1. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 11 Global Human Resource Management Introduction to Global Business

2. 1.Explain the basic cultural/regulatory issues involved in global human resource management including outsourcing/ offshoring. 2.Describe the challenges involved in staffing foreign operations, assessing needs for training and development, and designing appropriate strategies to meet those needs. 3.Discuss performance appraisals and employee compensation issues around the world, including cultural differences, cost of living, and how expatriate issues are handled. 4.Explain the interplay between international labor standards and free trade, the free trade and labor concerns presented by NAFTA, and the functions of labor unions. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. After studying this chapter, you should be able to:

3. Global Strategic Human Resource Management Conduct of human resource management (HRM) differs markedly throughout the world. U.S. companies doing business in different countries face different human resource environments. Differences relate to: –Cultural factors that vary from country to country –Regulations such as labor and tax laws, immigration, and border security © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

4. Statistical Overview Recent statistical analyses can shed light on the nature of work around the world. –Workforce participation rates for females vary greatly among countries. –The types of work that people do differ considerably. –Immigration laws and the ability of foreign-born individuals to work in a given country vary widely. –Some countries have persistently higher rates of unemployment than others. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

5. Cultural Issues and Differences Hofstede’s five major dimensions of national culture: –Power distance—the degree of equality of authority distribution in a given society and its workplaces, and employee expectations related to the same –Uncertainty avoidance—a culture’s desire for predictability, or the lack of predictability in the workplace and elsewhere –Individualism/collectivism—the extent people regard themselves as members of a group or collective, rather than as discrete individuals –Masculinity/femininity—the values that are traditionally associated with one gender or the other –Long-term/short-term orientation—the extent to which members of a given society value long-term and future planning as opposed to a more immediate short-term perspective © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

6. EXHIBIT 11.1HOFSTEDE’S FIVE WORK-RELATED VALUES IN NATIONAL CULTURE National Culture Individual/ collectivism Long-term/ short-term orientation Masculinity/ femininity Uncertainty avoidance Power distance © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

7. Regulatory Issues Including Immigration and Border Security Regulatory legal-political systems and structures that govern HRM differ greatly around the world. –Some regulations pertain to formation of labor unions and collective bargaining. –Employee working hour regulations differ by country. Governmental regulations related to immigration and border security are among the most important in IHRM. –Some countries have opened their doors to workers from other countries. –Others, such as the United States, have attempted to restrict foreign workers. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

8. Outsourcing and Offshoring Outsourcing –The process of a firm subcontracting a certain production function to a third party Offshoring –The process of transferring an organizational function to another country, regardless of whether this function is outsourced or stays within the same firm or corporation © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

9. Staffing Policies Staffing a local office in a host country –Should the firm use staff from the parent country, from the host country, or from other countries? –Staff from the parent country are called parent country nationals. –Workers already living in the host country are host country nationals. –Employees from countries other than parent or host country are third country nationals. –Parent country nationals and third country nationals are also known as expatriates. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

10. Virtual Staffing Virtual staffing –Using technology to employ foreign nationals as virtual expatriates who do not relocate to the host country Technology such as e-mail, videoconferencing, and web-based collaboration makes virtual staffing possible. Drawback to virtual staffing: –It’s hard for virtual expatriates to build strong and trusting relationships with people in the foreign office. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

11. Expatriate Issues in Staffing Reasons to use expatriates: –Lack of qualified host country nationals –Maintenance of control of host country operations Issues arising from the use of expatriates: –Rates of expatriate failure are greater than 30 percent. –Family problems play a part in expatriate failure; shorter-term expatriate assignments may help. –The reverse culture shock that expatriate employees experience upon repatriation. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

12. What Are Training and Development? Training involves providing employees with skills specific to the job they are going to be doing. Development involves preparing employees for new future assignments or higher-level positions. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

13. Needs Assessment Assessing needs for training and development is directly related to company international strategic planning. –Firms must make sure their staff have the training to succeed in a host-country setting. –They must also focus on training and development needs of host country national employees. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

14. Types of Training and Development Types of training and development differ depending on the given situation. Some training and development decisions include: –Internet-based training or in-person training and development –Individual or group-based training –Whether groups and different organizational levels of employees can train together © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

15. Expatriate Needs in Training and Development Expatriates must be familiar with host country standards and customs. Training and preparation should foster reasonable expectations about normal life in the host country. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

16. Performance Appraisal and Compensation Performance appraisal involves assessing employee performance. –Important because there is generally a direct link between performance appraisals and compensation. –Employees who are performing well should receive higher rewards and compensation than those who are performing poorly. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

17. Assessing Performance One purpose of performance appraisal is to provide feedback to employees on how they are doing. Another purpose is to help identify areas for potential training and development. Other issues include who does the performance appraisal ratings and how feedback is presented. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

18. Cultural Differences in Performance Appraisal Cultures vary in how they present good and bad feedback at an appraisal. Cultures differ in whether appraisal is for an individual or a group. Performance appraisal differs according to power distance: –In high power distance countries, strict hierarchies are maintained and managers evaluate subordinates. –In lower power distance countries, subordinates may evaluate managers. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

19. Compensation and National Differences in Cost of Living Compensating employees around the world can present a challenge. –Cost of living differs dramatically around the globe. –Major cities and urban areas are expensive. –Assignments to underdeveloped countries can be expensive if expatriates expect to maintain their home country lifestyle. National differences in forms of compensation: –Constant salary payments versus annual bonuses –Composition of pay packages vary in types and level of benefits provided to employees. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

20. Expatriate Issues in Compensation Are expatriates compensated using home-country or host-country pay levels? Should they be paid in their home-country currency or local currency? The balance sheet approach is keeping the expatriate on the home country’s salary structure (balance sheet) while providing various additional allowances. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

21. Executive Pay Executive compensation is being scrutinized more carefully since 2008. –Focus is on the gap between what an executive receives relative to what workers receive. –Some companies tie pay to performance by using performance stock awards and bonuses based on meeting target goals. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

22. International Trade, Labor Relations, and HRM Ethical and other managed trade concerns have arisen with respect to abuse of workers in countries around the world. –Is it ethically acceptable to allow products produced by slave labor to be sold in our country? –Are people willing to pay more for goods that are not manufactured in a sweatshop or slave labor situation? United Nations International Labor Organization (ILO) has developed minimal labor standards: –Prohibit slave or forced labor –Restrict use of child labor –Mandate basic job safety protections and right of workers to form unions © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

23. The North American Agreement on Labor Cooperation (NAALC) During the negotiation of NAFTA, discussion arose about low wages and lack of enforcement of labor rights in Mexico. The North American Agreement on Labor Cooperation (NAALC) is a special agreement outside the main NAFTA agreement which requires each NAFTA country to strongly enforce its own labor laws and regulations. NAALC allows parties in the NAFTA countries to approach the labor department in their own country and file a formal complaint about labor standards in another NAFTA country. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

24. International Labor Relations Central tenet of United Nations ILO’s global labor standards is the right of workers to have freedom of association, form labor unions, and engage in collective bargaining. A labor union is a formal organization representing a group or groups of employees. A collective bargaining agreement is a contract comprehensively setting forth employee terms and conditions of employment at a given workplace or group of workplaces. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

25. Comparative Labor Relations Relations between labor and management are governed and conducted very differently around the globe. In the United States, the National Labor Relations Board (NLRB) oversees and regulates private sector labor relations activities. Germany has multi-employer bargaining, with negotiations in which a number of employers jointly bargain with a given labor union. The most prominent feature of German labor relations is co-determination, which allocates seats for employee representatives on corporate boards of directors. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

26. outsourcing offshoring parent country nationals host country nationals third country nationals expatriates expatriate failure repatriation training development appraisal balance sheet approach labor union collective bargaining agreement multi-employer bargaining co-determination © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Key Terms