1. INTERNATIONAL HRM

2. International HRM Differences
Greater Number of Services
Special Services to Unique Group
Compensation Complexity
Foreign Exchange Rate Attention
Language and Cultural Differences

3. Increasing Importance of Global Human Resources Understanding
International Mergers and Acquisitions
Importance of Global Human Resources Management
Foreign Human Resources
Global Competition
Market Access Opportunities

4. Composition of the Cultural Environment of International Business
Language
spoken
written language
official language
linguistic pluralism
language hierarchy
international languages
mass media
Religion
sacred objects
philosophical
systems
beliefs & norms
prayer
taboos
holidays
rituals
Technology and Material Culture
transportation
energy systems
tools & objects
communications
urbanization
science
invention
Values and Attitudes
Toward:
time
achievement
work
wealth
change
scientific method
risk-taking
Law
common law
code law
foreign law
home country law
antitrust policy
international law
regulation
Education
formal education
vocational training
primary education
secondary education
higher education
literacy level
human resources planning
Politics
nationalism
sovereignty
imperialism
power
national interests
ideologies
political risk
Social Organization
kinship
social institutions
authority structures
interest groups
social mobility
social stratification
status systems

5. Key Issues in International HRM
Worldwide Human Resources Planning
Recruiting and Selection
Expatriate orientation and training
Repatriation
Performance appraisal
Compensation
Dealing with inflation and unexpected changes in exchange rates
Providing sufficient pay to keep individuals
Should company pay hardship allowance?
Dissatisfaction with cost of living allowances
Housing (Complex problems at home and overseas)

6. Key Issues in International HRM
Benefits Planning
Developing equity among employees
Several plans necessary for different categories of personnel
Taxation (Proliferation of new laws)
Communication of HR Policies and Programs Worldwide
Treat communication as a continuous process
Face-to-Face contact frequently
Make policy manuals brief and simple
Be sensitive to needs of receiver
Send regular written explanations of policy changes
Periodic rotation of overseas HR managers desirable
Security

7. Global Manufacturing

8. International Corporation
Domestic firm that uses its existing capabilities to move into overseas markets.

9. Multinational Corporation (MNC)
Firm which independent business units operating in multiple countries.

10. Global Corporation
Firm that had integrated worldwide operations through a centralized home office.

11. Transnational Corporation
Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units.

12. Types of Organizations
Global Efficiency
High
Global
Views the world as a single market; operations are controlled centrally from the corporate office.
Transnational
Specialized facilities permit local responsiveness; complex coordination mechanisms provide global integration.
Low
International
Uses existing capabilities to expand into foreign markets.
Multinational
Several subsidiaries operating as stand-alone business units in multiple countries.
Local Responsiveness

13. The Multi-National Corporation (MNC)
Home Country Employment
External Country Employment

14. Managing in a Foreign Environment
Attitudes Vary
Motivational Tools are Distinctly Different

15. Cultural Environment of International Business

16. Clustering Nations Approach
Geography
Languages
Religion
Job Attitudes
Work Goals
Values
Needs

17. Managerial Values Role of Competition Role of Blame Role of Shame
Role of Participation: Japan (hi)
Role of Autocratic: Europe (hi) and South America (hi)

18. Sources of Managerial Talent
Home Country Nationals (Expatriates)
Host Country Nationals (Natives)
Third Country Nationals (Non-Home/Host)

19. Advantages of Different Sources for Overseas Managers
Host Country
Home Country
Third Country
Less cost
Preference of host country government
Knowledge of environment
Language facility
Talent available within company
Greater control
Company experience
Mobility
Experience provided to corporate executives
Broad experience
International outlook
Multi-lingualism

20. SOME OF THE LARGEST U.S. MULTINATIONALS
AT&T
General Electric
Microsoft
Cisco
General Motors
Procter and Gamble
Citicorp.
Hewlett-Packard
RJR Nabisco
Coca-Cola
IBM
Texaco
DuPont
Intel
United Technologies
Exxon/Mobil Oil
J.P. Morgan
Wal-mart
Ford Motor
Johnson & Johnson
Xerox
Motorola

21. 6 Major Reasons for American Expatriate Failures in Foreign Environment
Inability of the manager’s spouse to adjust to a different cultural environment.
The manager’s inability to adapt to a different physical or cultural environment. Other family-related problems.
The manager’s personality or emotional immaturity.
The manager’s inability to cope with the responsibilities posed by the overseas work.
The manager’s lack of technical competence.
The manager’s lack of motivation to work overseas.

22. Selection Methods Interviews (executives and psychologists)
Assessment Centers (exercises)
Tests (language and special tests)
Role of Family

23. Flowchart of the Selection-Decision Process
Start the Selection Process
Can the position be filled by a local national?
Select local national and subject him/her to training basically aimed at improving technical and managerial skills.
YES NO
Identify degree of interaction required with local community – using a 7- or 9- point scale, ranging from low to high, indicate the degree of interaction with local community required for successful performance on the job.
Emphasis* on tasks variables.
Second but by no means unimportant question is to ask whether the individual is willing to serve abroad.
LOW
HIGH
YES NO
Is candidate willing?
Probably not suitable for position
YES
Identify degree of similarity / dissimilarity between cultures – using a 7- or 9-point scale, ranging from similar to highly diverse, indicate the magnitude of differences between the two cultures, NO
Probably not suitable for position
VERY SIMILAR
Start orientation
(moderate to high rigor)
Emphasis* on task variables
HIGHLY DIVERSE
Emphasis* on “relational abilities” factor.
“Family situation” factor must also be taken into consideration.
Start orientation
(moderate to high rigor)
Start orientation (most rigorous)

24. Preparing for an International Assignment
Study the following subjects:
Social and business etiquette.
History and folklore.
Current affairs, including relations between the country and the United States.
The culture’s values and priorities.
Geography, especially the cities.
Sources of pride: artists, musicians, novelists, sports, great achievements of the culture, including things to see and do.
Religion and the role of religion in daily life.
Political structure and current players.
Practical matters such as currency, transportation, time zones, hours of business.
The language.

25. Cultural Shock "A Disorientation that Causes Perpetual Stress"
Disorienting Incidents
Impossible Communication
Telephone Difficulties
Family Frustrations

26. Special Considerations
Career Development Risks
Reentry Problems
Managing Family Life
Terrorism

27. Recruitment Government Regulations Work Permits Universally Required
Recruitment of Locals Varies
Guest Workers
Role of Church, Family, Politics

28. Selection Merit Versus Best Family Family Ties Social Standing Origin
Industrialized versus Less Developed

29. Training Issues Local Resources Less Technical Capabilities
Apprenticeship Strengths in Europe
Management Development (US Leader)
Language (English Need)

30. Compensation Host Country Employees Managers
Production Standard or Time or Combination
Benefits (often higher than U.S.)
Profit Sharing (may be Required)
Managers
Narrowing of Salary Gap with USA

31. Expatriate Compensation
Base Pay
Differentials
Incentives
Company Assistance
Cost: 3-4 times USA Rate

32. Compensation of Expatriate Managers
To be effective, a compensation
program must:
Provide an incentive to leave the united states.
Maintain an American standard of living.
Facilitate reentry into the united states.
Provide for the education of children.
Maintain relationships with family, friends, and business associates.

33. Compensation Elements of an Expatriate
Programs used by most U.S. Based MNCs have four elements:
Base pay – equal to pay of domestic counterparts in comparably evaluated jobs.
Differentials – to offset the higher costs of overseas goods, services, and housing.
Incentives – to compensate the person for separation from family, friends, and domestic support systems.
Company assistance programs – to cover added costs such as moving and storage costs, automobile, and education expenses.

34. The Price of an Expatriate
Note: Additional costs often incurred aren’t listed above, including language and cross-cultural training for employee and family, and costs of selling home and cars in the U.S. before moving.
*Figures take into account payments by employee to company based on hypothetical U.S. income tax and housing costs.
*It is not unusual to triple costs compared to USA earnings.
An employer’s typical first-year expenses
of sending a U.S. executive abroad.
Direct Compensation Costs
Base Salary
100%
Foreign-service premium
15%
Goods and services differential
20%
Housing costs
20-40%
Transfer Costs
Relocation allowance 5%
Air fare 2%
Moving household goods
25%
Other Costs
Company Car
Schooling (two children)
Annual home leave (four people)
Personal income tax abroad
50%
Total = Salary plus %