MA GLOBAL BUSINESS CORE COURSE IN HUMAN RESOURCE MANAGEMENT IN THE GLOBAL ENVIRONMENT Academic year 2007 - 2008

Staffing the International Organization

Objectives After studying this unit, you should be able to:

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Develop strategic thinking on the international staffing question Asses the advisability of local vs. expatriate executives Know why international assignments fail

Understand the importance of cultural competence to organizational and global business success 4. How to develop cultural intelligence

Copyright © 2003 by The McGraw

Challenges
How is the best employee mix (host-country and expatriate) determined? Why do international assignments fail? How are returning employees re-integrated into the firm?

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Expatriate:A citizen of
one country living and working in another country.

Stages of a Global Organization

Managing an International Subsidiary

Ethnocentric Approach

Top management and key positions filled by people from home country
Polycentric Approach

International subsidiaries managed/staffed by personnel from host country
Geocentric Approach

Nationality deliberately downplayed Firm searches worldwide or regionally to hire best people to fill key positions

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Advantages of Using Local Employees to Staff International Subsidiaries

Lower labor costs Demonstrates trust in local citizens Increases acceptance of firm by local community Firm recognized as part of local economy Represents local opinions in decision-making Adaptation to local tastes and local way of doing things

Advantages of Using Expatriates to Staff International Subsidiaries
Cultural similarity with parent company ensures transfer of business practices: Japanese MNC Closer control / coordination of international subsidiaries: interdependence Xerox vs. McDonald's Employees get multinational orientation Political instability: expatriates Differences between the countries high: expatriates. USA Creates pool of internationally experienced executives Local talent may not yet add value Formalization / Control / Socialization

Disadvantages of Using Local Employees to Staff International Subsidiaries
Difficult to balance local demands / global priorities Leads to postponement of difficult local decisions (such as layoffs) Difficulty recruiting qualified personnel Reduce amount of control by headquarters (different kind of control…)

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Disadvantages of Using Expatriates to Staff International Subsidiaries
• Creates problems of adaptability to foreign environment and culture • Increases “foreignness” of subsidiary • Involve high transfer, salary and added costs • Result in personal and family problems • May lower moral and motivation of local management • Subject to local government restrictions

Why International Assignments Fail
USA failure rate three times higher…

Career blockage Culture shock (USA cultural tolerance level) Lack of pre-departure cross-cultural training Overemphasis on technical qualifications Getting rid of a troublesome employee Family problems

Upon Return (30% of repatriates resign)
Lack of Respect for Acquired Skills (USA huge market…) Loss of Status Poor Planning for Return Position Reverse Culture Shock (friendlycompetitive atmosphere, Spain-USA)

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Selection Employees for International Assignments
Emphasize cultural sensitivity as a selection criteria Establish a selection board of expatriates with ex-expatriates Require previous international experience: international students, mormons… Explore possibility of hiring foreign-born employees who serve as “expatriates” at future date: Coca-Cola, Japanese MNC Screen candidates’ spouses and families:Exxon

IHRM and national culture differences: Hofstede (1980) Contradiction HR-national values=failure
Power distance: status importance, hierarchy: Spain-Sweden Individualism: group, socialization… vs. autonomy, personal challenges… USA-Japan Uncertainty avoidance: risk, instability tendency: Italy-Hong Kong Masculinity/femininity: rigid sexual stereotypes: Germany-Finland Long-term/short-term orientation: China-USA

Case
You work for a global pharmaceutical company of 75,000 employees. Four of you have been assigned to each of the following four countries for one year: India, Australia, Zimbabwe and Peru. You are to leave in six months. How do you prepare for your year away? What challenges do you expect?

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Geert Hofstede´s Five Cultural Dimensions

Identity focuses on the degree the society reinforces individual or collective achievement and interpersonal relationships. Power distance focuses on the degree of equality or inequality between people in the country or society. Gender focuses on the degree of traditional gender role of achievement, control, and power. Time focuses on the degree the society embraces longor short-term devotion to traditional forward thinking values. Uncertainty focuses on the level of avoidance or tolerance for uncertainty and ambiguity within the society.

COLLECTIVIST,FEMININE THAILAND, KOREA COSTA RICA, CHILE RUSSIA, BULGARIA PORTUGAL, SPAIN MALTA FRANCE NETHERLANDS NORDIC COUNTRIES INDIVIDUALIST, FEMININE

COLLECTIVIST,MASCULINE CHINA, JAPAN MEXICO, VENEZUELA ARAB WORLD GREECE CZECHIA, HUNGARY POLAND, ITALY GERMAN SPK CTRIES ANGLO COUNTRIES, USA INDIVIDUALIST,MASCULINE

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Cultural Intelligence Cultural Intelligence: • The ability of people to deal effectively with the cultural aspects of their environment. • Why do many people who are intelligence and have good social skills and demonstrate emotional maturity fail at cross – cultural interactions?

Development of cultural intelligence • Stage 1: Reactivity to external stimuli. • Stage 2: Recognition of other cultural norms and motivation to learn more about them. • Stage 3: Accommodation of other cultural norms and rules in one’s own mind. • Stage 4: Assimilation of diverse cultural norms into alternative behaviors. • Stage 5: Proactivity in cultural behavior based on recognition of changing cues that others do not perceive.

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