Chapter

2. Chapter 16 International Dimensions of Human Resource Management

3. Understanding the Terms • Global corporation – a corporation 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 • Expatriate – also known as 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

4. Understanding the Terms • Home country – the expatriate’s country of residence • Host country – the country in which the expatriate is working • Third-country national – an expatriate who has transferred to an additional country while working abroad

5. The Framework of Cultural Understanding • Ten broad classifications help managers assess any culture and examine its people systematically • 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

6. The Expatriate: Recruitment Strategies • Recruitment: Three basic models • Ethnocentrism – selection from the national group of the parent company only • Recruitment from within the parent company’s country and the country where the branch is located • Geocentrism – adoption of an international perspective with emphasis on the unrestricted use of all nationalities

7. The Expatriate: Selection Strategies • Selection criteria: Seeing beyond technical qualifications • Personality • Extroversion • Agreeableness • Emotional stability • Skills • Technical • Communication • Home- and host-country languages • Verbal and Nonverbal • Interpersonal relations • Stress management

8. The Expatriate: Selection Strategies • Attitudes • Tolerant attitudes toward people who may differ significantly in race, creed, color, values, personal habits, and customs • Motivation • Eliminate those only looking to get out of their own country for a change of scenery • Behavior • Concern for other members of a group • Tolerance of ambiguity • Respect for people and customs different from one’s own • Nonjudgmental behavior

9. The Expatriate: Orientation Strategies • Three phases to orientation • Initial Orientation • Cultural briefing – traditions, history, government, economy, living conditions, clothing, housing requirements, health requirements, visa applications • Assignment briefing – length of assignment, vacations, salary and allowances, tax consequences, repatriation policy • Relocation requirements – shipping, packing, or storage; home sale or rental; information about housing at the new location

10. The Expatriate: Orientation Strategies • Three phases to orientation (continued) • Predeparture orientation • Introduction to the language • Further reinforcement of important values, especially open-mindedness • En route, emergency, and arrival information • Post-arrival orientation • Orientation toward the environment • Orientation toward the work unit and fellow employees • Orientation to the actual job

11. The Expatriate: Training Strategies • Three areas of training provide skills to survive, cope, and succeed: • Culture • Language • Day-to-day matters • Culture shock – usually occurs 4-6 months after arrival • Symptoms – homesickness, boredom, withdrawal, a need for excessive amounts of sleep, compulsive eating or drinking, irritability, exaggerated cleanliness, marital stress, family tension, conflict (involving children), hostility toward host-country nationals, loss of ability to work effectively, physical ailments of a psychosomatic nature

12. Objectives for an Effective International Compensation Policy • Attract and retain employees who are qualified for overseas service • Facilitate transfers between foreign affiliates and between home-country and foreign locations • Establish and maintain a consistent relationship between the compensation of employees of all affiliates, both at home and abroad • Maintain compensation that is reasonable in relation to the practices of leading competitors

13. Types of Expatriate Compensation Plans • Localization – practice of paying expatriates on the same scale as local nationals; salary and benefits may be supplemented with one-time or temporary transition payments • Works well under specific conditions • When the transferring employee has very limited home-country experience • In the case of permanent, indefinite, or extremely long (e.g., 10-year) transfers

14. Types of Expatriate Compensation Plans • “Higher-of-home-or-host” – 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 • Works well under specific conditions • Transfers within regions – notably in Latin America and in the European Union • Assignments of unlimited duration

15. Types of Expatriate Compensation Plans • Balance-sheet approach – the most common method used in North American, European, and, increasingly, Japanese global organizations; its primary objective is to ensure that expatriates neither gain nor lose financially compared with their home-country peers • Advantages • Preserves the purchasing power of expatriates in a cost-effective manner • Facilitates mobility among expatriates

16. Components of International Compensation Packages • Benefits • Best-of-both-worlds benefits – the expatriate is given home-country benefits coverage, for example pensions and medical coverage, and, where there may be no home-country plan, in areas such as disability insurance, the employee may join the host-country plan • Premiums • Housing allowance • Education allowance • Income tax equalization allowance • Hardship pay for living in areas with climactic extremes, political instability, or poor living conditions • Home leave • School allowance

17. Components of International Compensation Packages • Pay Adjustments and Incentives • Incentives that work in the home country may be impractical and detrimental in the host country • Equity norm – the most universal reward allocation practice; rewards are distributed to group members based on their contributions

18. Special Issues in the Repatriation of Overseas Employees • Three elements contribute to repatriation anxiety – personal finances, reacclimation to the U.S. lifestyle, readjustment to the corporate structure • Possible solutions • Planning • Prior to the assignment, the firm should define one or more of the three primary purposes for sending a particular expatriate abroad: • executive development • coordination and control between headquarters and foreign operations, and • transfer of information and technology • Careful inclusion of expatriation and repatriation moves in comprehensive planning will help reduce uncertainty and the fear that accompanies it

19. Special Issues in Repatriation of Overseas Employees • Possible solutions (continued) • Career management • Appoint a “Career Sponsor” • Looks out for the expatriate’s career interests while she or he is abroad and keeps the expatriate abreast of company developments • Is sensitive to the “job shock” the expatriate may suffer when she or he returns • Is trained to counsel the returning employee (and her or his family as well) until resettlement is deemed complete • Compensation • Use mobility premiums (e.g., 3 months’ pay) – one-time compensation for each move—overseas, back home, or to another overseas assignment • Low-cost loans and other financial assistance for housing • Financial counseling