Global Human Resource Management

1. Global Human Resource Management MIM 564 Spring, 2010 Sully Taylor and Berrin Erdogan

2. Week 2, Global Human Resource Management • The Global Labor Pool: Coloplast and the expansion into Hungary and China • The potential and problems of offshoring • The Quest for Global Talent: Peter Hanson and offshoring to China • Career Management and the Role of Effective Expatriation: Celtic Tiger

3. The Human Side of Globalizing a Company • The Global Work Force and Offshoring • Adapting the organization to globalization

4. The Global Labor Pool • What does a company need to consider when thinking about offshoring or outsourcing employment (or any corporate value chain activity)? • How do you determine the suitability of a labor pool in another country?

5. An application…. • Coloplast A/S

6. Outsourcing….is part of analyzing a business process to identify those activities that can be done external to the firm. A source can be either domestic or international. • Offshoring….is placing a part of a business activity in a foreign location. If kept within the firm, it can be called international in-house (out)sourcing. • Offshore outsourcing is using a supplier based in a foreign country on a recurrent basis.

7. Offshoring (in-house production) • Full control over quality of products • Leveraging of best practices across subsidiaries. • High short-term flexibility, allows adjustments to changing market (e.g., changes in import tax) • Know-how protection (IP) • Stable pricing and lower supply risk

8. Outsourcing to a Third Party • Lower lead time due to use of existing infrastructure • Specialized outsourcing companies • Exploit the advantages of using a subcontractor more focused on a particular task • High long-term flexibility because fewer asset-specific investments have been made • Lower investment costs – tend to be variable costs • Often cheaper production • Integrating binds (human and capital) resources and distracts managerial focus from other activities (such as marketing and branding)

9. The outsourcing decision Decision depends on vulnerability & costs of outsourcing. • Four factors that make an activity a target for outsourcing (vulnerability): a. Fungibility b. Is not tacitly specialized c. Is measurable d. Is stand-alone activity • Also must consider outsourcing costs (high/low) around: • Product/service delivery • Coordination • Control • Enforcement • Adapted from Ungson & Wong, 2008; Weidenbaum, 2005.

10. Peter Hanson case…. • Offshoring to increase the talent pool

11. Peter Hanson case presents us with several questions: • What is the goal of the PDC, and what will it take to make it successful? What strategic imperatives does it have to contend with? • What are the cultural and institutional forces it must take into account? • How can it reconcile (bridge) the conflicting cultural and institutional forces?

12. How can the differences be bridged?

13. Once you know whether you are going to look locally or globally, internally or externally for the people you need, then what? Recruitment…. Methods….

14. Talent Management and Global Career Management • Selecting People for Overseas Positions • How, and based on what criteria, was Peter Hanson selected for the PDC post in China?

15. Selection process • Gather information about the people in the pool of qualified recruits: • Evaluate the qualifications of each applicant • Make the decision about which to hire • Key question: what criteria will you use, and why? How do you know that the person meets that criteria?

16. Typical Selection Criteria • Education & experience • Skills and abilities (often subjective) • Personal characteristics – including the Big 5 personality traits (neuroticism, extraversion, openness to experience, agreeableness, conscientiousness) • Hiring for fit (personal values or personality fit)

17. What techniques can you use to select candidates for global positions? What are the strengths and weaknesses of each?

18. Major Selection Instruments used in Selection for all Jobs • Application blanks and resumes • Selection tests: e.g. mental or cognitive ability, psychomotor ability, work samples, personality, etc. • Interviews – structured/unstructured; situational (or behavioral) • Physical examinations • References and background checks • Assessment centers

19. Two important concepts in Selection Tools: • Reliability: the consistency of a measurement. Will you get about the same results if you use this instrument again with this person? E.g. test-retest. • Validity: how well does the instrument really tell you whether the person will do well in the job? Deals with the issues of (1) whether the test is an adequate measure of the characteristic it supposedly measures and (2) whether inferences and actions based on test scores are appropriate. E.g. predictive or concurrent validation.

20. One method of recruitment ….that is also a kind of selection tool…. • Realistic job previews……. What do they get you? Why do they work?

21. Common errors in interviews • First impression • Similarity error • Contrast error • Halo error • Non-relevancy error

22. Making the final determination of who to hire • Use multiple indicators – allows you to counterbalance the measurement error in any one selection technique

23. Expatriates and Global Staffing of Managerial positions in Global Companies

24. Broadly speaking, there are two categories of expatriates: • “Agents” – the agency motive for using expatriates is to fix a problem, or to control, or to transfer knowledge or corporate culture. • “Learners” – the reason for this is to develop the professional capabilities of managers, often at younger ages.

25. Three Key Roles of Expatriates • Alignment (helps to decentralize decisions while keeping the global perspective; WHO makes the decisions, not where) • Standardization (global standardization of practice, e.g. focus on operating procedures, or education and training) • Socialization – (inculcating the cultural code of the company in others, e.g., in Intel, have to be able to argue your point forcefully; in HP, teamwork is important).

26. In other words, using expatriates: • Permits decisions to be made locally but with the global perspective in mind. • Permits the transfer abroad of the standards of the parent company. • Permits the diffusion abroad of shared values – a key element in global integration.

27. Selecting people for global positions: the case of expatriation • What approach does the company have towards staffing in its affiliates overall? • What criteria does it use or should it use? • What instruments should it use to select among different candidates? E.g. assessment centers, past performance, interviews, psychological tests. • An examination of the reliability and validity of interviews.

28. Four general approaches to staffing of affiliates: • Ethnocentric • Polycentric • Geocentric • Regiocentric

29. Ethnocentric approach to staffing • All key positions filled by parent country nationals. • Advantages: easy communication with HQs; overcomes a lack of good local managers; good in early stages of internationalization. • Disadvantages: limits promotion opportunities of host country nationals; there is low productivity while the expatriate adjusts; often leads to inequitable pay packages.

30. Polycentric approach: • All key positions in parent country operations filled by parent country people; all key positions in host country affiliate by host country nationals. • Advantages: eliminates language barriers and adjustment problems; lowers the political profile of the affiliate; less expensive (usually); provides continuity of management. • Disadvantages; communication gap between host country and HQs; limits host country nationals’; career paths because can’t get necessary experience to go to highest reaches of the firm; limits international experience among top HQ executives.

31. A geocentric approach: • The best people are sought for key jobs throughout the organization, regardless of nationality. • Advantages: develops an international cadre of executives; deploys best talent for a particular situation; reduces identification with local unit. • Disadvantages: most host countries want foreign affiliates to employ their citizens; increases the training and relocation expenses; creates a need for standardized compensation structure; requires longer lead times and more centralized control of the staffing process.

32. Regiocentric Approach: • Is a modified geocentric approach, based on regional selection and deployment.

33. Assessment centers for international postings are: • Used to determine managerial potential of employees that evaluates individuals as they take part in a large number of activities conducted in a relatively isolated environment. It is also useful for identifying potential training needs. • (e.g. tasks such as dealing with a sudden disruption to supply chain; conflict between employees; government representative with a beef with the company; team work with others on a problem).

34. Criteria for Selecting Expatriates • Depends on the role the expatriate is expected to assume. • E.g. for agency-type assignments, clear managerial qualifications and the relevant professional skills are key. Also the ability to improvise, impart confidence and motivate. (agency = control or knowledge transfer) • In learning-oriented assignments, relationship abilities and cultural awareness may be more key as they open access to new knowledge. (career enhancement, development of young people)

35. The decision to take a global position…. • The Celtic Tiger case….