IHR Planning and Staffing

Global Staffing
There are staffing issues that international firms confront that are either not present in a domestic environment or are complicated by the international context in which these activities take place. How an organization responds to them is partly determined by factors such as 1. General staffing policy on key positions in headquarters and subsidiaries 2. The constraints placed by the host government on hiring policies 3. Staff availability

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?

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?

Is the Expatriate Worth It?

Decisions must take into account costs of such assignments
High cost High failure rate

Approaches to Staffing
1. Ethnocentric- Few foreign subsidiaries have any autonomy and strategic decisions are made at headquarters. Key positions in domestic and foreign operations are held by HQ personnel. There are often sound business reasons for pursuing ethnocentrism a. Perceived lack of qualified host nationals b. Need to maintain good communication, coordination and control

Contd.
An ethnocentric policy has its own disadvantages a. It limits promotion opportunities of HCNs which leads to reduced productivity and increased turn over b. The adaptation of expatriate managers to host countries c. When PCN and HCN compensation packages are compared, considerable income gaps are viewed

2. Polycentric- The MNE treats each subsidiary as a distinct national entity with some decision making autonomy. Subsidiaries are usually managed by local nationals who are seldom promoted to HQ. The main advantage of a polycentric policy are a. It eliminates language barriers, avoids adjustment problems of expatriates b. Employment of HCNs allows a MNC to take a low profile in sensitive political situations c. It is less expensive d. Gives continuity to the management of foreign subsidiaries

contd The disadvantages are Cultural differences may isolate corporate head quarters HCNs have limited career paths with hQ

3. Geocentric- Here MNEs take a global approach to its operations, recognizing that each part makes unique contribution with its unique competence. It has three advantages a. It enables multi national firms to develop an international executive team b. It overcomes the federation drawback c. It supports cooperation and resource sharing across units

contd The disadvantages are a. Host govts. Want a high number of their citizens employed and may utilize immigration controls for this purpose b. It can be expensive to implement because of increased training cost

4. Regiocentric- This approach reflects the geographic strategy and structure of the multi national. It uses a wider pool of managers but in a limited way. Staff may move outside their countries but only within a particular geographic region.

Advantages and disadvantages of using PCNs, TCNs and HCNs

PCNs Advantages 1. Organizational control and coordination 2. Promising managers are given international experience 3. PCNs may be most suited because of special skills Disadvantages 1. The promotional opportunities of HCNs are limited 2. Adaptation to host country may take a long time 3. PCNs may impose an inappropriate HQ style 4. Compensation for PCNs and HCNs may differ

contd
TCNs Advantages 1. Salary and benefit requirements may be lower than for PCNs 2. TCNs may be better informed than PCNs about the host country environment Disadvantages 1. Transfers must consider possible national animosities 2. The host govt. may resist hiring of TCNs 3. TCNs may not want to return to their own countries after the assignment

contd
HCNs Advantages 1. Language and other barriers are limited 2. Hiring costs are reduced and no work permit is required 3. Continuity of management improves 4. Govt policy may dictate hiring of HCNs Disadvantages 1. Control of HQ may be impeded 2. HCNs have limited career opportunity outside the subsidiary

Approach to staffing Firm specific variables -stage -type of industry -Strategy -organisation Situation Variables -staff availability -location of assignment -Need for control -locus of decision GHRM activities -selection -training -compensation -repatriation

(Country A) Contextual Variables -legal system -cultural distance Country B Country C

Determinants of GHRM Approaches

Types of international assignments

Companies tend to classify types according to length and duration of assignment 1. Short term: upto 3 months; they are usually for trouble shooting or project supervision 2. Extended: upto 1year; these may involve activities similar to short term 3. Long term: varies from 1 to 5 years, involving clearly defined role in the receiving operation. It is also referred to as the traditional expatriate assignment

contd
Within these broad categories, it is possible to find what are termed non standard assignments 1. Commuter assignments- special assignments where the person concerned commutes from the home country on weekly or biweekly basis to the place of work 2. Rotational assignments- employees commute from home country to the other country for a short, set period followed by a break in the home country 3. Contractual assignments- used in situations where employees with specific skills vital to an international project are assigned for a limited duration of 6-12 months 4. Virtual assignments- where the employee does not relocate to a host location but manages from home base.

The roles of an expatriate

1. 2. 3. 4. 5. 6. An agent of direct control An agent of socialization As network builders As boundary spanners As language nodes Transfer of knowledge and competence

Comparison of global staffing

Japanese -Young people hired, hardly any mobility from companies -Slow promotion through ranks -Loyalty to co. -PA once or twice a year -Appraisal of long term perf. American -Rapid advancement desired -Loyalty to job -Comprehensive PA once a year -People hired out of school & co; job hopping common -Appraisal of short term result Chinese -Most people hired from school, fewer from companies -Slow promotion but salary increases -Lack of loyalty -PA usually once a year -Five year plan or short term

Japanese -Promotion based on long term perf. & other criteria -T&D considered long term investment -Life time employment

American -Promotions based on individual, short term perf. -T&D undertaken with hesitation

-Job insecurity

Chinese -Promotions based on perf., ability, family ties, good relation with superior -T&D program available, state administered exam for mgrs -Job security, now changing

Contd.

International recruitment and selection

The myth of the global manager

The concept of the global manager appears to be based on the following myths or assumptions 1. There is universal approach to management 2. People can acquire multicultural adaptability and behaviors 3. There are common characteristics shared by successful international managers 4. There are no impediments to mobility

Factors moderating expats performance

Moderators 1. Inability to adjust to foreign culture 2. Length of assignment 3. Willingness to move 4. Work related factors 5. Psychological contract

Figure 4-2: The phases of cultural adjustment

Factors in Expatriate Selection

Cross cultural suitability

Technical ability Individual Situation Country/cult. requirements

Family requirements

Selection decision MNE requirement Language

Expatriate s selection criteria

Technical and managerial skills Motive and desire of a manager Has social skills Diplomatic skills Maturity and stability Family factors Attitude to perform Ability to cope up with environmental variables

The use of selection tests

Mendenhall and Oddou propose a four dimensional approach that attempts to link specific behavioral tendencies to probable overseas performance 1. The self oriented dimension- the degree to which the expat expresses an adaptive concern for self preservation, self enjoyment and mental hygiene 2. The perceptual dimension-the expertise that the expat possesses in accurately understanding why host-nationals behave the way they do 3. The others oriented dimension-the degree to which the expat is concerned about host national co workers and desire to affiliate with them 4. The cultural-toughness dimension-a mediating variable that recognizes that acculturation is affected by the degree to which the culture of the host country is incongruent with that of home country

Expatriate selection in practice

Harris and Brewster argue that expatriate selection, in reality, is an ad hoc process and they propose the coffee machine system They suggest that executives chatting around the coffee machine can start the selection process through a casual conversation about an assignment need confronting one of them. Another executive can volunteer the name of a potential expatriate, thus starting the informal short listing of candidates The MNCs processes are then activated to legitimize the decision that has already been taken around the coffee machine

Table 4-2: Harris and Brewster s selection typology

Family friendly policies

Inter-company networking Job-hunting assistance Intra-company employment On-assignment career support

Are female expatriate s different?

Barriers to females taking international assignments

External Barriers

Self-established barriers

Some women have HR manager reluctant limited willingness to to select female relocate candidate The dual career couple Culturally tough locations preclude female expats Stereotypes in selectors influence decisions

Reasons for expatriates failure

1. 2. 3. 4. 5. 6. 7. 8. Their families Financial package Lack of ability to cope up with differing societal, legal, economic and technical demands Shock on new job Poor programs for career support Lack of support from HQ Inadequate preparation and training Selection based on HQ criteria rather than assignment needs

INTERNATIONAL PERFORMANCE MANAGEMENT

What is performance management?

A process that enables the multinational to evaluate and continuously improve individual, subsidiary unit and corporate performance, against clearly defined, preset goals and targets

10/35

Basic components of performance management

10/36

Evaluating subsidiary performance

Factors to consider:
Whole versus part Non-comparable data Volatility of the global environment Separation by time and distance Variable levels of maturity

10/37

Control and performance management

Performance management is part of the multinational s control system Performance targets, for example, are part of formal control Performance management contributes to shaping corporate culture

10/38

Variables affecting expatriate performance

10/39

Individual performance management

The task:
Chief executive officer Structure reproducer Troubleshooter Operative

Task variables more under the control of the multinational than environmental factors

10/40

Roles
A role is the organized set of behaviours assigned to a particular position Effective role behaviour is an interaction between the concept of the role, the interpretation of expectations, the person s ambitions, and the norms inherent in the role

10/41

PCN role conception

TCN role conception

10/42

Headquarter s Support
The support of headquarters is important both to the individual expatriate and accompanying family members as a performance variable The Employment Contract 1. Transactional- specific, short term, monetizable obligations, limited involvement of parties 2. Relational- broad, open-ended, long term obligations based on both exchanges around monetisable elements and socio-emotional elements

The host environment

The external context can be a major determinant of expatriate performance Differing demands in terms of context:
Societal Legal Economic Technical Physical Type of operation involved (eg. IJV versus wholly-owned subsidiary)

10/44

Cultural Adjustment

The phases of cultural adjustment

Non-expatriate performance management

A seemingly neglected group Performance effects of factors associated with constant air travel
Depression, nervous anxiety, sleep disturbance, weight gain, poor diet)

Stress associated with frequent absences and effect on family relationships Non-standard assignments such as commuter arrangements and virtual assignments share these aspects
10/46

Performance appraisal
Performance criteria
Hard goals: objective, quantifiable and can be directly measured Soft goals: relationship or trait-based Contextual goals: factors that result from the situation in which performance occurs

An appraisal system that uses hard, soft and contextual criteria is advocated
10/47

Contextual model of expatriate performance management

10/48

Other factors affecting appraisal

Who conducts the performance appraisal Use of standardized or customized appraisal form Frequency of appraisal Performance feedback
Timely Geographical distance affects

10/49

Appraisal of HCNs
The practice itself confronts the issue of cultural applicability May be necessary to use local staff and a customized form Level of position involved is an important consideration

10/50