International Human Resource Management

1. Foundations Selecting & Training Staff Maximizing Human Resources Retention International Human Resource Management Memory Reed Harris County High School July 2008

2. International HR Management Is Different • Different mix of workers • Labor costs vary • Worker mobility can be challenging • Obstacles to movement include: • Physical • Economic • Legal • Cultural • Managerial practices vary Memory Reed Harris County High School July 2008

3. Who Is the Labor Market? • Host-country nationals – (locals)- used for unskilled & semiskilled labor usually • Expatriates – (people living & working outside their native country) – usually used for skilled, technical & managerial workers • Parent-company nationals (home-country nationals) • Third-country nationals Memory Reed Harris County High School July 2008

4. HR Management Approaches • Ethnocentric • Polycentric • Regiocentric • Geocentric Memory Reed Harris County High School July 2008

5. Ethnocentric Human Resource Management Natives of the parent country of a business fill key positions at home and internationally. Advantages Disadvantages • Good to introduce new technology • Good when prior experience is needed • Transfers expertise & technology to less developed countries through training • Deprives local workers of the opportunity to fill key management positions • Can lower morale and productivity of local workers • Parent country might not be culturally sensitive enough to manage local workers well Memory Reed Harris County High School July 2008

6. Memory Reed Harris County High School July 2008 Ethnocentric Approach Illustrated American workers are managers both in the US and also in European operations.

7. POLYCENTRIC HR MANAGEMENT Host country natives manage in their country and parent-country native manage at headquarters. Advantages Disadvantages • Locals manage in the countries for which they are best prepared. • Cheaper since locals require few, if any, incentives, and are readily available and usually less expensive to hire • Helpful in politically sensitive situations • Allows for continuity of management • Cultural gap between subsidiary managers & headquarters managers • Sometimes subsidiaries function too independently • Limited opportunities of advancement • Company decision-makers at headquarters often have little or no international experience, but make decisions that have major effects on the subsidiaries Memory Reed Harris County High School July 2008

8. Memory Reed Harris County High School July 2008 POLYCENTRIC APPROACH ILLUSTRATED American managers manage at headquarters and Japanese managers manage in Japan.

9. REGIOCENTRIC HR MANAGEMENT Managers from various countries within the geographic regions of the business are used. Advantages Disadvantages • Adaptable to fit the company and product strategies. • When regional expertise is needed, natives of the region are hired. • If product knowledge is needed, parent-company nationals are brought in. • Managers from the region may not understand the view of the managers at headquarters. • Corporate headquarters may not employ enough managers with international expertise. • Could result in poor decisions. Memory Reed Harris County High School July 2008

10. Memory Reed Harris County High School July 2008 REGIOCENTRIC APPROACH ILLUSTRATED American managers are at headquarters in the U.S., but managers from various countries are placed within geographic regions of the business, such as several different nationalities in Britain.

11. GEOGENTRIC HR MANAGEMENT Geocentric approach uses the best available managers without regard for their countries of origin. Advantages Disadvantages • Worldwide strategy of business integration. • Development of international managers • Reduction of national biases • Most governments want businesses to hire employees from host countries. • It is difficult and sometimes impossible to get permission for non-natives to work in some countries. • Geocentric approach is expensive • Requires substantial training and employee development • Increased relocation expenses • More centralization of HR management Memory Reed Harris County High School July 2008

12. Memory Reed Harris County High School July 2008 GEOCENTRIC APPROACH ILLUSTRATED Managers are used based on their abilities, no matter what their country of origin.

13. Selecting & Training Staff • Employment forecasting – estimating in advance the types and numbers of employees needed. • Supply analysis – determining if there are sufficient types and numbers of employees available. • Job description – a document that includes the job identification, job statement, job duties and responsibilities, and job specifications and requirements. Memory Reed Harris County High School July 2008

14. How to Find Potential Employees • Job announcement • Internal announcement first • External announcement (advertising, etc.) • Type of employee determines way to find employees • Unskilled or semiskilled • Labor department or overseas equivalent could be used • Skilled, technical or managerial worker • Public or private employment companies may be used • High –ranking management • Head-hunters – specialized recruitment firms (expensive) Memory Reed Harris County High School July 2008

15. Selecting the Right Employees • The best applicant – the person with the highest potential of meeting the job expectations • Résumé's, interviews, tests • Competence – ability to perform job • Adaptability – ability to adjust to different conditions • Personal Characteristics – maturity, education, gender, social acceptability, diplomacy, health, stability of relationships Memory Reed Harris County High School July 2008

16. Training & Development of HR • Critical in International Business • U.S. businesses haven’t done this as well • This has made U.S. workers less competitive Memory Reed Harris County High School July 2008

17. Types of Training • Economic, legal & political issues • Governmental policies & regulations • Cultural differences • Managerial practices in culture • Language • Spousal & family training Memory Reed Harris County High School July 2008

18. Training & Development Prevents Failure • What causes employees stationed overseas to fail? • Unable to adjust to different culture • Spouse or family unable to adjust • Emotional immaturity • New responsibilities are overwhelming • Can’t cope with challenges of working internationally • Not technically competent enough to handle working overseas Memory Reed Harris County High School July 2008

19. How to Reduce Failure • Only choose successful & satisfied workers to work overseas • Provide extensive training before, during and after assignment • Make the international assignment part of a long-term development process • Have open communication between company & employee • Use employee’s experience in assignment when returning • Value international experience Memory Reed Harris County High School July 2008

20. Retention • Motivation • Varies by culture • U.S. – money, praise & status motivates • Other countries have other motivations – managers have to determine what motivates people in that culture as well as each employee individually Memory Reed Harris County High School July 2008

21. Retention Continued • Compensation • Cultural Sensitivity • Cash & noncash benefit packages depending on the customs of the country • Base Salary • Parent-country national needs to maintain customary standard of living • Expatriate Bonus – to persuade to work overseas • Cost-of-living Adjustments – more expensive in many places • Employee Benefits – Extra expenses that wouldn’t be incurred in U.S. Memory Reed Harris County High School July 2008

22. Evaluating Performance • Environment • Task • Personality Memory Reed Harris County High School July 2008

23. Overseas Evaluation Is Difficult • What works in the U.S. probably won’t work overseas • Different cultures view employee performance in different ways (i.e.: punctuality, independence) • In some cultures evaluations are looked at as threatening, insulting, or showing lack of trust. Memory Reed Harris County High School July 2008

24. Repatriation • Repatriation - When an employee returns home and resettles after working overseas • Reverse culture shock – difficulty becoming reacquainted with their native culture • Isolation – grown apart from family & friends • Prevent by keeping in touch while overseas and preparing up to a year in advance for repatriation Memory Reed Harris County High School July 2008

25. International Human Resource Management THE END! Memory Reed Harris County High School July 2008

26. Works Cited • Dlabay, Les, and James Calvert Scott. International Business 3E. Mason, Ohio: Thomson-Southwestern, 2006. Memory Reed Harris County High School July 2008