1. Hiring and Managing Employees16
Hiring and Managing Employees
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

2. Recruitment and selection Training and development
International HRM
Expatriate managers
Recruitment and selection
Training and development
Compensation
Labor relations
Culture affects
Human resource management is the process of staffing a company and ensuring that employees are as productive as possible. Many unique issues arise when managing expatriates, or people who live and work outside their home country.
Culture is central to the tasks of managing people in an international business, including recruitment and selection, training and development, compensation, and labor relations.
Staffing policy is the means by which a firm staffs its offices. As we cover the three main approaches to international staffing, keep in mind that the policy a company selects is influenced by its level of international involvement, and that companies often blend these policies together.
Staffing policy
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

3. Ethnocentric Staffing
Individuals from home country manage operations abroad
Advantages
Locally qualified people not always available
Tight control over subsidiaries
Re-create local operations in home-office image
Interests of home office may be better protected
Ethnocentric staffing is when individuals from the home country manage operations abroad. Ethnocentric staffing offers several advantages:
Host countries may have a shortage of qualified personnel and bringing in expatriate managers may be the only practical option.
Expatriate managers can infuse subsidiaries with the corporate culture and a sense of shared values that helps control local decision making.
The policy can re-create operations abroad in the image of the home company, which can ease the transfer of special know-how.
Firms active in nationalistic markets or worried about industrial espionage may feel that expatriate managers can best protect the company’s interests.
Ethnocentric staffing also has the following disadvantages:
Relocating home-country managers is expensive, and can include relocation bonuses and reimbursement of moving expenses for entire families. This is why companies tend to pursue this policy for upper managerial posts only.
And expatriate managers can create barriers for the subsidiary if they give it a “foreign” image. For example, subordinates may feel that the foreign managers do not understand their culture and their workplace needs.
Disadvantages
Relocations are expensive
Give the business a “foreign” image
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

4. Individuals from host country manage operations abroad
Polycentric Staffing
Individuals from host country manage operations abroad
Advantages
Responsibility on those knowing local business
Avoid expensive relocations from home nation
Polycentric staffing is when individuals from the host country manage operations abroad. This policy has these main advantages:
It grants host-country managers a degree of decision-making autonomy and hands-on responsibility to those familiar with the local business environment.
It also eliminates the high cost of relocating expatriate managers from the home, or a third, country. Yet, companies still often incur the cost of sending host-country managers to the home-country office periodically to expose them to the company’s culture and business practices.
Polycentric staffing also has these disadvantages:
A large international company can soon resemble a collection of national businesses, with each one managed by natives of the country. This could hamper efforts to create a global corporate culture, for example.
And for a firm following a global strategy, performance can suffer if polycentric staffing reduces integration and knowledge sharing.
Disadvantages
Resemble a collection of national entities
Potentially harm performance
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

5. Geocentric Staffing Advantages Disadvantage
Best-qualified individuals, regardless of nationality,
manage operations abroad
Advantages
Managers who can adjust anywhere
Break down nationalistic barriers
Geocentric staffing is when the best-qualified individuals, whether from the host, the home, or a third country, manage operations abroad.
One advantage of geocentric staffing is that it develops global managers who can easily adjust to any business environment.
It can also help a company break down nationalistic barriers among managers within a subsidiary or between subsidiaries in different nations.
The main drawback of this policy is that people with these special skills are in limited supply and hiring them can be prohibitively expensive. This is why the policy is typically reserved for the highest level managers.
Disadvantage
These individuals command high salaries
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

6. Human Resource Planning
Forecasting human resource needs and supply
Phase 1
Phase 2
Phase 3
Take inventory of current human resources
Estimate firm’s future human resource needs
Develop plan to recruit and select people for vacant and anticipated new positions
Human resource planning is forecasting a company’s human resources needs and its supply. It involves three phases of activities:
Phase one involves taking inventory of a company’s current human resources. Information is collected on an employee’s education, job skills, previous jobs, language skills, and any experience living abroad.
Phase two involves estimating future human resource needs to decide whether to hire employees or subcontract production to other producers.
And phase three involves developing a plan for recruiting and selecting people to fill vacant and anticipated new positions.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

7. Tips for Small Businesses
Expanding internationally can severely
strain the resources of small firms
Do not rely solely on home-country expatriates
Local contacts do not guarantee contracts
Going global can severely strain the resources of a small business. Things for the small business manager to consider include:
Expatriates do not understand local culture as well as natives. Hire a local general manager and sprinkle support staff with home-country expatriates.
Having powerful contacts in the host country government does not guarantee that the company will obtain the contracts it desires.
Treating employees and all those in the host country with respect demonstrates honesty and creates goodwill, which leads to trust and potentially profitable business relationships.
And use the Internet in the search for talent. Many Web sites allow people to post their resumés online and let companies post job openings.
Treat employees abroad with respect
Employ the Web in your talent search
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

8. Recruiting Human Resources
Process of identifying and attracting a qualified pool of applicants for vacant positions
Recent college graduates
Local managerial talent
Nonmanagerial workers
Current employees
Recruitment of human resources is the process of identifying and attracting qualified applicants for vacant positions. For their future employees, companies usually tap the following sources:
Current employees may be good candidates for an international assignment, especially if they have been exposed to the firm’s international activities. They may even have important contacts in the host country and have experience with its culture.
Companies also recruit from among recent college graduates who came from other countries to study in the firm’s home country. A common practice among U.S. companies, it gives new hires general and specialized training, and teaches them the corporate culture. Individuals later receive positions in their native countries.
Hiring local managerial talent is common when cultural understanding and local contacts are needed on the job. Host country governments may force a company to recruit local managers to develop its own managerial talent.
Companies can also recruit locally for nonmanagerial workers to fill jobs that require few specialized skills. For more demanding positions, specialists can come from the home country to train people hired locally.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

9. Selecting Human Resources
Process of screening and hiring the best-qualified applicants with the greatest performance potential
Ability to bridge cultural
differences is key
Expatriates must adapt
to new ways of life
Cultural sensitivity raises
odds for success
Selection of human resources involves screening and hiring the best-qualified applicants with the greatest performance potential.
For international assignments, a person’s ability to bridge cultural differences is often essential.
If an opening is for an expatriate manager, the ability to work with others from different cultures and to adapt to a new way of life is crucial.
Culturally sensitive managers can increase the odds for success. Recruiters can assess cultural sensitivity by asking candidates about their receptiveness to new ways of doing things and about racial and ethnic issues.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

10. Culture Shock
Psychological process affecting people living abroad that is characterized by homesickness, irritability, confusion, aggravation, and depression
Stage I:
Thrilling experience
Stage II:
Downward slide
Stage III:
Recovery begins
Stage IV:
Embrace local culture
Culture shock causes an individual to have trouble adjusting to the new environment in which they find themselves. If allowed time to run its course, culture shock has four stages and the expatriate eventually feels entirely comfortable in the adopted culture. Cultural training programs for employees sent abroad may lessen the effects of culture shock.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

11. Reverse Culture Shock Readapting Reducing its effects to home culture
Once-natural thoughts and
feelings now strange
Can be more unsettling than
culture shock
Some companies reabsorb
expatriates poorly
Home-culture reorientation
programs
Career-counseling sessions
Career-development program
before posting abroad
Reverse culture shock is the psychological process of re-adapting to one’s home culture. Values and behavior that once seemed so natural in the home country now seem strange. Returning managers sometimes find that no position or only a “standby” position awaits them in their old office.
To help returning managers and their families deal with reverse culture shock, a company may offer reorientation programs and career-counseling sessions. An employer might even bring the family home for a short stay before the permanent return to ease them back into the home culture.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

12. Cultural Training Methods
To obtain maximum productivity from its expatriate managers, a firm can provide cultural training programs. The goal is to create informed, open-minded, and flexible managers that have a level of cultural training appropriate to their duties. Common programs include the following:
Environmental briefings are basic introductions and include information on local housing, health care, transportation, schools, and climate.
Cultural orientations offer insight into social, political, legal, and economic institutions in the host country.
Cultural assimilation teaches the culture’s values, attitudes, manners, and customs. Learning basic phrases in the local language and role-playing may also be included.
Sensitivity training teaches people to be considerate and understanding of the local peoples’ feelings and emotions.
Intense language training helps teach why local people behave as they do. This is a crucial element of training for long-term assignments.
Finally, field experience involves visiting the culture, walking its streets, and becoming absorbed by it for a short period of time before the relocation.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

13. Compiling a Cultural Profile
CultureGrams
Background
Notes
Country
Studies Area
Handbooks
Cultural profiles can be quite helpful in deciding whether to accept an international assignment. Sources for constructing a cultural profile include:
CultureGrams, which is a guide found in the reference section of many libraries. Frequent updates make this an excellent source.
Country Studies Area Handbooks, which is a series that explains how politics, economics, society, and national security issues are related and shaped by culture in more than 70 countries.
And Background Notes, which contain relevant factual information on human rights and related issues.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

14. Worker Training Emerging markets Basic skills training Apprenticeship
Nonmanagerial workers also have training and development needs. In some emerging markets, workers may have not completed primary school. Even well educated workers may lack industry experience or the basic skills needed to work in an industry.
In some countries, students who do not enter college can enter programs that provide extensive training for cutting-edge technologies. Germany is a leader in vocational and apprenticeship programs for nonmanagerial workers.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

15. Compensation of Managers
Cost-of-living
effects
Bonus and
tax incentives
Compensation packages for managerial employees should reflect the host country’s cost of living, which includes expenses for groceries, dining out, clothing, housing, schooling, transportation, and so forth. In other words, it simply costs more to live in some countries than it does in others, in some cities than it does in others, and in cities versus rural areas.
Managers who relocate to lower cost-of-living countries are paid the same salary that they received at the home office. Otherwise, he or she would be penalized for accepting the international job assignment. Managers who are hired and native to the host country typically receive the same pay as managers in other local companies.
Companies sometimes offer inducements for taking an international posting, such as a financial bonus. Hardship pay is a bonus for working in an unstable country or one with a low standard of living. The U.S. government permits citizens working abroad to exclude “foreign-earned income” from their taxable income if they paid income taxes abroad.
Finally, it is important to remember that compensation practices of any host country are rooted in its culture and history.
Cultural and
social factors
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

16. Compensation of Workers
Greater cross-
border investment
Labor mobility in
some markets
Two main factors influence the wages of nonmanagerial workers.
First, their compensation is increasingly influenced by greater cross-border business investment. Employers can fairly easily relocate to nations where wages are lower, but workers must accept other jobs at perhaps lower wages or go without work. This may create a trend toward a leveling of workers’ pay worldwide. But an improvement in workers’ lives in one country may come at the expense of workers’ livelihoods in another nation.
Second, labor is increasingly mobile in certain locales. The European Union allows workers from one EU nation to freely work in another. For example, if workers in Spain have no jobs or the pay is inadequate, they can move to another European Union country to find work.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

17. Labor-Management Relations
Positive or negative relations between
a company’s management and its workers
Rooted in local culture
Directly influences
workers’ lives
Often affected by
political movements
Important to human resource management in host countries is the positive or negative condition of relations between management and workers. When management and workers realize their futures are intertwined, the company can better meet its goals and surmount unexpected obstacles.
Because relations between laborers and managers are human relations, they are rooted in culture and directly influence workers’ lives. They are also affected by political movements and calls for better wages, working conditions, and so forth.
Localizing management decisions can contribute to better labor-management relations because local managers may handle local matters more effectively.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

18. Labor Unions Selection of a location Performance in a market Emerging
markets
Codetermination
in Germany
The strength of labor unions in a country can affect its selection as a location and can impact firm performance in the market.
Multinational companies may examine labor unions as part of its analysis of a market. Host country governments know this and may promise to keep labor unions in check if the company invests there.
Developed nations are attractive if a cooperative atmosphere exists between company management and labor unions. Under a practice called codetermination, German workers enjoy a direct say in the strategies and policies of their employers.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

19. International Labor Movements
International activities of unions are making progress in improving treatment of workers and reducing child labor
But can be difficult
Events in distant lands difficult to comprehend
Workers in different nations often compete
Unions worldwide are making progress on improving the treatment of workers and reducing incidents of child labor. Yet, it can be difficult for a union in one nation to support its counterpart abroad.
Events in other countries can be difficult to comprehend and workers sometimes compete against each other for jobs. For example, a labor union in one country might offer concessions to attract the jobs created by a new production facility and lure a multinational away from another country.
It is this type of situation that some people say is creating downward pressure on wages and union power worldwide.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall