International Human Resource Management

1. 10 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 • 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 • 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

11. Key Questions Regarding Local Employees • 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?

12. Key Questions Regarding Local Employees (cont.) • 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, compensation, and training decisions?

13. 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?

14. 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?

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

16. Exhibit 10.1: Paying for the Expatriate Manager: Indices of Cost of Living Abroad

17. 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

18. Reasons for U.S. Expatriate Failure (cont.) • Cultural • Manager fails to adapt • Manager fails to develop relationship with key people • Organizational • Excessively difficult responsibilities • Company fails to pick the right person • Company fails to provide the technical support

19. 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

20. International Cadre: Another Choice • 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

21. Key Success Factors for Expatriate Assignments • Technical and managerial skills • Personality traits • Relational abilities • Family situation • International motivation • Language ability

22. Exhibit 10.2: Expatriate Success Factors and Selection Methods

23. 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

24. Exhibit 10.3: Selecting Expatriates: Priorities for Success Factors by Assignment Characteristics

25. 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

26. 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

27. Exhibit 10.4: Training Rigor: Techniques and Objectives

28. Expatriate Performance Appraisal: Challenges • Fit of international operation in multinational strategy • Unreliable date • Complex and volatile environments • Time difference and distance separation • Local cultural situation

29. 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

30. Exhibit 10.6: Evaluation Sources, Criteria, and Time Periods for Expatriate Performance Appraisals

31. The Expatriate Manager: Compensation • 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

32. Exhibit 10.7: Balance Sheet Approach To Expatriate Compensation

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

34. 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

35. 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

36. 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

37. 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

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

39. 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

40. 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

41. 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

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

43. Strategic Benefits of e.HR Systems • Reduce HR and administrative system cost • Boosts productivity • 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 • Repository of information for outside stakeholders

44. 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

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

46. Exhibit 10.8: IHRM Orientation and IHRM Practices for Managers and Technical Workers

47. Exhibit 10.8: IHRM Orientation and IHRM Practices for Managers and Technical Workers

48. Exhibit 10.8: IHRM Orientation and IHRM Practices for Managers and Technical Workers

49. Multinational Strategy and IHRM • Ethnocentric IHRM: all aspects of HRM for managers and technical workers tend to follow the parent organization’s home-country HRM practices

50. Benefits of Ethnocentric IHRM • Little need to recruit qualified host country nationals for higher management • Greater control and loyalty of home country nationals • Key decisions centralized