1. International Management

2. Human Resource Selection and Development across Cultures
Chapter 14
Human Resource Selection and Development across Cultures

3. Learning Objectives
Identify the three basic sources that MNCs can tap when filling management vacancies in overseas operations in addition to options of subcontracting and outsourcing
Describe the selection criteria and procedures used by organizations and individual managers when making final decisions

4. Learning Objectives (continued 1)
Discuss the reasons why people return from overseas assignments, and present some of the strategies used to ensure a smooth transition back into the home-market operation
Describe the training process, the most common reasons for training, and the types of training that often are provided

5. Learning Objectives (continued 2)
Explain how cultural assimilators work and why they are so highly regarded

6. Challenge of Talent Retention in India
MNCs mistakenly use the same methods to try to retain employees in India as in the home country
Key to high retention - Employee engagement
HR practices to keep employees engaged
Performance management
Professional development
Manager support
Organizational commitment to a larger social purpose

7. Importance of International Human Resources
Human resource management is key to an efficient and productive workplace
Understanding how employees feel they are being treated is important
Retention and commitment to the organization is achieved by focusing on employees and tailoring human resource management to the individual

8. Importance of International Human Resources (continued)
Success of firms depends on attracting the most qualified employees and matching them to the jobs for which they are best suited
Sending employees overseas can be expensive
Investment in recruiting and training is required
Nature of the human resources process is changing as a result of ongoing pressures for reduced costs and increased efficiencies

9. Sources for Human Resources
Home-country nationals
Host-country nationals
Third-country nationals
Inpatriates
Other potential sources
Subcontracting
Offshore outsourcing

10. Home-Country Nationals
Managers who are citizens of the country where the MNC is headquartered
Called headquarters nationals or expatriates
Reasons to use home-country nationals
Start up operations
Provide technical expertise
Develop promising managers
Facilitate coordination and control

11. Host-Country Nationals
Local managers hired by the MNC
Reasons to use host-country nationals
Countries expect the MNC to hire local talent
Cut cost of transferring and maintaining home-country personnel

12. Third-Country Nationals (TCNs)
Managers who are citizens of countries other than the country in which:
MNC is headquartered
Managers are assigned to work by the MNC
Advantages of using TCNs
Salary and benefit package is less than that of a home-country national
Good working knowledge of the region or familiarity with the local language

13. Third-Country Nationals (TCNs) (continued)
Achieve corporate objectives is more effective than with expatriates or local nationals
Substitute for expatriates and offer new perspectives to viewpoints of local nationals and headquarters personnel during rapid expansion
Possible to demonstrate a global or transnational image and bring unique cross-cultural skills to the relationship in joint ventures

14. Inpatriates
Individuals from a host country or third country who are assigned to work in the home country
Called inpats
Help MNCs develop their global core competencies
Global managers or transnational managers are now emerging

15. Offshore Outsourcing
Presents significant opportunities for cost savings, lower overhead, and access to qualified personnel
Politically controversial - Union groups, politicians, and NGOs have challenged MNCs’ right to engage in labor arbitrage
Can create quality control problems
Tool for managing and deploying international human resources

16. Selection Criteria for International Assignments
General criteria
Adaptability to cultural change
Physical and emotional health
Age, experience, and education
Language training
Motivation for a foreign assignment
Spouse and family adaptability
Leadership ability

17. Expat Assignments Objective - To fill a managerial or technical gap
Employee benefits - Faster promotions, higher pay, stronger performance ratings, and more mobility within the company
Rejected due to family and spouse's career concerns
Extremely expensive and return on investment is difficult to quantify

18. International Human Resource Selection Procedures
Tests and interviews
Adjustment model
Anticipatory adjustments - Carried out before the expat leaves for the assignment
In-country adjustments - Takes place once the expatriate is on site

19. Factors Influencing Anticipatory and In-Country Adjustments
Anticipatory adjustments
Pre-departure training
Previous experience the expat may have had with the assigned country
In-country adjustments
Ability to maintain a positive outlook
The job itself
Organizational culture and how easily the expat can adjust to it
Nonwork matters
Ability to develop effective socialization tactics

20. Compensation
Base salary - Amount of money that an expatriate receives in the home country
Benefits - One-third of compensation for regular employees
Allowances - Expensive feature that covers a variety of expenses
Cost-of-living, relocation, housing, education, and hardship allowances

21. Compensation (continued)
Incentives - Ongoing premiums are replaced with a one-time, lump-sum premium
Tax equalization - Any taxes that exceed what would have been imposed in the home country are paid by the MNC

22. Approaches to Tailor the Compensation Package
Balance-sheet approach: Ensures the expat does not lose money by taking the assignment
Negotiation approach - Involves working out a special, ad hoc arrangement that is acceptable to both the company and the expat
Localization: Pays the expat a salary comparable to that of local nationals

23. Approaches to Tailor the Compensation Package (continued)
Lump-sum method: Gives expats a predetermined amount of money and lets them decide how to spend it
Cafeteria approach: Gives expats a series of options and lets them decide how to spend the available funds
Regional system: Sets a compensation system for all expats who are assigned to a particular region

24. Individual and Host-Country Viewpoints
Candidate motivations
Greater demand for their talents abroad than at home
Individual achievement and advancement
Security and good working conditions
Earning and fringe benefits
Host-country desires
Preference for a managerial style similar to that of their own country

25. Repatriation Return to one’s home country from an overseas assignment
Reasons for returning
Agreed-on tour of duty is over
Family concerns
Difficulty faced by spouses in acclimating to a new culture
Desire to educate children in a home-country school
Company restructuring

26. Repatriation: Readjustment Problems
Demotion of permanent position
Lack of opportunities to put foreign experience to work
Lack of communication about what would happen after return
Loss of salary and fringe benefits
Difficulty in adjusting to lower standard of living
Absence of cultural lifestyles
Less significance on international experiences

27. Transition Strategies
Help smooth the adjustment from an overseas to a stateside assignment
Repatriation agreements: Firm:
Agrees with the individual the duration of overseas posting
Promises to give the individual, on return, a job that is mutually acceptable
Some firms rent or maintain expatriates’ homes until they return

28. Transition Strategies (continued 1)
Arranging an event to welcome and recognize the employee and family
Establishing support to facilitate family reintegration
Offering repatriation counseling or workshops to ease the adjustment
Assisting the spouse with job counseling, résumé writing, and interviewing techniques

29. Transition Strategies (continued 2)
Providing educational counseling for the children
Providing the employee with a thorough debriefing by a facilitator
Offering international outplacement to the employee and reentry counseling
Arranging a postassignment interview with the expatriate and spouse

30. Training in International Management
Helps ensure that employees' full potential is tapped in overseas assignments
Aids in understanding the customs, cultures, and work habits of the local culture
Simplest training - Placing a cultural integrator in each foreign operation
Topics in cultural training - Social and business etiquette, customs, economics, history, and politics

31. Philosophies That Influence Training Programs
Ethnocentric MNC
Stresses nationalism and puts home-office people in charge of key international management positions
Polycentric MNC
Places local nationals in key positions and allows these managers to appoint and develop their own people

32. Philosophies That Influence Training Programs (continued)
Regiocentric MNC
Relies on local managers from a particular geographic region to handle operations in and around that area
Geocentric MNC
Seeks to integrate diverse regions of the world through a global approach to decision making

33. Reasons for Training Organizational reasons
Help overcome ethnocentrism
Ethnocentrism: Belief that one’s way of doing things is superior to that of others
Improve the flow of communication
Increase overall efficiency and profitability

34. Reasons for Training (continued)
Personal reasons
Improve overseas managers' ability to interact effectively with local people and their personnel
Develop foreign language skills
Deal with arrogance, overruling of decisions, and criticism
Improve overall management style

35. Types of Training Programs
Small firms rely on standard training programs
Example - Quantitative analysis
Tailor-made training programs
Employed by larger firms
Created for the specific needs of the participants
Designed to provide a new set of skills for a new culture

36. Cultural Assimilators
Expose members of one culture to some of the concepts, attitudes, role perceptions, customs, and values of another culture
Include critical incidents and alternative responses that are validated for their effectiveness
Expensive but can be applied to nearly all cultures

37. Positive Organizational Behavior (POB)
Study and application of positively oriented human resource strengths and psychological capacities
Can be measured, developed, and effectively managed for performance improvement in today’s workplace

38. Positive Organizational Behavior (POB) (continued)
Positivity in workplace has been linked to employee satisfaction
Positive individual traits, internal and external states, and systems promote positive behavior
Results in positive organizational citizenship behavior (OCB)

39. Future Trends Localization of expatriates
Integration of talent management and international assignment mobility
Emergence of cross-border commuters
Employees who regularly move back and forth between countries
Rise and growth of emerging markets

40. Be the Management Consultant
Given the Russian government’s history of interfering with private business, would you make as large an investment in Russia as BP has done?
What are the pros and cons of this investment?
Does the fact that BP’s investment is suffering from Ukraine-related sanctions affect your decision to invest in the country in any sense?

41. Review and Discuss
A New York-based MNC is in the process of staffing a subsidiary in New Delhi, India
Why would it consider using expatriate managers, local managers, or third-country managers in the unit?

42. Review and Discuss (continued 1)
What selection criteria are most important in choosing people for an overseas assignment?
Identify and describe the four that you judge to be of most universal importance, and defend your choice
What are the major common elements in an expat’s compensation package?
Besides base pay, which would be most important to you? Why?

43. Review and Discuss (continued 2)
Why are individuals motivated to accept international assignments?
Which of these motivations would you rank as positive reasons?
Which would you regard as negative reasons?
Why do expatriates return early?
What can MNCs do to prevent this from happening?
Identify and discuss three steps they can take

44. Review and Discuss (continued 3)
What kinds of problems do expatriates face when returning home?
Identify and describe four of the most important
What can MNCs do to deal with these repatriation problems effectively?

45. Review and Discuss (continued 4)
How do the following types of MNCs differ: ethnocentric, polycentric, regiocentric, and geocentric?
Which type is most likely to provide international management training to its people?
Which is least likely to provide international management training to its people?

46. Review and Discuss (continued 5)
IBM is planning on sending three managers to its Zurich office, two to Madrid, and two to Tokyo, and none of these individuals has any international experience
Would you expect the company to use a standard training program or a tailor-made program for each group?

47. Review and Discuss (continued 6)
Zygen Inc., a medium-sized manufacturing firm, is planning to enter into a joint venture in China
Would training be of any value to those managers who will be part of this venture?
If so, what types of training would you recommend?

48. Review and Discuss (continued 7)
Hofstadt & Hoerr, a German-based insurance firm, is planning on expanding out of the EU and opening offices in Chicago and Buenos Aires
How would a cultural assimilator be of value in training the MNC's expatriates?
Is the assimilator a valid training tool?

49. Review and Discuss (continued 8)
Ford is in the process of training managers for overseas assignments
Would a global leadership program be a useful approach?
Why or why not?

50. Review and Discuss (continued 9)
Microsoft is weighing setting up a new R&D facility in India to develop new software applications
Should it staff it with Microsoft employees or Indian employees? Or should it subcontract with an Indian firm?
Explain your answer and some of the potential challenges in implementing it