2 International HRM Differences Greater Number of ServicesSpecial Services to Unique GroupCompensation ComplexityForeign Exchange Rate AttentionLanguage and Cultural Differences
3 Increasing Importance of Global Human Resources Understanding International Mergers and AcquisitionsImportance of Global Human Resources ManagementForeign Human ResourcesGlobal CompetitionMarket Access Opportunities
4 Composition of the Cultural Environment of International Business Languagespokenwritten languageofficial languagelinguistic pluralismlanguage hierarchyinternational languagesmass mediaReligionsacred objectsphilosophicalsystemsbeliefs & normsprayertaboosholidaysritualsTechnology and Material Culturetransportationenergy systemstools & objectscommunicationsurbanizationscienceinventionValues and AttitudesToward:timeachievementworkwealthchangescientific methodrisk-takingLawcommon lawcode lawforeign lawhome country lawantitrust policyinternational lawregulationEducationformal educationvocational trainingprimary educationsecondary educationhigher educationliteracy levelhuman resources planningPoliticsnationalismsovereigntyimperialismpowernational interestsideologiespolitical riskSocial Organizationkinshipsocial institutionsauthority structuresinterest groupssocial mobilitysocial stratificationstatus systems
5 Key Issues in International HRM Worldwide Human Resources PlanningRecruiting and SelectionExpatriate orientation and trainingRepatriationPerformance appraisalCompensationDealing with inflation and unexpected changes in exchange ratesProviding sufficient pay to keep individualsShould company pay hardship allowance?Dissatisfaction with cost of living allowancesHousing (Complex problems at home and overseas)
6 Key Issues in International HRM Benefits PlanningDeveloping equity among employeesSeveral plans necessary for different categories of personnelTaxation (Proliferation of new laws)Communication of HR Policies and Programs WorldwideTreat communication as a continuous processFace-to-Face contact frequentlyMake policy manuals brief and simpleBe sensitive to needs of receiverSend regular written explanations of policy changesPeriodic rotation of overseas HR managers desirableSecurity
8 International Corporation Domestic firm that uses its existing capabilities to move into overseas markets.
9 Multinational Corporation (MNC) Firm which independent business units operating in multiple countries.
10 Global CorporationFirm that had integrated worldwide operations through a centralized home office.
11 Transnational Corporation Firm that attempts to balance local responsiveness and global scale via a network of specialized operating units.
12 Types of Organizations Global EfficiencyHighGlobalViews the world as a single market; operations are controlled centrally from the corporate office.TransnationalSpecialized facilities permit local responsiveness; complex coordination mechanisms provide global integration.LowInternationalUses existing capabilities to expand into foreign markets.MultinationalSeveral subsidiaries operating as stand-alone business units in multiple countries.Local Responsiveness
13 The Multi-National Corporation (MNC) Home Country EmploymentExternal Country Employment
14 Managing in a Foreign Environment Attitudes VaryMotivational Tools are Distinctly Different
17 Managerial Values Role of Competition Role of Blame Role of Shame Role of Participation: Japan (hi)Role of Autocratic: Europe (hi) and South America (hi)
18 Sources of Managerial Talent Home Country Nationals (Expatriates)Host Country Nationals (Natives)Third Country Nationals (Non-Home/Host)
19 Advantages of Different Sources for Overseas Managers Host CountryHome CountryThird CountryLess costPreference of host country governmentKnowledge of environmentLanguage facilityTalent available within companyGreater controlCompany experienceMobilityExperience provided to corporate executivesBroad experienceInternational outlookMulti-lingualism
20 SOME OF THE LARGEST U.S. MULTINATIONALS AT&TGeneral ElectricMicrosoftCiscoGeneral MotorsProcter and GambleCiticorp.Hewlett-PackardRJR NabiscoCoca-ColaIBMTexacoDuPontIntelUnited TechnologiesExxon/Mobil OilJ.P. MorganWal-martFord MotorJohnson & JohnsonXeroxMotorola
21 6 Major Reasons for American Expatriate Failures in Foreign Environment Inability of the manager’s spouse to adjust to a different cultural environment.The manager’s inability to adapt to a different physical or cultural environment. Other family-related problems.The manager’s personality or emotional immaturity.The manager’s inability to cope with the responsibilities posed by the overseas work.The manager’s lack of technical competence.The manager’s lack of motivation to work overseas.
22 Selection Methods Interviews (executives and psychologists) Assessment Centers (exercises)Tests (language and special tests)Role of Family
23 Flowchart of the Selection-Decision Process Start the Selection ProcessCan the position be filled by a local national?Select local national and subject him/her to training basically aimed at improving technical and managerial skills.YESNOIdentify degree of interaction required with local community – using a 7- or 9- point scale, ranging from low to high, indicate the degree of interaction with local community required for successful performance on the job.Emphasis* on tasks variables.Second but by no means unimportant question is to ask whether the individual is willing to serve abroad.LOWHIGHYESNOIs candidate willing?Probably not suitable for positionYESIdentify degree of similarity / dissimilarity between cultures – using a 7- or 9-point scale, ranging from similar to highly diverse, indicate the magnitude of differences between the two cultures,NOProbably not suitable for positionVERY SIMILARStart orientation(moderate to high rigor)Emphasis* on task variablesHIGHLY DIVERSEEmphasis* on “relational abilities” factor.“Family situation” factor must also be taken into consideration.Start orientation(moderate to high rigor)Start orientation (most rigorous)
24 Preparing for an International Assignment Study the following subjects:Social and business etiquette.History and folklore.Current affairs, including relations between the country and the United States.The culture’s values and priorities.Geography, especially the cities.Sources of pride: artists, musicians, novelists, sports, great achievements of the culture, including things to see and do.Religion and the role of religion in daily life.Political structure and current players.Practical matters such as currency, transportation, time zones, hours of business.The language.
25 Cultural Shock "A Disorientation that Causes Perpetual Stress" Disorienting IncidentsImpossible CommunicationTelephone DifficultiesFamily Frustrations
26 Special Considerations Career Development RisksReentry ProblemsManaging Family LifeTerrorism
27 Recruitment Government Regulations Work Permits Universally Required Recruitment of Locals VariesGuest WorkersRole of Church, Family, Politics
28 Selection Merit Versus Best Family Family Ties Social Standing Origin Industrialized versus Less Developed
29 Training Issues Local Resources Less Technical Capabilities Apprenticeship Strengths in EuropeManagement Development (US Leader)Language (English Need)
30 Compensation Host Country Employees Managers Production Standard or Time or CombinationBenefits (often higher than U.S.)Profit Sharing (may be Required)ManagersNarrowing of Salary Gap with USA
31 Expatriate Compensation Base PayDifferentialsIncentivesCompany AssistanceCost: 3-4 times USA Rate
32 Compensation of Expatriate Managers To be effective, a compensationprogram must:Provide an incentive to leave the united states.Maintain an American standard of living.Facilitate reentry into the united states.Provide for the education of children.Maintain relationships with family, friends, and business associates.
33 Compensation Elements of an Expatriate Programs used by most U.S. Based MNCs have four elements:Base pay – equal to pay of domestic counterparts in comparably evaluated jobs.Differentials – to offset the higher costs of overseas goods, services, and housing.Incentives – to compensate the person for separation from family, friends, and domestic support systems.Company assistance programs – to cover added costs such as moving and storage costs, automobile, and education expenses.
34 The Price of an Expatriate Note: Additional costs often incurred aren’t listed above, including language and cross-cultural training for employee and family, and costs of selling home and cars in the U.S. before moving.*Figures take into account payments by employee to company based on hypothetical U.S. income tax and housing costs.*It is not unusual to triple costs compared to USA earnings.An employer’s typical first-year expensesof sending a U.S. executive abroad.Direct Compensation CostsBase Salary100%Foreign-service premium15%Goods and services differential20%Housing costs20-40%Transfer CostsRelocation allowance5%Air fare2%Moving household goods25%Other CostsCompany CarSchooling (two children)Annual home leave (four people)Personal income tax abroad50%Total = Salary plus%