International Human

Resource Management
MGMT414
Assoc. Prof. Dr. Cem Tanova

1. Bic pens are

1. French, Bic;

2. Godiva chocolate is
3. Algidas owner is

2. American, Campbell
Soup;
3. Anglo-Dutch, Unilever

4. Haagen-Dazs ice cream

is made by a(n) company

4. British, Grand
Metropolitan;

5. Firestone (Bridgestone)
tires are
6. RCA televisions are
made by a(n) company

5. Japanese, Bridgestone
Corp;
6. French, Thompson;

7. Atari Video games are

7. American, Atari Corp;

8. Jaguar cars made by a(n)

company
9. Holiday Inns are owned
by
10. The parent company of
Braun household products

8. American, Ford Motor

Co.;
9. British, Bass;
10. American, Gillette Co.;

Introduction to International
Human Resource Management
How the world is changing,
Importance of globalization,
IHRM as a key factor in the success
of international business.
An overview of domestic HRM and
discussion on what is different in
IHRM.

Questions to consider
What are the key elements of best
practice in HRM?
Can the best practices be applied on
a global level?
To what extent are the principles of
managing people universal and to
what extent culture specific?

 Inter-cultural or International? What

is the difference? (Our focus will be
international)

Motivations and Perspectives Shaped by Administrative

Heritage
Inter War Period
- National market differences
-

Transport/communication barriers

Rising protectionism

* Internationalize through rationally differentiated and responsive strategies

- European MNC expansion

Immediate Post-War period

- Post-war reconstruction
- Transfer of new technologies
-

Leverage management skills

* Internationalize through transfer of technological and managerial innovations

- American MNC expansion

Mid 1960s to late 1970s

- Falling trade barrier

- Homeogeniziing markets
- Improved transport, communications
Irwin/McGraw-Hill

* Internationalize by capturing global scale advantages and global competitive games

STRATEGIC PERSPECTIVES IN MNCs

AN EVOLVING MANAGEMENT MENTALITY
INTERNATIONAL PERSPECTIVE

DOMESTIC COMPANIES WITH FOREIGN APPENDAGES

OPPORTUNISTIC APPROACH TO FDI

PORTFOLIO APPROACH TO MANAGEMENT OF FOREIGN OPERATIONS

MULTI-NATIONAL PERSPECTIVE
-

INCREASED REALIZATION OF IMPORTANCE OF INTERNATIONAL MARKETS

- MANAGE OVERSEAS OPERATIONS AS A FEDERATION OF INDEPENDENT

COMPANIES

GLOBAL PERSPECTIVE
- GROWING CONCERN ABOUT INTERNATIONAL COMPETITION AND
INEFFICIENCIES
OF MULTI-NATIONAL RESPONSE
-

DRIVE FOR COST COMPETITIVENESS THROUGH PRODUCT STANDARDIZATION

ORGANIZATIONAL CENTRALIZATION

MANAGE WORLWIDE OPERATIONS AS SINGLE ENTITY

AND

TRANS-NATIONAL PERSPECTIVE
-

NEED TO RESPOND TO HOST COUNTRY PRESSURES AND GLOBAL COMPETITIVE

DEMAND SIMULTANEOUSLY
Irwin/McGraw-Hill

Strategies of international,
multinational, global &
transnational organizations
International company transports its
business outside home country; each of its
operations is a replication of the company's
domestic experience; structured
geographically; and involves subsidiary
general managers
Companies offering multiple products often
find it challenging to remain organized e.g.
need to have a common information systems
for accounting, financial and management
controls, and marketing. Most evolve to
become multinational companies
Copyright 2003-2006, Chris Chan

Strategies of international,
multinational, global &
transnational organizations
Multinational company grows and defines
its business on a worldwide basis, but
continues to allocate its resources among
national or regional areas to maximize the
total.

Copyright 2003-2006, Chris Chan

Strategies of international,
multinational, global &
transnational organizations
Global organizations treat the
entire world as though it were one
large country; may be the entire
company or one or more of its
product lines; may operate with a
mixture of two or more
organizational structure
simultaneously.
Copyright 2003-2006, Chris Chan

10

Strategies of international,
multinational, global &
transnational organizations
Transnational organization - Use
specialized facilities to permit local
responsiveness; more complex
coordination mechanism to provide
global integration

Copyright 2003-2006, Chris Chan

11

Global efficiency and local

responsiveness of different types of
firms

High
Global
efficiency
Low

Global

Transnational

International

Multinational

Local responsiveness

Copyright 2003-2006, Chris Chan

High

12

Evolving Motivations: Changing

Perspectives
High

TransNational

Global

Global
Coordination
Integration

International

Low

Low
Irwin/McGraw-Hill

National differentiation,
Responsiveness

MultiNational
High

MNCs STRATEGIC AND ORGANIZATIONAL TASK:

DEVELOPING MULTIPLE CAPABILITIES
NEED FOR
GLOBAL
COORDINATION,
INTEGRATION

TOYOTA

- DRIVEN BY
SCALE AND
TECHNOLOGY
- REINFORCED
BY GLOBAL
COMPETITION

G.M

- DRIVEN BY SCOPE
AND MARKETS
Irwin/McGraw-Hill

- REINFORCED BY
GOVERNMENTS

FIAT

NEED FOR NATIONAL

DIFFERENTIATION,
RESPONSIVENESS

Key Trends
63,000 transnational companies account
for more than half (2/3) of world trade.
The top 100 companies account for 14%
of worldwide sales, 12% of assets, and
13% of employment.
Physical location of value creation is
very difficult to determine.
Much of the force of globalisation comes
through mergers and acquisitions.

Impact of globalisation on the

nature of work
Outsourcing to low labor countries
First manufacturing, then processing
services, now white collar work.

Questions for HR
professionals
Do we have a strategy for becoming an international
firm?
What type of managers will we need to be
successful?
How can I find out about the way that HRM is
conducted in other countries (laws, trade unions,
labor market).
What will be the impact of cultural norms on our HR
policies.
How will we choose whether to send expatriates or
use local employees.
How do we move people to different locations
How do we manage transfer of knowledge across
borders

Parent-country Nationals
Advantages
Control and co-ordination by
HQ is maintained.
Promising managers get
international experience.
PCNs may be the best
people for the job.
Assurance that the
subsidiary will comply with
company objectives policies
etc.

Disadvantages
HCNs promotion
opportunities are limited.
Adaptation to host country
may take a long time.
PCNs may impose an
inappropriate HQ style.
Compensation differences
between PCNs and HCNs
may cause problems.

Host-country Nationals
Advantages
No problems with
language and culture.
Reduced hiring costs.
No work permits required.
Continuity of management
improves since HCNs stay
longer in positions.
Govt. policy may force
hiring of HCNs.
Promotional opportunities
not limited - so higher
morale among HCNs.

Disadvantages
HQ may have less control
over operations.
HCNs may still have
limited career
opportunities outside the
subsidiary.
Hiring HCNs limits
opportunities for PCNs to
gain overseas experience.
Hiring HCNs may
encourage a federation of
disintegrated national
units rather than one
integrated global unit.

Third-country Nationals
Disadvantages
Transfers must
Advantages
consider national
Salary and
animosities.
compensation may be Host government may
lower than for PCNs.
resent TCNs as much
May be more familiar
as PCNs.
with host country than TCNs may not comply
with HQ style of
the PCNs.
management.
TCNs may not want to
return after
assignment.

International Recruitment and

Selection
A selection program for international
assignments involves assessing prospective
candidates on certain criteria thought to be
associated with assignment effectiveness.
In order to have a successful selection
program there needs to be a broad range of
prospective candidates from which to choose
criteria of effectiveness and valid procedures
for assessing candidates on them.

empathy
flexibility
patience
openness
reliability
confidence
emotional stability
communication skills
tolerance for
differences
humor
resourcefulness
sensitivity
teaching skills

ability to handle alcohol

curiosity
positive regard for others
acceptability of assignment
desire to be abroad
non ethnocentrism
high motivation
courtesy
adaptability
tolerance for ambiguity
language skills
interest in host culture

International Training and

Development
Empirical literature give guarded support to
the proposition that cross cultural training
has a positive impact on cross cultural
effectiveness.
Cultural awareness training is not just for
the employee going overseas. It has
numerous applications domestically that
will increase organizational effectiveness.
Findings indicate that it should be a regular
part of personnel training
especially
management development. The realities of
a more pluralistic society and international
business make this a necessity.

International Training and

Development
Area studies programs
Culture assimilator programs
Language training programs
Sensitivity training programs
Field experience programs

International Compensation
If compensation is high then
problems may be encountered on
return to head office.
If compensation is not adequate
then there may be no incentive to
go for the international
assignment given the hardships
that are usually involved in doing
so.

International Compensation
Expatriation Premium
Cost of Living Allowance
Swamp Pay Allowance
Shelter Allowance
Educational Allowance
Home Leave

Repatriation
Virtually all repatriated personnel
experienced some personal difficulty
in reintegrating on return home. The
main complaints were loss of status
loss of autonomy lack of recognition
of the value of the experience and
lack of career direction.

Repatriation: Reverse
Culture-shock

JOB RELATED FACTORS

Out of sight out of
mind
International
experience devalued
Loss of status and pay
relatively peaking
Changes in the HQ

SOCIAL FACTORS
Expat assignment different type of social
interaction (going from
a very close expat
community to where
everyone is very busy
with their own lives)
Problems of spouse
returning to the
workforce
Lack of peer support for
teenagers