in London
Monthly Expenses
Accompanied
(2-bedroom, 2 adults)
Unaccompanied
(1-bedroom, 1 adult)
Housing
US $3,718
US $2,091
Food
1,524
791
Car Rental and Fuel
1,986
Miscellaneous
343
216
Total monthly living expenses
$7,571
$5,084
Total annual living expenses
$90,852
$61,008

23. Host Country Nationals and the Global Corporation
Managers who are host country nationals have distinct advantages over expatriates
cultural sensitivity
understanding of local employees’ motivations and needs
Careful recruitment, selection, and training of HCNs can reduce or eliminate the potential problems with using HCNs

24. The Legal and Ethical Climate of Global HRM
Business practices that are considered unethical or illegal in the U.S. might be considered part of the national conduct of business in other countries
Foreign Corrupt Practices Act of 1977 (FCPA)
Employment discrimination

25. The Sullivan Principles to Promote Racial Equality in International Employment (1 of 2)
Nonsegregation of the races in all work facilities
Equal and fair employment practices for all employees
Equal pay for all employees performing equal work

26. The Sullivan Principles to Promote Racial Equality in International Employment (2 of 2)
Training programs to prepare (in substantial numbers) Blacks and other nonwhites for supervisory and technical jobs
Increasing the number of Blacks and other nonwhite minorities in management
Improving the quality of employees’ lives outside the work environment

27. Labor Relations and the International Corporation
Labor laws and relations are unique and vary across every nation in which an organization wishes to do business
Differences in how much participation employees are entitled to
Government regulation of business
Establishment of global organizations to represent labor

28. Summary
Global human resource management is an important component of an organization’s success in a global marketplace
Organizations must be sure that their HRM policies can accommodate a culturally diverse workforce