1. Managing Global Human Resources17
Managing Global Human Resources
This chapter outlines some of the HR problems and issues involved with international businesses. The subjects covered include understanding inter-country differences, using selection to improve international assignments, and training and maintaining international employees.
Many companies desire to rotate managers through international assignments. However, work visa requirements of the host countries (including the U.S.) can sometimes greatly hinder these efforts. Federal anti-terrorism laws also make moving employees across borders more challenging.
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2. Learning Objectives List the HR challenges of international business.
Illustrate with examples how inter-country differences affect HRM.
List and briefly describe the main methods for staffing global organizations.
At the conclusion of this chapter, you will be able to:
List the HR challenges of international business.
Illustrate with examples how inter-country differences affect HRM.
List and briefly describe the main methods for staffing global organizations.
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3. Learning Objectives
Discuss some important issues to keep in mind in training, appraising, and compensating international employees.
Explain with examples how to implement a global human resource management program.
You also will be able to:
Discuss some important issues to keep in mind in training, appraising, and compensating international employees.
Explain with examples how to implement a global human resource management program.
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4. The Management Challenges of International Business
Coordinating market, product, and production plans on a worldwide basis
Creating organization structures capable of balancing centralized home-office control with adequate local autonomy.
Extending its HR policies and systems to service its staffing needs abroad:

5. The HR challenges of international business
The global challenges for management include deployment, knowledge, and innovation dissemination. They also include identifying and developing talent on a global basis. Complicating these decisions are the cultural, political, legal, and economic differences among countries and their peoples. This is a role for global HR.
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6. The HR Challenges of International Business
Deployment
Easily getting the right skills to where we need them, regardless of geographic location.
Knowledge and innovation dissemination
Spreading state-of-the-art knowledge and practices throughout the organization regardless of where they originate.
Identifying and developing talent on a global basis
Identifying can function effectively in a global organization and developing his or her abilities.

7. How inter-country differences affect HRM
A company operating multiple units abroad does not have the luxury of dealing with a relatively limited set of economic, cultural, and legal variables. We’ll discuss some of the differences in HR management and practices next.
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8. Adapting HR Activities to Inter-Country Differences
Countries differ widely in their cultures, which are based on values to which their citizens adhere. Cultural differences from country to country necessitate corresponding differences in management practices among a company’s subsidiaries.
Differences in economic systems translate into differences in HR practices. In Europe, for example, variances in HR practices affect minimum European Union wages, working hours, and employee representation. In China, there are relatively scarce employment services, and there is an active union movement. Sporadic labor shortages are fairly widespread.
Employers with transnational operations should have set policies on things like discrimination, harassment, bribery, and Sarbanes-Oxley. U.S. law applies to U.S. citizens working overseas but local laws govern locals overseas. It is a good practice for transnational companies to adjust their procedures and practices to the local laws while respecting U.S. laws.
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9. Adapting HR Activities to Inter-Country Differences
Let’s discuss some common HR practices and how they work in various countries.
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.
SELECTION - The dominant employee selection method involves analyzing the applicant’s résumé and then interviewing him or her.
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 confrontational, tension-producing situations.
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.
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10. Inter-Country Differences Affecting HRM
Cultural Factors
Economic Systems
Legal and Industrial Relations Factors
The European Union

11. Global Differences and Similarities in HR Practices
Personnel Selection Procedure
The Purpose of the Performance Appraisal
Training and Development Practices
The Use of Pay Incentives

12. The main methods for staffing global organizations
Employers’ focus today is increasingly on managing human resource activities locally. In other words, their main concern is on selecting, training, appraising, and managing the in-country employees where they do business. However, deciding whether to fill local positions with local versus expatriate (“imported”) employees has been and continues to be a major concern.
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13. Staffing the Global Organization
International staffing: Home or local?
Expatriates (expats): Noncitizens of the countries in which they are working.
Home-country nationals: Citizens of the country in which the multinational company has its headquarters.
Third-country nationals: Citizens of a country other than the parent or the host country.
Offshoring
Having local employees abroad do jobs that the firm’s domestic employees previously did in-house.

14. Staffing the Global Organization (cont’d)
Offshoring
Having local employees abroad do jobs that the firm’s domestic employees previously did in-house.
Issues in offshoring
Having an effective supervisory and management structure in place to manage the workers.
Screening and required training for the employees receive the that they require.
Ensuring that compensation policies and working conditions are satisfactory.

15. Values and International Staffing Policy
Ethnocentric
The notion that home-country attitudes, management style, knowledge, evaluation criteria, and managers are superior to anything the host country has to offer.
Polycentric
A conscious belief that only the host-country managers can ever really understand the culture and behavior of the host-country market.
Geocentric
The belief that the firm’s whole management staff must be scoured on a global basis, on the assumption that the best manager of a specific position anywhere may be in any of the countries in which the firm operates.

16. Staffing the Global Organization
Selecting expatriate managers
Selection testing
Legal issues
Avoiding early expatriate returns
Traits
Family pressures
What employers can do
Selecting expatriate managers is similar to selecting domestic managers, but firms need to determine whether managers for foreign assignments can cope internationally.
International assignments fail for various reasons including personality, the person’s intentions, and non-work factors. Family pressures are frequent. Three things help the adjustment: language fluency, having preschool age children rather than school-age or no children, and a strong bond between spouse and ex-pat partner.
Employers can help make ex-pat assignments more successful by providing realistic previews, facilitating self-selection, and using traditional selection procedures focusing on traits such as
openness.
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17. Why Expatriate Assignments Fail
Personality
Personal intentions
Family pressures
Inability of the spouse to adjust
Inability to cope with larger overseas responsibility.
Lack of cultural skills

18. Helping Expatriate Assignment Succeed
Providing realistic previews of what to expect
Careful screening
Improved orientation
Cultural and language training
Improved benefits packages

19. Selecting Expatriate Managers
Adaptability screening
Assessing the assignee’s (and spouse’s) probable success in handling the foreign transfer.
Overseas Assignment Inventory
A test that identifies the characteristics and attitudes international assignment candidates should have.
Realistic previews
The problems to expect in the new job as well as about the cultural benefits, problems, and idiosyncrasies of the country.

20. I. Job Knowledge
and Motivation
Managerial ability
Organizational ability
Imagination
Creativity
Administrative skills
Alertness
Responsibility
Industriousness
Initiative and energy
High motivation
Frankness
Belief in mission and job
Perseverance
III. Flexibility/Adaptability
Resourcefulness
Ability to deal with stress
Flexibility
Emotional stability
Willingness to change
Tolerance for ambiguity
Adaptability
Independence
Dependability
Political sensitivity
Positive self-image
V. Family Situation
Adaptability of spouse and family
Spouse’s positive opinion
Willingness of spouse to live abroad
Stable marriage
Five Factors Important in International Assignee Success, and Their Components
IV. Extracultural Openness
Variety of outside interests
Interest in foreign cultures
Openness
Knowledge of local language[s]
Outgoingness and extroversion
Overseas experience
II. Relational Skills
Respect
Courtesy and fact
Display of respect
Kindness
Empathy
Non-judgmentalness
Integrity
Confidence
Source: Adapted from Arthur Winfred Jr., and Winston Bennett Jr., “The International Assignee: The Relative Importance of Factors Perceived to Contribute to Success,” Personnel Psychology 18 (1995), pp. 106–107.
Figure 17–1

21. Important issues in training, appraising, and compensating international employees
Executives tend to agree that international assignees do best when they receive the special training (in things like language and culture) that they require. Fewer actually provide it. Let’s talk about what will help.
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22. Orienting and Training for International Assignment
There is little or no systematic selection and training for assignments overseas.
Training is needed on:
The impact of cultural differences on business outcomes.
How attitudes (both negative and positive) are formed and how they influence behavior.
Factual knowledge about the target country.
Language and adjustment and adaptation skills.

23. Trends in Expatriate Training
Rotating assignments that permit overseas managers to grow professionally.
Management development centers around the world where executives hone their skills.
Classroom programs provide overseas executives with educational opportunities similar to stateside programs.
Continuing, in-country cross-cultural training
Use of returning managers as resources to cultivate the “global mind-sets” of their home-office staff.
Use of software and the Internet for cross-cultural training.

24. Compensating Expatriates
The “Balance Sheet Approach”
Home-country groups of expenses—income taxes, housing, goods and services, and discretionary expenses—are the focus of attention.
The employer estimates what each of these four expenses is in the expatriate’s home country, and what each will be in the host country.
The employer then pays any differences such as additional income taxes or housing expenses.

25. The Balance Sheet Approach (Assumes Base Salary of $80,000)
Table 17–2

26. Incentives Foreign service premiums Hardship allowances
Financial payments over and above regular base pay, and typically range between 10% and 30% of base pay.
Hardship allowances
Payments to compensate expatriates for exceptionally hard living and working conditions at certain foreign locations.
Mobility premiums
Lump-sum payments to reward employees for moving from one assignment to another.

27. Appraising Expatriate Managers
Challenges in appraising oversea managers
Determining who should appraise the manager.
Deciding on which factors to base the appraisal.
Improving the expatriate appraisal process
Stipulate the assignment’s difficulty level, and adapt the performance criteria to the 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, use a former expatriate from the same overseas location for advice.

28. Repatriation: Problems and Solutions
Making sure that the expatriate and his or her family don’t feel that the company has left them adrift.
Solutions
Match the expat and his or her family with a psychologist trained in repatriation issues.
Make sure that the employee always feels that he or she is still “in the loop” with what’s happening back at the home office.
Provide formal repatriation services.

29. How to implement a global human resource management program
With employers increasingly relying on local rather than expatriate employees, transferring one’s human resource practices abroad is a top priority. Employers may have to defer to local managers on some specific human resource management policy issues. One study suggests that big inter-country HR practice differences are often not necessary or even advisable. The important thing is how you implement the global human resource management system.
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30. Putting a Global HR System into Practice
Managing HR Locally
Putting a Global HR System into Practice
Global HR system effectiveness
Global HR system acceptability
Implementation
Global companies that are truly effective in their HR practices engage in two best practices in developing their worldwide human resource policies and practices. They form global HR networks and they create a sense of partnership with onsite HR managers. They also know that it’s more important to standardize ends and competencies than specific methods.
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. They know that truly global organizations find it easier to install global systems. They investigate pressures to differentiate and determine their legitimacy. Finally, they work within the context of a strong corporate culture.
Finally, two best practices helped ensure success in actually implementing the globally
consistent human resource policies and practices. They learn to communicate actively and effectively and they dedicate adequate and ongoing resources to the effort.
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