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11InternationalHumanResourceManagementLearningObjectives(1of3)Knowthebasicfunctionsofhumanresourcemanagement.Defineinternationalhumanresourcemanagement.Understandhowinternationalhumanresourcemanagementdiffersfromdomestichumanresourcemanagement.Knowthetypesofworkersthatmultinationalcompaniesuse.LearningObjectives(2of3)Explainhowandwhenmultinationalcompaniesdecidetouseexpatriatemanagers.Knowtheskillsnecessaryforasuccessfulexpatriateassignment.Understandhowexpatriatemanagersarecompensatedandevaluated.Appreciatetheissuesregardingexpatriateassignmentsforfemalemanagers.LearningObjectives(3of3)Knowwhatcompaniescandotomaketheexpatriateassignmenteasierfortheirfemaleexpatriates.Understandtherelationshipbetweenchoiceofamultinationalstrategyandinternationalhumanresourcemanagement.HumanResourceManagement(HRM)HumanResourceManagement(HRM):dealswiththeoverallrelationshipoftheemployeewiththeorganizationMajorgoalsofHRMaremanaginganddevelopinghumanassets.BasicHRMFunctions(1of2)BasicHRMfunctionsare:Recruitment:identificationofqualifiedindividualsforavacantpositionSelection:processoffillingvacantpositionsintheorganizationTraining:providingopportunitiestohelptheindividualtoperformPerformanceAppraisal:assessingtheindividual’sperformanceBasicHRMFunctions(2of2)BasicHRMfunctionsare:(cont’d)Compensation:providingtheadequaterewardpackageLaborRelations:therelationshipbetweentheindividualandthecompanyInternationalHuman
ResourceManagement(IHRM)Whenappliedtotheinternationalsetting,theHRMfunctionsmakeupInternationalHumanResourceManagement.Intheinternationalarena,thebasicHRMactivitiestakeonanaddedcomplexity,fortworeasons:EmployeesofMNCsincludeamixtureofworkersofdifferentnationalities.HRManagersmustdecidethenecessaryextentofadaptationtolocalbusiness&nationalcultures.TypesofEmployeesinMultinationalOrganizations(1of2)Expatriate:EmployeeswhocomefromacountrythatisdifferentfromtheoneinwhichtheyareworkingHomeCountryNationals:Expatriateemployeeswhocomefromtheparentfirm’shomecountryThirdCountryNationals:Expatriateworkerswhocomefromneitherthehostnorthehomecountry.HostCountryNationals:LocalworkerswhocomefromthehostcountrywheretheMNCunitislocated.TypesofEmployeesinMultinationalOrganizations(2of2)Inpatriate:Employeesfromforeigncountrieswhoworkinthecountrywheretheparentcompanyislocated.Flexpatriates:Employeeswhoaresentonfrequentbutshort-terminternationalassignments.InternationalCadre(Globals):Managerswhospecializeininternationalassignments.CommuterAssignmentsEmployees:Employeeswholiveinonecountry,butspendpartoftheworkweekinanothercountry.MultinationalManagers:
ExpatriateorHostCountry(1of2)Decidingwhethertouseexpatriateorlocalmangersdependsmostlyonafirm’smultinationalstrategy.Transnationalstrategistsseetheirmanagerialrecruitsasemployableanywhereintheworld.Multidomesticstrategiststendtofavorlocalmanagers.Foraparticularposition,thefirmshouldask:Givenourstrategy,whatisourpreferenceforthisposition(host,home,orthirdcountrynational)?MultinationalManagers:
ExpatriateorHostCountry(2of2)Forexpatriatemanagers(parentorthirdcountry):Isthereanavailablepoolofmanagerswithappropriateskillsfortheposition?Aretheywillingtotakeexpatriateassignments?Doanylawsaffecttheassignmentofexpatriatemanagers?Forhostcountrymanagers:Dotheyhavetheexpertisefortheposition?Canwerecruitthemfromoutsideourfirm?IstheExpatriateWorthIt?IHRMdecisionsregardinguseofexpatriatemanagersmusttakeintoaccountthecostsofsuchassignments.Thetotalcompensationofexpatriatemanagersisoften3-4timeshigherthanhome-basedsalaries.Inadditiontohighcostsofrelocatingexpatriates,moremultinationalsarenowconcernedwithexpatriatesafetyworldwide.Also,thefailurerateofU.S.expatriatesishigherthanthosefromEuropeandJapan.Exhibit11.1:
PercentofMillenialsWhoWanttoWorkOutsideoftheirHomeCountryExhibit11.2:
TheTenMostExpensive
andLeastExpensiveCitiesReasonsfor
U.S.ExpatriateFailure(1of3)Individual:PersonalityofthemanagerLackoftechnicalproficiencyNomotivationforinternationalassignmentFamily:Spouseorfamilymembersfailtoadapttolocalculture.Spouseorfamilymembersdonotwanttobethere.Reasonsfor
U.S.ExpatriateFailure(2of3)Cultural:TheManagerfailstoadapttolocalcultureorenvironment.TheManagerfailstodeveloprelationshipswithkeypeopleinthenewcountrybecauseofthecomplexityofcultivatingnetworkswithdiversepeople.Reasonsfor
U.S.ExpatriateFailure(3of3)Organizational:ExcessofdifficultresponsibilitiesintheassignmentFailuretoprovideculturalandotherimportantpre-assignmenttraining,likelanguageandcultureFailureofcompanytopicktherightpersonCompany’sfailuretoprovidetheleveloftechnicalsupportthatdomesticmanagersareusedtoFailureofthecompanytoconsidergenderequityTheStrategicRoleof
ExpatriateAssignmentsHelpmanagersacquireskillsnecessarytodevelopsuccessfulstrategiesinaglobalcontextHelpthecompanycoordinateandcontroloperationsthataredispersedgeographicallyandculturallyProvideimportantstrategicinformation.ProvidecrucialinformationaboutlocalmarketsProvideopportunitiesformanagementdevelopmentProvideimportantnetworkknowledgeSelectingExpatriateManagersSelectingthewrongpersonforthejobleadstofailure.Selectingthewrongpersoncanbeamajorexpense,costingmorethan$1millionperexpatriatefailure.Improperlyselectedemployeeswhocannotperformbutwhoremainonassignmentcanbemoredamagingtothefirmthanthosewholeaveprematurely.Domesticperformancedoesnotpredictexpatriateperformance.Selectioncriteriamaydiffer.KeySuccessFactorsforExpatriateAssignmentsTechnicalandmanagerialskillsPersonalitytraits(flexible,willingtolearn)Relationalabilities(abilitytoadapttoothercultures)Familysituation(spouse&familywillingnesstogo)Stresstolerance(abilitytomaintaincomposure)Languageability(speak,read&writethelanguage)Emotionalintelligence(empathize,relatetoothers)Exhibit11.3:
ExpatriateSuccessFactors
andSelectionMethodsThePriorityofSuccessFactorsforExpatriateAssignmentsTheimportanceofsuccessfactorsforaparticularassignmentdependsonfourassignmentconditions:AssignmentlengthShortassignmentsfocusontechnicalandprofessionalsskillsCulturalsimilarityRequiredinteractionandcommunicationwithlocalsJobcomplexityandresponsibilityExhibit11.4:
WhatPercentageofCompaniesareUsingMoreShortTermAssignments?Exhibit11.5:
SelectingExpatriates:PrioritiesforSuccessFactorsbyAssignmentTrainingandDevelopment(1of2)Predeparturecross-culturaltrainingreducesexpatriatefailureratesandincreasesjobperformance.ThemainobjectiveofCross-CulturalTrainingistoincreasetherelationalabilitiesofthefutureexpatriateandthespouseandfamily.Thetrainingrigordependsontheassignment.TrainingRigor:TheextentofeffortbybothtraineesandtrainerstopreparetheexpatriateforworkabroadTrainingandDevelopment(2of2)LowrigortrainingShorttimeperiodConsistsoflecturesandvideosonlocalculturesBriefingsoncompanyoperationsHighrigortrainingLastsoveramonthMoreexperientiallearningExtensivelanguagetrainingIncludesinteractionswithhostcountrynationalsExhibit11.6:
BuildingCross-CulturalTrainingRigor:TechniquesandObjectivesExhibit11.7:
TrainingNeedsand
ExpatriateAssignmentCharacteristics
PerformanceAppraisal
fortheExpatriate
Conductingreliableperformanceappraisalfortheexpatriateisverychallenging.Seldomcanthefirmusesameperformancecriteria.Challenges:FitofinternationaloperationinmultinationalstrategyUnreliabledataComplexandvolatileenvironmentsTimedifferencesanddistanceseparation
StepstoImprovetheExpatriatePerformanceAppraisal
Withoutintensiveanddirectcontact,performanceappraisalscanfailtodemonstrateacomprehensiveunderstandingoftheexpatriatemanager’ssituation.Toovercomethesedifficulties:Fittheevaluationcriteriatothestrategy.Fine-tunetheevaluationcriteria.Usemultiplesourcesofevaluationwithvaryingperiodsofevaluation.Exhibit11.8:
EvaluationSources,Criteria,andTimePeriodsforExpatriateEvaluationExpatriateCompensationCompensationpackagesmustbeattractivetoskilledmanagers,butalsoconsidertheincreasingcosts.Compensationpackageshavemanycommonfactors:LocalmarketcostoflivingHousingTaxesBenefitsTheBalance-SheetApproach
(1of2)Providesacompensationpackagethatattemptstobalancepurchasingpowerinthehostcountrywiththatinthehomecountry.Theexpatriateshouldnotbeinabetterorworsepositionfinanciallybecauseoftheassignment.Thefirmprovidesallowancesforadjustmentsfordifferencesintaxes,costofliving,housing,food,recreation,personalcare,clothing,education,homefurnishing,transportation,andmedicalcare.TheBalance-SheetApproach
(2of2)Inadditiontomatchingpurchasingpower,firmsmayprovideadditionalallowances:Foreignservicepremiums(often10-20%ofbasepay)Hardshipallowance(extramoneyfordifficultpostings)Relocationallowances(miscellaneouscostsofmove)Home-leaveallowances(transportationcoststoreturnhomeonceortwiceperyear)Exhibit11.9:
TheBalanceSheetApproach
ToExpatriateCompensationOtherApproaches
toExpatriateCompensationThehighcostofexpatriatecompensationandthetrendtowardworldwideworkershasresultedinmodificationsofthebalancesheetapproach.Somevariations:Headquarters-basedCompensation:payinghomecountrywagesregardlessoflocationHost-basedCompensation:adjustingwagestolocallifestylesandcostsoflivingGlobalpaysystems:worldwidejobevaluations,performanceappraisalmethods,andsalaryscalesTheRepatriationProblemRepatriationProblem:thedifficultiesthatmangersfacecomingbacktotheirhomecountriesandreconnectingwiththeiroldjobs.Threebasicculturalproblems“reversecultureshocks:”AdaptingtonewworkenvironmentandcultureofhomeofficeRelearningtocommunicatewithothersinhomeandorganizationalculturesAdaptingtotheirbasiclivingenvironmentStrategiesfor
SuccessfulRepatriationThesestrategiesmayhelpfirmstosuccessfullyrepatriatetheirmanagers:Provideastrategicpurposefortherepatriation.Establishateamtoaidtheexpatriate.Provideparentcountryinformationsources.Providetrainingandpreparationforthereturn.InternationalAssignments
forWomen(1of2)Womenininternationalassignmentsarestrikinglyrare.Estimatesarethatwomenrepresentonly12%ofexpatriatemanagers,but45%ofmanagement.Womenfaceaglassceilingathome,andanexpatriateglassceilingworldwide,becauseof2myths:Myth1:Womendonotwishtotakeinternationalassignments.Myth2:Womenwillfailbecauseoftheforeignculture’sprejudicesagainstlocalwomen.InternationalAssignments
forWomen(2of2)Don’tassumethatpeoplefromforeignculturesapplythesamegenderroleexpectationstoforeignworkersthattheydotolocalwomen.Successfulwomenexpatriatesemphasizenationality,notgender.Theissuesthatariseincross-culturalinteractionsdependmoreonhowforeignersreacttothoseofadifferentnationality.InternationalAssignments
forWomen:AdvantagesWomenmayhaveadvantagesinexpatriatepositions:Beinguniquemeansshebecomesmorevisible.Localbusinesspeoplefromtraditionalculturesassumethatsheisthebestpersonforthejob.Womenaremorelikelytoexcelinrelationalskills,amajorfactorinexpatriatesuccess.Localmenspeakateasewithawomanaboutmoretopicsthanmen,leadingtomoreinteraction.InternationalAssignments
forWomen:DisadvantagesWomenalsosufferdisadvantagesworsethanmales:Facetheglassceiling,isolationandloneliness;needtoworkhardertoprovethemselves.Seldomgivenaninternationalassignmentuntillaterintheircareers.NeedtobalanceworkandfamilyresponsibilitiesNeedtoworryaboutaccompanyingspouseWhatCanCompaniesDo
toEnsure
FemaleExpatriateSuccess?Despitethedisadvantagestheyface,opportunitiesforwomenasexpatriatemanagersareexpectedtogrow:Shortageofhigh-qualitymultinationalmanagers.Fewermenarewillingtotaketheassignments.Whatfirmscandotoensurethesuccessofwomen:Providementors,networkingwithotherwomenIdentifyandremovesourcesofbarrierstointernationalassignment.MultinationalStrategy
andIHRM(1of2)MultinationalcompanieshaveseveraloptionsfordevelopingtheappropriateIHRMpoliciesfortheimplementationoftheirmultinationalstrategies.OnewayistoexamineitsIHRMorientation,orphilosophy.IHRMOrientation:Acompany’sbasictacticsandphilosophyforcoordinatingIHRMactivitiesformanagerialandtechnicalworkers.MultinationalStrategy
andIHRM(2of2)TherearefourbasicIHRMorientations:Ethnocentric:AllaspectsofHRMtendtofollowtheparentorganization’shomecountryHRMpractices.Regiocentric&Polycentric:HRMismoreresponsivetothehostcountrydifferencesinHRMpractices.Global:Thefirmassignsitsbestmanagerstointernationalassignments,recruitingworldwide.Exhibit11.10:
IHRMOrientationandPracticesforManagers
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