International Human Resources Management

International HumanResources Management Chapter 10, Part 1

Chapter Outline • International human resources management (IHRM) • Human resources management (HRM) • Adapting HRM practices to global business • Types of employees in global organizations • Home-country nationals • Host-country nationals • Third-country nationals • Inpatriates • Legal documents: passports and visas

Chapter Outline (2) • Expatriate vs. home country managers • Criteria for making this decision • Is the expatriate worth it? • Financial costs of expatriates • Risk of expatriate failure • Benefits of having managers with international experience • International cadre: another choice

Chapter Outline (3) • Choosing the right expatriate for the job • Key success factors • Matching the candidate and the job

Human Resources Management (HRM) and HRM Functions • 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

HRM Functions (2) • Training and development: giving employees the knowledge, skills, and abilities to perform successfully • Performance appraisal: system to measure and assess employees’ work performance

HRM Functions (3) • Compensation (pay and benefits): 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

International Human Resource Management • 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

Key Questions aboutAdapting HRM Practices • How can we identify talented local employees? • How can we attract these employees to apply for jobs? • Can we use our home country’s training methods with local employees? • What types of appraisal methods are customary and legal?

Key Questions aboutAdapting HRM Practices (2) • What types of rewards do local people value? • How can we retain and develop employees with a high potential as future managers? • Do any local laws affect staffing, pay, benefits, and training decisions?

Types of Employees inMultinational Companies • Home country nationals • Host country nationals • Third-country nationals • Inpatriates

Home-country Nationals • Are citizens of the country where the company is headquartered but live and work elsewhere • Often used • To start up operations (most common reason) • To provide technical or managerial expertise • To help the company maintain financial control • In top management positions • Companies sometimes start with home-country nationals and switch to host-country nationals as qualified people become available.

Host-country Nationals • Citizens of the country where they live and work • They are familiar with the culture and know the language • They are less expensive than home-country personnel • Host-country governments often prefer use of host-country nationals and some require it • Hiring them is good public relations • U. S. companies tend to rely heavily on host-country nationals

Third-country Nationals • People who are citizens of neither the home country or the host country • Example: A Mexican, employed by an American company, working in Argentina • The employee's native country and the country where he works are often in the same geographic region

Advantages of Third-Country Nationals • They often require less compensation than home-country nationals • They usually have experience with the company. They know the company's culture, values, and policies. • If they are from the same geographic region as the host country and also know the company's culture, they can often achieve objectives better than other types of managers.

Inpatriates • Persons who work in the home country and are citizens of a different country • Advantages of inpatriates • Help to develop global core competencies • Provide diversity and an international perspective in the home office • Improve career opportunities for company managers who are not from the home country – avoids the "glass ceiling"

Passports and Visas • A passport is a document that identifies its owner as the citizen of a particular country. • A visa is a document from a foreign government that allows the visa owner to enter the foreign country for a particular purpose or reason, such as personal travel, work, or study. • Most visas are valid for a specified period of time. Some visas can be renewed. • Many governments have different rules for people from different countries.

Expatriate • Any person who lives and works outside the country of which he or she is a citizen • Includes home-country nationals, third-country nationals, and inpatriates • In most countries, expatriates must have work visas in order to work. • Exception: By 2011, citizens of most EU countries will be able to work in any EU country without a visa.

Expatriate or Host Country Manager? • Using expatriate managers • Do they 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?

Is the Expatriate Worth It? • Consider costs, risks, and benefits • High financial costs • High failure rate of expatriates • Benefits of international experience to the company • Expatriate failure occurs when • An expatriate is recalled to the home country because of poor performance OR • An expatriate comes home early because the manager or family cannot adjust to the foreign country.

Reasons for U.S. Expatriate Failure • Individual • Personality of the manager – poor interpersonal relationships or communication • Lack of technical proficiency • No motivation for assignment • Family • Spouse or family members fail to adapt • Spouse cannot find a job • Family members or spouse do not want to be there

Reasons for U.S. Expatriate Failure (2) • Cultural • Manager fails to adapt • Manager fails to develop relationship with key people (company, customers, suppliers, government). Poor performance may result. • Organizational • Excessively difficult responsibilities • Company fails to pick the right person • Company fails to provide technical support or training

Reasons for Expatriate FailureCross-country Comparison • A study of American, European, and Japanese managers found that: • Expatriate failure is highest among Americans, somewhat lower among Europeans, and lowest among Japanese. • For Americans and Europeans, family issues are the most common cause of expatriate failure. • For Japanese managers, not having the needed job skills is the most common cause of failure

How Companies Benefit fromManagers' International Experience • 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 • These benefits can be strategically important to the company. • Some companies now require international experience for high-level managers.

International Cadre: Another Choice • Separate group of expatriate managers who specialize in a career of international assignments • Have permanent international assignments • Move from one international assignment to another • May be recruited from any country • Sent to worldwide locations to develop cross-cultural skills

Key Success Factors for Expatriate Assignments • Technical and managerial skills to do the job • Personality traits • Ability to relate well to people from different cultures • Family situation • International motivation • Language ability

Matching the Candidateand the Job • Assignment length • For short assignments, technical and professional skills are usually the most important criteria • For longer assignments, other factors are also important • Cultural similarity: it is easier to work in a culture similar to your own.

Matching the Candidateand the Job • Amount of interaction with local people – higher levels of interaction require better skills in developing relationships across cultures. • Job complexity and responsibility – high-level jobs require a higher level of experience. • Cultural acceptance in the host country • Employees and business contacts in Asian countries may feel insulted if they have to deal with older managers in high-level positions

International Human Resources Management