1. Chapter © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11 International Human Resource Management

2. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives (1 of 3) Know the basic functions of human resource management. Define international human resource management. Understand how international human resource management differs from domestic human resource management. Know the types of workers that multinational companies use. Know the basic functions of human resource management. Define international human resource management. Understand how international human resource management differs from domestic human resource management. Know the types of workers that multinational companies use.

3. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives (2 of 3) Explain how and when multinational companies decide to use expatriate managers. Know the skills necessary for a successful expatriate assignment. Understand how expatriate managers are compensated and evaluated. Appreciate the issues regarding expatriate assignments for female managers. Explain how and when multinational companies decide to use expatriate managers. Know the skills necessary for a successful expatriate assignment. Understand how expatriate managers are compensated and evaluated. Appreciate the issues regarding expatriate assignments for female managers.

4. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives (3 of 3) Know what companies can do to make the expatriate assignment easier for their female expatriates. Understand the relationship between choice of a multinational strategy and international human resource management. Know what companies can do to make the expatriate assignment easier for their female expatriates. Understand the relationship between choice of a multinational strategy and international human resource management.

5. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Human Resource Management (HRM) Human Resource Management (HRM): deals with the overall relationship of the employee with the organization Major goals of HRM are managing and developing human assets. Human Resource Management (HRM): deals with the overall relationship of the employee with the organization Major goals of HRM are managing and developing human assets.

6. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic HRM Functions (1 of 2) Basic HRM functions are: Recruitment : identification of qualified individuals for a vacant position Selection : process of filling vacant positions in the organization Training: providing opportunities to help the individual to perform Performance Appraisal : assessing the individual’s performance Basic HRM functions are: Recruitment : identification of qualified individuals for a vacant position Selection : process of filling vacant positions in the organization Training: providing opportunities to help the individual to perform Performance Appraisal : assessing the individual’s performance

7. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic HRM Functions (2 of 2) Basic HRM functions are: (cont’d) Compensation : providing the adequate reward package Labor Relations : the relationship between the individual and the company Basic HRM functions are: (cont’d) Compensation : providing the adequate reward package Labor Relations : the relationship between the individual and the company

8. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. International Human Resource Management (IHRM) When applied to the international setting, the HRM functions make up International Human Resource Management. In the international arena, the basic HRM activities take on an added complexity, for two reasons: Employees of MNCs include a mixture of workers of different nationalities. HR Managers must decide the necessary extent of adaptation to local business & national cultures. When applied to the international setting, the HRM functions make up International Human Resource Management. In the international arena, the basic HRM activities take on an added complexity, for two reasons: Employees of MNCs include a mixture of workers of different nationalities. HR Managers must decide the necessary extent of adaptation to local business & national cultures.

9. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Types of Employees in Multinational Organizations (1 of 2) Expatriate : Employees who come from a country that is different from the one in which they are working Home Country Nationals : Expatriate employees who come from the parent firm’s home country Third Country Nationals : Expatriate workers who come from neither the host nor the home country. Host Country Nationals : Local workers who come from the host country where the MNC unit is located. Expatriate : Employees who come from a country that is different from the one in which they are working Home Country Nationals : Expatriate employees who come from the parent firm’s home country Third Country Nationals : Expatriate workers who come from neither the host nor the home country. Host Country Nationals : Local workers who come from the host country where the MNC unit is located.

10. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Types of Employees in Multinational Organizations (2 of 2) Inpatriate : Employees from foreign countries who work in the country where the parent company is located. Flexpatriates: Employees who are sent on frequent but short-term international assignments. International Cadre (Globals) : Managers who specialize in international assignments. Commuter Assignments Employees : Employees who live in one country, but spend part of the work week in another country. Inpatriate : Employees from foreign countries who work in the country where the parent company is located. Flexpatriates: Employees who are sent on frequent but short-term international assignments. International Cadre (Globals) : Managers who specialize in international assignments. Commuter Assignments Employees : Employees who live in one country, but spend part of the work week in another country.

11. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Multinational Managers: Expatriate or Host Country (1 of 2) Deciding whether to use expatriate or local mangers depends mostly on a firm’s multinational strategy. Transnational strategists see their managerial recruits as employable anywhere in the world. Multidomestic strategists tend to favor local managers. For a particular position, the firm should ask: Given our strategy, what is our preference for this position (host, home, or third country national)? Deciding whether to use expatriate or local mangers depends mostly on a firm’s multinational strategy. Transnational strategists see their managerial recruits as employable anywhere in the world. Multidomestic strategists tend to favor local managers. For a particular position, the firm should ask: Given our strategy, what is our preference for this position (host, home, or third country national)?

12. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Multinational Managers: Expatriate or Host Country (2 of 2) For expatriate managers (parent or third country): Is there an available pool of managers with appropriate skills for the position? Are they willing to take expatriate assignments? Do any laws affect the assignment of expatriate managers? For host country managers: Do they have the expertise for the position? Can we recruit them from outside our firm? For expatriate managers (parent or third country): Is there an available pool of managers with appropriate skills for the position? Are they willing to take expatriate assignments? Do any laws affect the assignment of expatriate managers? For host country managers: Do they have the expertise for the position? Can we recruit them from outside our firm?

13. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Is the Expatriate Worth It? IHRM decisions regarding use of expatriate managers must take into account the costs of such assignments. The total compensation of expatriate managers is often 3-4 times higher than home-based salaries. In addition to high costs of relocating expatriates, more multinationals are now concerned with expatriate safety worldwide. Also, the failure rate of U.S. expatriates is higher than those from Europe and Japan. IHRM decisions regarding use of expatriate managers must take into account the costs of such assignments. The total compensation of expatriate managers is often 3-4 times higher than home-based salaries. In addition to high costs of relocating expatriates, more multinationals are now concerned with expatriate safety worldwide. Also, the failure rate of U.S. expatriates is higher than those from Europe and Japan.

14. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 11.1: Percent of Millenials Who Want to Work Outside of their Home Country

15. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 11.2: The Ten Most Expensive and Least Expensive Cities

16. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Reasons for U.S. Expatriate Failure (1 of 3) Individual: Personality of the manager Lack of technical proficiency No motivation for international assignment Family: Spouse or family members fail to adapt to local culture. Spouse or family members do not want to be there. Individual: Personality of the manager Lack of technical proficiency No motivation for international assignment Family: Spouse or family members fail to adapt to local culture. Spouse or family members do not want to be there.

17. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Reasons for U.S. Expatriate Failure (2 of 3) Cultural: The Manager fails to adapt to local culture or environment. The Manager fails to develop relationships with key people in the new country because of the complexity of cultivating networks with diverse people. Cultural: The Manager fails to adapt to local culture or environment. The Manager fails to develop relationships with key people in the new country because of the complexity of cultivating networks with diverse people.

18. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Reasons for U.S. Expatriate Failure (3 of 3) Organizational: Excess of difficult responsibilities in the assignment Failure to provide cultural and other important pre- assignment training, like language and culture Failure of company to pick the right person Company’s failure to provide the level of technical support that domestic managers are used to Failure of the company to consider gender equity Organizational: Excess of difficult responsibilities in the assignment Failure to provide cultural and other important pre- assignment training, like language and culture Failure of company to pick the right person Company’s failure to provide the level of technical support that domestic managers are used to Failure of the company to consider gender equity

19. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Strategic Role of Expatriate Assignments Help managers acquire skills necessary to develop successful strategies in a global context Help the company coordinate and control operations that are dispersed geographically and culturally Provide important strategic information. Provide crucial information about local markets Provide opportunities for management development Provide important network knowledge Help managers acquire skills necessary to develop successful strategies in a global context Help the company coordinate and control operations that are dispersed geographically and culturally Provide important strategic information. Provide crucial information about local markets Provide opportunities for management development Provide important network knowledge

20. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Selecting Expatriate Managers Selecting the wrong person for the job leads to failure. Selecting the wrong person can be a major expense, costing more than $1 million per expatriate failure. Improperly selected employees who cannot perform but who remain on assignment can be more damaging to the firm than those who leave prematurely. Domestic performance does not predict expatriate performance. Selection criteria may differ. Selecting the wrong person for the job leads to failure. Selecting the wrong person can be a major expense, costing more than $1 million per expatriate failure. Improperly selected employees who cannot perform but who remain on assignment can be more damaging to the firm than those who leave prematurely. Domestic performance does not predict expatriate performance. Selection criteria may differ.

21. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Key Success Factors for Expatriate Assignments Technical and managerial skills Personality traits (flexible, willing to learn) Relational abilities (ability to adapt to other cultures) Family situation (spouse & family willingness to go) Stress tolerance (ability to maintain composure) Language ability (speak, read & write the language) Emotional intelligence (empathize, relate to others) Technical and managerial skills Personality traits (flexible, willing to learn) Relational abilities (ability to adapt to other cultures) Family situation (spouse & family willingness to go) Stress tolerance (ability to maintain composure) Language ability (speak, read & write the language) Emotional intelligence (empathize, relate to others)

22. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 11.3: Expatriate Success Factors and Selection Methods

23. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Priority of Success Factors for Expatriate Assignments The importance of success factors for a particular assignment depends on four assignment conditions: Assignment length Short assignments focus on technical and professionals skills Cultural similarity Required interaction and communication with locals Job complexity and responsibility The importance of success factors for a particular assignment depends on four assignment conditions: Assignment length Short assignments focus on technical and professionals skills Cultural similarity Required interaction and communication with locals Job complexity and responsibility

24. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 11.4: What Percentage of Companies are Using More Short Term Assignments?

25. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 11.5: Selecting Expatriates: Priorities for Success Factors by Assignment

26. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Training and Development (1 of 2) Predeparture cross-cultural training reduces expatriate failure rates and increases job performance. The main objective of Cross-Cultural Training is to increase the relational abilities of the future expatriate and the spouse and family. The training rigor depends on the assignment. Training Rigor : The extent of effort by both trainees and trainers to prepare the expatriate for work abroad Predeparture cross-cultural training reduces expatriate failure rates and increases job performance. The main objective of Cross-Cultural Training is to increase the relational abilities of the future expatriate and the spouse and family. The training rigor depends on the assignment. Training Rigor : The extent of effort by both trainees and trainers to prepare the expatriate for work abroad

27. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Training and Development (2 of 2) Low rigor training Short time period Consists of lectures and videos on local cultures Briefings on company operations High rigor training Lasts over a month More experiential learning Extensive language training Includes interactions with host country nationals Low rigor training Short time period Consists of lectures and videos on local cultures Briefings on company operations High rigor training Lasts over a month More experiential learning Extensive language training Includes interactions with host country nationals

28. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 11.6: Building Cross-Cultural Training Rigor: Techniques and Objectives

29. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 11.7: Training Needs and Expatriate Assignment Characteristics

30. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Performance Appraisal for the Expatriate Conducting reliable performance appraisal for the expatriate is very challenging. Seldom can the firm use same performance criteria. Challenges: Fit of international operation in multinational strategy Unreliable data Complex and volatile environments Time differences and distance separation Conducting reliable performance appraisal for the expatriate is very challenging. Seldom can the firm use same performance criteria. Challenges: Fit of international operation in multinational strategy Unreliable data Complex and volatile environments Time differences and distance separation

31. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Steps to Improve the Expatriate Performance Appraisal Without intensive and direct contact, performance appraisals can fail to demonstrate a comprehensive understanding of the expatriate manager’s situation. To overcome these difficulties: Fit the evaluation criteria to the strategy. Fine-tune the evaluation criteria. Use multiple sources of evaluation with varying periods of evaluation. Without intensive and direct contact, performance appraisals can fail to demonstrate a comprehensive understanding of the expatriate manager’s situation. To overcome these difficulties: Fit the evaluation criteria to the strategy. Fine-tune the evaluation criteria. Use multiple sources of evaluation with varying periods of evaluation.

32. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 11.8: Evaluation Sources, Criteria, and Time Periods for Expatriate Evaluation

33. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Expatriate Compensation Compensation packages must be attractive to skilled managers, but also consider the increasing costs. Compensation packages have many common factors: Local market cost of living Housing Taxes Benefits Compensation packages must be attractive to skilled managers, but also consider the increasing costs. Compensation packages have many common factors: Local market cost of living Housing Taxes Benefits

34. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Balance-Sheet Approach (1 of 2) Provides a compensation package that attempts to balance purchasing power in the host country with that in the home country. The expatriate should not be in a better or worse position financially because of the assignment. The firm provides allowances for adjustments for differences in taxes, cost of living, housing, food, recreation, personal care, clothing, education, home furnishing, transportation, and medical care. Provides a compensation package that attempts to balance purchasing power in the host country with that in the home country. The expatriate should not be in a better or worse position financially because of the assignment. The firm provides allowances for adjustments for differences in taxes, cost of living, housing, food, recreation, personal care, clothing, education, home furnishing, transportation, and medical care.

35. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Balance-Sheet Approach (2 of 2) In addition to matching purchasing power, firms may provide additional allowances: Foreign service premiums (often 10-20% of base pay) Hardship allowance (extra money for difficult postings) Relocation allowances (miscellaneous costs of move) Home-leave allowances (transportation costs to return home once or twice per year) In addition to matching purchasing power, firms may provide additional allowances: Foreign service premiums (often 10-20% of base pay) Hardship allowance (extra money for difficult postings) Relocation allowances (miscellaneous costs of move) Home-leave allowances (transportation costs to return home once or twice per year)

36. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 11.9: The Balance Sheet Approach To Expatriate Compensation

37. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Other Approaches to Expatriate Compensation The high cost of expatriate compensation and the trend toward worldwide workers has resulted in modifications of the balance sheet approach. Some variations: Headquarters-based Compensation : paying home country wages regardless of location Host-based Compensation : adjusting wages to local lifestyles and costs of living Global pay systems : worldwide job evaluations, performance appraisal methods, and salary scales The high cost of expatriate compensation and the trend toward worldwide workers has resulted in modifications of the balance sheet approach. Some variations: Headquarters-based Compensation : paying home country wages regardless of location Host-based Compensation : adjusting wages to local lifestyles and costs of living Global pay systems : worldwide job evaluations, performance appraisal methods, and salary scales

38. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Repatriation Problem Repatriation Problem: the difficulties that mangers face coming back to their home countries and reconnecting with their old jobs. Three basic cultural problems “reverse culture shocks:” Adapting to new work environment and culture of home office Relearning to communicate with others in home and organizational cultures Adapting to their basic living environment Repatriation Problem: the difficulties that mangers face coming back to their home countries and reconnecting with their old jobs. Three basic cultural problems “reverse culture shocks:” Adapting to new work environment and culture of home office Relearning to communicate with others in home and organizational cultures Adapting to their basic living environment

39. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Strategies for Successful Repatriation These strategies may help firms to successfully repatriate their managers: Provide a strategic purpose for the repatriation. Establish a team to aid the expatriate. Provide parent country information sources. Provide training and preparation for the return. These strategies may help firms to successfully repatriate their managers: Provide a strategic purpose for the repatriation. Establish a team to aid the expatriate. Provide parent country information sources. Provide training and preparation for the return.

40. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. International Assignments for Women (1 of 2) Women in international assignments are strikingly rare. Estimates are that women represent only 12% of expatriate managers, but 45% of management. Women face a glass ceiling at home, and an expatriate glass ceiling worldwide, because of 2 myths: Myth 1: Women do not wish to take international assignments. Myth 2: Women will fail because of the foreign culture’s prejudices against local women. Women in international assignments are strikingly rare. Estimates are that women represent only 12% of expatriate managers, but 45% of management. Women face a glass ceiling at home, and an expatriate glass ceiling worldwide, because of 2 myths: Myth 1: Women do not wish to take international assignments. Myth 2: Women will fail because of the foreign culture’s prejudices against local women.

41. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. International Assignments for Women (2 of 2) Don’t assume that people from foreign cultures apply the same gender role expectations to foreign workers that they do to local women. Successful women expatriates emphasize nationality, not gender. The issues that arise in cross-cultural interactions depend more on how foreigners react to those of a different nationality. Don’t assume that people from foreign cultures apply the same gender role expectations to foreign workers that they do to local women. Successful women expatriates emphasize nationality, not gender. The issues that arise in cross-cultural interactions depend more on how foreigners react to those of a different nationality.

42. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. International Assignments for Women: Advantages Women may have advantages in expatriate positions: Being unique means she becomes more visible. Local business people from traditional cultures assume that she is the best person for the job. Women are more likely to excel in relational skills, a major factor in expatriate success. Local men speak at ease with a woman about more topics than men, leading to more interaction. Women may have advantages in expatriate positions: Being unique means she becomes more visible. Local business people from traditional cultures assume that she is the best person for the job. Women are more likely to excel in relational skills, a major factor in expatriate success. Local men speak at ease with a woman about more topics than men, leading to more interaction.

43. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. International Assignments for Women: Disadvantages Women also suffer disadvantages worse than males: Face the glass ceiling, isolation and loneliness; need to work harder to prove themselves. Seldom given an international assignment until later in their careers. Need to balance work and family responsibilities Need to worry about accompanying spouse Women also suffer disadvantages worse than males: Face the glass ceiling, isolation and loneliness; need to work harder to prove themselves. Seldom given an international assignment until later in their careers. Need to balance work and family responsibilities Need to worry about accompanying spouse

44. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What Can Companies Do to Ensure Female Expatriate Success? Despite the disadvantages they face, opportunities for women as expatriate managers are expected to grow: Shortage of high-quality multinational managers. Fewer men are willing to take the assignments. What firms can do to ensure the success of women: Provide mentors, networking with other women Identify and remove sources of barriers to international assignment. Despite the disadvantages they face, opportunities for women as expatriate managers are expected to grow: Shortage of high-quality multinational managers. Fewer men are willing to take the assignments. What firms can do to ensure the success of women: Provide mentors, networking with other women Identify and remove sources of barriers to international assignment.

45. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Multinational Strategy and IHRM (1 of 2) Multinational companies have several options for developing the appropriate IHRM policies for the implementation of their multinational strategies. One way is to examine its IHRM orientation, or philosophy. IHRM Orientation : A company’s basic tactics and philosophy for coordinating IHRM activities for managerial and technical workers. Multinational companies have several options for developing the appropriate IHRM policies for the implementation of their multinational strategies. One way is to examine its IHRM orientation, or philosophy. IHRM Orientation : A company’s basic tactics and philosophy for coordinating IHRM activities for managerial and technical workers.

46. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Multinational Strategy and IHRM (2 of 2) There are four basic IHRM orientations: Ethnocentric : All aspects of HRM tend to follow the parent organization’s home country HRM practices. Regiocentric & Polycentric : HRM is more responsive to the host country differences in HRM practices. Global : The firm assigns its best managers to international assignments, recruiting worldwide. There are four basic IHRM orientations: Ethnocentric : All aspects of HRM tend to follow the parent organization’s home country HRM practices. Regiocentric & Polycentric : HRM is more responsive to the host country differences in HRM practices. Global : The firm assigns its best managers to international assignments, recruiting worldwide.

47. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 11.10: IHRM Orientation and Practices for Managers & Technical Workers

48. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Ethnocentric IHRM Benefits Benefits: Little need to recruit qualified host country nationals for higher management Greater control and loyalty of home country nationals Little need to train home country nationals Key decisions centralized Benefits: Little need to recruit qualified host country nationals for higher management Greater control and loyalty of home country nationals Little need to train home country nationals Key decisions centralized

49. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Ethnocentric IHRM Costs Costs: May limit career development for host country nationals Host country nationals may never identify with the home company Expatriate managers are often poorly trained for international assignments and make mistakes Costs: May limit career development for host country nationals Host country nationals may never identify with the home company Expatriate managers are often poorly trained for international assignments and make mistakes

50. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Regiocentric & Polycentric IHRM Benefits Benefits: Reduces training expenses Fewer language and adjustment issues Lessened hiring and relocation costs Benefits: Reduces training expenses Fewer language and adjustment issues Lessened hiring and relocation costs

51. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Regiocentric & Polycentric IHRM Costs Costs: Coordination problems with headquarters based on cultural, language, and loyalty differences Limited career-path opportunities for host country and regional managers Limited international experiences for home country managers Costs: Coordination problems with headquarters based on cultural, language, and loyalty differences Limited career-path opportunities for host country and regional managers Limited international experiences for home country managers

52. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global IHRM Benefits & Costs Benefits Bigger talent pool High international expertise Development of transnational organizational cultures Costs Difficulty in importing managerial and technical employees Added expense Benefits Bigger talent pool High international expertise Development of transnational organizational cultures Costs Difficulty in importing managerial and technical employees Added expense

53. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Summary When basic HRM practices are applied to a company’s international operations, they become IHRM. Chapter 11 focused on HRM practices for expatriates. Expatriates present special challenges for MNCs. Successful IHRM is a 21 st century challenge. Globalization allows MNCs to hire from a worldwide pool of talent. It is important for multinationals to find ways to properly manage expatriates successfully. When basic HRM practices are applied to a company’s international operations, they become IHRM. Chapter 11 focused on HRM practices for expatriates. Expatriates present special challenges for MNCs. Successful IHRM is a 21 st century challenge. Globalization allows MNCs to hire from a worldwide pool of talent. It is important for multinationals to find ways to properly manage expatriates successfully.