CHAPTER 11 INTERNATIONAL HUMAN RESOURCE MANAGEMENT

COMPONENTS OF HRM
Recruitment Selection Training & Development Performance Appraisal Compensation Labor Relations

INTERNATIONAL HRM (IHRM)

Basic HRM issues remain Must choose a mixture of international employees How much to adapt to local conditions?

EMPLOYEES IN MULTINATIONAL ORGANIZATIONS

Host country nationals Expatriates Home country nationals Third country nationals Inpatriates

MULTINATIONAL MANAGERS

Host country or expatriate?

USING HOST COUNTRY MANAGERS

Do they have the expertise for the position? Can we recruit them from outside the company?

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?

IS THE EXPATRIATE WORTH IT?

High cost High failure rate

EXHIBIT 11.1 PAYING FOR THE EXPATRIATE MANAGER

400000 350000 300000 250000 $ 200000 150000 100000 50000 0 Hong Kong Home Salary Tokyo London Taipei Singapore

REASONS FOR U.S. EXPATRIATE FAILURE

Spouse fails to adapt Manager fails to adapt Other problems within the family Personality of the manager Level of responsibilities

Reasons for expatriate failure, continued

Lack of technical proficiency No motivation for assignment

MOTIVATIONS TO USE EXPATS

Managers acquire international skills Coordinate and control operations dispersed activities Communication of local needs/strategic information to headquarters

KEY EXPATRIATE SUCCESS FACTORS

Professional/technical competence Relational abilities Motivation Family situation Language skills

Willingness to accept position

PRIORITY OF SUCCESS FACTORS

Depends on : assignment length cultural distance amount of required interaction with local people job complexity/responsibility

EXHIBIT 11.3 SHOWS A DECISION MATRIX USED TO SET PRIORITIES OR DIFFERENT SUCCESS FACTORS DURING SELECTION

Expatriate Success Factors

Longer Duration

Professional/ Technical Skills Relational Abilities International Motivation Family Situation Language Skills

High Moderate High High Moderate

Assignment Characteristics Greater More Interaction More Cultural and Complex or DisCommunica- Responsimilarity tion sible Job Requirements with Locals Neutral Moderate High High High High High High High Neutral High Moderate High Moderate Neutral

EXPATRIATE TRAINING

TRAINING RIGOR The extent of effort by trainees

and trainers required to prepare the trainees for expatriate positions

LOW RIGOR TRAINING

Short time period Lectures Videos on local culture Briefings on company operations company operations

HIGH RIGOR TRAINING

Lasts over a month Experiential learning Extensive language training Often includes interactions with host country nationals

EXHIBIT 11.4 SHOWS VARIOUS TRAINING TECHNIQUES AND THEIR OBJECTIVES AS THE RIGOR OF THE CROSS- CULTURAL TRAINING GROWS

T e c h n iq u e s : F ie ld tr ip s to h o s t c o u n tr y , m e e tin g s H ig h w ith m a n a g e r s e x p e r ie n c e d T r a in in g in h o s t c o u n tr y , m e e tin g s R ig o r w ith h o s t c o u n tr y n a tio n a ls , in te n s iv e la n g u a g e tr a in in g . O b je c tiv e s : D e v e lo p c o m fo r t w ith h o s t c o u n tr y n a tio n a l c u ltu r e , b u s in e s s c u ltu r e , a n d s o c ia l in s titu tio n s .

M id le v e l T r a in in g R ig o r

T e c h n iq u e s : E x p e r ie n tia l le a r n in g e x e r c is e s , r o le p la y in g , s im u la tio n s , c a s e s tu d ie s , s u r v iv a l la n g u a g e tr a in in g . O b je c tiv e s : G e n e r a l a n d s p e c ific k n o w le d g e o f h o s t c o u n tr y c u ltu r e , r e d u c e e th n o c e n tr is m .

T e c h n iq u e s : L e c tu r e s , v id e o ta p e s , r e a d in g b a c k g r o u n d m a te r ia l. O b je c tiv e s : P r o v id e b a c k g r o u n d in fo r m a tio n o n Low T r a in in g h o s t c o u n tr y b u s in e s s a n d R ig o r n a tio n a l c u ltu r e s , b a s ic in fo r m a tio n o n c o m p a n y o p e ra tio n s .

CHALLENGES OF EXPATRIATE PERFORMANCE APPRAISAL

Unreliable data Complex and volatile environments Time differences and distance separation Local cultural situations

STEPS TO IMPROVE THE PROCESS

1. Fit the evaluation criteria to strategy. 2. Fine tune the evaluation criteria 3. Use multiple evaluators with varying periods of evaluation

EXHIBIT 11.6 Shows several sources of information a superior or the HRM professionals may use to evaluate an expatriate managers

Evaluation Sources Self evaluation

Criteria Meeting objectives Management skills Project successes Leadership skills Communication skills Subordinate development Team building Interpersonal skills Cross-cultural interaction skills Management skills Leadership skills Meeting objectives Service quality and timeliness Negotiation skills Cross-cultural interaction skills

Periods Six months and at the completion of a major project After completion of major project Six months

Subordinates

Peer expatriate and host country manages

On-site supervisor

At the completion of significant projects Yearly

Customers and clients

EXPATRIATE COMPENSATION

THE BALANCE SHEET APPROACH

Provides a compensation package that equates purchasing power

BALANCE SHEET COSTS

Allowances for cost of living, housing, utilities, furnishing, educational expenses, medical expenses, club memberships, and car and/or driver expenses

Domestic Assignment Expenses and Spendable Income Base Salary

Expatriate Assignment Expenses and Balanced Spendable Income + Allowances = + Base Salary Allowances as an incentive to take position, foreign service premium, hardship pay, R&R Taxes Allowances to balance extra tax payments Goods and Services Allowances to cover cost of living differences, housing, childrens education, medical costs, automobile, recreation, home leave travel Housing Allowances for moving expenses, settling in expenses, initial housing costs, and furnishing allowances Spendable Income

Taxes Goods and Services

= + = +

Housing

= +

Spendable Income

OTHER APPROACHES
Parent country wages everywhere Wean expatriates from allowances Pay based on local or regional markets Cafeteria selection of allowances Global pay systems

THE REPATRIATION PROBLEM

Difficult for many organizations "Reverse culture shock" Expatriates must relearn own national and organizational culture Includes whole family

STRATEGIES FOR SUCCESSFUL REPATRIATION PROVIDE:

A strategic purpose for repatriation A team to aid the expatriate Home country information sources Training and preparation for the return Support for expatriate and family

WOMEN EXPATRIATES: TWO IMPORTANT "MYTHS"

Myth 1: women do not wish to take international assignments Myth 2: women will fail in international assignments because of the foreign culture's prejudices against local women

SUCCESSFUL WOMEN EXPATRIATES

Foreign not female emphasize nationality not gender The woman's advantage strong in relational skills wider range of interaction options

MULTINATIONAL STRATEGY AND IHRM

IHRM ORIENTATIONS Ethnocentric Polycentric Regiocentric Global

IHRM ORIENTATION AND MULTINATIONAL STRATEGY

Early stages of internationalization = ethnocentric IHRM Multilocal strategies = ethnocentric or regiocentric Regional strategy = closer to the global

 International strategy = ethnocentric or polycentric IHRM Transnational strategies = a global IHRM

CONCLUSIONS
HRM functions IHRM challenges Expatriate managers The role of women in multinational organizations Multinational strategies and IHRM orientations