International Human Resource Management

1. 11 International Human Resource Management

2. Learning Objectives • Know the basic functions of human resource management • Define international human resource management • Understand the difference between international and domestic human resource management • Know the types of workers used by multinationals

3. Learning Objectives • Know how and when to use expatriate managers • Know the skills necessary for a successful expatriate assignment • Understand how expatriate managers are compensated and evaluated • Appreciate the issues regarding expatriate assignments of women managers

4. Learning Objectives • Know what to do to make the expatriate assignment easier for their female expatriates • Understand e.HR systems and how they can be useful in IHRM • Understand the relationship between choice of a multinational strategy and international human resource management

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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?

12. 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?

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

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

15. 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

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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

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

24. Exhibit 11.2: Expatriate Success Factors and Selection Methods

25. 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

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

27. 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

28. 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

29. Exhibit 11.4: Training Rigor: Techniques and Objectives

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

31. 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

32. 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

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

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

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

36. 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

37. Exhibit 11.8: Balance Sheet Approach To Expatriate Compensation

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

39. 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

40. 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

41. 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

42. 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

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

44. 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

45. 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

46. 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

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

48. 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

49. 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

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