Chapter 4

1. 1 (c) 2009 by Nelson Education Limited. Chapter 4

2. 2 (c) 2009 by Nelson Education Limited. Chapter Learning Objectives After reading this chapter, you should be able to: discuss issues relating to the various approaches to staffing foreign operations provide reasons for using international assignments:filling positions, management development and organizational development define the various types of international assignments:short term, extended and longer term, along with non-standard arrangements: commuter, rotator, contractual and virtual

3. 3 (c) 2009 by Nelson Education Limited. Chapter Learning Objectives describe the role of expatriates and non-expatriates in supporting international business activities outline the possibilities on a return on investment of international assignments define the role of the corporate HR function

4. 4 (c) 2009 by Nelson Education Limited. Opening Vignette Help! IHRM plays a leading role in the staffing of international operations by supporting and guiding managers involved in assignments in foreign companies.

5. 5 (c) 2009 by Nelson Education Limited. Opening Vignette Discuss some of the areas and aspects that should have been managed by his company’s HRM team. How could the HR function help its Dutch employee?

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7. 7 (c) 2009 by Nelson Education Limited. Approaches to Staffing ethnocentric polycentric geocentric regiocentric

8. 8 (c) 2009 by Nelson Education Limited. Ethnocentric few foreign subsidiaries have any autonomy and strategic decisions are made at headquarters key positions in domestic and foreign operations are held by headquarters’ personnel subsidiaries are managed by staff from the home country (PCNs).

9. 9 (c) 2009 by Nelson Education Limited. Advantages & Disadvantages of Using PCNs (IHRM Notebook 4-1)

10. 10 (c) 2009 by Nelson Education Limited. Cost of Employing Expatriates (IHRM Today 4.3) the costs of sending this manager on a international assignment are nearly a million dollars, compared to the approximately $300,000 it would cost to employ a U.K. – based manager.

11. 11 (c) 2009 by Nelson Education Limited. Advantages & Disadvantages of Using TCNs (IHRM Notebook 4-1) 

12. 12 (c) 2009 by Nelson Education Limited. Polycentrism subsidiary is treated as a distinct national entity with decision-making autonomy subsidiaries are managed by local nationals (HCNs) HCNs are seldom promoted to positions at headquarters PCNs are rarely transferred to foreign subsidiary operations

13. 13 (c) 2009 by Nelson Education Limited. Advantages & Disadvantages of Using HCNs (IHRM Notebook 4-1) 

14. 14 (c) 2009 by Nelson Education Limited. Geocentrism a global approach to its operations, recognizing that each part (subsidiaries and headquarters) makes a unique contribution world wide integrated business; nationality is ignored in favour of ability.

15. 15 (c) 2009 by Nelson Education Limited. Advantages of Geocentrism develops international executive teams and internal pools of labour overcomes federation drawback supports cooperation and resource sharing across units

16. 16 (c) 2009 by Nelson Education Limited. Disadvantages of Geocentrism host governments may utilize immigration controls in order to force HCN employment companies required to provide extensive documentation increased training and relocation costs

17. 17 (c) 2009 by Nelson Education Limited. Disadvantages of Geocentrism compensation structure with standardized international base pay large numbers of PCNs, TCNs, and HCNs need to be sent abroad requires longer lead time and centralized control of the staffing process

18. 18 (c) 2009 by Nelson Education Limited. Regiocentrism reflects the geographic strategy and structure of the MNE it utilizes a wider pool of managers but in a limited way staff may move outside their countries but only within the particular geographic region regional managers may not be promoted to headquarters positions but enjoy a degree of regional autonomy

19. 19 (c) 2009 by Nelson Education Limited. Advantages of Regiocentrism interaction between executives sensitivity to local conditions (staffed by HCNs) way to gradually move from a purely ethnocentric or polycentric approach to a geocentric approach

20. 20 (c) 2009 by Nelson Education Limited. Disadvantages of Regiocentrism can produce federalism at a regional rather than a country basis improves career prospects at the national levels

21. 21 (c) 2009 by Nelson Education Limited. A Philosophy Towards Staffing The internal and external contingencies facing an internationalizing MNE influence its staffing practices managerial attitude degree of culture differences local government requirements foreign market maturity of operation organizational needs

22. 22 (c) 2009 by Nelson Education Limited. Determinants of Staffing Choices (Figure 4.1)

23. 23 (c) 2009 by Nelson Education Limited. Transferring Staff for International Business Activities HRM implications reasons for using international assignments types of international assignments role of expatriates and non-expatriates role of inpatriates

24. 24 (c) 2009 by Nelson Education Limited. Reasons for International Assignments position filling management development organization development

25. 25 (c) 2009 by Nelson Education Limited. Types of International Assignments Short term up to 3months Extended up to 1year Long term (traditional expatriate assignment) 1 to 5 years

26. 26 (c) 2009 by Nelson Education Limited. Short-term Assignments take up to three months usually for troubleshooting, project supervision, or a stopgap measure

27. 27 (c) 2009 by Nelson Education Limited. Extended Assignments up to one year may involve similar activities as that for short term assignments

28. 28 (c) 2009 by Nelson Education Limited. Long-term Assignments traditional expatriate assignment varying from one to five years involving a clearly defined role in the receiving operation

29. 29 (c) 2009 by Nelson Education Limited. Differences Between Traditional & Short-term Assignments(IHRM Notebook 4-2)

30. 30 (c) 2009 by Nelson Education Limited. Non-standard International Assignments Commuter go home every one to two weeks Rotational commute for set period followed by in home country Contractual specific skills employees hired for 6 to 12 months on specific projects

31. 31 (c) 2009 by Nelson Education Limited. Non-standard International Assignments Virtual employee manages international responsibilities from home country base relies on communications technologies such as telephone, email or video conferences frequent visits to the host country

32. 32 (c) 2009 by Nelson Education Limited.  Virtual Assignments  Advantages overcoming high costs of international assignments fills shortage of mobile staff prepared to accept longer term postings Disadvantages stress resulting from intensive travel commitments role conflict, dual allegiance, and identification issues interpersonal and work relationships

33. 33 (c) 2009 by Nelson Education Limited. The Roles of an Expatriate (Figure 4.2) 

34. 34 (c) 2009 by Nelson Education Limited. Agent of Direct Control subsidiary compliance through direct supervision enables strategic objectives for local operations to be achieved

35. 35 (c) 2009 by Nelson Education Limited. Agent of Socialization the transfer of shared values and beliefs; related to the use of corporate culture as an informal control mechanism assist in knowledge sharing and competence transfer, and adoption of common work practices

36. 36 (c) 2009 by Nelson Education Limited. Network Builders  develop social capital: fostering interpersonal linkages that can be used for informal control and communication purposes

37. 37 (c) 2009 by Nelson Education Limited. Boundary Spanners collect host country information and act as representatives of their firms in the host country can influence agents bridge internal and external organizational contexts

38. 38 (c) 2009 by Nelson Education Limited. Language Nodes many MNEs operate through language standardization – or corporate language, usually English. employees competent in other languages may be the person in which other country representatives preferred to conduct queries from the MNE.

39. 39 (c) 2009 by Nelson Education Limited. Transfer of Competence and Knowledge elements from all roles

40. 40 (c) 2009 by Nelson Education Limited. The Role of Non-Expatriates travel internationally yet do not relocate to another country a large proportion of their role involves constant international visits to foreign markets, subsidiary units, international projects

41. 41 (c) 2009 by Nelson Education Limited. Stress Factors the international component of their work is performed within the context of their ‘normal’ duties a high level of stress involved for those whose job responsibilities contain a large proportion of international business travel

42. 42 (c) 2009 by Nelson Education Limited. Stress Factors home and family work arrangements travel logistics health concerns host culture issues 

43. 43 (c) 2009 by Nelson Education Limited. The Role of Inpatriates international assignments of HCNs or TCNs from a foreign location to the MNE headquarters “linking pins” between the different organizational units

44. 44 (c) 2009 by Nelson Education Limited. Expatriate ROI a calculation in which the financial and non-financial benefits to the MNC are compared to the financial and non-financial costs of the international assignment

45. 45 (c) 2009 by Nelson Education Limited. ROI Indicators for Calculating International Assignment (Figure 4-3)

46. 46 (c) 2009 by Nelson Education Limited. 4-Steps to Calculate Expatriate ROI identify financial and non-financial costs and benefits. link the costs and benefits to the purpose of the long-term assignment. identify the appropriate antecedents from a system’s perspective. conduct the calculation at an appropriate time within the context of the assignment’s purpose.

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51. 51 (c) 2009 by Nelson Education Limited. Case: RBC Dexia Investor Services Questions PART A 1. When two international companies like RBC and Dexia partner up in a joint venture many positions are double occupied. From a HR perspective how would you approach this problem? What are your options to solve this problem? 2. What are some of the other key HR challenges in an international partnership such as Canada’s RBC and Belgium/Luxembourg Dexia?

52. 52 (c) 2009 by Nelson Education Limited. Case: RBC Dexia Investor Services Questions PART A What are your options to fill the 300 additionally required jobs in Luxembourg? 4. What kind of impression could the sudden and justification lacking announcement of changes at the top management level have on employees? 

53. 53 (c) 2009 by Nelson Education Limited. Case: RBC Dexia Investor Services Questions PART B Based on the message from this note what are the consequences for employees wanting to move between RBC to RBC Dexia? 2. With regard to service history, pensions and benefits, what are the options for HRM to help employees wanting to move from RBC to RBC Dexia?