1. International Human Resources Management
© 2007 Thomson/South-Western. All rights reserved.

2. Objectives After studying this chapter, you should be able to:
Identify the types of organizational forms used for competing internationally.
Explain the economic, political-legal, and cultural factors in different countries that HR managers need to consider.
Explain how domestic and international HRM differ.
Discuss the staffing process for individuals working internationally.
Identify the unique training needs for international assignees and their employees.
© 2007 Thomson/South-Western. All rights reserved.

3. Objectives (cont’d) After studying this chapter, you should be able to:
Identify the characteristics of a good international compensation plan.
Reconcile the difficulties of home- and host-country performance appraisals.
Explain how labor relations differ around the world.
© 2007 Thomson/South-Western. All rights reserved.

4. Increasing Importance of Global Human Resource Understanding
International Mergers and Acquisitions
Importance of
Global Human
Resources
Management
Foreign Human Resources
Global Competition
Market Access Opportunities
© 2007 Thomson/South-Western. All rights reserved.

5. Managing Across Borders
International corporation
Domestic firm that uses its existing capabilities to move into overseas markets.
Multinational corporation (MNC)
Firm with independent business units operating in multiple countries.
Global corporation
Firm that has integrated worldwide operations through a centralized home office.
Transnational corporation
Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units.
© 2007 Thomson/South-Western. All rights reserved.

6. Figure 15–1 Types of Organizations
© 2007 Thomson/South-Western. All rights reserved.

7. How Does the Global Environment Influence Management?
Unified Economies
Closely partnered nations such as the European Union (EU) have developed into strong competitors.
Promotes job growth in trading nations.
Cultural environment
The communication patterns, religion, values and ideologies, education, and social structure of a host country influence how HR is conducted in that country.
© 2007 Thomson/South-Western. All rights reserved.

8. Figure 15–3 Cultural Environment of International Business
© 2007 Thomson/South-Western. All rights reserved.

9. International Staffing
Expatriates, or Home-country Nationals
Employees from the home country who are on international assignment.
Host-country Nationals
Employees who are natives of the host country.
Third-country Nationals
Employees who are natives of a country other than the home country or the host country.
© 2007 Thomson/South-Western. All rights reserved.

10. Figure 15–4 Changes in International Staffing over Time
© 2007 Thomson/South-Western. All rights reserved.

11. Hiring Host-Country Nationals
Three main advantages:
Hiring local citizens is generally less costly than relocating expatriates.
Since local governments usually want good jobs for their citizens, foreign employers may be required to hire locally.
Most customers want to do business with companies they perceive to be local versus foreign.
© 2007 Thomson/South-Western. All rights reserved.

12. Recruiting Internationally
Work Permit, or Visa
Government document granting a foreign individual the right to seek employment.
Guest Workers
Foreign workers invited to perform needed labor.
Apprenticeships
Vocational training programs in skilled trades.
Transnational Teams
Teams composed of members of multiple nationalities working on projects that span multiple countries.
© 2007 Thomson/South-Western. All rights reserved.

13. Selecting Global Managers
A manager equipped to run an international business
Skills Categories
Ability to seize strategic opportunities
Ability to manage highly decentralized organizations
Awareness of global issues
Sensitivity to issues of diversity
Competence in interpersonal relations
Skill in building community
© 2007 Thomson/South-Western. All rights reserved.

14. Selecting Global Managers
Begin with self-selection.
Create a candidate pool.
Assess core skills.
Assess augmented skills and attributes.
© 2007 Thomson/South-Western. All rights reserved.

15. Skills of Expatriate Managers
Highlights in HRM 2
Skills of Expatriate Managers
CORE SKILLS AUGMENTED SKILLS
Experience Technical skills
Decision making Negotiation skills
Resourcefulness Strategic thinking
Adaptability Delegation skills
Cultural sensitivity Change management
Team building
Maturity
© 2007 Thomson/South-Western. All rights reserved.

16. Figure 15–5 Comparison of Advantages in Sources of Overseas Managers
HOST-COUNTRY HOME-COUNTRY NATIONALS THIRD-COUNTRY
NATIONALS (EXPATRIATES) NATIONALS
Less costly Talent available within company Broad experience Preferred by host-country Greater control International outlook governments
Intimate knowledge of Company experience Multilingualism environment and culture
Language facility Mobility
Experience provided to corporate executives
© 2007 Thomson/South-Western. All rights reserved.

17. Figure 15–6 Expatriate Selection Criteria
© 2007 Thomson/South-Western. All rights reserved.

18. Figure 15–7 Causes of Expatriate Assignment Failure
Family adjustment
Lifestyle issues
Work adjustment
Bad selection
Poor performance
Other opportunities arise
Business reasons
Repatriation issues
© 2007 Thomson/South-Western. All rights reserved.

19. Training and Development
Essential training program content to prepare employees for working internationally:
Language training
Cultural training
Assessing and tracking career development
Managing personal and family life
Repatriation
Culture shock
Perpetual stress experienced by people who settle overseas.
© 2007 Thomson/South-Western. All rights reserved.

20. Training Methods
Reviewing available information about the host company: books, magazines, video tapes.
Conversations with host country natives.
Sensitivity training to become familiar with the customs and overcome prejudices.
Temporary assignments to encourage shared learning.
© 2007 Thomson/South-Western. All rights reserved.

21. Compensation
Different countries have different norms for employee compensation.
Financial (money) incentives versus nonfinancial incentives (prestige, independence, and influence)
Individual rewards versus collectivist concerns for internal equity and personal needs
General rule: match the rewards to the values of the local culture—create a pay plan that supports the overall strategic intent of the organization but provides enough flexibility to customize particular policies and programs to meet the needs of employees in specific locations.
© 2007 Thomson/South-Western. All rights reserved.

22. Figure 15–11 Forces Driving Global Pay
CULTURAL PREFERENCES
Importance of status
Role of individual vs. organization
vs. government
Equality vs. disparity
Achievement vs. relationships
PERSONAL PREFERENCES
Attitudes toward risk
Quality of life vs. work
Short- vs. long-term
Competitiveness vs. solidarity
ECONOMIC CONDITIONS
Size of economy
Types of industries, natural resources
Inflation, unemployment
Protectionism vs. open market
SOCIAL CONSTRAINTS
Income tax rates, social costs
Laws and regulations
Collective bargaining, worker
participation
Skills, education of workforce
Source: Steven Gross and Per Wingerup, “Global Pay? Maybe Not Yet!” Compensation and Benefits Review 31, no. 4 (July/August 1999): 25–34.
© 2007 Thomson/South-Western. All rights reserved.

23. Expatriate Compensation Systems
Home-Based Pay
Pay based on an expatriate’s home country’s compensation practices
Balance-Sheet Approach
A compensation system designed to match the purchasing power in a person’s home country
Calculate base pay
Figure cost-of-living allowance (COLA)
Add incentive premiums
Add assistance programs
© 2007 Thomson/South-Western. All rights reserved.

24. Expatriate Compensation Systems (cont’d)
Host-Based Pay
Expatriate pay comparable to that earned by employees in a host country to which the expatriate is assigned.
Localization
Adapting pay and other compensation benefits to match that of a particular country
Other Issues
Adequacy of medical care
Personal security
Education
© 2007 Thomson/South-Western. All rights reserved.