1. International Human Resource Management Practices
Asst. Prof. Dr. Serdar AYAN

2. Human Resource Management and Functions
Human resource management (HRM): deals with the entire relationship of the employee with the organization
Recruitment: process of identifying and attracting qualified people to apply for vacant positions
Selection: process of filling vacant positions in the organization

3. Basic HRM Functions
Training and development: giving employees the knowledge, skills, and abilities to perform successfully
Performance appraisal: system to measure and assess employees’ work performance

4. Basic HRM Functions
Compensation: organization’s entire reward package, including financial rewards, benefits, and job security
Labor relations: ongoing relationship between an employer and those employees represented by labor organizations

5. International Human Resource Management (IHRM)
All HRM functions, adapted to the international setting
Two added complexities compared to domestic HRM
- Must choose a mixture of international employees
- Must decide the extent of adaptation to local conditions

6. Types of Employees in Multinational Organizations
Expatriate: employee from a different country
Home country nationals: expatriate employees from the parent firm’s home country
Third country nationals: expatriate workers who come from neither the host nor home country

7. Types of Employees in Multinational Organizations
Host country nationals: local workers who come from the host country where the unit is located
Inpatriate: employees from foreign countries who work in the country where the parent company is located
Flexpatriates: employees who are sent on frequent but short-term international assignments

8. The Expatriate or the Host Country Manager
Multinationals must decide whether to use expatriates or home country nationals
Need to look at some questions
- Given the firm’s strategy, what is the preference for the position?

9. The Expatriate or the Host Country Manager
Using expatriate managers
- Do parent country managers have the appropriate skills?
- Are they willing to take expatriate assignments?
- Do any laws affect the assignment of expatriate managers?
Using host country managers
- Do they have the expertise for the position?
- Can we recruit them from outside the company?

10. Is the Expatriate Worth It?
Decisions must take into account costs of such assignments
- High cost
- High failure rate

11. Exhibit 11.1: Paying for the Expatriate Manager: Indices of Cost of Living Abroad

12. Reasons for U.S. Expatriate Failure
Individual
- Personality of the manager
- Lack of technical proficiency
- No motivation for assignment
Family
- Spouse or family members fail to adapt
- Family members or spouse do not want to be there

13. Reasons for U.S. Expatriate Failure (cont.)
Cultural
- Manager fails to adapt
- Manager fails to develop relationship with key people

14. Reasons for U.S. Expatriates Failure (cont.)
Organizational
Excessively difficult responsibilities
Failure to provide cultural training
- Company fails to pick the right person
Company fails to provide the technical support
Excess of difficult responsibilities of international assignment
Failure of company to consider gender equity

15. Strategic Role of Expatriate Assignments
Helps managers acquire international skills
Helps coordinate and control operations dispersed activities
Communication of local needs/strategic information to headquarters
In-depth knowledge of local markets
Provide important network knowledge

16. International Cadre
International cadre (or Globals): Separate group of expatriate managers who specialize in a career of international assignments
- Have permanent international assignments
- Move from international assignments to international assignments
- Recruited from any country
- Sent to worldwide locations to develop cross-cultural skills

17. Flexpatriates
The frequent flyers who travel on short notice for shorter time durations while maintaining their family and personal lives at the home-country location
Key functions
- Sent to explore markets
- Consider problem areas in the foreign subsidiary
- Manage projects
- Help with transfer of technology

18. Flexpatriates Advantages
- Do not experience many of the family and personal difficulties and stress associated with expatriate assignments
- Much less expensive than expatriate – no relocation or repatriation costs

19. Flexpatriate Disadvantages
- Taxation issues can become complicated if the assignment exceeds six months – he company may end up paying the tax
- Does not fully integrate into the local work environment and does not learn low to adapt locally
- May be resented for neglecting the host-country culture

20. Key Success Factors for Expatriate Assignments
Technical and managerial skills
Personality traits
Relational abilities
Family situation
International motivation
Stress tolerance
Language ability
Emotional intelligence

21. Exhibit 11.2: Expatriate Success Factors and Selection Methods

22. Priority of Success Factors
Assignment length
- Technical and professionals skills are key for short assignments
Cultural similarity
Required interaction with local people
Job complexity and responsibility

23. Exhibit 11.3: Selecting Expatriates: Priorities for Success Factors by Assignment Characteristics

24. Training and Development
Cross-cultural training: increases the relational abilities of future expatriates and their spouses and families
Training rigor: extent of effort by both trainees and trainers required to prepare the trainees for expatriate positions

25. Training and Development (cont.)
Low rigor training
- Short time period
- Lectures and videos on local cultures
- Briefings on company operations
High rigor training
- Last over a month
- Experiential learning
- Extensive language training
- Includes interactions with host country nationals

26. Exhibit 11.4: Training Rigor: Techniques and Objectives

27. Exhibit 11.5: How the Rigor of Training Relates to the Basic Expatriate Assignment Conditions

28. Expatriate Performance Appraisal
Conducting reliable performance appraisal for the expatriate is very challenging
Challenges
Fit of international operation in multinational strategy
Unreliable date
Complex and volatile environments
Time difference and distance separation
Local cultural situation

29. Steps to Improve the Expatriate Performance Appraisal
Fit the evaluation criteria to strategy
Fine-tune the evaluation criteria
Use multiple sources of evaluation with varying periods of evaluation

30. Exhibit 11.6: Evaluation Sources, Criteria, and Time Periods for Expatriate Performance Appraisals

31. Expatriate Compensation
Compensation packages tend to include many common factors includes:
- Local market cost of living
- Housing
- Taxes
- Benefits

32. Exhibit 11.7: Average Rent of Two-Bedroom, Unfurnished Apartments in Selected European Cities

33. The Balance-Sheet Approach
Provides a compensation package that equates purchasing power
Allowances for cost of living, housing, food, recreation, personal care, clothing, education, home furnishing, transportation, and medical care

34. Exhibit 11.8: Balance Sheet Approach To Expatriate Compensation

35. Additional Allowances and Perquisites
Foreign service premiums
Hardship allowance
Relocation allowances
Home-leave allowances

36. Expatriate Manager Compensation: Other Approaches
Headquarters-based compensation: paying home country wages regardless of location
Host-based compensation system: adjusting wages to local lifestyles and costs of living
Global pay systems: worldwide job evaluations, performance appraisal methods, and salary scales are used

37. Repatriation Problem Difficulties faced coming back home
Three basic cultural problems—“reverse culture shocks”
- Adapt to new work environment and culture of home
- Expatriates must relearn own national and organization culture
- Need to adapt to basic living environment

38. Strategies for Successful Repatriation
Provide a strategic purpose for the repatriation
Establish a team to aid the expatriate
Provide parent country information sources
Provide training and preparation for the return
Provide a home-leave policy to encourage expatriates to make regular visits to the home office
Provide support for the expatriate and family on return

39. International Assignments for Women: Two Myths
Myth 1: Women do not wish to take international assignments.
Myth 2: Women will fail in international assignments because of the foreign culture’s prejudices against local women.
Successful women expatriates
- Foreign not female—emphasize nationality not gender

40. International Assignments for Women: Advantages
More visible
Strong in relational skills
Wider range of interaction options

41. International Assignments for Women: Disadvantages
Face the glass ceiling
- Isolation and loneliness
- Constant proving of themselves, working harder than male
Need to balance work and family responsibilities
Need to worry about accompanying spouse

42. More Women in the Future?
Women expatriate managers are expected to grow
Acute shortage of high-quality managers
Increasing number of women provide role models

43. What Can Companies Do To Ensure Female Expatriate Success?
Provide mentors
Provide opportunities for interpersonal networks as a form of organizational support
Remove sources of barriers
Provide support to cope with dual-career issues

44. Multinationals and Electronic Human Resource Management
Electronic human resources (e.HR): automation of various aspects of the human resources system of a company

45. Strategic Benefits of e.HR Systems
Reduce HR and administrative system cost
Improve HR services to employees
Employees take control of their own data
Repository of the wealth of knowledge and skills of expatriates
Employee tracking for career management and other HR purposes

46. Proper Steps to e.HR Implementation
Develop business case to justify using e.HR or upgrade to e.HR
Make the system customer-focused
Be proactive
Organize collected data in ways that is useful to the organization

47. Multinational Strategy and IHRM
IHRM orientation: company’s basic tactics and philosophy for coordinating IHRM activities for managerial and technical workers

48. Exhibit 11.9: IHRM Orientation and IHRM Practices for Managers and Technical Workers

49. Exhibit 11.9: IHRM Orientation and IHRM Practices for Managers and Technical Workers

50. Exhibit 11.9: IHRM Orientation and IHRM Practices for Managers and Technical Workers

51. Multinational Strategy and IHRM
Ethnocentric IHRM: all aspects of HRM for managers and technical workers tend to follow the parent organization’s home-country HRM practices

52. Benefits of Ethnocentric IHRM
Little need to recruit qualified host country nationals for higher management
Greater control and loyalty of home country nationals
Key decisions centralized

53. Costs of Ethnocentric IHRM
May limit career development for host country nationals
Host country nationals may never identify with the home company
Expatriate managers are often poorly trained for international assignments and make mistakes
Expatriates may have limited career development

54. Regiocentric and Polycentric IHRM
Regiocentric IHRM: region-wide HRM policies are adopted
Polycentric IHRM: firm treats each country-level organization separately for HRM purposes
Greater responsiveness to host country differences

55. Benefits of Polycentric and Regiocentric HRM Policies
Reduces costs for training of expatriate managers from headquarters
No investment in language training
Fewer problems with adjustments to local cultures
Less expensive

56. Costs of Polycentric and Regiocentric IHRM Policies
Coordination problems with headquarters
- based on cultural, language, and loyalty differences
Limited career-path opportunities for host country and regional managers
Limited international experience for home country managers

57. Global IHRM Orientations
Recruiting and selecting worldwide
Assigning the best managers to international assignments regardless of nationality

58. Global IHRM Orientations
Benefits
- Bigger talent pool
- Develops international expertise
- Helps build transnational organizational cultures
Costs
- Importing managerial and technical employees not always possible
- Added expense

59. IHRM Orientation and Multinational Strategy
Early stages of internationalization—ethnocentric IHRM
Multilocal strategies—ethnocentric or regiocentric
Regional strategy—regiocentric, polycentric or global

60. Exhibit 11.10: IHRM Orientations and Multinational Strategies

61. Conclusion
When basic HRM practices are applied to a company’s international operations, they become International HRM
Chapter focused on HRM practices as applied to the expatriate employees
Expatriates present special challenges for multinationals
It is important for multinationals to find ways to properly manage expatriates to benefit from their experiences