International Human Resource Management

1. International Human ResourceManagement Chapter 8 IBUS 681, Dr. Yang

2. Learning Objectives • Define international human resource management • Understand how corporate strategy influences IHRM • Explain major IHRM functions • Discuss additional concerns of managing expatriate employees IBUS 681, Dr. Yang

3. Major HRM Functions • Staffing • Recruiting and selection • Training and development • Compensation and benefits • Employee motivation • Performance evaluation • Labor relations IBUS 681, Dr. Yang

4. Major Areas of IHRM • The management of human resources in global corporations • The management of expatriate employees • The comparison of HRM practices in a variety of different countries IBUS 681, Dr. Yang

5. Approaches to Managing and Staffing Subsidiaries • Ethnocentric • Polycentric • Regiocentric • Geocentric What factors would influence your choice? IBUS 681, Dr. Yang

6. Choosing an Approach to IHRM • Political and legal concerns • Level of development in foreign locations • Technology and the nature of the product • Organizational life cycle • Age and history of the subsidiary • Organizational and national cultural differences IBUS 681, Dr. Yang

7. Recruitment and Selection • Employee classification • Parent country national (PCN) • Host country national (HCN) • Third country national (TCN) • Managing and staffing approaches • Selecting the right candidate IBUS 681, Dr. Yang

8. Selecting the Right Candidate • Need a balance between internal corporate consistency and sensitivity to local labor practices • Consider cultural values, e.g., • Achievement-oriented • Ascription-oriented • Must comply with local labor laws, e.g., • EEOA IBUS 681, Dr. Yang

9. Expatriate Selection • Western European and Japanese MNCs emphasize technical competence and ability to acclimate • North American corporations select mainly on technical competence • Behaviors successful at home may not work abroad • Previous experience abroad may or may not predict future success IBUS 681, Dr. Yang

10. Training and Development • Planned individual learning, organization development, and career development • Delivery of programs worldwide • Developing globally minded managers IBUS 681, Dr. Yang

11. Delivery of Programs Worldwide • Centralized approach • Ethnocentric – training originates at headquarters and corporate trainers travel to subsidiaries • Geocentric – training develops through input from both headquarters and subsidiary staff and trainers could be from any location IBUS 681, Dr. Yang

12. Delivery of Programs Worldwide • Decentralized approach • Training on a local or regional basis • Local people develop training materials and techniques for use in their own area • Effective training considers cultural background of trainees • With a centralized approach, trainers need to adapt to local cultures IBUS 681, Dr. Yang

13. Cultural Impacts on Training and Development Practices • Human resource development roles • Analysis and design • Development and delivery • Administration and environment • US and Canada • East Asia • Middle East and North Africa • Latin America IBUS 681, Dr. Yang

14. Cross-Cultural Training Methods Explain the major aspects of the host country culture, including customs, traditions, every day behaviors. Explain the history, geography, economy, politics, and other general information about the host country and region. Portray a real-life situation in business or personal life to illustrate some aspect of living or working in the host culture. • Cultural Briefings • Area Briefings • Cases IBUS 681, Dr. Yang

15. Cross-Cultural Training Methods (cont.) Allows the trainee to act out a situation that he or she might face in living or working in the host country. Provides a written set of situations that the trainee might encounter in living or working in the host country. Trainee selects one from a set of responses to the situation and is given feedback as to whether it is appropriate and why. Provide an opportunity for the trainee to go to the host country or another unfamiliar culture to experience living and working for a short time. • Role Playing • Culture Assimilator • Field Experiences IBUS 681, Dr. Yang

16. How Situational Factors Influence the Selection of a CCT Method High Degree of Culture Novelty Degree of Training Rigor EXPERIENTIAL Simulations Low Field Trips Role Plays Interactive Language Training High Training Methods ANALYTICAL Sensitivity Training Culture Assimilators Case Studies Degree of Job Novelty Classroom Language Training Films FACTUAL Books Lectures Area Briefings Low High Low Degree of Interaction with Host Country Nationals IBUS 681, Dr. Yang

17. Developing Globally Minded Managers • Companies whose CEO's have international assignment experience are better performers • Even stronger if the top management team also has international experience and the company has an extensive global strategy • Companies must identify managers with global potential and provide them various training and development opportunities. IBUS 681, Dr. Yang

18. Performance Evaluation • Systematic appraisal of employees’ performance within the organization • Depends on overall HRM strategy • Should consider cultural influences IBUS 681, Dr. Yang

19. Performance Evaluation • Purpose • Timeframe • Standards • Feedback • Market conditions • Economic factors IBUS 681, Dr. Yang

20. Expatriate Performance • Based on HR administrative reports • Failure as premature return from international assignments IBUS 681, Dr. Yang

21. Expatriates Selection Criteria • Technical competence • Adaptability • Communication skills • Family stability • Gender • Age • Ethnicity IBUS 681, Dr. Yang

22. Compensation and Benefits • Salary-related and non-salary related factors • Organizational philosophy and strategy • Cost to the organization • Employee motivation • Company image IBUS 681, Dr. Yang

23. Typical Expatriate Benefits • Overseas premium • Housing allowances • Cost of living allowances (COLA) • Moving expenses • Tuition assistance for dependent education • Home leave • Tax reimbursement plans IBUS 681, Dr. Yang

24. How HR and IHR differ in compensation? • Company strategy and philosophy • Salary and non-salary related, e.g. • Key elements in compensation package • Home-based, host based or region-based • Performance and motivation • Gender • Nationality IBUS 681, Dr. Yang

25. Employee Compensation Extrinsic Intrinsic Participate in Financial Non-Financial decision making Greater job Implied Membership-based Performance-based Explicit Membership-based freedom and Preferred office discretion furnishings More Protection Cost - of - living Preferred responsibility Piecework programs increases lunch hours Commission Labor Assigned Pay for time More interesting work parking spaces market not worked Incentive adjustment plans Preferred Opportunities Time-in-rank Services and for personal work Performance assignments increase perquisites growth bonuses Business Cards Profit sharing Diversity of Merit pay activities Own secretary plans Impressive titles IBUS 681, Dr. Yang

26. Per Capita Incomes by Metropolitan Area (U.S. Average: $29,469) Source: U.S. Department of Commerce Bureau of Economic Analysis, The Mercury News, August 4, 2002 IBUS 681, Dr. Yang

27. Per Capita Incomes by Metropolitan Area (U.S. Average: $29,469) Source: U.S. Department of Commerce Bureau of Economic Analysis, The Mercury News, August 4, 2002 IBUS 681, Dr. Yang

28. Typical U.S. Expatriate Remuneration Package Based on a 3-year term with an annual base pay of $100,000 IBUS 681, Dr. Yang

29. Gender Pay Gap Differentials in EU and the US Source: Adapted from National data - EIRO; Eurostat data, May 2001, Theme 3; US DOL Bureau of Labor Statistics, August 2001 IBUS 681, Dr. Yang

30. Women’s Average Earnings as Percentage of Men’s IBUS 681, Dr. Yang

31. Gender-based Occupation Source: USDOL BLS, 2005 IBUS 681, Dr. Yang

32. Wal-Mart’s Gender-based Pay Differentials Based on Business Week March 3, 2003 IBUS 681, Dr. Yang

33. Family Impact on Gender-based Pay Ratios (Corrected for Hours) Source: Adapted from The gender earning gaps: Learning from international comparisons, Blau and Kahn, American Economic Review, (82) 2, 1992 IBUS 681, Dr. Yang

34. The Dual-career Penalty Source: Effects of alternative family structures on managerial career paths, Schneer, and Reitman, Academy of Management Journal 30 (4), 1993 IBUS 681, Dr. Yang

35. Why both are working? Percentage change 1975-95 Income vs. Costs Source: Is your family wrecking your career, Fortune, March 17, 1997: 71 IBUS 681, Dr. Yang

36. Labor Relations • Labor relations function • Identify and define roles of management and workers in the workplace • Collective bargaining • Union organizations • Union membership • Labor law IBUS 681, Dr. Yang

37. Union Density Figures for Selected Countries Source: U.S. Department of Labor, Bureau of International Labor Affairs, Foreign Labor Trends and Bureau of Labor Statistics, IBUS 681, Dr. Yang

38. Trade Unions in Industrial Countries IBUS 681, Dr. Yang

39. Managing Expatriates • Training and development • Cross-cultural adjustment • Expatriate evaluation • Expatriate compensation • Expatriate reentry assistance • Minimize “reverse culture shock” • Integrate the manager back into the home office • Adjustments to a new or lower standard of living • Allow for reentry time IBUS 681, Dr. Yang

40. Culture Shock Cycle High Mood Low 1 2 3 4 5 6 Length in a New Culture IBUS 681, Dr. Yang

41. Retaining the Expatriates • 80% believe they would be promoted • About 23% get the promotion • 20% want to leave the company upon return • Averaged 44% turnover – 25% leave within one year after repatriation, 55% after three years • Average turnover cost is $250,000 IBUS 681, Dr. Yang

42. Large corporations’ preference for consistent worldwide systems Smaller companies’ desire for more professional systems Need to follow local HRM laws and social norms Development of unique techniques and practices to suit local cultural and legal requirements Convergence or Divergence? IBUS 681, Dr. Yang

43. Implications for Managers • Every international manager has responsibility for effectively managing human resources, and therefore, must understand IHRM functions. • It is helpful to understand IHRM because of potential impacts on one’s career. IBUS 681, Dr. Yang