1. © 2013 Cengage Learning. All rights reserved. CHAPTER 13 GLOBAL2  PENG © iStockphoto.com/YinYang

2. © 2013 Cengage Learning. All rights reserved. CHAPTER 13 LEARNING OBJECTIVES After studying this chapter, you should be able to: 1.Explain staffing decisions, with a focus on expatriates. 2.Identify training and development needs for expatriates and host-country nationals. 3.Identify and discuss compensation and performance appraisal issues.

3. © 2013 Cengage Learning. All rights reserved. CHAPTER 13 LEARNING OBJECTIVES After studying this chapter, you should be able to: 4. List factors that affect labor relations in both home and host countries. 5. Discuss how the institution-based and resource- based views shed additional light on human resource management. 6. Identify the five Cs of human resource management.

4. © 2013 Cengage Learning. All rights reserved. LO1: EXPLAIN STAFFING DECISIONS Terms to know:  Human resources management  Staffing  Host country nationals (HCNs)  Expatriates

5. © 2013 Cengage Learning. All rights reserved. LO1: TYPES OF EXPATRIATES

6. © 2013 Cengage Learning. All rights reserved. LO1: THREE APPROACHES TO STAFFING Ethnocentric approach: Emphasizes norms and practices of parent company. Relies on PCNs. Perceived lack of talent among HCNs often necessitates this approach. © Howard Grey/Stone/Getty Images

7. © 2013 Cengage Learning. All rights reserved. LO1: THREE APPROACHES TO STAFFING Polycentric approach: Focuses on norms and practices of host country. Relies on HCNs. “When in Rome…” HCNs have no language or cultural barriers. Placing HCNs in top roles may send a morale-boosting signal to other HCNs.

8. © 2013 Cengage Learning. All rights reserved. LO1: THREE APPROACHES TO STAFFING Geocentric approach: Focuses on finding most suitable managers, disregarding nationality. For geographically dispersed MNE, this approach can help create corporate-wide culture and identity.

9. © 2013 Cengage Learning. All rights reserved. LO1: STRATEGY AND STAFFING Systematic link between strategic posture of an MNE and its staffing approach

10. © 2013 Cengage Learning. All rights reserved. LO1: THE ROLE OF EXPATRIATES

11. © 2013 Cengage Learning. All rights reserved.  Strategists – represent interests of the MNE’s headquarters  Daily managers – run operations and build local capabilities  Ambassadors – represent headquarter’s interests, build relationship with host- country stakeholders; represent subsidiary to headquarters  Trainers – for their replacements LO1: THE ROLE OF EXPATRIATES

12. © 2013 Cengage Learning. All rights reserved. LO1: FACTORS IN EXPATRIATE SELECTION  Expatriate failure rates are high… premature (earlier than expected) return unmet business objectives unfulfilled career development objectives  Causes for failure: Family’s inability to adjust to culture Usually a combination of work-related and family-related problems

13. © 2013 Cengage Learning. All rights reserved. LO1: FACTORS IN EXPATRIATE SELECTION

14. © 2013 Cengage Learning. All rights reserved. LO2: TRAINING FOR EXPATRIATES Length and rigor should correspond to expected length of stay Extensive language training Sensitivity training, with immersion approach

15. © 2013 Cengage Learning. All rights reserved. LO2: DEVELOPMENT FOR EXPATRIATES/REPATRIATES Psychological contract Career anxiety Loss of status Cultural re-adjustment

16. © 2013 Cengage Learning. All rights reserved. LO2: TRAINING AND DEVELOPMENT FOR HCNS In China, for example, a key factor in retaining or losing talent is which employer can offer better training and development opportunities.

17. © 2013 Cengage Learning. All rights reserved. LO3: COMPENSATION FOR EXPATRIATES Going Rate versus Balance Sheet

18. © 2013 Cengage Learning. All rights reserved. LO3: BALANCE SHEET APPROACH Hypothetical Compensation Package Using Balance Sheet Approach

19. © 2013 Cengage Learning. All rights reserved. LO3: COMPENSATION FOR HCNS  Low-level HCNs have relatively little bargaining power.  HCNs in management and professional positions gaining more bargaining power.

20. © 2013 Cengage Learning. All rights reserved. LO3: PERFORMANCE APPRASIAL  Cultural differences may create problems in appraising HCNs.  Expatriates need to be evaluated by their own supervisors.  Compensation and performance appraisal are even more important during difficult economic times. Performance appraisal helps managers make decisions about pay and promotion, development, documentation, and subordinate expression.

21. © 2013 Cengage Learning. All rights reserved. LO4: LABOR RELATIONS AT HOME  Firms’ key concern – cut costs, enhance competitiveness.  Unions’ concern – higher wages and more benefits.  Threat of job loss vs. threat of strike.

22. © 2013 Cengage Learning. All rights reserved. LO4: LABOR RELATIONS ABROAD  MNEs prefer to deal with non-unionized labor.  In many developing countries, governments welcome MNEs and at the same time silence unions.  However, high profile strikes at plants run by Taiwan’s Foxconn and Japan’s Honda in China suggest that government stances may be changing.

23. © 2013 Cengage Learning. All rights reserved. LO5: INSTITUTIONS AND HUMAN RESOURCE MANAGEMENT

24. © 2013 Cengage Learning. All rights reserved. LO5: FORMAL INSTITUTIONS AND HUMAN RESOURCE MANAGEMENT Formal institutions: Every country has rules and regulations governing human resource management.

25. © 2013 Cengage Learning. All rights reserved. LO5: INFORMAL INSTITUTIONS AND HUMAN RESOURCE MANAGEMENT Informal institutions: MNEs from different countries have different norms in staffing. Must avoid stereotyping. Extra compensation required to attract high-caliber expats.

26. © 2013 Cengage Learning. All rights reserved. LO5: RESOURCES AND HUMAN RESOURCE MANAGEMENT Are particular HR activities rare? Does a particular HR activity add value? How imitable are certain HR activities? Do HR practices support organizational capabilities? © iStockphoto.com/photovideostock

27. © 2013 Cengage Learning. All rights reserved. LO6: THE FIVE Cs OF HRM

28. © 2013 Cengage Learning. All rights reserved. DEBATE: ACROSS-THE-BOARD PAY CUT vs. REDUCTION IN FORCE Across-the-board:  With US firms, results tend to be very negative.  May clash with individualistic culture. Reduction in force:  “Corporate cannibalism”  Often viewed as unethical outside the Anglo-American world.  When managed correctly, impacted employees are able to separate with dignity.