1. Prepared by. Annisa Citra Elsa Mayasari Freda Sitorus Muhammad Saflianto Richard

2. Managing Human Resources Globally Chapter 15

3. Managing Human Resources Globally Chapter 15 Introduction Competitive advantages: 1.New markets - Large number of potential customers 2.Building facilities in other countries – Lower labor costs (for unskilled jobs) 3.Rapid Increase in telecommunication & IT – Work done more rapidly, efficiently, effectively Strategically manage human resources in an international context RANKCOMPANYREVENUESPROFITS ($ MILLIONS) ($MILLIONS) 1 ExxonMobil339,938.036,130.0 2 Wal-Mart Stores315,654.011,231.0 3 Royal Dutch Shell306,731.025,311.0 4 BP267,600.022,341.0 5 General Motors192,164.0 -10,567.0

4. Managing Human Resources Globally Chapter 15 Current Global Change European Economic Community (EEC) Close geographic proximity Most of European countries agreed to participate in EEC - 1992 “ A Confederation of most of the European nations that agree to engage in free trade with one another, with commerce regulated by an overseeing body called the European Commission (EC) ” North American Free Trade Agreement (NAFTA) “ An agreement among Canada, The United States, and Mexico that has created a free market even larger than the European Economic Community “ A free trade agreement since 1989 Has increased U.S. investment in Mexico

5. Managing Human Resources Globally Chapter 15 Current Global Change The Growth of Asia “ An additional global market that is of economic consequence to many firms lies in Asia “ Asian flu General Agreement on Tariffs and Trade (GATT) “ An international framework of rules and principles for reducing trade barriers across countries around the world “

6. Managing Human Resources Globally Chapter 15 Factors Affecting HRM in Global Markets Culture Education – Human Capital Economic System Political – Legal System Human Resource Management Factors Affecting Human Resource Management in International Markets

7. Managing Human Resources Globally Chapter 15 Factors Affecting HRM in Global Markets Culture Education – Human Capital Economic System Political – Legal System Human Resource Management Factors Affecting Human Resource Management in International Markets CULTURE The most important factor influencing international HRM Reasons: 1. Determines the others 3 factors affecting HRM in global markets 2. Determines effectiveness The set of important assumptions Hofstede’s Cultural Dimensions  Individual-collectivism  Power distance  Uncertainty avoidance  Masculinity-feminity  Long term–Short term Orientation Implications of Culture for HRM Important impact on approaches to managing people

8. Managing Human Resources Globally Chapter 15 Factors Affecting HRM in Global Markets Culture Education – Human Capital Economic System Political – Legal System Human Resource Management EDUCATION – HUMAN CAPITAL Productive capabilities of individuals – that is the Knowledge, Skills, experience That have economic value

9. Managing Human Resources Globally Chapter 15 Factors Affecting HRM in Global Markets Culture Education – Human Capital Economic System Political – Legal System Human Resource Management POLITICAL – LEGAL SYSTEM Regulation Requirements for certain HRM practices Legal system is an outgrowth of the culture in which it exist

10. Managing Human Resources Globally Chapter 15 Factors Affecting HRM in Global Markets Culture Education – Human Capital Economic System Political – Legal System Human Resource Management ECONOMIC SYSTEM A country’s culture is integrally tied to its economic system The health of the system can have an important impact Affects by taxes on compensation packages

11. Managing Human Resources Globally Chapter 15 Managing Employees in a Global Context Types of International Employees Parent country Host country Third country Expatriate Parent-country nationals (PCNs) Host-country nationals (HCNs) Third-country nationals (TCNs) Corporate Headquarters Corporate Headquarters Foreign Subsidiary Foreign Subsidiary Foreign Subsidiary Foreign Subsidiary Foreign Subsidiary Corporate Headquarters Corporate Headquarters Increasing participation in global markets DomesticInternationalMultinationalGlobal Parent Country Host Country

12. Managing Human Resources Globally Chapter 15 Managing Expatriates in Global Markets Human Resource in Managing Expatriates Staffing and Selection Communicate the value of international assignment for the company global Mission Ensure those with highest potential move internationally Provide short term assignment to increase the pool of employee with international experience Recruit employees who have lived or who were educated abroad Training & Career Make international assignment planning a part of career development Encourage early international experience Create learning opportunities during the assignment Use international assignment as a leadership development tools PA & Compensation Differentiate PM based on their roles Align Incentives with expatriation objectives Tailor benefits to the expatriate needs Emphasizes rewarding careers rather than short term outcomes Repratioation Involve the family in the orientation program at the beginning and at the end Establish mentor relationship Support for dual careers Secure opportunities for the returning manager to use knowledge and skills learned while being assisgned

13. Managing Human Resources Globally Chapter 15 Managing Employees in a Global Context Managing Expatriates in Global Markets Selection of Expatriate Managers Training and Development of Expatriates Compensation of Expatriates Reacculturation of Expatriates

14. Chapter 16 Strategically Managing the HRM Function “explore the changes in HRM function and manage the changes”

15. Index : - HRM Roles and its Strategies - Assessment for HRM - Improving HRM efficiency and effectiveness - Applied Technology (Software) for HRM - The future for HR professionals

16. Index : - HRM Roles and its Strategies - Assessment for HRM - Improving HRM efficiency and effectiveness - Applied Technology (Software) for HRM - The future for HR professionals

17. Transactional (65 – 75%) Benefits administration Record keeping Employee services Traditional (15 – 30%) Recruitment and selection Training Performance management Compensation Employee relations Transformational (5 – 15%) Knowledge management Strategic redirection and renewal Cultural change Management development HRM Activities in Terms of Strategic Value Strategic

18. HRM Basic Perspective : Customer-Oriented Perspective Customers Line managers Strategic planners Employees HRM function Technology Staffing Performance management Rewards Training and development Customers’ needs Committed employees Competent employees

19. HR’s Strategy HRM function : Customer-oriented HRM activities : Strategic value

20. HR Strategy : the basic process Scan the external environment Identify strategic business issues Identify people issues Develop HR strategy Communicate HR strategy Line executives involvement : -Input provider - members of the dev. Team - communication receiver - approver

21. Ways to Generated an HR Strategy Business issues/outcomes 3 different Inside-Out Stages People issues/outcomes HR Strategy People issues/outcomes HR Strategy People issues/outcomes HR Strategy Business-Linked (5 cases) People-Linked (7 cases) HR Focused (3 cases) An Outside-in Perspective Business issues/outcomes People issues/outcomes HR Strategy Business-Driven (5 cases)

22. Index : - HRM Roles and its Strategies - Assessment for HRM - Improving HRM efficiency and effectiveness - Applied Technology (Software) for HRM - The future for HR professionals

23. Assessment of an HRM Function Objectives -Marketing the function : - Providing accountability : Approaches for Evaluating Effectiveness -Audit approach Focuses on reviewing various outcomes of HR function using list of key indicators and measuring it through its customers. Example : Demerit : its solely voicing out the employees Key IndicatorsCS Measures Labor Relations Ratio of grievances by plan to number of employees Assistance provided to line managers in handling grievances

24. Assessment of an HRM Function Approaches for Evaluating Effectiveness -Analytical approach Focuses on reviewing various outcomes of HR function by determining the impact of, or the financial cost and benefits of a program or practice. Example : Cost-benefits-analysis Human resources accounting -Capitalization of salary -Net present value of expected wage payments - Returns on human assets and human investments Utility Analysis -Turnover cost - Absenteeism and sick leave costs - Gains from selection program - Impact of positive employee attitudes - Financial gains of training program

25. Index : - HRM Roles and its Strategies - Assessment for HRM - Improving HRM efficiency and effectiveness - Applied Technology (Software) for HRM - The future for HR professionals

26. Transactional (65 – 75%) Benefits administration Record keeping Employee services Traditional (15 – 30%) Recruitment and selection Training Performance management Compensation Employee relations Transformational (5 – 15%) Knowledge management Strategic redirection and renewal Cultural change Management development Improving HRM Activities in Terms of Strategic Value Strategic Outsourcing Process redesign, information technology

27. Restructuring HRM Organization Structure VP, HRM Director Staffing Director Compensation Director Training & Development Director Planning Historical HRM Organizational Structure New HRM Organizational Structure VP, HRM Centers for Expertise -Rewards - Staffing - Training & Dev. - Communications Traditional/transfor mational Field Staff -HR Generalist Transformational/tra ditional Service Center -Information technology - Claim processing Transactional

28. Transactional (65 – 75%) Benefits administration Record keeping Employee services Traditional (15 – 30%) Recruitment and selection Training Performance management Compensation Employee relations Transformational (5 – 15%) Knowledge management Strategic redirection and renewal Cultural change Management development Improving HRM Activities in Terms of Strategic Value Strategic Outsourcing Process redesign, information technology

29. Improving HRM Activities in Terms of Strategic Value 1. Outsourcing A use of an outside organization for a broad of services 2. Process Redesign Review and redesign of work processes to make them more efficient and improve the quality of the end product or services Indentify the process to be reengineered Understand the process Redesign the process Implement the new process feedback

30. Improving HRM Activities in Terms of Strategic Value 3. New Technology - HRM Information Systems Applying advanced application of knowledge, procedures and equipment that have not been used before. a. Transaction process b. Decision support systems c. Expert systems Current: a. Interactive voice technology b. Networks and client-server architecture c. Relational database d. Imaging e. Expert systems f. Groupware New/Add : Improve effectiveness through increasing access to information, improving communications, improving the speed which HRM transaction and information can be gathered and reducing the cost and facilitating the administration of HRM function such as recruiting, training and performance management

31. Index : - HRM Roles and its Strategies - Assessment for HRM - Improving HRM efficiency and effectiveness - Applied Technology (Software) for HRM - The future for HR professionals

32. Applied Technology (Software) to Ease HRM Function to be More Strategic Transactional (15 – 25%) Benefits administration Record keeping Employee services Traditional (25 – 35%) Recruitment and selection Training Performance management Compensation Employee relations Transformational (25 – 35%) Knowledge management Strategic redirection and renewal Cultural change Management development Traditional Face to face delivery Outsourcing Electronic Delivery Process redesign, information technology

33. Index : - HRM Roles and its Strategies - Assessment for HRM - Improving HRM efficiency and effectiveness - Applied Technology (Software) for HRM - The future for HR professionals

34. The Future for HR Professionals Nowadays HR functions become more strategic by becoming the “SOURCE OF PEOPLE EXPERTISE – People Issues HR must posses and use knowledge of how people can do and play role as well as the policies, programs, and practices that can leverage the firm’s people as a source of competitive advantage HR Basic Competencies Business Competences Proffessional – Technical Knowledge Management of Change Process Integration competence

35. Thank You