2. International Dimensions of Human Resource Management
Chapter 16
International Dimensions of Human Resource Management
McGraw-Hill/Irwin
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.

3. Questions This Chapter Will Help Managers Answer
What factors should I consider in “sizing up” managers, employees, and customers from a different culture?
What should be components of expatriate recruitment, selection, orientation, and training strategies?
How should an expatriate compensation package be structured?
What kind of career management issues should a manager consider before deciding to work for a foreign-owned firm in the United States?
What special issues deserve attention in the repatriation of overseas employees?

4. Factors Driving the Backlash Against Globalization
Insecurity
Mistrust
Policy
Priorities
Technophobia

5. Definition of Terms
A global corporation is one that has become an “insider” in any market or nation where it operates and is thus competitive with domestic firms operating in local markets. Unlike domestic firms, however, the global corporation has a global strategic perspective and claims its legitimacy from its effective use of assets to serve its far-flung customers

6. Definition of Terms (contd.)
An expatriate, or a foreign-service employee, is a generic term applied to anyone working outside her or his home country with a planned return to that or a third country

7. Definition of Terms (contd.)
The home country is the expatriate’s country of residence
The host country is the country in which the expatriate is working
A third-country national is an expatriate who has transferred to an additional country while working abroad. A German working for a U.S. firm in Spain is a third-country national

8. Overseas Compensation
Table 16-1 Typical U.S. Expatriate Compensation Package (Annual Expense): Married With One Child
Category
U.S. Compensation
Overseas Compensation
Base salary
$85,000
Overseas incentive
15%
Hardship
10%
Housing differential
35%
Furniture
12%
Utilities differential
20%
Car and driver
Cost-of-living adjustment
40%
Club membership 2%
Education
Total
$221,850
U.S. Tax
24,000
Net annual compensation
$61,000
$197,850

9. Cultural Understanding
Local perspective: managers believe in the inherent superiority of their own group and culture, and they tend to look down on those considered “foreign”
Cosmopolitan perspective: managers are sensitive to cultural differences, respect the distinctive practices of others, and make allowances for such factors when communicating with representatives of different cultural groups

10. Understanding Cultural Differences Factors
Sense of self and space
Dress and appearance
Food and eating habits
Communication: verbal and nonverbal
Time and time sense
Relationships
Values and norms
Beliefs and attitudes
Work motivation and practices
Mental processes and learning

11. Hofstede’s Cultural Dimensions
Power distance refers to the extent that members of a culture accept inequality and whether they perceive much distance between those in power and those with little power
Uncertainty avoidance is reflected in the emphasis on ritual behavior, rules, and stable employment
Individualism reflects the extent to which people emphasize personal or group goals. The essence of collectivism (the opposite of individualism) is giving preference to in-group over individual goals.

12. Hofstede’s Cultural Dimensions (contd.)
Masculinity is found in societies that differentiate very strongly by gender. Femininity is characteristic of cultures where sex-role distinctions are minimal. While the centrality of work in a person’s life is greater in masculine cultures, feminine cultures emphasize quality of life and give more of their GNP to the third world.

13. Hofstede’s Cultural Dimensions (contd.)
Long-term vs. short-term orientation refers to the extent to which a culture programs its members to accept delayed gratification of their material, social, and emotional needs.

14. Lessons Regarding Cross-Cultural Differences
Do not export headquarters-country bias
Think in global terms
Recognize that no country has all the answers

15. Recruitment
Companies may select from the national group of the parent company only (ethnocentrism: home-country executives only)
They may recruit only from within their own country and the country where the branch is located (home-and host-country nationals)

16. Recruitment (contd.)
They may adopt an international perspective and emphasize the unrestricted use of all nationalities (geocentrism – “best person for job” regardless of nationality)

17. International Staffing Key Components of Initial Orientation
Cultural briefing
Assignment briefing
Relocation requirements

18. International Staffing Topics Covered in Predeparture Orientation
Introduction to the language
Further reinforcement of important values, especially open-mindedness
En route, emergency, and arrival information

19. International Staffing Post-Arrival Orientation
Orientation toward the environment
Orientation toward the work unit and fellow employees
Orientation to the actual job

20. Culture Shock Symptoms (selected items)
Homesickness
Boredom
A need for excessive amounts of sleep
Irritability
Marital stress
Family tension and conflict (involving children)
Hostility toward host-country nationals
Loss of ability to work effectively
Physical ailments of a psychosomatic nature

21. Types of Expatriate Compensation
Localization
“Higher-of-home-or-host” compensation
Balance sheet

22. Types of Expatriate Compensation (contd.)
Localization refers to the practice of paying expatriates on the same scale as local nationals in the country of assignment
Higher-of-home-or-host compensation localizes expatriates in the host-country salary program, but establishes a compensation floor based on home-country compensation so that expatriates never receive less than they would be paid at home for a comparable position

23. Types of Expatriate Compensation (contd.)
In the balance sheet approach, the primary objective is to ensure that expatriates neither gain nor lose financially compared with their home-country peers. If there is no financial advantage to being in one country instead of another, then this objective will be realized. It also facilitates mobility among the expatriate staff in the most cost-effective way possible.

24. Philosophies that Characterize the Balance Sheet Approach
Protection
Equalization or “split pay”

25. Key Terms Discussed in This Chapter
Global corporation
Expatriate
Home country
Host country
Third-country national
Culture
Local perspective
Cosmopolitan perspective
Norms of behavior
Power distance
Uncertainty avoidance
Individualism
Masculinity
Ethnocentrism
Geocentrism
Extroversion
Agreeableness
Emotional stability
Conscientiousness
Culture shock
Localization
Balance-sheet approach

26. Key Terms (contd.) Protection Equalization
Modified balance-sheet approach
Acquired rights law
Best-of-both worlds benefits
Equity norm
Maquiladora
Repatriation
Reverse culture shock
Mobility premium
Globalites