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• Managing Global
Workforce
• Case
• Culture

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 International HRM

International human resource management (IHRM) is defined as

“the set of distinct activities, functions, and processes that
are directed at attracting, developing, and maintaining
multinational enterprises’ human resources” (Taylor,
Beechler, & Napier, 1996, p. 960).
 International HRM
• IHRM is the interplay among the three dimensions- HR Activities,
types of employees, and countries of operation
IHRM Activities- HRP,
Recruitment, T&D,
Compensation, PM, Industrial
Relations

Country Categories-
• Host Country- where the
company is located
• Home Country- Where the
company has its headquarters
• ‘Other Countries’- Countries
as source of finance/labor
Globalization Terms
• Expatriate: a person who lives outside their native
country.
• Home Country: Country of legal residence.
• Host Country: Country in which expatriate is working
• Parent country nationals (PCNs) are employees
who are citizens of and are hired from the nation
where an organization has its original and current
headquarters (the parent country).
• Host Country Nationals (HCNs): Persons from one of
the host countries, working in the host country
operations.
• Third-Country National: Expatriate who is
transferred to another country while working abroad.
• Culture Shock: Period of time to adjust to new
culture lasting an average of 6 months.
• Reverse Culture Shock
Cross-National Differences
Culture

Religion Politics

Cross
National
differences
Language History

Demographics Economics
Hofstede’s Cultural Dimensions

• Power Distance
• Uncertainty Avoidance
• Individualism vs. collectivism
• Masculinity vs. feminism
• Short term vs. long term orientation
• Indulgence vs. Restraint
 Managing International HR Activities

Recruitment and Selection

• Ethnocentric Approach- In this approach all key management positions are held
by parent-country nationals. This strategy may be appropriate during the early
phases of international business.

• Polycentric Approach- This requires host- country nationals to be hired to

manage subsidiaries, while parent-nationals occupy key positions at home
office/corporate headquarters in parent country.

• The Geocentric Approach- Best people for key jobs throughout the organization,
regardless of nationality.
 What might be advantages and
disadvantages of various approaches?
 STAFFING STRATEGY Advantages Disadvantages
Ethnocentric Staffing • Provide control in the subsidiary • Costly to send PCNs to international
(preference for PCNs) • They spread the workings, culture, policies and locations (expatriate pay and
procedures of the parent company in the training).
subsidiary. • Failure due to lack of cultural
• Act as a communication channel. adjustment gets spilled over.
• Can also help avoid local ethnic/racial tensions. • Communication challenges with the
• Provide a foreign image. subsidiary.
• OUTSIDERS: Antagonize local
managers and workers.

Polycentric Staffing • Understand the local environment. • Might lack formal qualifications and
(preference for • Communicate with local stakeholders (gov, expertise.
HCNs) unions etc) • High cost of on job training (spend
• In tune with local culture: Managerial style is time at parent company)
aligned with local customs. • Communication challenges with
• Provide a local image. HQs.

Geocentric Staffing • Knowledge and Expertise of the TCN. • Dealing with multiple cultures.
• Selecting the BEST person for the job. • Communication challenges
• Cost
 OYO Hotels and Homes has appointed
Guruprasad Sankarnarayana (pictured
left), country head for OYO Thailand,
as chief operating officer for Southeast
Asia and Middle East. As COO, he will
anchor all the central business
functions - revenue and all channels,
supply, transformation, operations and
strategic partnerships. He worked at
ZS Associates and McKinsey & Co
before joining OYO India and South
Asia team as the operations leader two
years ago. Last September,
Sankarnarayana moved to Bangkok to
assume the role of country head and
lead the business in Thailand. Since
then, OYO said Sankarnarayana has
played a key role for the company,
What kind of staffing is growing the portfolio of hotels in
Thailand while ensuring overall supply
this? strategy met profitability guardrails.

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Staffing and the International Product Life
Cycle
• ETHNOCENTRIC
Early Stages STAFFING
of Product Life • PCNs will
oversee
Cycle exports/licensing.

• POLYCENTRIC
Middle Stages STAFFING
• HCNs will help
of Product Life in adapting the
Cycle product to
local needs.

• GEOCENTRIC
STAFFING
Later Stages • PCN will
of Product Life provide
control, HCN
Cycle will provide
cost advantage
 Selection of International Managers
• Testing, interviewing, and background checks are applicable for selecting expatriates
for domestic assignments.

• Best practices in international assigne selection include:

 Testing- Example Brookfield Global Relocation Services Intercultural Group has used its
Overseas Assignment Inventory (OAI) for over 40 years to help employers do a better
job at selecting candidates for assignments abroad.
 Realistic Previews- “spell it all out” ahead of time
 Adaptability Screening
 Facilitating self selection
 Traditional selection procedures focusing on personal traits- what Big 5 personality
traits will predict success in international assignments?
 Managing International HR Activities
Training and Development

After selection, the next step in IHRM is to train and develop new hires,
particularly for -those who are expected to be posted overseas.

A few commonly understood objectives of training in the multinational

corporations are
• Bridging the cultural gaps between the host and the parent organizations
• Recognizing that orientation/induction challenges are different for the
parent and the host unit
• Building a united corporate culture across subsidiaries.
 The Training Process of INTERNATIONAL
MANAGERS
Cross-cultural training
⮚ Cross-cultural training: Formal programs designed to teach people from one culture how to adjust &
how to work effectively in another culture.
⮚ Focus on: Norms, values, traditions
⮚ Includes at a minimum: Language, Culture, Day-to-day practicalities, Currency, Signs, Manners
⮚ Example: tipping or not, gift giving, “bring a plate”

TYPES
• Low-rigor and passive training methods focus on factual issues and include books, lectures, and area
briefings.
• Moderate-rigor and somewhat active methods are described as analytical and include films, classroom
discussion, and sensitivity training.
• High-rigor and fully participative methods seek to really involve the candidate in cross-cultural
experiences; they are described as experiential and include role-playing, simulations, and field
trips.
• Lets learn Australian (not really English)! https://www.youtube.com/watch?v=yDb_WsAt_Z0
Performance Appraisal of International
Managers

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

• Weigh the evaluation more toward the on-site manager’s appraisal than toward
the home-site manager’s.
• If the home-office manager does the actual written appraisal, have him or her use
a former expatriate from the same overseas location for advise.
Compensation and
Benefits
In addition to regular compensation and
housing/living allowances, PCNs expect
additional benefits such as
• schooling for their children,
• regular trips home,
• access to recreational clubs.
Some assignments are seen as
unattractive. In these cases, PCNs may
require additional incentives.
Compensating International Managers
The balance sheet approach- determines an expatriate’s salary based on the going rate for the same
— or a similar — position in their home country.
Organizations will typically allocate additional allowances or reimbursements as appropriate, which
ensures employees can maintain their usual standard of living once they relocate. Ultimately, this
method preserves the employee’s current purchasing power, no matter where they end up working.

Step 1: The organization determines the employee’s net salary based on their home country’s going
rates.
Step 2: The employee’s salary is broken into four categories:
Taxes
Housing – including rent, bills, utilities, etc.
Goods and services – including expenses such as food, clothing, recreation, medical care, and transport
Reserve – including savings, benefits, pension contributions, education, etc.
Step 3: The organization provides additional benefits or allowances, based on specific
circumstances. For example, an employee relocating with their partner and/or children might receive an
additional allowance, particularly if a partner is unable to work in the host country.
Compensating International Managers
Incentives

• Foreign Service Premiums- financial payments over and

above regular base pay.

• Hardship Allowances

• Mobility Premiums
Steps in Establishing a Global Pay System

1. Set Strategy- strategic goals for the next 5 years- in terms of

improving productivity/boosting market share.
2. Identify critical executive behaviors- actions you expect your
executives to exhibit in order to achieve these strategic goals.
3. Global Philosophy Framework
4. Identify Gaps
5. Systemize pay systems- consistent performance assessment
practices
6. Adapt pay policies
 CHALLENGES IN IHRM

• Managing EFR (Employee Failure Rate)

• Managing Dual Career Couples
• Repatriation Strategy
• Countering Terrorism and Expat Safety
CLASS EXERCISE
You are an Indian ethnic apparel
company. Post success in the
Indian market you decide to
internationalize. You have decided
to open a store in Times Square,
NYC.

What are some HRM practices you

need to consider.
 • HPT005
OCTOBER 6, 2016

Can a Strong Culture Be Too

Strong?

COPYRIGHT © 2016 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
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 What are the major themes in
this case?

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 Organizational Culture

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 What words come to your mind
when you think about culture at
Parivar?

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 Organizational Culture
• The simplest definition of culture is `the way we do things around here'
(Deal and Kennedy, 1982).

• The system of shared actions, values, ideologies, assumptions,

explanations, attitudes, norms and beliefs that develops within an
organization and guides the behavior of its members.

• Some of these practices are so thoroughly internalized that no one

questions them- they are taken for granted; in other words, they get
institutionalized.
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What evidence of culture can you
point out to?

CEOs attentiveness to personal and professional matters.

Exit Interviews

Inviting comfortable couches in the CEO’s Office

Annual Future Vision Exercise

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Strength of culture is determine
by….
1. Degree to which there is consensus about its norms and values.

2. Intensity to which those norms and values are followed.

Strong culture are associated with greater coordination, better goal alignment, and higher employee motivation.

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Why is high turnover a problem
at Parivar?

What is causing the turnover?

Why might people be leaving?

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Is there an acceptable level of
turnover?

What is People Support? How

will it work?

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What is People Support? How
will it work?

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What should Indira Pandit do?

People Support one element of proposal

Analyze exit interview data to determine root cause
Feedback on culture
Company’s reputation as a place to work
Level of compensation.

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The Iceberg Model of Organizational Culture

The organizational iceberg analogy comes from Edward T. Hall’s “Iceberg Model of
Culture”. In this analogy, Hall explains how organizational culture is similar to an iceberg.

What you see is just the tip of the iceberg. Underneath

lies an enormous, invisible mass, which holds
everything together strongly.

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Level one lies above the surface: the ‘artifacts’ or the visible part of your organization’s
culture. This part can be noticed, but not necessarily understood, by a visitor or
‘outsider’ in the form of (among other things) physical artifacts such as a building’s
interior, office design and decoration, appearance, perks and benefits, and
technology, as well as your organization’s own language, rewards or recognition,
visible traditions, social practices, and even office jokes.

• Stories (CEO, getting fired, how company deals with employees who have to relocate,
crisis situations, whether lower employees can rise up)
• Rituals- everyday organizational practices that are repeated routinely.
• Ceremonies- elaborated set of activities that are enacted time and again on important
occasions.
• Languages- Jargons
Level two, the ‘espoused values’, are what an organization says it stands for and
claims to value, such as published organizational values or a mission. These are
stated goals, and they reflect the members’ shared opinion on ‘how things should be’.
They can be the ‘public relation face’ of the organization, though it does not always
match the reality.

Level three, the ‘basic assumptions’, are your employees’ core beliefs. They can heavily
influence how people act and interact, although they are not always conscious
assumptions. A basic assumption is a kind of belief that is taken for granted as a fact,
and so it is never challenged, e.g., ‘it is best to speak up when I have a good idea’. A
pattern of these evolves among the members of a social group such as an organization
and makes up the core of the culture.
When you see an iceberg, the portion visible above water is only a smaller part of a larger whole. Think of
organizational culture in the same way.

People often perceive culture as the various observable characteristics of a specific company that
they *see* with their eyes—perks, benefits, dress code, office environment, amenities, location, and
people.

However, the reality is that they are just an external manifestation of broader and deeper
components of culture: the intricate ideas, deeply ingrained priorities and preferences known as
values and attitudes.

Deep below the 'water line' lies an enormous, invisible mass, which holds every ingrained cultural
assumption that's too difficult to affect. Simply put, it’s an organization’s ideologies or core values.

These are majorly learned ideas of what's good, bad, right, wrong, desirable, undesirable, acceptable, and
unacceptable. Ultimately, these become visible only through the way people act, the words they use, the
laws they enact, and how they communicate.

No wonder an organization's culture is a common denominator that differentiates the best-performing

organizations from the rest.
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 Thank You

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