CH 17

Managing Global Human Resources

The Manager’s Global Challenge

o The global employer faces these differences: Political, Social, Legal, Cultural

The challenging thing about managing globally is that what works in one country may not work in
another. The employer faces an array of political, social, legal, and cultural differences among countries
and people abroad.

What is International Human Resource Management (IHRM)?

Is the human resource management concepts and techniques employers use to manage the human
resource challenges of their international operations.

IHRM generally focuses on three main topics:

1. Managing human resources in global companies (for example, selecting, training, and compensating
employees who work abroad)

2. Managing expatriate employees (those the employer sends abroad)

3. Comparing human resource management practices in different countries

Adapting Human Resource Activities to Inter-country Differences

The point is that managers have to adapt their human resource policies and practices to the countries in
which they’re operating. Figure 17-1 sums up critical inter-country differences
Employers with transnational operations should have set policies on things like discrimination,
harassment, bribery, and Sarbanes-Oxley

Cultural Factors

Cultural differences manifest themselves in differences in how people from different countries think,
act, and expect others to act.

1. The Hofstede Study Studies by Professor Geert Hofstede illustrate international cultural
differences. Hofstede says societies differ in five values, which he calls power distance,
individualism, masculinity, uncertainty avoidance, and long-term orientation.
2. Legal Factors Employers expanding abroad must also be familiar with the labor laws in the
countries they’re entering. than 100 workers need government permission to fire anyone.
3. Codetermination means employees have the legal right to a voice in setting company policies.
Workers elect their own representatives to the supervisory board of the employer.

Hofstede’s Dimensions of National Culture

• Power Distance: High power distance mean that few people on the top of the society hold a lot
of power which more or less accepted by others, while low distance power mean power
distributed more equally and people want that no one gains too much power,

• Uncertainty Avoidance: Some cultures avoid uncertainty conditions and afraid off, others try to
control the future and take the risk.

• The Individualism/Collectivism: Individualism the degree of independency a society maintain

among its member, people are supposed to look after themselves and act independently while
Collectivism emphasize group membership, the groups take care of individuals which in return
acts loyal towards its group.

• The Masculinity/Femininity: Masculinity whether the people want to be the best through
competition, achievement and success , ambition while Femininity want to like what they do
caring for others and quality of life.

Hofstede Dimensions of National Culture

Economic System
Similarly, differences in economic systems translate into differences in intercountry HR practices.

In market economies (such as the United States), governments play a relatively restrained role in
deciding what will be produced and sold at what prices.

In planned economies (such as North Korea), the government decides and plans what to produce and
sell at what price.

In mixed economies (such as China), many industries are still state-owned, while others make decisions
based on market demand.

Differences in economic systems tend to translate into differences in human resource management
policies.

HR Abroad Example: The European Union

 Minimum EU wages. Most EU countries have minimum wage systems. Some set national limits.
Others allow employers and unions to work out their own minimum wages.
 Working hours. The EU sets the workweek at 48 hours, but most EU countries set it at 40 hours.
 Termination of employment. Required notice periods in Europe impede dismissals (which from
employees’ perspective is a good thing). For example, Whirlpool Corporation spent more than 3
years trying to eliminate 500 jobs in Italy, while (for better or worse) it took them less than a
year to dismiss 1,000 people in Arkansas.
HR Management Practices in different Countries

1. RECRUITING - Because of governmental constraints on migration and other legal constraints, it is

relatively difficult to recruit, hire, and retain good employees in China. Their Employment Contract Law
requires that employers report the names, sexes, identification numbers, and contract terms for all
employees they hire within 30 days of hiring.

2. SELECTION - The dominant employee selection method involves analyzing the applicant’s résumé and
then interviewing him or her.

3. APPRAISING - Employee appraisal is particularly sensitive to the cultural realities in China. The
appraisal therefore needs to follow the formalities of saving face and avoiding confrontational‫مواجهه‬,
tension-producing situations.

4. COMPENSATION - Although many managers endorse performance-based pay in China, many

employers, to preserve group harmony, make incentive pay a small part of the pay package

Staffing the Global Organization: Home or Local

1. Using Locals Most employees will be locals, for good reason. First, the cost of using expatriates is
usually far greater than the cost of using local workers. Some companies are surprised at the cost of
posting someone abroad. Local people may view the multinational as a “better citizen” if it uses local
management talent; some governments even press for staffing with local management.

2. Using Expats - Yet there are also reasons for using expatriates—either home-country or third-country
nationals.

 Employers often can’t find local candidates with the required qualifications.
 a required step in developing top managers. Furthermore,
 The assumption is that home-country managers are already steeped in the firm’s policies and
culture, and thus more likely to apply headquarters’ ways of doing things.
Posting expatriates abroad is expensive, security problems give potential expatriates’ pause,
returning expatriates often leave for other employers within a year or two, and educational
facilities are turning out top-quality candidates abroad. As a result, new expatriate postings tend
to be down, and many employers are bringing them home early.

3. Other Solutions - The choice is not just between expatriate versus local employees. For example,
there are “commuter” solutions, involving frequent international travel but no formal relocation.

4. Offshoring As we explained in Chapter 5, offshoring—moving business processes such as

manufacturing or call-center operations abroad, and thus having local employees abroad do jobs that
the firm’s domestic employees previously did in-house— is another globalization option.

Reducing Expatriate Costs

1. Use short-term expats to replace some long-term expats (and their families) who the company
must maintain abroad for extended periods.
 2. Replacing some expatriate postings with local hires.
3. Reviewing their firms’ policies regarding such things as housing, education, and home leave,
along with expatriate allowances and premiums

Using Transnational’s ‫وراء الحدود‬and Virtual Teams

Managing internationally may also involve organizing “transnational” teams, composed of employees
located in various countries. Such teams of course often “meet” in virtual environments. Virtual teams
are groups of geographically dispersed coworkers who interact using a combination of
telecommunications and information technologies to accomplish an organizational task. To facilitate the
merger of Marion Laboratories and Merrell Dow Pharmaceuticals, the companies created a
transnational virtual team composed of members from production sites in Asia, Europe, and North
America. The team helped deal with potential merger integration problems.

The main challenges virtual teams face are often people related. Challenges include

1. Building trust, cohesion, and team identity, and overcoming the isolation among team members.
Success therefore depends on human resource management actions. In particular, train virtual
team members in leadership, conflict management, and meetings management, and to respond
swiftly to virtual teammates. Be scrupulous about answering e-mails and being positive. Select
virtual team members using behavioral and situational interviews, where they describe how
they’d respond to illustrative virtual team situations. Use current virtual team members to help
recruit and select new team members.

Management Values and International Staffing Policy

Experts classify top executives’ values as:

1. Ethnocentric-run firms: They believe that home country attitudes, management styles, and
knowledge are superior to the host country. (relies primarily on expatriate)
2. Polycentric-run firms: They believe they are the only ones that can really understand the culture
and the behavior of the host country market. (focuses on using local employees to staff a
company’s foreign subsidiaries)
3. Geocentric-run firms: They believe that the best manager for any specific position anywhere on
the globe may be in any of the countries in which the firm operates. (the best employee
selected regardless of their countries of origin )

Ethics and Code of Conduct

• Employers also need to make sure their employees abroad are adhering‫ يلتزم‬to their
firm’s ethics codes

• Instead of exporting the employee handbook, some create and distribute a global code
of conduct.
Global employers need global codes of conduct ‫ سلوك‬on things like discrimination, harassment
‫ مضايقة‬, bribery, and Sarbanes-Oxley.

Selecting International Managers

Selection criteria include technical/professional skills, expatriates’ willingness to go, experience

in the country, personality factors (including flexibility), leadership skills, the ability to work with
teams, and previous performance appraisals in the selection process. Thus the following are
proven tools:

1. Testing - As noted, employers can take steps to improve the expat selection process,
and testing is an obvious tool.

2. Realistic Previews - Even in familiar foreign postings there will be language barriers,
bouts of homesickness, and new friends. Realistic previews about the problems as well
as about the country’s cultural benefits are thus an important part of screening.

3. Adaptability Screening - Such screening aims to assess the assignee’s (and spouse’s)
probable success in handling the foreign transfer, and to alert them to issues (such as
the impact on children) the move may involve.

4. Legal Issues - In selecting employees for international assignments, managers should

consider the legal issues. If equal employment opportunity laws conflict with the laws of
the country in which the U.S. employer is operating, the laws of the local country
generally take precedence ‫اولوية‬.

5. Avoiding Early Expatriate Returns - Systematizing the entire expatriate management

process is one way to avoid early returns. For example, employers should have an
expatriate policy covering matters such as compensation and travel costs. Include
procedures, for instance, requiring that the manager responsible for the expat’s costs
obtain all chain of command approvals. Another step in avoiding early returns is to test
and select people who have the necessary traits and adaptability. And perhaps most
importantly consider the expat’s family situation.

6. Family Pressures: inability of spouse to adjust, managers’ inability to adjust, other

family problems, managers’ personal or emotional immaturity, and inability to cope
with larger overseas responsibility. Such findings underscore a truism about selecting
international assignees:

Diversity Counts: Sending Women Manager Abroad

Line managers make these assignments, and many assume that women don’t want to work
abroad, are reluctant to move their families abroad, or can’t get their spouses to move. In fact,
this survey found, women do want international assignments, they are not less inclined to
move their families, and their male spouses are not necessarily reluctant. Safety is another
issue. Employers tend to assume that women abroad are more likely to become crime victims.

Fear of cultural prejudices ‫ تحيز‬against women is another issue. In some cultures, women do
have to follow different rules, for instance, in terms of attire. But as one expat said, “Even in the
more harsh cultures, once they recognize that the women can do the job … it becomes less of a
problem.”

Employers take several steps to identify more women to assign abroad:

• Formalize a process for identifying employees who are willing to take assignments
abroad.
• Train managers to understand how employees really feel about going abroad, and what
the real safety and cultural issues are.
• Let successful female expats help recruit prospective ‫متوقع‬female expats. And provide
the expat’s spouse with employment assistance

Some Practical Solutions to the Expatriate Challenge

Expat failure is expensive; managers can take several practical steps to improve the expat’s
success abroad.

1. Provide realistic previews of what to expect abroad, careful screening (of both the
prospective expat and his or her spouse), improved orientation, and improved benefits
packages.
2. Shorten the length of the assignment.
3. Use Internet-based video technologies and group decision-making software to enable
global virtual teams to conduct business without relocation.
4. Form “global buddy” programs. Here local managers assist new expatriates with advice
on things such as office politics, norms of behavior, and where to receive emergency
medical assistance.
5. Use executive coaches to mentor and work with expatriate managers

Training and Maintaining Employees Abroad

Orienting and Training Employees on International Assignment

Executives agree that international assignees do best when they receive the special training (in
things like language and culture) that they require. Few provide it. Ongoing Training Beyond
such pre-departure training, more firms provide continuing, in-country cross-cultural training
during the early stages of an overseas Assignment.

Performance Appraisal of International Managers

 Several things complicate appraising an expatriate’s performance. Cultural differences are one.
Furthermore, who does the appraisal? Local management must have some input, but, again,
cultural differences may distort the appraisals.

Suggestions for improving the expatriate appraisal process include:

1. Adapt the performance criteria to the local job and situation.

2. Weigh the evaluation more toward the on-site manager’s appraisal than toward the home-
site manager’s.

3. If the home-office manager does the actual written appraisal, use a former expatriate from
the same overseas location for advice.

Compensating Managers Abroad - In compensating those it transfers abroad, an employer has

basically three choices:

1. Continue paying based on the person’s current home-country pay, or pay based on
what locals in the new country are paid, or pay so the person’s home—country
standard of living stays the same.
2. The Balance Sheet Approach: The basic idea is that each expatriate should enjoy the
same standard of living he would have had at home. The balance sheet approach
addresses four groups of expenses—income taxes, housing, goods and services, and
discretionary ‫اختياري‬expenses (child support, car payments, and the like).
3. Incentives - Employers pay various incentives to encourage the employee to take
the job abroad. For example, Foreign Service premiums are financial payments over
and above regular base pay. These typically range from 10% to 30% of base pay, and
appear as weekly or monthly salary supplements. Hardship allowances compensate
expatriates for hard living and working conditions at certain foreign locations.
Mobility premiums are typically lump-sum payments to reward employees for
moving from one assignment to another..

Steps in Establishing a Global Pay System

Step 1. Set strategy. First, formulate longer term strategic goals, for instance, in terms of
improving productivity or boosting market share.

Step 2. Identify crucial‫ حاسم‬executive behaviors. Next, list the actions you expect your
executives to exhibit in order to achieve these strategic goals.

Step 3. Global philosophy framework. Next, step back and ask how you want each pay
component (salary, bonus, incentives, and so forth) to contribute to prompting those
executive actions.

Step 4. Identify gaps. Next, ask, “To what extent do our pay plans around the world now
support these actions and what changes if any are required?”

Step 5. Systematize pay systems. Next, create more consistent performance assessment
practices, and establish consistent job requirements and performance expectations for
similar jobs worldwide.

Step 6. Adapt pay policies Finally, review your global pay policies (for setting salary levels,
incentives, and so forth). Conduct surveys and analyses to assess local pay practices.
Then fine-tune the firm’s global pay policies so they make sense for each location.

Training and Maintaining Employees Abroad

Union Relations Abroad - Firms opening subsidiaries abroad face differing union-management
relations practices among countries and regions

Terrorism, Safety, and Global HR - Terrorism abroad is a serious issue. Even stationing
employees in assumedly safe countries is no guarantee.

1. Taking Protective Measures - Employers have thus had to institute more

comprehensive safety plans abroad, including, for instance, evacuation plans to get
employees to safety. Many employers use intelligence services for monitoring potential
terrorist threats abroad.

2. Kidnapping and Ransom ‫(فديه‬K&R) Insurance - so many employers buy kidnapping and
ransom (K&R) insurance. Various events may trigger payments under such policies. The
obvious ones are kidnapping, extortion (threatening bodily harm), and detention
(holding an employee without any ransom demand). The insurance typically covers
several costs associated with kidnappings, abductions, or extortion.

3. Repatriation‫ترحيل‬: Problems and Solutions - One of the most worrisome facts about
sending employees abroad is Keeping Business Travel Safe

Employee Engagement Guide for Managers

The top drivers of employee engagement around the globe

1. Career opportunities was the number-one key driver of employee engagement in all
regions of the world, underscoring the universal importance of providing such
opportunities.

2. But beyond that point of agreement, the other key drivers varied by geographic area
For example, setting goals/managing performance was the number two key driver of
employee engagement in North America but was much less important in Europe; the
reputation of the organization was number two in Europe, pay was number two in
Asia/Pacific, and recognition was number two in Latin America. So, the management
actions that drive engagement vary somewhat by region

Managing HR Locally: How to Put into Practice a Global HR System

Years ago international businesses often ran their international operations from
“international” units within their corporate headquarters. That structure evolved into a
“multinational” structure; here subsidiary units (often with their own HR units) abroad
largely controlled themselves. Now the trend is toward the “global” company. Global
companies seek to be fully integrated. This global approach has at least two big
implications for human resource management. For one thing, it generally means that
the company as a whole will want to be able to redeploy their best employees
anywhere the firm does business (although most employers still rely most heavily on
local employees). Second, being “global” also affects how the company organizes and
manages its human resource management function, with the emphasis often on
standardizing HR practices worldwide. Figure 17-2 summarizes this

Developing a More Effective Global HR System

First, these employers engage in two best practices in developing their worldwide human
resource policies and practices

1. Form global HR networks. To head off resistance, human resource managers around the
world should feel part of the firm’s global human resource management team. Treat the
local human resource managers as equal partners and
2. Remember that it’s more important to standardize ends and competencies than
specific Methods.

Making the Global HR System More Acceptable

Next, employers engage in three best practices so that the global human resource

systems they develop will be acceptable to local managers around the world. These practices
are:

1. Remember that truly global organizations find it easier to install global systems.

2. Investigate pressures to differentiate and determine their legitimacy‫مشروعيه‬

3. Try to work within the context of a strong corporate culture.

Implementing the Global HR System

Finally, two best practices helped ensure success in actually implementing the globally
consistent human resource policies and practices:

1. “You can’t communicate enough.” “There’s a need for constant contact with the
decision makers in each country, as well as the people who will be implementing and
using the system.
2. Dedicate adequate resources for the global HR effort.