2. Chapter 16 Human Resource Management

3. 16 - 3 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Human Resource Management Different approaches to staffing policy Foreign postings -Why do managers fail? -How can they increase their chances of success? The role of training, management development, and compensation practices in IB

4. 16 - 4 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Human Resource Management Activities aimed at effective use of human resources -Staffing, management development, performance evaluation, compensation Process complexity increases across borders -Environmental differences of: labor markets, culture, legal systems, economic systems -HR differences: compensation practices, labor laws, motivation issues

5. 16 - 5 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Staffing and International Strategy

6. 16 - 6 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Expatriate Managers Failure Rates (in order of importance) US MNCs 1.Spouse cannot adjust culturally 2.Manager cannot adjust culturally 3.Other family adjustment problems 4.Manager’s lack of personal or emotional maturity 5.Manager cannot cope with broader responsibility overseas Japanese MNCs 1.Manager cannot cope with broader responsibility overseas 2.Manager cannot adjust culturally 3.Manager’s lack of personal or emotional maturity 4.Lack of technical competence 5.Spouse cannot adjust culturally

7. 16 - 7 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

8. 16 - 8 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Expatriate Success Predictors Self-orientation -Strengthen self-esteem, self-confidence, mental well-being -Adapt to food, music, sport, outside interests -Superior technical competency Others-orientation -Enhance ability to interact effectively with host nationals -Relationship development, willingness to communicate Perceptual ability -Understand why people in other countries behave the way they do -Non-judgmental, non-evaluative in interpreting others’ behavior Cultural toughness -How tough is host culture to adjust to? From: Mendenhall and Oddou

9. 16 - 9 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Career Development for Expatriates Pre-departure, on-site training -Cultural training -Language training -Practical training Repatriation -Many repatriating expatriates lost to MNCs because suitable positions not available at home -Autonomy, span of control, compensation -Repatriation strategy failure makes recruitment of competent expatriates difficult

10. 16 - 10 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Other Expatriate Issues Performance appraisal -Two groups with conflicting perspectives/cultures appraise the expatriate: home managers, host managers Compensation -Different national standards -Expatriate pay issues: base pay, cost-of-living, housing, education, hardship, foreign-service- premium, double-taxation, medical/pension benefits, home leave

11. 16 - 11 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Performance Appraisal Two groups evaluate expatriate managers, both biased -Host-nation managers -Home-country managers Home-country managers -Distance bias -No understanding of international business challenges -Hard data often obscure soft issues Host-nation managers -“foreign spy” syndrome -Expatriate’s career depends on home-country perception

12. 16 - 12 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Other IHRM Issues International labor relations -Concerns of organized labor: cultural and legal differences affect attitudes towards... Better pay, job security, working conditions Bargaining power with management -Strategy of organized labor Establish international, cross-border labor organizations Lobby national governments to restrict MNC activities -Approach to labor relations Degree to which MNC labor relations are centralized or decentralized (integration vs responsiveness…)