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© 2003 Prentice Hall, Inc Instructor presentation questions: Chapter 16 Managing Global Human Resources
16-2 © 2003 Prentice Hall, Inc. Chapter 16 Outline HR and the Internationalization of business The HR Challenges of international business How intercountry differences influence HRM Cultural factors Economic systems Legal and industrial relations factors The European Union
16-3 © 2003 Prentice Hall, Inc. Chapter 16 Outline Improving international assignments through selection Why international assignments fail International staffing: Home or local? Values and international staffing policy Selecting international managers The new workplace: Sending women managers abroad
16-4 © 2003 Prentice Hall, Inc. Chapter 16 Outline Training and maintaining international employees Orienting and training employees of international assignments International compensation The balance sheet approach Incentives Beyond compensation
16-5 © 2003 Prentice Hall, Inc. Chapter 16 Outline Training and maintaining international employees (continued) Performance appraisal of international managers International labor relations Safety and fair treatment abroad HR.net Repatriation: Problems and solutions Strategic HR
16-6 © 2003 Prentice Hall, Inc. Chapter 16 Outline A final word: Strategic HR Strategy and strategic HR Management values and philosophy Auditing the HR function Summary
16-7 © 2003 Prentice Hall, Inc. After Studying This Chapter You Should Be Able To: More effectively manage international HR- related tasks Illustrate how intercountry differences effect HRM Explain five ways to improve international assignments through selection Discuss how to train and maintain international employees
16-8 © 2003 Prentice Hall, Inc. Strategic Overview Basic concepts Managing international aspects of HR How businesses are internationalizing
16-9 © 2003 Prentice Hall, Inc. HR and The Internationalization of Business Increasingly, US based companies are doing business abroad Keys to success for firms like P&G, IBM, and Citicorp New challenges
16-10 © 2003 Prentice Hall, Inc. What US Firms Should Do Coordinate plans on a worldwide basis Create organization structures providing balance Extend HR challenges, systems abroad Answer these questions: Should we staff offices with local or US managers? How should we appraise and pay the local employees? How should we deal with the unions in our offices abroad?
16-11 © 2003 Prentice Hall, Inc. HR Challenges of International Business Deployment Knowledge and innovation dissemination Identifying and developing talent globally Researchers asked “What are the key global pressures affecting human resource management practices in your firm currently and for the projected future?” Responses were:
16-12 © 2003 Prentice Hall, Inc. Global Staffing Pressures Candidate selections Assignment terms Relocation Immigration Culture and language Compensation Tax administration Handling spouse and dependent matters
16-13 © 2003 Prentice Hall, Inc. How Intercountry Differences Influence HRM How do cultural, political, legal, and economic differences of other countries influence HR policies? Cultural factors address the ethos of a country Management styles vary
16-14 © 2003 Prentice Hall, Inc. A Classic Study Power distance is the extent to which the less powerful members of institutions accept and expect an unequal distribution of power Different expectations Definition
16-15 © 2003 Prentice Hall, Inc. Power Distance Effect In Mexico, Managers keep their distance Formal rules Individualism and self-sufficiency German workers never arrive late
16-16 © 2003 Prentice Hall, Inc. Economic Differences Translate into differences in HR practices: Espousing ideals of free enterprise Wage costs vary Other labor costs vary
16-17 © 2003 Prentice Hall, Inc. Legal and Industrial Relations Factors Industrial relations means the relationships among the worker, the union, and the employer The US practice of employment at will does not exist in Europe Work councils Codetermination Definition
16-18 © 2003 Prentice Hall, Inc. European Union EU formation caused: Tariffs disappeared Free movement between jobs Use of the Euro as single currency Union consulting
16-19 © 2003 Prentice Hall, Inc. Intra-EU Differences Some countries have no minimum wages Workweeks vary Minimum number of annual holidays Termination advance notice length No limit 48 hours Employment contracts vary
16-20 © 2003 Prentice Hall, Inc. Failure Rates of International Assignments International assignment failure can cost hundreds of thousands of dollars
16-21 © 2003 Prentice Hall, Inc. Why International Assignments Fail Personality Person’s intentions Family pressures Lack of cultural skills Other non-work conditions like living and housing conditions, and health care
16-22 © 2003 Prentice Hall, Inc. Improving Failure Rates/ Solutions Provide realistic previews Have a careful screening process Improve orientation Provide good benefits Test employees fairly Shorten assignment length
16-23 © 2003 Prentice Hall, Inc. International Staffing Multinational corporations (MNC’s) use several types of international managers: Locals Expatriates Home-country nationals Third-country nationals
16-24 © 2003 Prentice Hall, Inc. Reasons to Hire Locals Working in a foreign country Cost Being a “better citizen” Short-term projects Security
16-25 © 2003 Prentice Hall, Inc. Reasons to Use Expatriates Technical competence Know company culture Climbing the corporate ladder
16-26 © 2003 Prentice Hall, Inc. Avoiding Pitfalls in Hiring Multinationals Don’t rush Always obtain originals Confirm existence of institution Write or fax Have applicant sign and notarize documents Verify foreign credentials Telltale signs of fraudulent credentials
16-27 © 2003 Prentice Hall, Inc. Value Systems and Staffing Policies If you were an executive manager in an ethnocentric run firm, who might you hire? Why? Ethnocentric Polycentric Geocentric
16-28 © 2003 Prentice Hall, Inc. Selecting International Managers Test for traits that predict success in adapting to new environments Job knowledge and motivation Relational skills Flexibility and adaptability Extracurricular openness Family situation Predictive trait breakdown
16-29 © 2003 Prentice Hall, Inc. Important Predictors of Success Family situation tops the list Flexibility/adaptability screening was high on results Use paper and pencil tests like the Overseas Assignment Inventory Previewing what changes an international assignee can expect
16-30 © 2003 Prentice Hall, Inc. General Selection Procedures Use of structured interviews varies widely by country 10.3% 12.1% 17.1% 22.9 % 29.2 % 33 %34.6% 37.5% 54.8 % 59.1% Can you name each country?
16-31 © 2003 Prentice Hall, Inc. The New Workplace: Sending Women Abroad Only 6% filled overseas positions compared to 49% domestic One survey found inaccurate stereotypes Not as internationally mobile Might have a tougher time building teams
16-32 © 2003 Prentice Hall, Inc. Orienting and Training More form than substance Little or no systematic selection and training Only 42% have formal briefings
16-33 © 2003 Prentice Hall, Inc. What Special Training Do Overseas Candidates Need? Impact of cultural differences Understanding attitude formation Factual knowledge about target country Language and adjustment/adaptability skills
16-34 © 2003 Prentice Hall, Inc. Continued Training and Development IBM offers rotating assignments Have worldwide management development centers INSEAD in France provides educational opportunities
16-35 © 2003 Prentice Hall, Inc. Training Trends Trends in expatriate training and development: Use of cross-cultural training Use returning managers as resources for new assignees Software and internet programs like Bridging Cultures for cross-cultural training
16-36 © 2003 Prentice Hall, Inc. International Compensation Determining international pay scales is no easy task Expensive locales require additional pay else no one will take position What to do when relocating to less costly locale
16-37 © 2003 Prentice Hall, Inc. Determining Equitable Wages Lots of compensation data available in US but not overseas conducts an international study of Used to determine next year’s compensation KRAFT compensation
16-38 © 2003 Prentice Hall, Inc. Balance Sheet Approach 85% of US firms use it Has 4 main home-country expense groups: Income taxes Housing Goods and services Discretionary expenses Expatriate receives base pay + additional for each group Sample balance sheet approach
16-39 © 2003 Prentice Hall, Inc. Incentives To have expatriates accept and stay on international assignments: Foreign service premiums Hardship allowances Mobility premiums Non-monetary rewards
16-40 © 2003 Prentice Hall, Inc. Performance Appraisals Who appraises the expatriate is key Stipulate the assignment’s difficulty level Favor the on-site manager’s appraisal Home-office manager writing the appraisal consults a former expatriate Modify the normal performance criteria
16-41 © 2003 Prentice Hall, Inc. International Labor Relations Union membership varies widely worldwide 14% 29% 44% 39% 80% 24% 23% 39%
16-42 © 2003 Prentice Hall, Inc. International Labor Relations Continued Areas of differences in labor relations practices include: Centralization Union structure Employer organization Union Security Content and scope of bargaining Grievance handling Strikes Worker participation
16-43 © 2003 Prentice Hall, Inc. Safety and Fair Treatment Abroad Raises some unique safety issues Provide general training Blend in Arrive at airports at departure time Security systems Vary departure/arrival times and routes to work
16-44 © 2003 Prentice Hall, Inc. Safety and Fair Treatment Abroad Keep current on crime and other problems Remain confident at all times Companies working to combat AIDS
16-45 © 2003 Prentice Hall, Inc. HR.net – HR Information Systems HRIS is an automated system by which interrelated components work together to collect, process, store, and disseminate information to support decision- making, coordination control, analysis, and visualization of an organization’s human management activities Definition
16-46 © 2003 Prentice Hall, Inc. HRIS Benefits Get an accurate head count of employees worldwide Select for overseas assignment Keep track of pay plans and benefits Integrate and update HR systems and reports Monitor global HR activities in real time
16-47 © 2003 Prentice Hall, Inc. Repatriation Problems Leaving the firm prematurely Mediocre or makeshift jobs Finding former colleagues promoted Reverse culture shock
16-48 © 2003 Prentice Hall, Inc. Repatriation Solutions Shorten time abroad – have written agreement Assign a sponsor Provide career counseling Keep communications open Develop reorientation programs Have returnees advise future expatriates
16-49 © 2003 Prentice Hall, Inc. Strategic HR – Seimens Basic HR Strategy A living company is a learning company Global teamwork is the key to realizing potential Redefine management to meet globalization challenges A climate of mutual respect
16-50 © 2003 Prentice Hall, Inc. Strategy and Strategic HR Strategic human resource management is the linking of HRM with strategic goals and objectives HR strategies are the courses of action the company uses Definition
16-51 © 2003 Prentice Hall, Inc. Management Values and Philosophy Do your assumptions and values influence your decisions? How do organizations demonstrate their philosophy?
16-52 © 2003 Prentice Hall, Inc. Employee Commitment Employee commitment - An employee’s identification with and agreement to pursue the company’s or the unit’s missions—to act like an owner rather than as an employee Good managers use employee commitment as their guide Definition
16-53 © 2003 Prentice Hall, Inc. Commitment Building Establish people-first values Guarantee fair treatment Use value-based hiring Encourage employees to actualize
16-54 © 2003 Prentice Hall, Inc. Saturn I’m committed to Saturn for what they did for me; 300 plus hours of training and problem solving that expanded my personal horizon; the “Excel” program that pushes me to the limit; and because I know that at Saturn I can go as far as I can go. This company wants its people to be all that they can be.
16-55 © 2003 Prentice Hall, Inc. Auditing the HR Function Process involves 5 questioning steps: Define What should our HR functions be? Rate How important is each function? Grade How well are functions performed? Improve What needs improvement? Feedback How effectively does each use resources?
16-56 © 2003 Prentice Hall, Inc. Chapter 16 Summary Firms must be managed globally Challenges include: coordinating production, sales, and financial operations on a worldwide basis Intercountry differences
16-57 © 2003 Prentice Hall, Inc. Chapter 16 Summary A large percentage of expatriate assignments fail Screening for expatriate managers look for traits like: Adaptability and flexibility Cultural toughness Self-orientation Etc.
16-58 © 2003 Prentice Hall, Inc. Chapter 16 Summary Training for overseas managers typically focuses on cultural differences and other factors. Can you name some? The need to have both local and home- office supervisors provide input into the performance appraisal
16-59 © 2003 Prentice Hall, Inc. Chapter 16 Summary Can you name some common repatriation problems and how to avoid them? Strategic human resource management “…the linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility” The End!
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