Staffing, Training, and Compensation

Staffing, Training, and Compensation
Chapter 9: Staffing, Training, and Compensation for Global Operations Ninth Edition Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Chapter Learning Goals
To understand the strategic importance to the firm of the IHRM function and its various responsibilities To learn about the major staffing options for global operations and the factors involved in those choices Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

To emphasize the need for managing the performance of expatriates through careful selection, training, and compensation To discuss the role of host country managers and the need for their training and appropriate compensation packages Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Opening Profile: Staffing Company Operations in Emerging Markets
BRIC Have outpaced the supply of mid and upper-level management Need for up to business leaders, but 3000–5000 may be available Many are simply not at the skill level required by foreign companies BRIC Countries The ability to staff subsidiaries in emerging market economies with local managers has become a major challenge in the race for recruiting and training local talent. Emerging economies such as Brazil, Russia, India, and China (BRIC Countries) have been developing so rapidly and have attracted increasing overseas investment that they have outpaced the supply of suitable mid-level and upper-level managers in their own markets. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Opening Profile: Staffing Company Operations in Emerging Markets
The ability to staff subsidiaries in emerging market economies with local managers has become a major challenge in the race for recruiting and training local talent. Emerging economies such as Brazil, Russia, India, and China (BRIC Countries) have been developing so rapidly and have attracted increasing overseas investment that they have outpaced the supply of suitable mid-level and upper-level managers in their own markets. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Opening Profile: BRIC—The Shortage of Mid/Upper-Level Managers
Brazil Deficit at upper-level management Russia Deficit at all management levels India Deficit starting at the middle level. Also, dealing with the “brain drain” China Severe deficit at all levels of management For these reasons, the challenge to companies operating around the world is not only to recruit capable local managers, but to be able to retain them. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Opening Profile: What Attracts the Potential Recruits in Emerging Markets?
Brand A global “name brand” known for its excellence Purpose A company that is breaking into new markets, with new models and strategy Opportunity A company that provides a fast-track training and career path Culture An organizational culture of openness and transparency Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Major Challenges in IHRM
Enhancing global business strategy Aligning HR issues with business strategy Designing and leading change Building global corporate cultures Staffing organizations with global leaders Copyright ©2017 Pearson Education, Inc.

Staffing for Global Operations
Ethnocentric Approach Polycentric Approach Used at internationalization stage of strategic expansion, with centralized structure Parent-country nationals (PCNs) Often used with multinational strategy Host-country nationals (HCNs) Managerial staffing abroad falls into one or more of four staffing approaches: ethnocentric, polycentric, regiocentric, and global. In the ethnocentric approach, key managerial positions are filled with people from headquarters, i.e., parent-country nationals (PCNs). Advantages of this approach include PCN familiarity with company goals products, technology, policies, and procedures. Additionally, it can be a means of dealing with inadequate local managerial skills and of maintaining close control. Disadvantages include lack of opportunities and development for local managers, and poor adaptation and lack of effectiveness of expatriates in foreign countries. This approach also can perpetuate ineffective home-country processes and prevent the company from taking advantage of the worldwide pool of management skill. The polycentric staffing approach is often used with a multinational strategy and fills key positions with host country nationals (HCNs). HCNs are local managers hired to fill key positions in their own country. This approach helps companies to “act local,” can be less expensive than using PCNs, and can help stave off problems in sensitive political situations. Often this approach is achieved by acquiring foreign firms. Disadvantages of the polycentric approach include difficulty coordinating activities and goals between the subsidiary and parent company, conflicting loyalties from local managers, and headquarters managers do not gain overseas experience. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Global Staffing Approach Regiocentric Approach Third country nationals (TCNs) Transpatriates Inpatriates: managers with global experience who are transferred to the organization’s headquarters country Can produce a mix of PCNs, HCNs, and TCNs In the global staffing approach, the best managers are recruited from within or outside of the company, regardless of nationality (i.e., third country nationals). Advantages of this approach include providing a greater pool of qualified and willing applicants from which to choose, which can further develop a global executive cadre. Additionally, TCNs tend to be more culturally flexible, bi or multilingual, and viewed as an acceptable compromise between headquarters and local managers. It also can be more cost-effective to transfer and pay managers from some countries than from others because their pay scale and benefits packages are lower. As some become truly global and move away from the concepts of host and home country, the term “transpatriate” is replacing the term “expatriate.” Implementing a global staffing approach is easier said than done, as there can be difficulty in finding high-quality mangers who are willing to transfer frequently around the world. With the regiocentric approach, recruiting is done on a regional basis. This approach can produce a mix of PCNs, HCNs, and TCNs depending on the needs of the company or the product strategy. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

In the global staffing approach, the best managers are recruited from within or outside of the company, regardless of nationality (i.e., third country nationals). Advantages of this approach include providing a greater pool of qualified and willing applicants from which to choose, which can further develop a global executive cadre. Additionally, TCNs tend to be more culturally flexible, bi or multilingual, and viewed as an acceptable compromise between headquarters and local managers. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

It also can be more cost-effective to transfer and pay managers from some countries than from others because their pay scale and benefits packages are lower. As some become truly global and move away from the concepts of host and home country, the term “transpatriate” is replacing the term “expatriate.” Implementing a global staffing approach is easier said than done, as there can be difficulty in finding high-quality mangers who are willing to transfer frequently around the world. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Maintaining a Globalization Momentum
Copyright ©2017 Pearson Education, Inc.

Strategic Mode, Organizational Variables, and Staffing Orientation
Aspect of enterprise Ethnocentric Polycentric Regiocentric Global Strategic orientation International Multidomestic Regional Transnational Perpetuation Expatriates used for key positions Locals used for key positions locally Regional people used regionally Best people used anywhere Evaluation and control Home standards applied Determined locally Determined regionally Globally integrated Rewards High at home; low in subsidiaries Wide variation Based on contribution to regional objectives Based on contribution to local and worldwide objectives The choice of staffing policy has a considerable influence on organizational variables in the subsidiary, such as locus of decision making authority, the methods of communication and the perpetuation of human resource management practices. Some of these influences are highlighted in this slide, which summarizes some of the information in Exhibit 9-4 in the text. It focuses on the other primary HR functions. Research indicates that an ethnocentric policy is associated with a higher incidence of IHRM problems. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Strategic Mode, Organizational Variables, and Staffing Orientation
The choice of staffing policy has a considerable influence on organizational variables in the subsidiary, such as locus of decision making authority, the methods of communication and the perpetuation of human resource management practices. Some of these influences are highlighted in this slide, which summarizes some of the information in Exhibit 9-4 in the text. It focuses on the other primary HR functions. Research indicates that an ethnocentric policy is associated with a higher incidence of IHRM problems. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

MNC Staffing Most MNCs start from their own pool of managers  polycentric or regiocentric policy: Increasing pressure from local governments to hire locals The greater cost of expatriate staffing Improvement in managerial and technical competence “All things being equal, a local national who speaks the language, understands the culture and the political system, and is often a member of the local elite should be more effective than an expatriate alien” Copyright ©2017 Pearson Education, Inc.

Global Mind-set Attributes for Successful Expatriates
Intellectual capital Psychological capital Social capital Copyright ©2017 Pearson Education, Inc.

Managing Expatriates: Selection
Job factors Relational dimensions Motivational state Family situation Language skills Success categories An important responsibility of IHR managers is that of managing expatriates. Most multinationals underestimate the importance of the human resource planning function in selection, training, acculturation, and evaluation of expatriates. Although there are many factors that contribute to expatriate success, many personal directors select expatriates only on the basis of their domestic track records and technical expertise. The need to ascertain whether potential expatriates have the necessary cross-cultural awareness and interpersonal skills is often overlooked. Studies suggest there are five categories of success for expatriates. Of course, determining whether the expatriate will be successful in those dimensions can be challenging. Research indicates that extroverted managers with high tolerance for stress are more likely to adjust to overseas assignments and perform well. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

An important responsibility of IHR managers is that of managing expatriates. Most multinationals underestimate the importance of the human resource planning function in selection, training, acculturation, and evaluation of expatriates. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Although there are many factors that contribute to expatriate success, many personal directors select expatriates only on the basis of their domestic track records and technical expertise. The need to ascertain whether potential expatriates have the necessary cross-cultural awareness and interpersonal skills is often overlooked. Studies suggest there are five categories of success for expatriates. Of course, determining whether the expatriate will be successful in those dimensions can be challenging. Research indicates that extroverted managers with high tolerance for stress are more likely to adjust to overseas assignments and perform well. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Expatriates Performance Management
Selection based on headquarters criteria Inadequate preparation, training, orientation Alienation or poor support from headquarters Inability to adapt to the local culture Many reasons, besides poor selection, contribute to expatriate failure in US multinationals. Failure also can be attributed to poor preparation and planning for entry and reentry transitions of the manager and his or her family. The suitability and adjustment of the spouse is particularly important and often given insufficient attention. Indeed the latter is the most frequently cited reason for expatriate failure in US and European countries. This slide and the next provide a synthesis of the factors frequently mentioned by researchers and firms as the major causes of expatriate failure. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Problems with spouse and children Insufficient compensation and financial support Poor programs for career support and repatriation After careful selection, plans must be made for the preparation, training, and development of expatriate managers. Though these issues are addressed separately in the following slides, it is important to note that they should be components of an integrated performance management program that is specific to expatriates. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Many reasons, besides poor selection, contribute to expatriate failure in US multinationals. Failure also can be attributed to poor preparation and planning for entry and reentry transitions of the manager and his or her family. The suitability and adjustment of the spouse is particularly important and often given insufficient attention. Indeed the latter is the most frequently cited reason for expatriate failure in US and European countries. This slide and the next provide a synthesis of the factors frequently mentioned by researchers and firms as the major causes of expatriate failure. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

After careful selection, plans must be made for the preparation, training, and development of expatriate managers. Though these issues are addressed separately in the following slides, it is important to note that they should be components of an integrated performance management program that is specific to expatriates. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Comparative Management in Focus: Expatriate Performance Management Practices: Samples from Five Countries Goal setting Performance Appraisal Training and Development Performance-related Pay Hsi-An Shih et al. conducted a study in which they interviewed expatriates and human resource professionals in global information technology companies headquartered in five countries. These were Applied Materials (American) with 16,000 employees in 13 countries, Hitachi High Technologies (Japanese) with 470,000 employees in 23 countries, Philips Electronics (Dutch) with 192,000 employees. in 60 countries, Samsung (Korean) with 173,000 employees in 20 countries, and Winbond Electronics (Taiwanese) with 47,000 employees in six countries. Shih et al. found that those companies used standardized forms from headquarters rather than tailoring them to the host environment; as such, they reflected the company culture but not the local culture in which those expatriates were operating. There also was lack of on-the-job training from those companies.58 The differences in procedures for goal setting, performance appraisal, training, and performance-related pay among those five companies are detailed in Exhibit 9-5. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Comparative Management in Focus: Expatriate Performance Management Practices: Samples from Five Countries global information technology companies headquartered in five countries. These were Applied Materials (American) with 16,000 employees in 13 countries, Hitachi High Technologies (Japanese) with 470,000 employees in 23 countries, Philips Electronics (Dutch) with 192,000 employees. in 60 countries, Samsung (Korean) with 173,000 employees in 20 countries, and Winbond Electronics (Taiwanese) with 47,000 employees in six countries Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

. Shih et al. found that those companies used standardized forms from headquarters rather than tailoring them to the host environment; as such, they reflected the company culture but not the local culture in which those expatriates were operating. There also was lack of on-the-job training from those companies.58 The differences in procedures for goal setting, performance appraisal, training, and performance- related pay among those five companies are detailed in Exhibit 9-5. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Global Team Performance Management
Expatriate performance on a team, based on decisions made with team members in various countries, cultures, and time zones Discussions conducted through teleconferencing, Skyping, and social media Careful selection and training of team members for insight, local knowledge, and group creativity Copyright ©2017 Pearson Education, Inc.

Expatriate Training and Development
China Eating duck tongue and pigeon head Brazil Home phones don’t work India Pervasive poverty Indonesia Rent paid 2–3 years in advance Japan Doctors reveal little to patients Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Expatriate Training and Development
Japanese Expatriate Planning Selection based on long-term knowledge of executives and their families Use of longer assignments (e.g., 5 years) Extensive headquarters support Unlike most US companies, foreign companies tend to provide much more training and preparation. Thus, expatriates from certain countries tend to experience much fewer incidences of failure. For example, in addition to training programs Japanese companies have very careful selection programs that eliminate potential “failures” from the start. They also make use of longer assignments to give expatriates more time to adjust initially and then function at full capacity. Once on assignment, the Japanese receive considerable support from headquarters and sometimes even from local divisions set up for that purpose. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Irritation and hostility Gradual adjustment Biculturalism
Culture Shock Honeymoon Irritation and hostility Gradual adjustment Biculturalism Copyright ©2017 Pearson Education, Inc.

IHRM Process to Maximize Effectiveness of Expatriate Assignments
Evaluate potential problems. Select expatriates. Develop contracts. Assess development and support needs. Evaluate effectiveness and problems. Repatriate after successful assignment. Integrate value-added to firm. Debrief expatriate and family. To improve IHRM process Copyright ©2017 Pearson Education, Inc.

Cross-Cultural Training
A state of disorientation and anxiety about not knowing how to behave in an unfamiliar culture The goal of training is to ease the adjustment to the new environment Culture Shock When a manager is transferred to another part of the country, where there are cultural differences The “shock” comes from feeling like an “immigrant” in one’s own country Subculture Shock The three areas critical to preparation are cultural training, language instruction, and familiarity with everyday matters. Training in language and practical affairs is fairly straightforward, but cross-cultural training is complex and deals with deep-rooted behaviors. One goal of cross-cultural training is to reduce culture shock—a state of disorientation and anxiety about not knowing how to behave in an unfamiliar culture. The cause of culture shock is the trauma people experience in new cultures, where they lose the familiar signs and cues that they had used to interact in daily life and where they must learn to cope with new cues and expectations. Results of culture shock include the inability to work effectively, family stress, and hostility toward host nationals. Culture shock usually progresses through four stages: The honeymoon phase includes positive attitudes and excitement and may last up to several weeks. The irritation and hostility phase is the crisis stage when cultural differences result in problems at home and work. It is characterized by homesickness, and many expatriates never get past this phase. Gradual adjustment is a phase of recovery in which the expatriate begins to understand and predict patterns of behavior, use the language, and accept his or her new life. Biculturalism is a stage in which the expatriate and family members grow to accept and appreciate local people and practices and are able to function effectively in two cultures. Many people never get to this stage, but operate acceptably at the third stage. Subculture shock occurs when a manager is transferred to another part of the country where there are cultural differences—essentially from what he or she perceives to be a “majority” culture to a “minority” one. The shock comes from feeling like an “immigrant” in one’s own country and being unprepared for such differences. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Corporate Programs to Develop Global Managers
ABB rotates managers to different countries to develop transpatriots PepsiCo has an orientation program for foreign managers British Telecom uses informal mentoring techniques Honda offers Japanese language and culture preparation General Electric wants managers to have a global perspective Some MNCs are beginning to recognize that there is no substitute for on-the-job training (OJT) in the early stages of the careers of managers they hope to develop into senior-level global managers. Exhibit 9-7 shows some global management development programs for junior employees. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Integrating Training with Global Orientation
Export Stage Multi-domestic Stage Training need: low to moderate Content: interpersonal skills, culture, customer values, business behavior HCNs: train to understand parent-country products and policies Training need: moderate to high Content: interpersonal skills, culture, technology transfer, business practices and laws HCNs: familiarize with production and service procedures Training programs, like staffing approaches, should be designed with the company’s strategy in mind. The relative level or stage of globalization the firm has reached should be considered. Exhibit 9-8 suggests levels of rigor and types of training content appropriate for the firm’s managers, as well as those for host-country nationals, for four globalization stages—export, multidomestic, multinational, and global. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Integrating Training with Global Orientation
Multinational Stage Global Stage Training need: high moderate to high Content: interpersonal skills, two-way technology transfer, corporate value transfer, strategy, stress management, culture, business practices HCNs: training in technical areas, products and services, corporate culture Training need: high Content: global corporate operations, corporate culture transfer, customers, global competitors, strategy HCNs: training in proficiency in production and efficiency systems, corporate culture, business systems, global conduct policies Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Factors that Influence the Integration of Expatriates with Local Staff
Facilitates Integration Hinders Integration Forming close working relationships Learning local language Transferring technical/business knowledge Cultural adaptability Respect Not using team concept Not learning local language HQ mentality Spouse/family adjustment problems Being autocratic Limited time in assignment Exhibit 9-9 lists behaviors that can help or hinder expatriate integration with local staff. The information was collected from actual expatriate managers and can provide the basis for expatriate training. It also can help HCNs to anticipate and work with expatriates to meet joint strategic objectives. This first four helping behaviors presented in Exhibit 9-7 are shown in this slide. The first four hindrances are shown in the next slide. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Compensating Expatriates
DuPont’s Global Transfer Center of Expertise creates perceptions of equity and goodwill Companies are looking for ways to cut the costs of expatriate assignments The need to reconcile parent- and host-country practices adds complexity The balance sheet approach Tax equalization Components of the compensation package: salary, taxes, allowance, benefits Compensation is a crucial link between strategy and its successful implementation: There must be fit between compensation and the goals for which the firm wants managers to aim. The premature return of expatriates or the unwillingness of managers to take overseas assignments can often be traced to their knowledge that the assignment is financially detrimental. DuPont is an example of a company that centralizes its programs for about 400 international locations in its Global Transfer Center of Expertise. Because of this centralization, expatriates know they are getting the same package. The Wall Street Journal estimates that sending a $100,000-a-year manger to London can cost the organization $300,000 per year. Send the same manager to Stockholm or Tokyo and the cost may rise to $1 million. For this reason, many companies are looking for ways to cut the costs of expatriate assignments, such as by making assignments longer (to cut down on relocation costs) or shorter (so that the family does not need to accompany the expatriate). Particularly challenging when it comes to designing expatriate compensation packages is the need to reconcile parent- and host-country practices. Though there may be little world-wide variation in typical executive base salaries, wide variation in net spendable income is often present. US executives may receive more in cash and stock, but must pay for many things European companies provide (e.g., cars, entertainment allowances). Also, purchasing power is affected by the relative cost of income in different locations. In designing compensation packages, it is necessary to make sure expatriates can maintain a standard of living that is equivalent to their colleagues at home and to compensate them for any additional costs incurred. The balance sheet approach is used to equalize the standard of living between the host and home country and to add some compensation for inconvenience or qualitative loss. Some companies, however, are now striving to create a standard of living that is comparable to host-country managers. Even so, the MNC is obliged to make up additional costs that the expatriate would incur for taxes, housing, and goods and services. With tax equalization, the company pays any taxes due on any type of additional compensation that the expatriate receives for the assignment. The expatriate pays in taxes only what she or he would pay at home. Tax planning can lessen the tax burden for the company. For example, a company can save on taxes by renting an apartment for the employee rather than providing a cash housing allowance. All components of the compensation package must be considered in light of home- and host-country legalities and practices. In designing each of these components, it is most important to be strategically competitive by making the package attractive to those kinds of managers the company wishes to relocate. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Components of the Compensation Package
Salary Local salary buying power vs. home salary Taxes Equalize any differential effects of taxes Allowances Relocation expenses, housing, trips home… Benefits Health insurance, stock options Managing PNC compensation is a complex challenge for companies with overseas operations. All components of the compensation package must be considered in the light of both home and host-country legalities and practices. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Training Host Country Nationals
Facilitates indigenization Links successful corporate culture and local culture Facilitates e-business adoption The continuous training and development of HCNs and TCNs for management positions is also important in the long-term success of multinational corporations. The ongoing development of HCNs will facilitate the transition to an indigenization policy. It also is a way of bridging the gap between a firm’s successful corporate culture and practices and local culture and practices. Additionally, managerial training in information and communication technologies is critical for firms in new economy and emerging markets, and it can provide leverage for rapid economic growth. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Management in Action: Success
Management in Action: Success! Starbucks’ Java Style Helps to Recruit, Train, and Retain Local Managers in Beijing Challenges: recruiting, motivating, and retaining Beijing managers Chinese recruits want training and advancement opportunities more than money Recruits need trust and participation in an environment where local nationals do not exercise initiative or authority Starbucks has achieved a remarkable penetration rate in China, given that it is a country of tea drinkers who do not readily take to the taste of coffee. Despite Starbuck’s success to date in China, it has had trouble recruiting, motivating, and retaining managers in a country where the demand for local managers by foreign companies is far greater than the supply of managers with any experience in capitalist-style companies. Consequently, Chinese recruits are particularly interested in training and advancement opportunities because they know that managers with experience in Western organizations can always get a job. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Management in Action: Success
Management in Action: Success! Starbucks’ Java Style Helps to Recruit, Train, and Retain Local Managers in Beijing Recruits are trained in management and in Starbucks’ culture Three months in Seattle Make coffees in a real store Casual atmosphere Training, and resulting trust and participation, also serve as motivators Management recruits spend three-months in Seattle, Washington, to experience the West Coast lifestyle and the company’s informal culture. This experience includes backyard barbecues and learning the art of coffee-making at real stores. The training on culture at Starbucks is very different from what most Chinese recruits have experienced in state-owned Chinese companies, where work is strictly defined and has no challenge for employees. In an environment where local nationals are traditionally not expected to exercise initiative or authority, Starbuck’s approach also serves as a means of motivating recruits. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Compensating Host Country Nationals
Eastern Europeans require more cash than Americans. Compensation in Japan is becoming more Westernized. In Latin America an employee’s pay and title are associated with the type of car received. How do firms determine appropriate compensation for HCNs, given local norms, and the competitive needs of the firm? Research by Mercer indicates that most firms have a global pay structure in place that includes policies on position pay relative to the market, short- and long-term incentives, and methodologies for job grading. When designing HCN pay, there are many variables to consider. These variables include the local market and local pay scales, government involvement in benefits, the role of unions, and the cost of living. For example, Hungarians, Poles, and Czechs spend about 35-40% of their disposable incomes on food and utilities. Russians may spend as much as 75%. Thus, Eastern European managers must have cash for about 65-80% of their base pay, whereas US managers only have about 40% in cash. MNCs also can be competitive by providing goods and services that are either not available or very expensive in Eastern Europe. In Japan, compensation is becoming more Westernized to become more competitive. For instance, they are beginning to base pay on performance, rather than seniority, and are making people responsible for their own retirement fund decisions. Alternatively, Chinese workers often resist pay for performance, leading many Western companies to use salary increases. Companies also set up housing schemes, such as investing in apartments, as a way to compete for good managers. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Conclusion Global HR management = vital component of global strategy
Strategies = ethnocentric, polycentric, regiocentric, and global Many causes of ex-pat failure: inadequate preparation, inability to adapt, lack of HQ support for repatriation, etc Cultural training, language instruction, familiarity with everyday matters  training is needed Compensation must be carefully designed Copyright ©2017 Pearson Education, Inc.

Copyright © 2017 Pearson Education, Inc.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2017 Pearson Education, Inc. 51

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